A New Year’s Jobs Jamboree Friday...
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In This Issue..

* Will the ADP report be a good indicator?                      
* China to slow treasury purchases?                   
* Gold as a store of wealth...                       
* Dealing with the devil...                                  

And Now... Today's Pfennig!

A Jobs Jamboree Friday...                        

Good day... And a Happy Friday to one and all! A Fantastico Friday, as it is forecast to get to 50 degrees today here in St. Louis. Never mind that tomorrow's high will be 29! It doesn't take away from today! What a trading day in the currencies yesterday... Whew! It's a Jobs Jamboree Friday, so let's not beat around the bush... It's time to Jamboree!

Today is the day the Gov't prints the December Jobs Jamboree, and if Wednesday's ADP report did what they said it was going to, and that is change their methodology to mirror the BLS (Bureau of Labor Statistics) then this morning's Jobs Jamboree will be a nightmare. Of course not the kind of nightmare that the over 2.5 million people that lost jobs in 2008 had! I was once in those numbers, as our old Bank, Mark Twain Bank, was bought by a bigger bank, Mercantile Bank, and Mercantile decided after a few months to perform ethnic cleansing of Mark Twain employees... I called it "my retirement" but with a 3 year old at home and on my lap most of the day, "retirement" couldn't last too long! My point is that you don't know the emptiness and failure you feel when they show you the door... So my thoughts are always with those that lose their jobs...

OK, back to the Jobs Jamboree... Earlier in the week the "experts" were forecasting a -500K in job losses... But as the week has gone on, that forecast has inched up to -515K and then -523K... It's like the BLS is setting us up for a BIG number, but wants the media to carry on their charade of reporting the jobs numbers by saying they came in "just above the forecast" (as if the forecast wasn't bad!)

The other thing to think about prior to the print is the shenanigans the BLS plays with the jobs numbers... I'll tell you this... Given what we know about the state of the economy, should the Jobs Jamboree print lower than the -525K that's now forecast, then you will know in your heart of hearts that the BLS "cooked the books"... That's all I'll say about that...

The Weekly Initial Jobless Claims came in under 500K for the second week in a row... I would put this down to the Holidays... I fully expect this to catch up next week! UGH!

So... The currencies yesterday rallied hard, sold off, rallied hard again, sold off, and this went on for the bulk of the day. As I signed off yesterday, the Bank of England (BOE) cut rates 50 BPS, and sent the pound sterling higher... I know, I know, that shouldn't be, but it is, and the mental giants that are running these trading desks, reward countries that debase their currencies!

But in the end... The euro was higher on the day, along with yen, and Swiss francs... The high yielders took one to the chin, as risk takers have gone back under the covers to get warm, as the chill in the air got to them!

I had more than a few people send me a story that appeared in the NYT that played well with my screaming from the rooftops about the Budget Deficit announcement from the day before... Here is a snippet, of the story that can be read in its entirety at: http://www.nytimes.com/2009/01/08/business/worldbusiness/08yuan.html?hp

"In the last five years, China has spent as much as one-seventh of its entire economic output buying foreign debt, mostly American. In September, it surpassed Japan as the largest overseas holder of Treasuries.

But now Beijing is seeking to pay for its own $600 billion stimulus - just as tax revenue is falling sharply as the Chinese economy slows. Regulators have ordered banks to lend more money to small and medium-size enterprises, many of which are struggling with lower exports, and to local governments to build new roads and other projects.

All the key drivers of China's Treasury purchases are disappearing - there's a waning appetite for dollars and a waning appetite for Treasuries, and that complicates the outlook for interest rates, said Ben Simpfendorfer, an economist in the Hong Kong office of the Royal Bank of Scotland."

OK... Back to me... So... If, what President-Elect Obama said regarding "expecting Trillion dollar Budget Deficits for several years" is to come to fruition, then what pray-tell will we do with all the Treasuries we issue to pay for the debt?

