It’s A Jobs Jamboree Friday!

* Jobs Jamboree & Chuck doesn’t care anymore!
* Most currencies are either up or flat VS dollar.
* Aussie Retail Sales rebound in January.
* Is Chuck just a grumpy old man?.

And now. Today’s A Pfennig For Your Thoughts.

Good Day. And a Happy Friday to one and all! Whew! I fought the urge to sleep through the alarm this morning, and I have a feeling that I’ll be heading back to bed once I complete the delivery process this morning. I’m greeted this morning by the group: King Crimson, and their song: In the Court of the Crimson King. Now that song is as “Classic Rock” as you can get. A rock band that was formed in 1968, had their hit song, In the Court of the Crimson King in 1969, and is still plays gigs, although only one member of the original lineup remains with the band, and they’ve not enjoyed the success that the late 60’s brought them, since that time.

Well, it’s a Jobs Jamboree Friday. I hate to be the bearer of bad news. Well, in this case it’s not necessarily bad news, but more of the “I don’t care anymore news”. And I don’t mean to sound like Phil Collins, singing, “I don’t care anymore” but in reality that’s what it’s really like, for I don’t know how else to tell anyone that I just don’t care anymore. Did you know that an accountant, did the math, and if the BLS had used the same “seasonal adjustment” they used a year ago, that the 158,000 jobs created in January would have actually been a loss of jobs totaling 188,000? Look, I do and don’t get seasonal adjustments, I’m on the fence with them, but if they are going to be used, for crying out loud, could we have some consistency, please? Serenity Now!

So, the consensus forecast going into the Jobs Jamboree is for an increase of jobs in February of 195,000. I just can’t wait to see what monkey business gets played with the surveys by the BLS this month. NOT! But the strange thing going on overnight and in the early morning session is that despite the ramifications for the dollar should the Jobs data be strong according to the BLS, the currencies and metals, for the most part, are in rally mode this morning. So, what’s up with that? Why would the currencies rally strongly like this, ahead of a Jobs report in the U.S. that could lead to another rate hike?

Well, that’s a good question, and I think the answer lies in the fact that the markets have priced in only a 10% probability of a rate hike this month, and to go further out, one more rate hike of 25 Basis Points (1/4%) is discounted by 50%… So, in other words, the markets are not buying the Fed’s rhetoric about more rate hikes. Add all that together, and you have the markets selling dollars, because they just don’t believe the Fed any longer. Uh-oh! Have we gotten to the place where the Fed has lost all credibility? Well, maybe, but even more and more the talk is about negative rates, and how the Fed will have to deal with them sooner or later, probably sooner in the whole scheme of things.

I’ll get to the currencies in just a minute, but first I’m on a roll here with interest rates and you don’t want to stop me when I get on a roll! There was an article on recently, regarding the Fed and negative rates. let’s listen in to what was said there. “As we detailed initially {1}, and followed {2}, there is a clear and present danger – no matter what the various Federal Reserve (“Fed”) speakers say – that The Fed will be forced into negative rates sooner rather than later. The market appears to be losing complete faith in The Fed’s current narrative as bets on negative interest rate policy (“NIRP”) have reached record levels – with 2017 now more likely than 2016 (Quantitative Easing [“QE”] first?).”

Alrighty then. Apparently the markets “don’t care anymore” about the Jobs Jamboree either! Well, since I took this stance about 6 months ago, I would have to say they are jumping on my bandwagon! Come on there’s still more room! I guess we’ll really see if this is real, once the Jobs data prints this morning. Currency Traders are fickle, and I really don’t’ see them as traders that have the strength to hold to their convictions, and are easily swayed away from what they believe. A stronger than expected jobs print could turn this whole thought process around this morning. Oh boy! Where do I sign up for more of that thought?

