A Jobs Jamboree Friday!
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In This Issue.

* Euro finishes its rally week on high note.

* Yen continues to benefit from repatriation.

* Draghi sounds upbeat.

* China prepares its curb appeal.

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

A Jobs Jamboree Friday!

Good day. And a Happy Friday to one and all! What a dolt I was yesterday, not paying attention to the actual calendar. Yesterday, I should have acknowledged that June 6, 1944 was D-Day. What a day in our history! On that day 150,000 allied soldiers landed on the shores of Normandy. Many soldiers died on that beach, but for no reason. Those soldiers made a difference in the world we live in today, and they should be thanked on more days than just Veteran's Day. I read yesterday that 600 WWII veterans die each day. I lost my dad 17 years ago, he was one of the soldiers that fought in WWII.

OK. I apologize to any veteran who thought I had snubbed them yesterday! Sometimes, I come in, see something, and begin to write without checking the calendar. Maybe I won't do that any longer!

The euro is on a roll folks. I haven't seen this type of consecutive day performance to the upside in the euro in a month of Sundays, and probably even longer! Yesterday, I told you how 1.31 had seemed to be tough row to hoe, but that the euro had finally passed that figure. By the time European Central Bank (ECB) President, Draghi, finished talking yesterday, the euro had pushed through the 1.31 handle and took out 1.32 before finally pausing.

So, the markets were all lathered up for ECB President, Mario Draghi, to give the world his thoughts after announcing that rates would remain unchanged yesterday.. Before I go on, speaking of interest rates in the Eurozone, they currently stand at 50 basis points or ½%... Where did the markets think Draghi would take them from here? I said after Draghi made the last rate cut, and I'll say it again. I just don't see where an economy gets any traction from cutting rates when they are already below 1%...

OK. back to Draghi's statement. Apparently, Draghi is upbeat about the Eurozone's recovery. He said that, "the Euro-area economy will return to growth by the end of the year. Euro-area economic activity should stabilize and recover in the course of the year albeit at a subdued pace." There was no mention of implementing negative deposit rates, which was the fear by the markets, going into the meeting.

As Draghi talked, traders began to see where he was going, and began to mark up the euro. Yesterday morning in the currency roundup the euro was 1.3115. But by the time Draghi finished talking the single unit had risen to 1.3190, and it wasn't long into the afternoon that 1.32 was taken out. It's quite a scene, given all the negativity that the euro has had to endure the past 3 years.

For those of you who took the time to click on the link I provided the other day to my video interview, you will recall that I made the point that the euro no longer has to face the questions of a sovereign default, breakup of the Eurozone, or collapse of the euro, and therefore sentiment should improve for the currency going forward. I hesitate to even say that the euro is in rally mode. In fact, I won't say that. We've seen the euro bump up and then fall back down several times in the past couple of years, and I expect this to continue. But, isn't it nice to see the euro on the rise once again?

The Japanese yen is fighting with the euro for best performer, which makes them an odd couple, don't you think? Let's see, yen continues to rally, and the Aussie dollar (A$) continues to get whacked. I HAVE to believe my thought that yen repatriation is what's causing this performance in both currencies. The euro is the Big Dog, offset currency to the dollar, usually, if the Big Dog leaves the porch, the rest of the little dogs can get to chasing the dollar down the street. So that would mean the A$... But, as I watch this yen strength gain momentum, and the whacking of the A$ continue, I would have to be shown that Japanese investors are not repatriating yen from A$'s to believe that it's not the cause of the A$'s problems right now.

Well. As we draw closer to the meeting between the Presidents of China and the U.S. this weekend in California, the Chinese decided to really juice up the appreciation of the renminbi, just for curb appeal. The level this morning in the renminbi / yuan is the strongest reference rate on record! China also granted passports to the mother and eldest brother of a Chinese dissident. Recall that the dissident, Chen, escaped house arrest last year, and fled to the U.S. embassy in Beijing, before being allowed to go to N.Y. So, the Chinese are looking like the good guys before the meeting with the U.S. President. They've put their foot on the gas pedal for currency appreciation, and are allowing the dissident's family to visit him here in the U.S.

Now, if they can only get the U.S. President to believe that they have had nothing to do with the cyber attacks, they'll be golden.

Tomorrow, we'll get the latest Chinese export data, which I told you yesterday is thought by the experts to have really plunged. So, it will be interesting to see what the Chinese do with the renminbi on Monday. My guess is that they will not be so generous with appreciation of the renminbi / yuan.

Have you noticed the creeping up of the price of Oil this week? We began the week with the WTI Crude trading at $91.98, or $92 for GP. And today, the price of Oil is over $95. That's a $3 gain in a week! WOW! So. the rise in the price of Oil should be reflected in the petrol currencies, right? Not so fast! Yes, the petrol currencies of Norway, and Canada seem to be enjoying the rise in the price of black gold, Texas tea. But, I guess the problems in Brazil, Mexico, U.K. and Russia are just too great to overcome with a rising Oil price.

The price of Gold also saw a nice rise yesterday, after the Draghi statement.. But, the shiny metal is searching for a bid this morning, and is being spent by $2 at the moment.

