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No Recovery. No Jobs. No Growth..
* Dollar still sits on top of the hill!..
* 3 Central Bank meetings this week!..
* What happened to Silver on Thursday?..
* What’s up with the Cost of Living?
And now. Today’s A Pfennig For Your Thoughts.
Good Day. And a Marvelous Monday to you! Well, did you have a grand weekend? Mine was front-end heavy and then it ground to a halt! Had a great dinner with friends, Larry and Debbie Weis on Friday night, had great seats for the Saturday game at Roger Dean, and then I hit the wall, and basically slept the rest of the day! UGH! The strong winds have returned to S. Florida making going to the beach impossible, unless you feel like getting sand-blasted! The winds are so strong, I can hear them roaring from inside the building! UGH! Al Stewart greets me this morning with his song: On The Border..
There’s lots of talk these days about the border, eh? A few years ago, and longtime readers might recall this, as a Sunday Pfennig holds the record for the number of responses by readers, I wrote about Chuck’s Debt Solutions.. And it was a long list of things that I had where we could save money and use it toward paying down the national debt.. I even did a couple of presentations on this subject. So, maybe you attended one of those presentations, but the thing I’m getting at is the border.. One of my solutions was to close the military bases in countries that don’t want us there to begin with, and bring the soldiers home to protect our border.. If you’re a newbie to class each day, and you missed that Sunday Pfennig from probably 3 years now, could be 4 years, I don’t recall, but if you really, really , really want to see what I had to say about out Debt. Simply respond to the pfennig today, and I will eventually get around to sending you the text of my presentation, whi
ch isn’t exactly how the Sunday Pfennig was laid out, but it’s close..
Well now, what have we here? Oh, the markets are already getting all lathered up over the data print that will take place on Friday. Yes, it’s the Jobs Jamboree on Friday this week. The odds of a March rate hike are now at 85%, and a strong employment report for February on Friday would be the final nail. So, with the markets thinking a rate hike is a done deal, the dollar still is the key master of the currencies and metals. A couple of currencies have attempted to carve out gains VS the dollar overnight, but if they have, the gains have been small.
Gold is up $5 in the early morning trading today, after closing at $1.234.30 on Friday And Silver works on returning to $18.. Well, in my attempt to wrap up Friday’s Pfennig quickly to I could go ahead and close my swollen eye, I completely missed the story of the year in Silver.. and then I checked the Pfennig website later in the day, and saw a response by a reader letting me have it for missing the story on Silver. Dude! I was a hurting bird, give me a break! It’s still news, so. Let’s see what all the hub-bub is about. Ok, let me set this up. On Wednesday last week Silver climbed to $18.40, and opened on Thursday up a few cents, looking as though it would continue to gather cents to its price. But then something happened and the price of Silver dropped like a rock. And Friday morning Silver opened at $17.72. That’s quite a trip to the woodshed folks, and you have to wonder what the heck Silver did to be awarded with a trip like this to the woodshed..
You know, last week, I told you that I watched and listened, which is the important part, of the Trump speech to Congress, which is normally called a State of the Union Address, but for a new President, they drop that title. And something that President Trump said had been rattling around in my head since he said the words. He said, “94 Million Americans are out of the Labor Force. 43 Million are living in poverty. 43 Million Americans are on food stamps. And more than 1 in 5 people in their prime working years are not working.”
He went on to say that, “In the last eight years, the past administration has put on more debt than nearly all the other U.S. Presidents combined.” And then the thing that just was shot to the heart, when he said, “And we’ve spent trillions of dollars overseas, while our infrastructure at home has so badly crumbled”
He’s telling us that we are in deep dookie as a country.. this so-called recovery that we’ve been in since 2009, has been the worst financial recovery from a recession in 65 years, and longtime readers know that I’ve never fallen for this so-called recovery, instead calling this a depression.
