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U.S. Productivity Falls To Slowest Pace Since 2011…

* Dollar still sits on top of the hill!..
* ADP says 298,000 jobs created in Feb.
* BOC meeting was non-event, ECB today.
* 10 most expensive places to live in the U.S.

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

Good Day. And a Tub Thumpin’ Thursday to you. I’m draggin’ the line this morning, and even thought about “tapping out” But that’s not fair to those that have to pick up the pieces, so I dragged my bloated body out of bed, and here I am! But I’m not ready to rock you like a hurricane! Well, apparently we are no longer “productive” here in the U.S. more on that later, and when will the daily chopping off of Gold’s knees end? Deep Purple greets me this morning with their iconic rock song: Smoke On The Water.. the song’s lyrics tell the story of a rock band trying record music but having to move to a different location due to a fire.

The dollar jumped higher yesterday after the ADP Jobs report showed a stronger than expected 298,000. I’m sure the new President will grab onto that number and ride the wave if he can. But Bond yields rose, and the metals got whacked once again.. Since when did the ADP report move the markets? I find this all questionable, but nonetheless, traders, investors, and participants are “all-in” on the rate hike next week, and 2 more rate hikes this year. I have to question just how much more lift the dollar gets from the rates outlook..

And.. all you have to do is refer to yesterday’s Pfennig, and you’ll see that my opinion, which could be wrong, is for those additional 2 rate hikes scheduled for this year, to be cancelled, and we would begin to see reversals of the two rate hikes that have been made in the last two years.. But the markets don’t care about my opinion, and so the dollar buying continues.

What’s interesting is the fact that the euro continues to trade in a tight range at 1.0560.. The Japanese yen continues to take the brunt of the dollar strength, which is the scenario I’ve long thought should be in place, with yen getting sold, but the other currencies trading Steady Eddie. But this scenario is not on terra firma folks, not yet, I would like to think.

The Aussie dollar (A$) has dropped quite a bit this week, and that’s after the Reserve Bank of Australia (RBA) left rates unchanged, and sounded upbeat and optimistic. This is how I would look at this if I were a trader here.. the Aussie internal rate is 1.50% After the Fed hikes rates next week the U.S. internal rate will be 1.00%… Back when I was a foreign bond trader at Mark Twain Bank, my colleague, Neil, and I would have looked at this spread as a trading opportunity. Now that was in the 90’s, bond traders today, haven’t lost the art of an arbitrage have they? Of course they have! It’s all about derivatives, CDO’s, Credit Default swaps, and so on..

Hmmm, did I sound bitter there? I have to tell you something. I’ve become quite bitter about a lot of things. I could make out a list of things that I’ve become bitter about, with ALS at the top of the list. But I don’t have time to deal with lists..

The Bank of Canada (BOC) met yesterday, and like I said I thought would come of the meeting, no changes, and comments to move the markets, were the order of the day at the BOC. And the loonie got caught up in the dollar strength, and at the end of the day the loonie was desperately holding on to the 74-cents handle.

In China the past couple of days.. We had the Chinese Gov’t come out and say their outlook for GDP Growth for 2017, was 6.5%… And then yesterday was saw the color of the latest print of PPI (wholesale inflation) and this was no ordinary print, as the 7.8% increase in February was a record as the fastest pace since September 2008! And finally the Peoples Bank of China (PBOC) had two governors of the bank meet with reporters and tell them that they see stability in the renminbi.. If I were one of those reporters I would have been compelled to ask the question.. “if you see stability in the renminbi could you please point it out to me, for I don’t see it.. ”

Well, as I said above, Gold got whacked again yesterday, and this morning it’s not faring any better. UGH! Yesterday, Gold lost $7.60 from its price to close the day at $1,208.00, this morning Gold is down $4 in the early morning trading.. I ask the question above, when will the daily trips to the woodshed end for Gold? I guess when one trader says “no mas”..