So, the currencies and metals, for the most part, are booking gains VS the dollar this morning. The Big Dog, euro, finally got up and off the porch to chase the dollar down the street, and has added 1-cent to its figure since yesterday morning, but the Antipodeans are the best performers overnight, as this “risk” sentiment that I’ve been talking about for the past two weeks continues to settle in. And remember what I’ve told you again and again, that sentiment is all that matters these days.

There are three currencies that are sticking out like a red thumb this morning because they can’t join the other currencies on the rally tracks. It’s the same three as yesterday, Russian rubles, Mexican pesos, and Canadian dollar/ loonies. And again, I saw these three with losses and immediately went to the commodities screen to see what happened with the price of Oil and just like the previous time I was fooled by these losses in the Petrol Currencies, into thinking the price of Oil had dropped, I was wrong to think that! The price of Oil hasn’t gone anywhere in the last day, and remains steady Eddie.

And the Mexican peso just flipped into positive territory, leaving only the ruble and loonie to deal with losses today. Speaking of Mexico, I saw a report saying that the Banxico, (Mexican Central Bank) is planning on hiking rates 50 more basis points this year, bringing their internal rate to 4.25%… Still not enough interest there to provide a risk premium as far as I’m concerned, and really, isn’t that all that matters? What Chuck thinks? HAHAHAHAHAHA! As IF!

The Chinese renminbi saw a quite large appreciation at the fixing last night. That marks two days of appreciation heading into the National People’s Congress annual meeting, where it is believed that premier Li will probably drive home the point that the Gov’t will promote stability for the renminbi. Whatever it takes to get the renminbi on the appreciation path again, as it was beginning to get ugly with the day depreciations at the fixing. China has a lot of stuff going on folks, and it’s all coming together, and before we know it, China will have control of the Gold market pricing. Just another step toward “when I ruled the world, by the China”

Gold had a good day yesterday.. The price of Gold rose $24 without a takedown in the afternoon! WOW! Just when I thought the trading guidelines had been agreed upon between Gold traders and price manipulators, Gold hangs a $24 increase on the manipulators and says: neenerneenerneener! I kid, about this, here, but in reality that $24 increase without a takedown is scary to me. Well, the $1,250 figure finally got taken out, as Gold closed at $1,263, yesterday, and is up $4 in early morning trading this morning. Has Gold turned the corner, and soon the $1,200 figure will be a figure that just keeps getting smaller in Gold’s rear view mirror? I see some major financial institutions talking more about owning and buying Gold these days. It’s so difficult to call, given the wolf is always at the door here with the price manipulators. But, I’m going to go out on a limb and say, that in my opinion, which could be wrong, that Gold has turned the corner.

In Australia overnight, a print of January Retail Sales dominated the trading, and with the A$ stronger this morning, that means the report must have been OK. January Retail Sales grew at 0.3%, after a flat print in December, which was very disappointing, given it was the Christmas shopping month, but January rebounded, and that’s a good thing! And should keep the rate cut campers at arm’s length for now. I see that the Australian banks are still thinking that the Reserve Bank of Australia (RBA) will cut two more times in 2016. I’m hoping they are as wrong as the kid I saw yesterday at the ballpark with his baseball cap on sideways, and I told him. “Hey! Your hat’s on crooked” The crowd of people around me all began laughing out loud, and he just kept walking looking like a real dork with his hat on sideways!

Yes, I’m that kind of person. Most times I have a filter, but at times when I see things that just drive me crazy, like pants falling down, or hats on crooked, I feel I must address the situation. it’s a good thing Kathy wasn’t with me yesterday, because she would have been so ticked at me. She doesn’t get “it”. I always tell her, “dear, someone should take a picture of that kid and give it to him in 5 years, when he’ll look at it and say, “Hey! How could you let me go out in public looking like a dork?” it will be the parents fault, it always is. And she says, you’re just a grumpy old man.

Well, that was quite the trip down the rabbit hole! Sorry about that, but once I begin to talk about something, you know I’m going to the end of the story! Well, there’s really not that much going on this morning other than the Jobs Jamboree in a couple of hours now. Other than the Jobs Jamboree today, we’ll also see the January Trade Deficit, which should print around $44 Billion. Not a good thing.