Uh-oh! Spaghetti-o's! The Gov't will have to ratchet the yield on these bonds up so high to attract investors... OR... Allow a general debasing of the dollar to allow those purchases of Treasuries to be made at a discounted clearing price. I've said this all along folks... Over and over again and over again until I'm blue in the face... Or was I holding my breath again? Both! I hold my breath in hopes that it is all a nightmare!

I have to tell you all, especially new readers that haven't heard me screaming from the rooftops about the direction of this country, to socialism, that this is all getting completely out of hand! The Fed is well down the path to controlling the markets, taking the term "free markets" away for good... And do we expect anyone to stop them? Not unless it's us... We The People...

Ty Keough sent me a note yesterday from James Quinn on investmentrarities.com... "As the politicians scurry to "save" capitalism through the use of communist measures, more Americans are becoming disheartened. The definition of communism according to Webster's is:

A system in which goods are owned in common and are available to all as needed.

George Bush, Henry Paulson and Ben Bernanke have decided to seize money from the vast majority of Americans who lived within their means, utilized debt sparingly, and worked hard to get ahead, and give it to the most appalling failures in our society. They have shoveled billions to banks that operated their businesses like gambling parlors. They have shoveled hundreds of millions to people who bought houses with no money down, interest only mortgages and fraudulent loan applications. They are now rewarding automakers who made the wrong vehicles, pay 30,000 workers per year to not work, and have only been able to "sell" cars by giving them away with 0% financing to any schmuck who could sign on the dotted line. These acts fit the definition of communism. We are now more communist than China."

I spent a long time with a Wall Street Journal reporter yesterday... The reporter, who has interviewed me before, going back to 2002, was interested in my take on Gold as an inflation hedge... I know there are people out there that will dispute this, but if you go back to where Gold was issued when Nixon closed the Gold window in 1971 ($34), and not from it's previous high in 1981, you can see it not only is an inflation hedge but a store of wealth, and as people that own dollars look at the loss in purchasing power of their dollars, and look at the store of wealth Gold has held... It makes abundant sense to have Gold... I wonder if this will get printed in the WSJ....

And Savers... I'm a saver, are you a saver? Yes, I spend money, just like a lot of people, but I also save... And that's what ticks me off these days! The Fed has lowered rates to 0%, so there's no incentive to save if you only look at yield... But, if you look at the fact that saving has to start somewhere, then maybe the Gov't will get the hint / clue, and stop overspending! But doesn't it tick you off that the Fed has lowered rates to 0% and have basically told you, the saver, to go out and seek risk to offset that loss of yield? They don't want us to save, people... So... You know me! SAVE, SAVE, SAVE! And then SAVE some more!

And that... Leads me to a book, that a reader sent me, that he wrote! The title of the book is: Debt is Slavery... And 9 Other Things I Wish My Dad Had Taught Me About Money... The author is Michael Mihalik... I think most people don't believe they have a debt problem... But... If this financial meltdown continues at its current pace, I think they've got a rude awakening coming. Just like the U.S. and their debt problem... It's relatively the same ordeal...

So... The Bank of England (BOE) did cut rates 50 BPS yesterday, which puts their total of the last three rate cuts at 300 BPS... And what did the pound sterling do? It rallied! These are strange times, my dear reader friends... But in my humble opinion, I would view this rally as an opportunity to look to sell at these higher levels, because my view on the pound is not good... The U.K. has the same problems as here in the U.S. (not the deficit problems, but they could get there in heartbeat should they continue to bail out institutions) just on a smaller scale... And in the end, that will be enough to push pound sterling down... My long time friend, Joe Losos, asked me if he could write a piece for the next monthly newsletter to clients of EverBank World Markets. Of course I said yes... And he came back with a piece on the prospects for the pound... So look for that in the monthly Review & Focus at a newsstand near you, sometime in the future!

The Japanese yen is back on the rally tracks, as the risk takers have gone AWOL... Yen is back to below 91, trading with a 90 handle, and looking perky... Should the Jobs report in the U.S. today be rotten, yen should have a field day VS the dollar. Now there's something to look for!

