Jobs Jamboree Disappoints!

* High yielders react favorably! .
* Euro can’t get off the porch! .
* What happened to 2nd QTR GDP growth?
* Stevens holds last RBA meeting .

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

Good Day. And a Tom Terrific Tuesday to you! Whew! What an absolutely beautiful, weather-wise, weekend here in St. Louis. I know that the east coast got hit with a hurricane, so I hope everyone is safe, and I feel somewhat guilty mentioning our beautiful weekend, but, well, we had our fun with floods last Winter, and I’m sure they had beautiful weather then, so it all evens out. The Butler Labor Day BBQ, was a blast, and we didn’t have the police show up! It’s going to be a good day, I can tell already, because I hit every light on the way to work today on Green! And that’s not all! Then the elevator was waiting for me! That sure turned the morning around for me, given I had a rough go of it at home.

I left my iPod at home today, UGH! It’ll be quite quiet in my office today, without it! Not that I’ll be as quiet as a church mouse in here, but with no music going, well, you get the idea. The BLS played musical chairs with the Jobs data on Friday. When the music stopped, the BLS said we had gained 151,000 jobs. Far less than the forecasts of 185,000, and the currencies that have some yield, even the ones with small yield differentials, were the ones that received the most love. Remember, that I had told you that the markets had pretty much carved in stone that a +200,000 number would all but guarantee a rate hike in 3 weeks. Well, that didn’t happen.

On Friday before the jobs jamboree printed, Chris said that he thought the number of jobs would come in between 150,000 and 200,000. They came in at 151,000, so good job Chris! But. a quick look at the BLS fine lines, and we see that 106,000 jobs were added by the BLS after their surveys, with their Birth/ Death model. I really don’t mean to beat a dead horse here, but come on, BLS! It’s been proven that the U.S. has seen more business failures than births, since 2009, and yet, you continue to be very brazen and add unproven numbers of jobs to help the markets think everything is just peachy. Well, I say that’s just wrong! I’m going with 45,000 jobs created in August, and that’s that!

But all that will be forgotten today, as the Fed’s preferred method of tracking the labor markets, the Labor Markets Condition Index (LCMI) will print today. And that will give us the “real cue” of what to expect in 3 weeks from the Fed. I don’t particularly like starting the letter off with so much talk about data, but the darn markets continue to believe that the BLS jobs report carries weight. How much longer will they be fooled by this sham of a jobs report?

Alrighty then, so I told you that the “high yielders” and the “well, we’ve got some yield currencies” were the winners on Friday, and while the U.S. markets were closed yesterday, currency trading went on around the world, but without much liquidity. The asset without any yield, the precious metals, were the Big Winners though on Friday, with Gold adding over $11 to its value, but only $1.90 yesterday. The Emerging markets were on top of the heap of currencies, as they mostly have yield. But lots of risk too!

Well, there seems to be a theme for the economies of the world as the data from the 2nd QTR comes in, and that is that the 2nd QTR backed off from the 1st QTR in terms of GDP growth. And Manufacturing power. Here in the U.S. the 2nd QTR GDP will drop from the 1st QTR, and in the Eurozone, it’s the same as 2nd QTR GDP printed at 0.3%, and the 1st QTR was 0.5%… We saw that the same drop in the 2nd QTR GDP happened in the U.K. too. Now all we need is for the Chinese to print a smaller 2nd QTR GDP than the 1st QTR, and we’ll have something real to talk about, not just a theme that seems to be occurring.

But for now, think about this for a minute. Here in the U.S. we start each year since 2009, with the thought that “this is the year” that we finally get over the hump and the economy takes off, and every year by the time the baseball season starts in April, those thoughts are beginning to fade. This year appears to be no different. And don’t pay attention to the Fed members behind the curtain! They seem to find growth every year, and every year, it doesn’t materialize!

The euro has been held in check, and with the Dollar Index dropping below 96, that seems to be a bit suspicious, eh? Why, you may ask? Because, the Dollar Index is heavily weighted with euros, so normally when the Dollar Index (DXY) makes a move like it did on Friday, it’s because the euro has made a strong move one way or the other. But not with this move, folks. I kept checking the news stories from the G-20 meeting in China for news about the next leg down for the dollar, but I heard or read nothing of the sort. Hmmm.

