Jobs Jamboree Is Very Disappointing!
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In This Issue.

* Jobs report hurts currencies.

* Canadian job report is strong!

* Aussie Retail Sales print weaker.

* Oil prices fall out of bed.

And, Now, Today's Pfennig For Your Thoughts!

Jobs Jamboree Is Very Disappointing!

Good day. And a Terrific Tuesday to you! I'm told that this weekend, it's supposed to warm up here, but knowing that didn't help me as I walked across that bridge from the garage to the office building this morning. Burrrrrrr! Baby, it's cold outside! I leave tomorrow morning for Orlando, hopefully, the warming up that we're supposed to get here this weekend, is already there! I'm in dire need of warm sun, and to get away from snow & ice!

Well. Front and Center this morning, China just announced that they were raising their interest rate 25 basis points (1/4%). I have to say that I do believe that this rate hike has already been priced in by the markets, and therefore we shouldn't see much damage to commodities or the commodity currencies in reaction to this news. In fact, as I watch the currencies and metals trade after the announcement, it's quite the opposite. Gold & Silver are up, and the Aussie dollar (A$) the proxy for Commodity Currencies is gaining VS the U.S. dollar.

Yesterday, the healing continued in the currencies and metals from Friday afternoon. The Chinese have returned from their New Year celebrations. Someone on the desk told me last week that it was the year of the Rabbit. I corrected them, and said, it would be the year of the renminbi! HA! So. we're all in our places with our bright shining faces! The euro gained, dragging Norway, Sweden, and Denmark along for the ride to higher ground. I tell you this, folks. this back and forth, just drives me up a wall. I wish the currency traders would. Find a direction and stick with it!

So. as I said a minute ago, the Chinese hiked their interest rates today, and it looked like at first that Gold would take off, as it gained $3 right after the announcement, but another speed bump was put down in Gold's tracks. We'll have to keep an eye on the shiny metal today, to see if it can navigate that speed bump or if it just gives up and backs off like it has been prone to do the past month.

Overnight, New Zealand dollars / kiwi, and the Mexican peso are the big winners of the best performing currencies. Neither one would be my choice of currencies to be the best performing, because neither one has good fundamentals going for it. Exploding debt, a depleting Oil supply, or a host of other reasons that the fundamentals are not good for these two. But. as I always say, I was taught many moons ago that the "markets are never wrong". And so it is to be that these two fundamentally flawed currencies move to the front of the class.

Data cupboards all over the world, are pretty thin this week, but we will see some housing data from Canada today, and we've already seen the other piece of data that's printing today. German Industrial Production, showed weakness in December and dropped 1.5% from November. The Germans are blaming their harsh winter on a shutdown of the German industry. Observers here feel that once the warmer winds of spring begin to blow, the German economy will spring forward, just like the clocks! I'm not sure how you start and stop Industrial Production on a dime, but people that should know, are making these claims. So. there you have it!

Yesterday, I told you that the price of Oil had fallen out of bed, right? Well, since then, the price of Oil has fallen further. I'm surprised at how strong the Canadian dollar / loonie is remaining in the face of this falling Oil price. The loonie has slipped from yesterday's high, but remains above parity to the green/peachback, and to me, that's a sign of loonie strength. Well.. I take that back, it's a psychological level. the fact that the loonie is near parity, is a sign of strength, eh? I told you yesterday that Canada posted a very strong jobs report last Friday, that was overshadowed by the U.S. Jobs Jamboree. Well. I wasn't the only person to notice the strong report. Observers here are now saying that they believe that the Bank of Canada (BOC) Gov. Carney, is going to accelerate rate hikes. Whoa, there partner. you are putting the horse before the cart aren't you? I mean, We've got to see Carney admit that he's behind in raising rates, before we'll see "accelerated" rate hikes, right? But, it's nice to dream about it, eh?

Yesterday, I went off on CABAL Chairman, Big Ben Bernanke, for turning his back on the inflation pressures that are building steam. Big Ben continues to deny that inflation is all around us. Let me explain why he believes that folks. You see, members of the CABAL are creatures of habit. And in the past, rising wages is where they would find inflation to fight with rate hikes. But with all the unemployment, rising wages are not percolating. Instead, we have food and energy percolating. And these are two sectors that the CABAL pays little attention to, because.. "They are too volatile". So. you can't really throw darts at Big Ben's picture on the wall, he's just looking at the same data that CABAL heads have looked at for nearly 100 years!

