The Dollar Goes On A Moon Shot!

* 295,000 jobs. Really?
* Oh the tangled webs we weave.
* Greece & Eurogroup start negotiations again..
* Chinese exports rise 48.6%! .

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

Good day.. And a Marvelous Monday to you! Well, if there’s a designated day for problems, it has to be Monday, right? It just always seems to be a Monday, the day we use to kick start the week, to be the one where things just don’t work the way they are supposed to. This morning, for instance, it’s my mobile Bloomberg. Just what I need. the inability to see the markets. Well, as my dad used to say, there’s more than one way to skin a cat (no animals are being hurt here), and so now I’ll move on to those other ways!

Well, the story on Friday was the Jobs Jamboree, the results of the labor report sent the dollar on a moon shot higher and higher it went, while the euro went lower and lower, reaching a low of 1.0838 at one point in the day. This morning, the currencies are attempting to win back some of the major ground they lost on Friday, but at this point it’s only an attempt, nothing more, nothing less. So. since the Jobs Jamboree was the major domo of the day, let’s spend some time talking about Chuck’s view of the BLS’s survey.

Oh the tangled webs we weave, when we practice to deceive.. That’s just an old saying, and lyrics to a song, I’m not saying that anyone is trying to deceive us, because if I were, you wouldn’t be reading this, it would have been cut out. But what I am saying is either it’s deceit for just a lack of giving us credit for having an ounce of brains.. I’ll let you figure it out. I’ll just lay out the facts.

First of all, the BLS (oh the words that some people have come up with for B.L.S.) said that 295,000 jobs were created in February. So, In 2014, when we had a snow-filled winter, and the data all was weak, it was blamed on the bad weather. And now in 2015, when here in the U.S. it has been another snow filled, bad weather winter, we’ve had back-to-back months of 245,000 and 295,000 jobs created. supposedly.. Maybe it wasn’t “bad weather” that caused the weak numbers in 2014, eh?

I traded emails with a longtime Pfennig reader on Friday, expressing my disgust with the fact that it has been a year filled with more business deaths than births, but the BLS continues to add jobs using their Birth/ Death Model. In February it was 132,000.. Given that we know that there are more deaths than births these days, shouldn’t that have been a -132,000. And if so, then we’d be talking about 32,000 new jobs created, which is still probably bloated.

My friend Dennis Miller of Miller’s Money, a Casey Research letter, sent me a rant from somebody he reads that I wish I could replicate, for it goes through every number with facts, not surveys that are hedonically adjusted. I’m going to borrow some of that here: Since 2008 we’ve added 3 million jobs, while 13 million people have supposedly left the workforce (yes a lot of baby boomers in there, but not 13 million) and the unemployment rates is supposedly lower today than it was in 2008. The working age population is up by 16 million, we only have 3 million more jobs, but the unemployment rate has fallen.

So, in the end, because I really didn’t mean to spend all day on this. Here’s something to think about. I’ve been telling you over and over again that the economic data has been weak here in the U.S. But let’s get a quick overview just to refresh our memories. What we have here is an economy that’s losing energy jobs left and right and by the truckload each month, we’ve seen manufacturing new orders decline for 6 straight months, we have corporate profits falling, real median household income sitting at 1989 levels, and 80% of all economic reports miss to the downside, and yet. We’re told that 295,000 jobs were created in February.

I guess I should be celebrating, right? Why always be on the “dark side” of these things Chuck? Well, if it felt right, I would celebrate. the problem is, for me, that it just doesn’t feel right.. The guy that I owe most of my feelings of trepidation with the BLS number to is John Williams of, who said of Friday’s report, that “the drop in Unemployment Rate was due to Unemployed giving up looking for work, instead of finding work” He also kept his Unemployment Rate figure at 23%…

Alrighty then. I think I’ve sufficiently beaten that data to the ground now, so I’ll just move along. Sorry, to spend so much time on it, but really, did they think that no one would notice how ridiculous that number looked? Well then, Greece is back in front of the Eurogroup this week, trying to grease the tracks for their next go-around in June. From what I read this morning, the Eurogroup has already rejected Greece’s proposals for credit.. This is all a negotiation folks, so this is how it starts with Greece asking for “X” with no austerity, and the Eurogroup rejects it and they start from there. No reason to get excited or panicked over the first volley here.

This past weekend, while I got to see my beloved Cardinals play twice and win both games, the Chinese reported their lasted Trade numbers, with exports stealing the show once again. Chinese exports rose 48.9% in February VS a year earlier, and their Trade Balance was a $60.6 Billion, a new all-time record, beating January’s then new record of $60 Billion! Chinese imports were the Debbie downer of the data, but that’s to be expected given the soft belly of the Chinese economy right now. Plus remember, the price of Oil is down significantly thus reducing renminbi needed to import it. There was some holiday influence in the 48.9% increase, so to even it out, Chinese exports have risen 23% for far in 2015, VS last year, and VS the 7% increase the Gov’t had slated for exports this year. So, ahead of schedule so far.