The U.S Data Cupboard had a nasty print yesterday. Let me set this up for you.. Productivity here in the U.S. has lagged in recent years, and economists and analysts have been pointing to the lagging productivity as one of the reasons the U.S. economy can’t get off the couch.. OK, so the productivity of American workers grew at a slower pace in fourth quarter and last year recorded the smallest annual gain in five years.. Well, if the economists and analysts are correct and this can be a contributor to the economy’s unwillingness to get off the couch, then the economy is doing some “deep couch sitting” now! For those of you keeping score at home, The Labor Dept. reported that the 4th QTR Productivity grew at 1.3%, and the final productivity for 2016 was a negative -0.2%.. The smallest number since 2011..

We also saw the ADP Employment report that I talked about above.. That was quite the jump in jobs for February wasn’t it? 298,000 isn’t anything to shrug off the markets did not!

Today’s Data Cupboard doesn’t have much.. the weekly initial claims is a Thursday fixture, and the reports go downhill from there.. All focus today will shift to tomorrow’s Jobs Jamboree.. Are you ready?

To recap.. Another day, another slice of price is cut off Gold. ADP report printed 298,000 jobs created in Feb. and the markets took that and ran with it, until Gold had lost $7 on the day, and the Japanese yen took the brunt of the dollar strength. The euro continues to trade in a tight range around 1.0560, and the ECB meets today, I don’t expect anything to come of it. And Chuck has become bitter about things, so be careful around him! HA!

For What It’s Worth. I thought we would take a different road today with this, and talk about something different.. I found this on MarketWatch and it’s about the 10 Most Expensive places to live in the U.S. and you can read it all here:

Or, here’s your snippet: “Washington, D.C., is more expensive than New York City. In some spots in this country, it costs parents well into six figures just to eke by.

The amount that a two-parent, two-child family needs just to pay the bills (but not have money left over for savings) ranges from about $50,000 to more than $100,000 depending on where a family lives, according to data from the nonprofit and nonpartisan think tank the Economic Policy Institute.

“This does not mean a middle-class lifestyle,” says Elise Gould, a senior economist with EPI. “This is just living, no savings.”

The study looked at 618 metro areas and calculated the cost of living in each based on the costs of housing, child care, food, transportation, health care and other necessities (such as school supplies and clothing), as well as taxes.”

Chuck again.. So, the top ten most expensive places to live were 1. Washington D.C., 2. Nassau-Suffolk, N.Y., 3. Westchester County, N.Y. , 4. New York City, N.Y. 5. Stamford-Norwalk, Conn. 6. Honolulu, Hawaii, 7. Poughkeepsie-Newburg-Middletown, N.Y. 8. Ithaca, N.Y. , 9. San Francisco, CA, 10. Danbury, Conn.

With the cities of the North East dominating that top 10 list, I’m sure glad my grandfather decided that the middle of Missouri was where he was going to begin his farming.

Currencies today 3/9/17.. American Style: A$ .75, kiwi .6903, C$ .74, euro 1.0562, sterling 1.2265, Swiss $.9858, .European Style: rand 13.2360, krone 8.57, SEK 9.0417, forint 293.95, zloty 4. 0860, koruna 25.58, RUB 58.35, yen 114.98, sing 1.4201, HKD 7.7668, INR 66.68, China 6.9067, peso 19.73, BRL 3.1325, Dollar Index 102.68, Oil $52.80, 10-year 2.56%, Silver $17.19, Platinum $948.19, Palladium $760.53, Gold $1,205.10, and SGE Gold $1,234.50

That’s it for today.. A nice day at the ball park yesterday, that started off with rain and then turned to sunshine, but then I came home, and hit the wall! UGH! And thus why I’m dragging the line this morning! I’m listening to Stairway to Heaven right now, and they said something that applies to me this morning, to be a rock and not to roll! I’m not rolling right now but maybe later, eh? It’s a Happy Birthday to Joe Bielicke today! Joe is a colleague and has been with us for quite a few years now, eh, Joe? Joe always has a smile on his face and a good Morning to me when we pass each other on the way to the coffee! In our office there are only two March birthdays.. Joe’s and mine.. and mine is always spent at Roget Dean Stadium, where will you spend yours Joe? Scorpion takes us to the finish line today with their song, and my good friend Laura’s fave song, Still Loving You.. And on that note, it’s time to get this out the door, and to tell you to go out there and have a Tub Thumpin’ Thursday! Be Good To Yourself!

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

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