Jobs Jamboree Applies The Brakes!

* Jobs report sends dollar tumbling.
* RBA meets tonight 50/50 on rate cut.
* A Big Week for Greece.
* When will China give us the skinny on their Gold? .

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

Good day.. And a Marvelous Monday to you! If you celebrate Easter, I truly hope your Easter celebration and day was grand. The grandkids all looked so cute, and were pretty excited to go on their egg hunt. They all crashed from the sugar rush later in the day, and their moms and dads looked worn out. Me, I just sat back and thought. I remember when that was me. The day’s weather finally turned somewhat warm and the sun was out, which was much better than the weather I came back to on Friday. BRRRRRR! Well, there’s no sense beating around the bush on this. The Jobs Jamboree was a real disappointment last Friday, and since most traders had already headed to the Hamptons, today’s reaction to that employment print will be interesting.

In keeping with my “Chuck doesn’t care about the BLS jobs report any longer” I won’t spend an enormous amount of time talking about it, but the markets make such a big deal out of the surveys the BLS puts together and then makes “adjustments” to, that I need to tell you that for March, the U.S. only created 126,000 jobs, and of those 126,000 jobs 72,000 were added by the BLS in their Birth/ Death Model, which I will remind you is going against the facts that in the past year there have been more new business deaths and births, so why is the BLS still adding jobs each month? Ahhh, grasshopper, just one of the reasons I’ve given up on this data.

The currencies and metals reacted violently to the disappointing jobs data, with the dollar getting sold like funnel cakes at a state fair. I was in the “air” when the report printed, and therefore I really didn’t see goings on until later in the day, when I landed in cold St. Louis, and checked the currencies to see the euro trading near $1.10 and Gold adding value. I knew then that the jobs report had disappointed, but by how much was a still a mystery, until I got home and could really check things. But the major currencies have backed off those big chunks of gains from Friday in the overnight markets, and have what traders call, “consolidated”

And before I move on from Jobs talk, I wanted to make sure to print this little ditty. Americans not in the labor force has soared to 93.2 Million and the Labor Participation Rate remains at 1978 levels. If we still had soup lines, instead of EBT cards and SNAP checks in the mail, this would equal a depression. So, just think about that for a second. There, that’s enough, you certainly don’t want to dwell on that too long, for if you do, you’ll want to put away the sharp objects.

It’s going to be a Big Week for the euro and Greece. I’m told that Greece has a debt (Bills) auction on Wednesday and 450 Million euros due to the IMF on Thursday. As of right now, Greece is on schedule to make that payment, and should they do so without all kinds of crying and whining, the euro could push higher this week. It’s important to remember that with the euro, you’re talking about the offset currency to the dollar. So, how the dollar goes, often is the deciding measure for the euro. And with the dollar getting sold last Friday, the euro was allowed to bounce higher. Remember it’s not about the recession in the Eurozone, it’s not about QE in the Eurozone, it’s not about negative rates in the Eurozone, it’s about. the dollar. Sure these things play into a move in the euro, but the Big Kahuna when it comes to deciding whether the euro moves higher or goes lower is the dollar.

Well. The Reserve Bank of Australia (RBA) meets tonight. I had to laugh when I was reading this past weekend that right now, economists are 50/50 on whether the RBA cuts rates or not. I don’t believe the RBA needs to cut rates, but then I said that before the last two rate cuts by the RBA, so apparently they don’t listen to me! As if they would anyway! HA! But seriously, I truly don’t believe a rate cut is in order here. The economy is moving along and in today’s world, that’s not a bad thing. It’s far better than the old days of boom and bust for Australia! But the RBA probably is under the spell of the evil Central Bank wizard, that has put spells on most of the Central Banks in the world, that makes them do very strange things with their monetary policies.

Well, at least that’s what the RBA could use as their excuse! And all the other Central Banks that have turned the printing presses on, cut rates to the bone, and begun a debt monetization movement. Nevertheless, the Aussie dollar (A$) is flat today ahead of the RBA meeting, as traders just can’t figure out the direction the RBA will take this afternoon.

