The BLS Attempts A Fast One...
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In This Issue..

* Chuck in the Wall Street Journal!

* Feb Job losses -133,000

* Oil pushes Petrol currencies higher...

* Volcker believes euro to stay...

And Now... Today's Pfennig!

The BLS Attempts A Fast One...

Good day... And a Marvelous Monday to you! Was your weekend grand? The temps were below normal, but the sun filled a blue umbrella sky for most of the weekend, and for that I get a smile on my face... For those of you who don't like me going into personal stuff, and would much rather me stick to the facts, you'll want to skip ahead a few paragraphs, for I've got some very important personal stuff to talk about... If that's you... I'll see you in a bit... Otherwise, for the rest of us... Here goes!

Well... It was a great weekend at my house... No, my beautiful bride was still in Florida... It was great because, after a couple of weeks of waiting, and wondering if it was going to print or not... There was a very nice feature article in the Wall Street Journal Saturday, that featured... Me! And my Pfennig! I'm sure that most of you missed it, as the Pfennig Box had very few emails about the article... So... If by chance, you would want to read what the Wall Street Journal writer, Jeff Opdyke, had to say about me, and the Pfennig... Then click here... I must say, that some browsers require you to subscribe to the article... Some don't... I believe we'll have the article, text and picture, on our website soon...

Ok... You're back now... Well, my beautiful bride didn't have a comeback for me this time when this story printed, so I guess even she was impressed! There were some very nice quotes from Pfennig readers in there, except one... Of course the writer had to make it "fair" and "balanced" right? So...

My two older children were left out of the article, so I want to make sure everyone is aware that I have 3 children... Dawn, Andrew, and Alex... Dawn teaches kindergarten, and Andrew teaches high school social studies / history/ law, and coaches water polo and swimming.

OK... The article did say that some people don't like me taking up space with talk about family and the Cardinals, they forgot to mention my beloved Missouri Tigers! So, on that note, I had better get to the currencies / economies of the world, eh? But first, I want to thank Jeff Opdyke, and the WSJ, for picking me as the subject of the story... I was quite proud to have a picture and story in the WSJ... And.. I don't think that means I'm full of myself!

Well... Welcome back to those that skipped ahead! Friday's Jobs Jamboree turned out to be very interesting, after looking under the hood... According to the Bureau of Labor Statistics (BLS) the U.S. lost 36,000 jobs in February, much less than what was expected (-68K), and the unemployment rate remained at 9.7%... Of course we all know that the "real unemployment rate" is 21%, it all comes back to the games people play now, every night and every day now... The most important piece of the Jobs Jamboree is the Avg. Hourly Earnings, which printed at 1.9% gain... So, those that are working are seeing some increases... Marginal increases, but still!

And... The BLS did add 97,000 jobs out of thin air, so the job losses were really -133,000... I also found it suspicious that the BLS waited some time on Friday, before posting that +97,000 adjustment... Before they did, the markets were led to believe that job losses were dwindling... Again... The games people play... It sure looks like they tried to pull a fast one on the markets... But, I'm sure it was just a technical thing... Right?

So... The dollar began to go into the tank shortly after the BLS adjustment, and traded down for the rest of the day on Friday, and the overnight markets of Asia and Europe have not reversed that move from Friday. In fact, the overnight markets have added to the gains by the currencies...

Recall on Friday I told you that Pending Home Sales had dropped 7.6% last month, and then that was followed up by a not so good Jobs Jamboree... The rate hike campers here in the U.S. are beginning to feel like a forgotten lover... There's just no love coming from the Fed regarding rate hikes, and with that thought falling over the markets, the high yielders took off, as rate differentials came back into play.

The other currencies that took off were the Petrol-currencies... You know them, you love them, here they are.... The currencies of: Norway, Canada, Mexico, and... Even the beaten and downtrodden, U.K. are gaining ground VS the dollar as the price of Oil nears $82!

OK... A Greece update is needed here I think... Basically, the Greek 10-year bond issue was taken down by dealers, but at a cost to the Greeks... This is exactly what I keep talking about regarding the U.S. debt and need to finance... If we keep kicking the deficit spending can down the road for someone else to deal with, we will run into a financing problem like Greece, and to take our bonds, the buyers will demand higher yields... Uh-Oh!

There was news over the weekend, that France was ready to give Greece some financial support... And former Federal Reserve Chairman, Paul Volcker, has this to say about the euro... "I'm still a believer in the euro, the lack of a unified government to back up the European Central Bank is a "structural crack" and maybe fortunately it's tested with a country as small as Greece, which doesn't present an insuperable financing problem."

I was typing that, and I just couldn't get the Monkees song, I'm a believer, out of my head! Then I saw her face, now I'm a believer!

OK... I'm back now... Looks like we have two Central Bank meetings this week, the Swiss National Bank (SNB) and the Reserve Bank of New Zealand (RBNZ)... Although the RBNZ has been talking hawkish lately, it might be too soon for them to hike rates this week, although they have to be feeling a bit behind their kissin' cousins across the Tasman, who have raised rates 4 times in the past 6 months!

The Swiss, will not, and can not raise rates at this time...

There will be two jobs reports this week from Australia and Canada... So, there's a few things on the plates of the countries we follow this week.