Well, the Oil producing countries saw that Russia had come to agreement with Saudi Arabia to freeze production, and that has now persuaded the majority of OPEC members to agree to a freeze also.. Right now, only Iran and Libya are the holdouts. The price of Oil didn’t seem to get any love from the Russia/ Saudi agreement, so maybe the Oil traders are waiting for confirmation before pushing the price of Oil higher?

In Australia overnight, Reserve Bank of Australia (RBA) Gov. Stevens, held his last meeting, and left the cast rate unchanged at 1.50%… He noted that there has been some moderation in house prices over the last year, and then mentioned that he was satisfied with current policy settings. So, does this mean that the rate cuts are over in Australia? Well, we won’t know that for a few months, but it sure sounded like it to me!

Aussie 2nd QTR GDP will print later today, and just like the U.S. , U.K. and Eurozone, the Aussie 2nd QTR GDP will most like print lower than the 1st QTR’s number. But recall, that the last rate cut by the RBA was in the 3rd QTR, so maybe there’s something there for the Aussie economy to draw from going forward. The Aussie dollar (A$) 1. Liked the U.S. jobs data last Friday, 2. Liked what Stevens had to say, and 3. Is still basking in the glow from China’s good data last week.

So. The currencies that have benefitted from the relatively week, but significantly not as strong as the markets want it to be, Jobs report, include: The Russian ruble, Indian rupee, Aussie dollar, New Zealand dollar/ kiwi, S. African rand, and I’m sure that there are some Emerging markets that we don’t cover that have gained too. And we can’t forget: Gold, Silver, Platinum and Palladium, as they have all gained ground VS the dollar!

The real duds that haven’t been able to scratch and claw their way higher in value VS the dollar, include, the euro, krone, krona, forint, zloty, koruna, yen, sing $, honkers, peso, and real.

One curious currency on the upside VS the dollar that I didn’t mention above, because I wanted to highlight it, is the U.K. pound. It’s move has been stealth-like, but it has bounced from the decades low of 1.29 and change, and trades this morning with a 1.33 handle. Was the BREXIT selling overdone? It sure appears that way to me, from the way the pound has rebounded, even in the face of weaker economic data in the U.K. So, the question would be: Just how much was the pound oversold? Because if you knew this, you could make a decision on a short-term trade. But since no one knows this but the Shadow, we’ll have to wait-n-see.

So. getting back to the Jobs Jamboree from last Friday. I’ve brought this up before, several times, I might add, and I saw that my friend Dave Gonigam over at the 5 Minute Forecast, brought it up on Friday. And that is if you believe the BLS can goose the numbers higher to show the labor market picture look better than it is, then you would have to believe that they can also dial down the number. But why on earth would they do that? I’ll let Dave Gonigam from the 5 Minute Forecast ( tell you his own way.

“Maybe that’s true. But it’s equally true that it takes 150,000 new jobs each month just to keep up with population growth. By that standard, “the economy” is barely keeping its head above water. And maybe that’s the perception the Obama administration wants to convey, at least for a few days, the better to squelch any talk of the Federal Reserve raising interest rates.”

Remember 4 years ago, when former General Electric CEO Jack Welch, accused the White House of Jacking up the new-jobs numbers to make things look better than they were? This happened in the final weeks leading up to the election. I don’t know, you don’t know, and Dave Gonigam doesn’t know, if there really is number games going on to sway voters, but it makes for a good reason for this drop in jobs in August, doesn’t it?

I was reading Ed Steer’s letter on Saturday, while my Big Green Egg was smoking some Turkey Breasts, and I read that Hanjin Shipping, the world’s 7th Biggest shipping line, collapsed last week. Hanjin Shipping vessels were seized at Chinese ports. The firm handles almost 8% of all trans-Pacific trade volume for the U.S. Market. Here in the U.S. port operators began to turn away Hanjin ships because of the fear that they wouldn’t get paid.

And the economy is strong enough for another rate hike? Seriously? The Fed expects me to believe that? Really? I know that the Fed members have no idea who the heck I am, but should one of them ever come across the Pfennig, and think they have a thing or two to tell me over the phone, let me be clear, I too will have a thing or two to tell them!