So, according to me, and the data, there’s no recovery. Now, let’s switch to jobs. Sure the Unemployment Rate is below 5%, surely we’re near “full employment” right? Well, first, don’t call me Shirley, and second, I say balderdash! How can we be near “full employment” when 94 Million Americans are out of the work force? This is where I go to my old standard, of seeing what John Williams at Shadow Stats (www.shadowstats.com) thinks about the Unemployment Rate. And most of those jobs that have been created I wouldn’t consider to be “bread winner” jobs..
For those of you that just joined class, What John Williams does, is calculate data using the methodology that was used before the propeller heads figured out that the data could be “adjusted”. And so, in the case of the Unemployment Rate, that’s before 1990.. And using the same data the BLS uses, but calculating the Unemployment Rate differently, John Williams says the real Unemployment Rate is 23%!!!!!! You can argue all you want about this data, I truly believe that John Williams should be the head of the Congressional Budget Office (CBO), and I believe his results far more than those of the BLS who uses hedonic adjustments on every piece of data that they get their hands on.
Now, let’s switch to the economy.. 1.9% GDP Growth in the 4th QTR. 1.3% is the new forecast or the 1st QTR 2017. And for the last 10 years, the average growth in the U.S. has been below 2%.. That’s pretty anemic don’t you think? Well, once again, I turn to John Williams to see what he thinks about U.S. GDP. Well, since 2004, it has been negative according to John Williams. Negative GDP for more than 10 years! And people laugh at me when I say we’re in a depression not the recovery of a recession?
So. No recovery. No Jobs. No growth. But not to worry, the Fed, led by Janet Yellen, is going to hike rates when they meet in about 9 days..
The 10-year Treasury yield rose to 2.52% on Friday before closing at 2.47% this move above the 2.50% market is a psychological level and indicates to me that yields could continue to go higher, but what if the bond boys all think like Chuck, and that by the end of summer the Fed would be reversing these rate hikes, then you could see the bond boys not willing to move yields higher just yet.. But come on, do you really think that I could have nailed this one to the wall. And the bond boys all go along with the idea? That’s stretching the realms of reality..
There will be quite a bit of activity this week abroad.. The Bank of Canada (BOC), the European Central Bank (ECB), and the Reserve Bank of Australia (RBA) all meet this week to discuss rates.. Of the three, the only one that has a Slim and None chance of moving rates is the ECB, but in my opinion, Slim left town, and so the 3 Central Bank meetings will come and go without any moves made.. The RBA might change their bias, but I doubt it, and they will keep the neutral bias. The RBA leads off tonight, the BOC on Wednesday and ECB on Thursday. and then the Jobs Jamboree on Friday!
Last night, Aussie Retail Sales for January printed, and was strong at 0.4% month on month pushing year on year to 3.1%.. And that has the A$ pushing toward 76-cents again. Global growth is still in the tent revival but is looking stronger every day, and the A$ is the proxy for=for Global Growth! But in addition to the Global Growth, looking stronger, we had 4th QTR Domestic growth print 1/4% stronger than expected, and finally, the terms of trade are holding their gains and that’s a good sign for the A$..
‘Canada not only has the BOC meeting on Wednesday, but also will see the color of the International Merchandise Trade report tomorrow, and on Friday, the Jobs / unemployment report will print.. So a busy week for Canada, and the Canadian dollar/ loonie, which got whacked last week like all the other currencies, and is attempting recover the loss that the whacking caused.
Well, N. Korea fired 4 ballistic missiles into the Sea of Japan last night, and that has helped Gold gain $5 in the early morning trading, and that’s all I’ll say about that!
And on that note, I think I’ll start to wrap this up today, I have a doctor’s appt. this morning, so I really don’t have time to sit here trying to think of something clever to day!
The U.S. Data Cupboard on Friday last week had the ISM for Feb. and printed stronger than expected coming in at 57.6, which was a full point higher than expected. And that helped the dollar to maintain its spot on the top of the hill.. You know.. last week I reported on several countries that printed their Feb. PMI’s, which are the same thing as the ISM, and just about everyone one of those reports printed stronger than expected. The Tent Revival for Global Growth is picking up steam folks, and soon commodities will get rolling, and interest rates will attempt to move higher to slow things down, but the cow will be out of the barn at that point..