Yes, 1913. The year that Woodrow Wilson allowed the banking cartel that met secretively on Jekyll Island in Georgia, to begin their so-called "Federal Reserve system". I've gone on and one about 1913. it's one year that should be repealed! For not only did we get the CABAL, Wilson began income taxes, and. changed the way Senators would go to Washington D.C. OK. who's with me on repealing 1913? I'm getting that thought in my mind of Will Farrell streaking to "the quad" in Old School. "look dear, everyone is behind me!"

Well. the Treasury sell off that I've said was going to happen for over a year now (remember, last spring, it was well on the way to a HUGE sell off, and somebody suspiciously came in and supported Treasuries?), looks like it's on its way to HUGE losses again. You can't say that this recent weakness to the 3.60% level is all in reaction to the jobs data last Friday.. 1. The selling had already been going on for 4 days before the Jobs Jamboree, and 2. There's another $72 Billion in new Treasury issuance that's coming down the pike this week.

Then there was this. a long-time customer and reader sent this to me, and it cracked me up at first, and then it made me sad. Thanks Ed, for sending along!

The President ordered the cabinet to cut a whopping $100 million from the $3.5 trillion federal budget!

I'm so impressed by this sacrifice that I have decided to do the same thing with my personal budget. I spend about $2000 a month on groceries, medicine, bills, etc, but it's time to get out the budget cutting ax, go line by line through my expenses, and go to work.

I'm going to cut my spending at exactly the same ratio -1/35,000 of my total budget. After doing the math, it looks like instead of spending $2000 a month; I'm going to have to cut that number by six cents!

Yes, I'm going to have to get by with $1999.94, but that's what sacrifice is all about. I'll just have to do without some things, that are, frankly, luxuries.

Chuck again. See what I mean? On a sidebar though. I did see that Rand Paul (Ron Paul's son), introduced spending cuts that would total about $500 Billion. OK! Now, that's a good place to start!

To recap. China raised interest rates this morning 25 Basis points (1/4%), but the move must have been priced into the commodities and commodity currencies already, because there's not been any major slippage by Gold, or the Aussie dollar (A$) following the announcement. The Canadian dollar / loonie is holding on to parity, as the price of Oil continues to fall. Kiwi and pesos were the best performing currencies overnight.

Currencies today 2/8/10. American Style: A$ $1.0140, (I made a fat fingered typo in the A$ price yesterday, sorry), kiwi .7760, C$ $1.0110, euro 1.3660, sterling 1.6120, Swiss $1.0480, . European Style: rand 7.25, krone 5.76, SEK 6.4250, forint 196.80, zloty 2.8425, koruna 17.2450, RUB 29.25, yen 82.10, sing 1.2715, HKD 7.7815, INR 45.30, China 6.5860, pesos 11.98, BRL 1.6750, dollar index 77.72, Oil $87.40, 10-year 3.64%, Silver $29.44, and Gold.. $1,353.25

That's it for today. and for me this week. Mike Meyer graciously accepted his invitation to take the conn on the Pfennig the next 3 days. I remember years ago, I had no one to do that for me when I traveled, and this Orlando trip, I would always have my beautiful bride and little buddy, Alex with me (Disney!). I would have to get up, while they were sleeping, and write in the pitch dark, with only the light of the computer monitor to guide me. Now, they don't travel here with me any longer, but it sure does help out to have Mike take the conn! My beloved Missouri Tigers lost to highly disliked rival, Kansas last night. (when I went to bed, the Tigers were winning! So, to me, they won, for I didn't see them lose!) I saw that the Cardinals loaded up all their gear, on trucks and headed South to Jupiter Florida yesterday. I'll be about a month behind them. The Cardinals and Albert Pujols are working on a new contract, and apparently they aren't close to signing him, which means, and if they don't sign him before spring training starts. at the end of this season, he'll be a free agent That's a shame. a real shame. I realize that he is proclaimed to be the best player in the game, and so, I'm sure he wants to be paid like the best player, but, he doesn't play in New York, Boston, or L.A. or even Chicago (heaven forbid!) So. there has to be some give and take, that I don't believe is going on. Oh well. the Cardinals were here long before Albert arrived, and they'll be here long after he hangs up his cleats. It's his decision on whether he'll take his place outside Busch stadium next to the greatest Cardinal, Stan Musial, or if he rides off to L.A.. and with that. I'm outta here! I hope your Tuesday is Terrific!

Chuck Butler


EverBank World Markets



Posted 02-08-2011 10:10 AM by Chuck Butler