The U.S. Data Cupboard today, as the aforementioned LMCI, and a couple of reports from Gallup: one on Consumer Spending, and the other on Employee Confidence Index (ECI). And don’t forget the Non-Manufacturing Index (Services) that I never pay any attention to, because it’s Services. Not Manufacturing! I told you longtime readers years ago, that we, here in the U.S. , had turned into a Services country from a Manufacturing country, and that our Service stunk! I still believe that, as I find it difficult to find people that provide service with professionalism, expertise, and urgency to complete the job.

To recap. The Jobs Jamboree on Friday, told the markets that the U.S. economy is barely keeping its head above water. Was this the plan? But it took the starch out of the dollar’s collar, and the currencies with yield differentials and the precious metals all responded favorably VS the dollar, as the thought of a rate hike in 3 weeks faded with the number of jobs created in August. 2nd QTR GDP prints are coming in all around the world weaker than the 1st QTR. RBA Gov. Stevens hinted that the rate cuts are over in his last meeting. The Dollar Index dropped but the euro is stuck in the mud, so what happened?

Before I head to the Big Finish. Did you hear about the Chinese snub of the U.S. President as he arrived for the G-20 meeting? They didn’t have a staircase at the front of the plane for the President, and he had to exit the plan from the belly. But when the Russian President, Putin, arrived, they had a ticker tape parade? I certainly think that the Chinese used this opportunity as a symbol to point out that their new BFF is Russia.

For What It’s Worth. I pulled this from the website, and it’s a fellow named Ronan Manly, who writes about Gold. And this entry is about the IMF Gold Sales and talks about how their transparency really means secrecy. and can be found here:

Or here’s your Snippet: “while the International Monetary Fund repeatedly has claimed to be “transparent” about its gold sales, the IMF actually has obscured and suppressed its records of the transactions and even admits that some records are being withheld indefinitely, against the agency’s ordinary practice, because of their “sensitivity.”

It is plain from Manly’s research today that the IMF has been working closely with the Bank for International Settlements, other central banks, and bullion banks to move gold around the world and apply it to the markets as necessary for price control. Even the IMF’s duplicity about “transparency” cannot conceal the price control scheme, since it still permeates some of its records that remain in the public archive.

Manly also acknowledges that the success of this scheme is largely a matter of the complicity of mainstream financial news organizations – their refusal ever to put to any central banker any critical question about official involvement in the gold market.”

Chuck again… The report is quite long in nature, and will take more than a couple of minutes to get through it, but if you’re one who believes that there is all kinds of hanky panky in the Gold markets, that is going to blow up in the faces of those playing with the hanky panky, then you’ll want to read this one. If not, move along, for these are not the droids, you’re looking for!

Currencies today 9/6/16. American Style: A$ .7638, kiwi .7345, C$ .7755, euro 1.1170, sterling 1.3332, Swiss $1.0217, . European Style: rand 14.1892, krone 8.2425, SEK 8.5380, forint 277.38, zloty 3.8860, koruna 24.1978, RUB 64.78, yen 103.30, sing 1.3555, HKD 7.7554, INR 66.53, China 6.6784, peso 18.54, BRL 3.2834, Dollar Index 95.59, Oil $44.92, 10-year 1.60%, Silver $19.66, Platinum $1,087.92, Palladium $ 687.92, and Gold. $1,336.80

That’s it for today. Well, my beloved Missouri Tigers season started with a dud! What an ugly game to watch, and now I have to take back my thought that they could win 7 games this year! Cardinals are in Pittsburgh where they won the first of 3 there. They sure could use a sweep. I’m listening to my phone’s music which is the same as my iPod, but that won’t last long.. But it’s playing Eric Clapton’s song: Blues Power, which is the song that we used to open every show we did. I played one game of “bags” on Saturday, and then had cooking to do, and won.. so I went undefeated! All time champion of the world! HAHAHAHAHA! Feeling a bit better as the morning has gone on, so that’s a good thing. I’m late, so I have to get this out the door, but first, I want you to have a Tom Terrific Tuesday, and Be Good To Yourself!

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