But. all these moves and non moves are subject to change today, as today is the June Jobs Jamboree. We get to see all the book cooking right before our eyes once again. In our little contest we have here each month, I've put in that I believe last month's number will have been revised downward, and May's job creation will print at 135,000. The experts think the number will be more like 163,000, with the unemployment rate at 7.5%...

All this counting and adding in ghost jobs is a bunch of baloney to me. Like I keep telling you, I prefer to point to the labor participation rate, which remains at a 1979 low of 63.3% , and then look at the Avg Hourly Earnings, and Avg Weekly Hours, for any signs of wage inflation.

The markets though, get all tangled up in the web that the BLS and Gov't weaves. The web of deceit and hedonic adjustments. So, we must roll with the punches that the markets delivers when they see the adjusted numbers.

Drive-in movies turn 80 today. We don't have any drive-in movies near us here in St. Louis any longer. But I recall them being a great place to take a date when I was a young man. And when my older kids were young. That was fun! Now. what was I talking about. Oh, yeah, the Jobs Jamboree. oh well, it is what it is, folks. but we all know the truth about employment in this country. just remember the labor participation rate.

With the euro driving higher, the Swiss franc is allowed to run too, and the franc is back to a price of $1.08 this morning. I also read that the Swiss National Bank (SNB) announced that they have reached a record level of currency reserves. Recall how last year, I was telling you about how the SNB had begun to diversify their currency reserves into currencies like the A$... I wonder when the SNB begins to complain out loud about the franc's strength. Should be soon.

And Brazil's credit rating took a hit overnight, as S&P cut Brazil's credit rating outlook to negative, and blamed it on sluggish growth and an expansionary fiscal policy could lead to an increase in the government's debt levels. This might not be that big of a deal with the markets, folks, but it is with me.

For What It's Worth. There's something happening here.. What it is, ain't exactly clear. OK. there's been a lot of talk about manipulation of the metals (Gold & Silver) and I've told you where I stand on all of that. But there are people that don't believe in what they call "such nonsense" For instance, my friend, and investment guru extraordinaire, Doug Casey, has said something to the tune of; that he doesn't believe that the Gov't could be manipulating Gold because they don't have the money to do so, for they are already bankrupt. And that "considering that Gold's been in a bull market for a dozen years, I'm very unconcerned about the fact that it's come off. All the fundamentals that underlie the bull market are still in place."

In addition, my friend Addison Wiggin, thinks that "If we don't think the Fed is competent enough to set interest rates correctly. how the heck could they successfully control a global market? "

So. all the things that I've put before you previously, that draw out pure manipulation, still have me on the manipulation side of the fence. But. one thing that Doug, Addison and I can all agree on is that investors, in our opinion, should be using this drop in the price of Gold as an opportunity to buy at cheaper levels, for things have not changed, in fact they've gotten worse, and therefore the bull market for Gold (& Silver) remains intact.

In addition, remember what we learned about a decade ago, from investment and writer guru, Jim Rogers. That in the history of commodity bull markets, over 400 years, the bull markets last between 17-22 years. We've only passed the 12 or 13th year depending on when you believe the bull market began. And with all the uncertainty in the world today? Shoot Rudy, It's amazing to me that Gold isn't pushing the envelope of appreciation once again.

To recap. The Big Dog euro is back chasing the dollar down the street! Well, at least for this week it is! Remember. the euro may have lots of pimples, but if the markets continue to keep it well bid around 1.30, what does that tell you about what the markets think about the U.S. dollar? Japanese repatriation from A$'s continues, with yen rallying and A$'s continuing to get whacked. It's a Jobs Jamboree Friday, so we get to see the books get cooked once again, and the Presidents of China and the U.S. meet tomorrow in California. Should be interesting.

Currencies today 6/7/13. American Style: A$ .95, kiwi .7955, C$ .9755, euro 1.3250, sterling 1.5570, Swiss $1.08, . European Style: rand 9.9920, krone 5.75, SEK 6.5430, forint 223.85, zloty 3.2555, koruna 19.2765, RUB 32.30, yen 95.30, sing 1.2435, HKD 7.7625, INR 57.06, China 6.1620, pesos 12.85, BRL 2.1290, Dollar Index 81.33, Oil $95.06, 10-year 2.05%, Silver $22.65, and Gold. $1,410.97, . and it's Friday, so let's take a peek at the U.S. Debt Clock by clicking here: http://www.usdebtclock.org/index.html

That's it for today. South City Midnight Lady, by the Doobie Bros is playing right now, and that really mellows me out! I'm a bigger fan of the Doobie Bros, before Michael McDonald, but that later rendition wasn't too shabby either! And now Marshall Tucker! Wow! I'm being treated to some great music this morning! Things are pretty mushy and slushy around these parts, after all the rain we've received recently and will continue to receive this weekend according to the weather reports. UGH! It was payback night at Busch Stadium last night, as my beloved Cardinals blasted 5 home runs! I hope they saved some runs for their weekend series with the Reds. It was pretty quiet at the house for awhile last night, as everyone was gone. Except me of course, I'm always there! Safe Travels to the Gaffney family. And I get to end the week with the Los Bravos singing Black is Black. Not familiar with that song? A classic rock song! And with that I thank you for reading the Pfennig, and hope you have a Fantastico Friday!

Chuck Butler
EverBank World Markets

Posted 06-07-2013 3:02 PM by Chuck Butler
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