Here in the U.S. the data cupboard is pretty empty most of the week with some real data coming in Thursday and Friday... First we'll see the Monthly Budget Statement, and I have no idea why, but the expectations for Feb.'s deficit is $210 Billion! OUCH! Then the Trade Deficit prints for January, and then finally on Friday the Retail Sales for Feb... I don't think any of this is going to be rate hike positive, and therefore not dollar positive... But we'll have to wait-n-see, eh?

OK... Call me clairvoyant... Nah... I'm not that! I'm just a guy that sees things and thinks of ways to make them work better... In this case I'm talking about the announcement over the weekend of the European Monetary Fund... That's right! I did talk about the Eurozone creating this European Monetary Fund, a week ago, long before anyone even whispered it! Why did I think this? Because I knew that the European Central Bank (ECB) and the European Union was not going to go for any assistance to Greece by the IMF... So... I figured that it would be best to form their own IMF... And lo and behold look what they announced this past weekend!

"The European Monetary Fund, patterned after the International Monetary Fund, is a key part of an initiative backed by Germany and France to strengthen cooperation and surveillance of public finances across the Eurozone, government officials said. German Finance Minister Wolfgang Schäuble revealed details of the plan during the weekend."

OK... I'm going to have to come back down now... I was floating after hearing that announcement! I'm sort of like those Windows 7 commercials... The European Monetary Fund was my idea, and I'm a PC!

While I was looking around the Wall Street Journal this weekend, I saw a story that caught my eye... Here's a snippet from the WSJ... "Bank of America, Citigroup, JPMorgan Chase, Wells Fargo and other lenders reported a large increase in the volume of troubled loans they bought back last year. Barclays Capital estimated that banks repurchased about $20 billion in such loans, with half of the total written off. "Most investors haven't really focused on this issue and are surprised on how much impact this could have, including on earnings," said Ajay Rajadhyaksha, head of U.S. fixed-income and securitized strategy at Barclays Capital."

Back to Chuck again... Doesn't that stuff scare the bejeebers out of you? Mortgage loans that were made in the past 6 years are toxic! Of course not all of them are... But isn't this all we every hear about are these mortgage loans going bad and having to be written off?

Well... China was in the news this weekend, talking about their shrinking Trade Surplus... The thought here is simply that if China's trade surplus continues to shrink, the pressure applied to the Chinese to allow the renminbi to float will be eased... For those of you keeping score at home, China's Trade Surplus was $44 Billion a year ago... Today, it is $8 Billion...

One of my fave economists, Nouriel Roubini, said that he believed the Chinese would "limit the renminbi's appreciation to 4% over the next 12 months because of a super cautious outlook on the global economy."

I personally think that China will allow more than that as we go along, starting with a 2% or so, gain by summer... But then, that's just me...

Then there was this... There was a good story in the USA Today regarding Gold this past week, that long time colleague Ed Bonawitz, sent along to me... Here's a snippet...

By John Waggoner, USA TODAY

"If you like to have your investments close at hand - say, buried 12 paces northeast of the old apple tree - then gold bullion is the kind of investment you'd like. But even if you're not worried that the dollar will plunge, owning gold isn't a bad idea.

You hear many people pushing gold these days, citing our nation's $12.4 trillion debt. Gold is the classic hedge against inflation. If the U.S. resorts to printing money to repay our debts, the value of paper dollars will fall, and gold prices will skyrocket."

To recap... The Jobs Jamboree was worse than printed by the BLS, and not dollar positive. The price of Oil is shooting higher again, and taking the Petrol-currencies of Norway, Canada, Mexico and even the U.K. higher VS the dollar. And recent data has the rate hike campers here in the U.S. feeling left out, and therefore the rate differentials kick in for Australia, Brazil, and South Africa... And... Oh yes! Chuck was in the Wall Street Journal Saturday!

Oh.. And one more thing to quote John Maynard Keynes... "when the facts change, I change my opinion... What do you do, sir?

Currencies today 3/8/10: American Style: A$ .9110, kiwi .7005, C$ .9725, euro 1.3650, sterling 1.5120, Swiss .9330, European Style: rand 7.3910, krone 5.8875, SEK 7.1025, forint 195.15, zloty 2.8355, koruna 18.7770, RUB 29.73, yen 90.30, sing 1.3990, HKD 7.7590, INR 45.53, China 6.8264, pesos 12.62, BRL 1.7720, dollar index 80.35, Oil $81.95, 10-year 3.69%, Silver $17.35, and Gold... $1,133.80

That's it for today... Got a chance to go to the Championship game of the Missouri Valley Conference yesterday with good friend Rick... I love to watch basketball live... Same with hockey... On TV? I can take it or leave it, but live... I'm all over that like a cheap suit! Down to the days I can count on my hand, before I leave for spring training... I don't think Chris has figured out yet that he'll have the conn on the Pfennig for 3 weeks... Shhhhh, don't tell him! HA! Thanks to all of you who sent me a note, or called me about the enlarged mass on my left eye, and my fight with cancer. You are all wonderful people, and although I don't know you, I feel that I do... I believe that I'll beat this like I did the other cancer, so let's move onward and upward from here! OK? Alright, my fingers are tired of typing, so it must be time to hit send! I hope you have a Marvelous Monday!

Chuck Butler


EverBank World Markets



Posted 03-08-2010 10:42 AM by Chuck Butler