Yesterday’s Data Cupboard had the much anticipated ISM Services PMI, that would have the employment component. Well that didn’t turn out so good for the labor picture as the employment component fell thus offsetting the stronger than expected ADP employment change report from Wednesday. So, we have the ADP up and the ISM down with their employment reports going into today.. .But I contend that these have nothing to do with what the BLS will do with their surveys. See why “I just don’t care anymore”?

To recap. It’s a Jobs Jamboree Friday today, and Chuck doesn’t care, but the markets seem to still, and so we have to talk about it.. The Currencies and metals began to rally VS the dollar yesterday, and that carried through overnight and in the early morning sessions, with Gold the top performer yesterday gaining $24 without a takedown! The “risk sentiment” continues to settle in and that’s a good thing for the Antipodeans. And China appreciates the renminbi big time ahead of the National People’s Congress annual meeting, where Premier Li, will attempt to settle everyone down.

I started to tell you I had nothing for the FWIW section today, and then I remembered a MarketWatch article that hit my email yesterday. Here’s the link to the whole story:

And here’s the snippet. “Persistent weakness in the U.S. energy sector could have “negative ripple effects” on the larger financial market though the fire sale of assets by shadow banks, said Dallas Fed President Robert Kaplan on Thursday.

Wider spreads on high-yield debt has been one byproduct of lower oil prices, Kaplan said in a speech in Austin, Texas.

Energy companies have issued a material portion of these bonds and they are now held by shadow banks like mutual-funds and exchange-traded funds.

Weakness in the energy sector has the potential to create increased levels of fund redemptions.

With oil prices expected to stay low, there will be bankruptcies, mergers and restructurings in the energy sector.”

Chuck again.. Yes, I’ve been talking about all this stuff for some time now, and suddenly it’s become a conversation that the major media is covering. Welcome to the discussion folks! Where have you been?

Currencies today 3/4/16.American Style: A$ .7390, kiwi .6760, C$ .7445, euro 1.0980, sterling 1.4160, Swiss $1.0071, . European Style: rand 15.60, krone 8.5515, SEK 8.5089, forint 282.25, zloty 3.967, koruna 24.6410, RUB 73.39, (looky there! The ruble has flipped over to a positive gain today too! , that leave just the loonie that’s down today) yen 113.80, sing 1.3820, HKD 7.7665, INR 67.09, China 6.5284, pesos 17.86, BRL 3.7240, Dollar Index 97.51, Oil $34.56, 10-year 1.83%, Silver $15.39, Platinum $960.04, Palladium $539.81, and Gold. $1,264.99

That’s it for today. Another beautiful day at the ballpark yesterday, and I found a way to lure the vendors up to my seat.The early spring training games are usually a battle of minor leaguers once the 4th inning arrives, and by the end of March, it’s regular game-like conditions. But, it’s fun to watch the young kids try to make a name for themselves. I remember seeing Yadi catch a game for the first time, wondering why he was playing instead of the regular catcher at the time, Mike Matheny. And I remember rooting for Matt Carpenter to “make the team” as he battled a pitcher late in a game. Now these guys are established stars. A couple of years ago it was a young Stephen Piscotty that caught my eye, and this year, so far it’s young players named Patrick Wisdom, and Aledmys Diaz.. Well, one of my all-time fave songs takes us to the finish line today. The Blue Jays, and their song: I Dreamed Last Night. Alex sent me a text last night, telling me one of his college friends’ dad is a Pfennig Reader. It’s a small world, Alex.. was my reply. And then I asked him why all his friends dads weren’t Pfennig Readers! HA! Alrighty then, time to get off this bus today, and send you on your way to having a Fantastico Friday! And remember Be Good To Yourself!

Chuck Butler
Managing Director
EverBank Global Markets
Editor of A Pfennig For Your Thoughts