One other note about the A$… Its recent trading would lend to believe that it will soon be trading at parity with its kissin’ cousin across the Tasman, the New Zealand dollar / kiwi. There have been a ton of analysts weighing in on this, and most have come to the conclusion that the A$ will trade to parity with kiwi. I find this to be a good thing for kiwi. And another reason we’ll be highlighting kiwi for our next Currency of the Month in the Sunday Pfennig.

There’s a pretty good story/ article on the Bloomberg this morning regarding the Russian ruble, and how it has whipsawed forecasters (I would added investors too) with its move from worst currency performer to best currency performer. The article highlights that the ruble has been the best performing currency the first 3 months of this year, even in the face of the drop in the Oil price to a near 6-year low, and now with the CBR (Central Bank of Russia) cutting rates from the astronomical 17% level.. One forecaster had this to say. ” The ruble is completely unpredictable”. Yes, those that make a living off of short term currency forecasting, could apply that statement to just about any currency in a place and time!

Remember when I kept saying that “at one point, there has to be value in the ruble”? Well, I guess we passed that point a long time ago, eh? Hold on there, and just wait a minute there Partner! The ruble is trading today with a 56 handle. A year ago, it was around 35. So, it still has a long way to go, IF it were to retrace its path. but, now that the currency forecaster has told you that “the ruble is completely unpredictable”, I would think only those that have “speculation” in their blood and deep pockets would be willing to see if the ruble wants to retrace its path.

Hey! Remember me telling you a couple of months ago, about the investment flows into India, and how they were breaking records? Well, the one year, March to March numbers just printed, and they showed that overseas funds of $26.9 Billion flowed into rupee denominated investments, mostly debt, in that time frame.. I still like to think about how in August of 2013, I was being interviewed on Bloomberg radio by Pimm Fox regarding India. At that time, the rupee was the worst performing currency and things looked bleak in India, and the Bloomberg folks thought I would pile on India and the rupee, and instead I surprised them by talking glowingly about the new Reserve Bank of India (RBI) Gov. Rajan and how his reforms would turn things around in India and for the rupee.

According to the Bloomberg this morning, “Since taking office in September 2013, Rajan has won investors’ trust by leading the rupee’s turnaround from unprecedented lows, slowing what was then Asia’s fastest consumer inflation and building record foreign reserve to shield local markets from external shocks.”

Now add in the new PM, Modi, and things should be in even better condition in India and for the rupee than before! This is their (Rajan and Modi) opportunity to totally unlock all the potential the Indian economy holds, and so far they’ve pushed all the right buttons. There are more buttons to be pushed, and here’s hoping they keeping pushing the right ones!

Well. Gold, as I told you above, is advancing on the disappointing jobs print, as a lot of traders believe that this jobs print was a severe blow to the rate hike chances. To me, that’s fine, anything to get Gold going is good with me. I would prefer that Gold really got its advances from news like I saw on Google+ yesterday from Gold researcher, Koos Jansen, who reported that China’s physical Gold accumulation has reached “a staggering 561 Tonnes year to date, up 7.3% from 2014, and up 33% from 2013.” Koos also tells us that India has imported 230 Tonnes of Gold so far this year, which totals 642 Tonnes combined. and then he asks this question which is always on my mind.. “I wonder how long the Chinese demand can keep up this pace of importing before physical supply from Western vaults runs dry.?”

Going further with China and Gold. You know I’ve told you about how later this year, the IMF will decide whether or not to include the Chinese renminbi / yuan into the mix for their SDR’s. Well, IMF Managing Director, Christine Lagarde recently said, “It’s not a question of if, it’s a question of when.” So, the IMF could string the Chinese along year after year dangling inclusion in the SDR in front of them like a carrot on a string.. But I don’t think they will, the Chinese have become too powerful financially to play with like that. And now, pay attention here, because this is where it gets really good. And now why this is important to Gold. You see, Koos Jansen believes that when the formal process of including the renminbi / yuan into SDR’s is being gone through, the Chinese are going to have to come clean on how much Gold they have. And when they do, and if it’s anywhere near where I’ve said it is, the price of Gold should receive a HUGE boost. But, that’s down the road. So, just so you know.