The Brokerage House that owns a Bull, issued a report that said, "Dollar would slide if U.S. loses more than 700,000 jobs"... They really went far out on the limb with that one, eh? HAHAHAHAHAHAHA! No, I'm not taking a shot at our friends there, just pointing out that even the Big Boys right now, don't have a strong conviction on the direction of the markets right now... So, they tip-toe through the tulips...

Canada will also print their employment data this morning... About 1/2 hour before the Jobs Jamboree. I also didn't like hearing what the Canadian Finance Minister had to say yesterday about Canada seeing a "substantial deficit later this year"... The Finance Minister, Flaherty will present his budget on April 1... Let's hope he's setting us up for an April Fool's Day joke! Unfortunately, I don't think these Gov't people have a sense of humor, so I think it's safe to rule that thought out right here, right now!

I'll finish this up with a brief snippet from a report by one of my fave writers, William Pesek of Bloomberg... Mr. Pesek's complete piece can be found here: http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_pesek&sid=aHOuXTmCv61Y

Here's William Pesek... "Beijing bookstores would be wise to stock up on Johann Wolfgang von Goethe. His work will help Chinese officials understand the "Faustian bargain" in which they are engaged with the U.S.

The reference here is to a compromise of principles for fleeting gains. In literature, Goethe's Faust is a mythic German alchemist who made a deal with the devil. And that, in a nutshell, is where China, the biggest foreign holder of U.S. debt, finds itself as America re-inflates its economy.

Treasury Secretary Henry Paulson isn't the devil, yet on his watch the U.S. has morphed into a huge debt-issuing machine. The Congressional Budget Office says the U.S. deficit will more than double this year to at least $1.18 trillion, the biggest since World War II.

Barack Obama has even bigger plans. The CBO's estimates don't include the cost of the president-elect's stimulus package, which will probably add at least $750 billion to the total over the next two years. Last year's shortfall totaled $455 billion. The U.S. needs China's money more than ever.

"I spent most of the first two quarters of 2008 marveling at the pace of Chinese reserve accumulation," Council on Foreign Relations economist Brad Setser in New York wrote on his Web log this week. "I expect to spend the first few quarters of 2009 marveling at the size of the U.S. fiscal deficit."

Currencies today 1/9/09: A$ .7065, kiwi .5920, C$ .8435, euro 1.3710, sterling 1.5260, Swiss .9150, rand 9.69, krone 6.9350, SEK 7.8350, forint 201.70, zloty 2.9575, koruna 19.3150, yen 90.75, Sing 1.4790, HKD 7.7570, INR 48.25, China 6.8355, pesos 13.76, BRL 2.2980, dollar index 81.65, Oil $41, Silver $11.18, and Gold... $853.50

That's it for today... Congratulations to the Florida Gators and their fans, as the Gators beat Oklahoma last night 24-14 to win college's BCS National Championship... (the game was tied 7-7 when I went to bed!) Of course, there's always the questions about how a 1-loss team can be national champion when there's a no-loss, undefeated team hanging around... In this case, Utah... But that's someone's else's problem, not mine! OK... On Monday... I'll be interviewed on the Financial Lifeline Radio, which is nationally syndicated. They have a live web stream where you can listen through your computer at: http://www.rockymountainradionetwork.com/FLR/ the interview begins at 3:10 CT... I've done interviews with this show several times in the past. They want to talk to me about the Obama bounce I've been writing about and the $1.2 Trillion Budget Deficit... I think I could talk to them in my sleep about these things... But this should be fun (for me at least!)...

So... Hold on today... The Jobs Jamboree could be earth shattering as far as the markets are concerned... I'm looking forward to the weekend, as this is the first "full week" of work that done in over a month! My fave show 24 returns Sunday night... Jack Bauer rules! Ok, enough of that, time to get to work on this Fantastico Friday... And Wild Weekend! (ok, I have no idea why I said Wild, as I'll probably be a lump on a log all weekend!) So... I hope your Friday is Fantastico!

Chuck Butler
EverBank World Markets

Posted 01-09-2009 9:36 AM by Chuck Butler