Speaking of the price of Oil helping to reduce imports. the U.S. Trade Deficit shrunk in January, due mainly to the drop in the Oil price. The Trade Deficit fell from a revised upward $45.6 Billion in December to $41.8 Billion in January. That’s quite high, and the way the Trade numbers get thrown into the mix of calculating GDP, I would think that 1st QTR GDP will take a hit from this component. But we haven’t put 4th QTR GDP to be quite yet, so I guess we should concentrate on that before we move on to the 1st QTR.

Well, Gold didn’t get to hide from the dollar’s moon shot ride on Friday, and the shiny metal fell to $1,172. OUCH! That could leave a mark! So. have you heard the news? There’s good rockin’ at midnight! Oh, my! No, seriously, have you heard the news that the Chinese are working toward having their own Gold Fixing? Their Shanghai Gold Exchange (SGE) has been such a sensation, globally, that they are taking the next step, and creating their own Gold Fixing. What will be the difference between the Chinese Gold Fixing and the Gold Fixing in London? You can read more about the Chinese Gold Fixing here:

The U.S. Data Cupboard is pretty barren today. And the highlight of the cupboard today is confined to two Feb Member speeches, by Mester and Fisher. I’m still hopping mad about the fact that someone thought they could throw a large number out there and no one would notice. But I’ll get over it. As the song by Kansas that’s playing right now says: Carry On my wayward son, there’ll be peace when you are done. I know some of you are saying, why can’t you just be happy for the 295,000 people that found a job in February, Chuck? Well, I would, IF, I knew for sure that 295,000 people actually found good paying jobs. but I don’t know that.

For What It’s Worth. Well, I go back to my friends, Dave Gonigam and Addison Wiggin over at the 5 Minute Forecast for today’s FWIW. they focused on the question I keep asking. If the economy’s so strong, then. and then offered a few things to think about that puts the strong economy thought under the table. This is one of them, a thought by a fellow named Robert Higgs, who wrote a landmark book in 1987 called Crisis and Leviathan, in which he vividly explains how government power grows during crisis eras, but never shrinks back to its original size once the crisis is over calling it the “ratchet effect”. Sound familiar to what’s gone on now?

Well, his though now is about disposable income. Let’s listen in to Robert Higgs. “Arguably the best single, currently available measure of the entire public’s payoff from economic activity is real disposable income per capita..

This is the average amount per annum that Americans receive in exchange for the use of their labor and other input services, after taxes, corrected for changes in the purchasing power of the dollar. This measure of economic well-being has scarcely increased at all since 2007.

The average annual growth since 2007 works out to an anemic 0.6%. Even during the miserable decade bookended by the 1973 oil shock and the “double-dip” recession of 1980-82, the growth was double that rate.”

Chuck Again. Yes. You know, in the past recession were always followed by strong, brisk economic growth in the years following the end of the recession. Since that’s never happened here in the U.S. I think we can safely say that the recession never ended! Yeah, that’s the ticket!

Currencies today 3/9/15. American Style: A$ .7730, kiwi .7375, C$ .7940, euro 1.0890, sterling 1.5110, Swiss $1.0170, . European Style: rand 12.0430, krone 7.8815, SEK 8.4605, forint 280.20, zloty 3.78.95, koruna 25.0360, RUB 60.92, yen 120.85, sing 1.3795, HKD 7.7595, INR 62.55, China (sorry I don’t have access to this price today), pesos 15.40, BRL 3.0640, Dollar Index 97.40, Oil $49.48, 10-year 2.23%, Silver $15.93, Platinum $1,155.00,and Gold. $1,174.47

That’s it for today. I’m surprised I made it through the letter today. I’m not going back to bed, and hope and when I wake up next time things are better! It must be spring or darn near next to it because my allergies are going crazy! When I was a young man I had no allergies, and would make fun of people that were always complaining about their allergies acting up. Old age and 4 years of chemo took care of that! I have no immune system any longer and now I have to make fun of myself! The Kinks are playing their song: Sunny Afternoon on the iPod right now, which I hope today is. A sunny afternoon! Roger Dean Stadium was packed to the gills for yesterday’s game, kind of strange this early. I can’t imagine what it will look like when all the spring break people come down from St. Louis! Well, Thursday and Friday this week, I’ll be in St. Pete (actually Saturday too) and I’ll write from my hotel room. Should be interesting. I’m now down to one presentation and participation in a panel discussion about is this America’s Golden Age? I don’t know who’s on that panel with me, but I sure hope they do most of the talking, as my mind will be on the 4 hour drive back to the other side of the state, where I ‘ll be missing a game! UGH! And with that. I Hope you have a marvelous Monday!

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