Well. the U.S. Data Cupboard is relatively bare today, with only Markit PMI’s which are an afterthought since the national PMI (ISM or manufacturing index) printed last week. And then tomorrow just has Consumer Credit (read debt) for February. But Wednesday, we finally see the minutes from the Fed’s FOMC meeting last month. I would look for any hints of the Fed members being dovish, which would play nicely with the dollar selling going on right now.

And before I head to the Big Finish. A dear reader reminded me that the big drop in the imports that I talked about last week with regards to the Trade Deficit, could have been a result of the dock workers strike in California. Geez Louise, I can’t believe I didn’t think of that meself! (as Popeye would say!)

For What It’s Worth. Well. After Utah and Oklahoma made a splash in the news with their signing of bills that recognize Gold & Silver as legal tender, Arizona could have added to the fun. But Noooooooo! You can read the entire article here or just the snippets I have below.
http://tucson.com/news/state-and-regional/gov-doug-ducey-vetoes-bill-making-gold-legal-tender/article_cdb82f1e-f331-5e07-b2e2-b08c6ef132c0.html

“Gov. Doug Ducey vetoed a bill Wednesday that would have made Arizona the third state behind Utah and Oklahoma to recognize gold and silver as legal tender.

Proponents say the bill was designed to reflect a growing distrust of government-backed money. Opponents countered that it sends the wrong message that gold and silver are safer than currency.

Ducey said he didn’t feel the bill was appropriate at this time.

Former Gov. Jan Brewer vetoed similar legislation in 2013 over concerns that its language might exempt the state from collecting income taxes on transactions involving precious metals.”

Chuck again. Well, I guess the Gov. has his reasons. but I’m still confused as to why veto this bill? It would seem to be already in place if you asked me!

To recap. the Jobs Jamboree was a real disappointment with only 126,000 jobs created in March, and 72,000 of those were added by the BLS out of thin air! The dollar got hammered and there could still be some residual hammering due the dollar this morning, given that most traders had already headed to the Hamptons when the number was announced on Friday. It’s a big week in Greece. The RBA meets tonight, and Chuck says no rate cut is needed, but then since when does a Central Bank listen to him? And Gold is looking perky.

Currencies today 4/6/15. American Style: A$ .7635, kiwi .7595, C$ .8015, euro 1.0990, sterling 1.4945, Swiss $1.0520, . European Style: rand 11.7515, krone 7.9455, SEK 8.5350, forint 2721.85, zloty 3.6890, koruna 25.0020, RUB 55.99, yen 119.10, sing 1.3525, HKD 7.7520, INR 62.18, China 6.1348, pesos 14.80, BRL 3.1220, Dollar Index 96.62, Oil $50.52, 10-year 1.83%, Silver $17.15, Platinum $1,177.00, Palladium $762.55, and Gold. $1,217.73

That’s it for today. Well, I’m still on East Coast time, this morning, which means I was up and ready to go an hour earlier than I should have been! UGH! So, like I said above, I hope your Easter was grand. England Dan and John Ford Coley are singing their song: I’d really love to see you tonight”. I bet I surprised you with that one! Kind of soft rock, eh? Oh well, You have to be well rounded. And, I’m well rounded! HAHAHAHAHAHA! Well, I had some interesting lunches while I was gone. And I had two visits from someone I consider to be a good friend, Walt, which were a real treat! I get to visit the doctor that saved my life nearly 8 years ago today. I love this doctor! He always asks me how the euro is doing. The Big Boss, Frank Trotter, is prolonging our getting together again, as he will be traveling this week, and I’m finally back sitting here in my office writing and listening to my iPod. UGH! Last week we had some birthdays on the desk. Tim Smith’s was April1, and Antione Lawrence’s was April 2. Happy Birthday you youngsters! Yes, I’m officially considered old now. Of course not as old as lots of people, but older by at least a decade to anyone on the trading desk. I used to have a pet name for old people, but now, my wife reminds me all the time that now I’m one of the old people! HA! Oh well, getting older is better than the alternative! Alrighty, I’ve gotta get going now. I hope you have a Marvelous Monday!

Chuck Butler
Managing Director
EverBank Global Markets
Editor of A Pfennig For Your Thoughts
1-800-926-4922
https://www.everbank.com