Today’s U.S. Data Cupboard finally has a piece of real economic data when Factory Orders for January print, and this report should print a strong number of around 3%.. Month after month in 2016, this report disappointed. But disappoint the markets no more here =it looks like!
Want some more stuff that doesn’t make rate hikes any sense? So, the BLS says the CPI (consumer inflation ) is over the Fed’s 2% target.. The Employment Cost Index (ECI) is also over the Fed’s 2% target, and the Fed themselves have said that inflation was rising.. OK, if that’s so, then why was the Security Administration’s Cost of Living Adjustment (COLA) just 0.3% for 2017? THIS IS THE SMALLEST RAISE ON RECORD!
Holy rate of adjustment Batman! How can that be, just 0.3% when other inflation reports show inflation rising and has breached the Fed’s 2% target?
To recap.. Well, the dollar is still on top of the hill this morning, but Chuck tells us that there’s not growth, no jobs, no recovery, and wonders why we are entertaining another rate hike.. It’s a busy week with Central Bank meetings in Europe, Canada, and Australia. And to finish the week off we have a Jobs Jamboree Friday coming up this week!
For What It’s Worth.. Well, one thing that’s not participating in the Tent Revival for Global Growth is shipping.. And that’s where this story comes to us from BBC website, and can be found here: http://www.bbc.com/news/business-38653546
Or, here’s your snippet: “In January 2010, the container ship Hammonia Grenada was delivered from a Chinese yard to its new owners, reportedly priced at about $60m (about £37m at that time).
Just seven years later – at the start of this year – it was sold for scrap. The price: an estimated $5.5m (£4.4m today).
It’s not the only vessel to suffer this fate. Last year container ships were sold at rock-bottom prices for scrap in record numbers.
The simple reason is that there are too many ships for too little cargo.
The most dramatic casualty was South Korean group Hanjin, which collapsed last August weighed down by debts.”
Chuck again.. Too many ships for too little cargo.. That’s always going to be a problem, and it is quite evident here, eh?
Currencies today 3/6/17. American Style: A$ .7594, kiwi .7023, C$ .7467, euro 1.0590, sterling 1.2255, Swiss $ .9901, .. European Style: rand 12.9610, krone 8.4492, SEK 9.0, forint 292.0, zloty 4.0676, koruna 25.5095, RUB 58.22, yean 113.74, sing 1.4105, HKD 7.7638, INR 66.62, China 6.8973, peso 19.48, BRL 3.1144, Dollar Index 101.58, Oil $53.02, 10yr 2.47%, Silver $17.84, Platinum $988.40, Palladium $771.48, Gold $1,242.10, and SGE Gold.. $1,245.70
That’s it for today.. Man, the wind has returned, and so too has my cough! Drives me crazy, but it’ll go away soon.. Well, my beloved Missouri Tigers fired the basketball coach, and now they will be looking for their 5th coach since the great Norm Steward retired in 1999.. He may have “stabilized the program” but when you only win 8 conference games in 3 years, the writing will be on the wall.. Cards/ Nationals game on Saturday ended in a tie.. yes, that happens at least once every spring, and it happened Saturday.. at least it was a pretty day to sit in the sun, and watch baseball! In fact, this spring training games season so far, has seen the best weather ever! I’ve been in contact with Mary Anne and Pamela Aden (The Aden Sisters) a lot lately, they are such sweeties, and smart business people! They took over the Dow Theory Letters when the great Richard Russell died. They tell me that Richard read the Pfennig and loved it! I can’t begin to tell you how proud that make
s me feel. Jethro Tull takes us to the finish line to today with his classic rock song: Aqualung.. And on that note, I’ll see you on your way to a Marvelous Monday.. Be Good To Yourself!
EverBank Global Markets
Editor of A Pfennig For Your Thoughts