A Cautious Tone.
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In This Issue.

* U.S creates 204,000 jobs in Oct. per the BLS.

* Currencies & metals get whacked!.

* Chinese Third Plenum winds down today.

* A Credit Crunch is returning .

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

A Cautious Tone.

Good day. And a Tom Terrific Tuesday to you! Well, we started the 3-day holiday weekend in grand fashion with a warm, sunny Saturday, that saw my beloved Missouri Tigers win again, and our Blues win! Sunday was also sunny, but chilly, and saw our Rams surprise the Colts with an old fashioned whipping. Then Monday, back to typical November, with gray days, and cold. This morning an arctic front came through, and it's freezing outside!

I'm heading South this morning, so Hopefully, it will be warm where I'm going! I told you last week that I would be on the road for most of the next two weeks, but I'll be writing each day, so no worries there, for Chris and Mike! I may have to call one of them next Tuesday, but right now, I'm good to go.

Well, the BIG NEWS on Friday was the 204,000 jobs created in October, according to the BLS. I really don't believe it, but that doesn't matter. What does matter is what the Fed Heads think of this report.. .Do the Fed Heads look under the hood and not get all twisted and out of shape like the markets do when a report is printed? That's the question, for the markets have made an assumption that this jobs report will lead to the Fed tapering sooner than previously thought.

OK. Can we put away the streamers and confetti now? On Friday, the Jobs Jamboree was a big party! The BLS said that 204,000 jobs were created in October. Really? Well, not if you count the 126,000 jobs that the BLS added to the total they came out with! Yes. You know, the economy that is growing by leaps and bounds, (between 2-3%, but in reality much lower) is creating jobs that the BLS needs to account for, and their estimates told them that net jobs needed to be added to by 126,000!

Well. right after the Jobs Jamboree posted a gain in jobs created in October of 204,000, Mike Meyer said, "And all that was done while the Government was shut down for two weeks, maybe they should shut down more often"! I then chimed in, "or, maybe they should shutdown for good!"

And the report is very confusing folks. if you look under the hood you see that the number of people not in the labor force exploded by nearly 1 million in October! This was the third largest monthly increase in people falling out of the labor force in U.S. History folks. I'm telling you that this report is so full of ins and outs, ups and downs, and adjustments, that it makes no sense to me, and I don't see how the markets went carte-blanche on selling currencies and metals after it printed!

And then we had Fed Head, Lockhart, warning everyone on Friday that "some data will be unreliable through year-end". OK, I just pulled myself off the floor, from falling out of my chair as a result of laughing out loud so strongly! I would say that "all data will be unreliable until cooking the books is outlawed!"

And just to make things worse for the jobs picture, the participation rate fell to a 1978 low. So, what was previously thought to be the bottom for the participation rate at 63%, is now adjusted for the new low of 62%... And just for grins I slipped over to Shadow Stats to see what John Williams thought about the Jobs report. And yes, he still believes that if we counted all the eggs in the basket correctly, the unemployment rate in the U.S. would be 24%!

But as bad as all that was. It didn't stop the markets from going hog wild on buying dollars. I think it's becoming quite clear that the markets are getting hoodwinked, but that doesn't stop them from causing losses in currencies and metals. That was Friday.

Yesterday, Veteran's Day here in the U.S., a handful of currencies attempted to make a comeback, but in the overnight markets, they have given up and gone back to the woodshed. The euro was strengthening and showing some life after getting whacked on Friday, but overnight, the euro has turned sour again, and gone back down. So, I sat here wondering what might I do to find out what happened overnight! Of course, I say to myself. Read! Research! You knucklehead!

OK. I think I've found it. China's Third Plenum, will end today, and there's been no word from the meetings how things are going for President Xi, and Premier Li. Recall, I told you that these two are attempting to convince China's Communist leaders to open up the Chinese economy even more, to take the next steps to floating the renminbi, and liberalizing interest rates. So, no news is bad news.

You see, I truly believe that the markets have a cautious tone about them with regards to China, and well they should, I guess. For China is still a Communist Country, and just because Xi & Li believe that opening up the economy is a good idea, doesn't necessarily mean it will get done easily.. But, I still hold out hope that all this will be done, and China can continue to be a part of the world's economy on a larger scale.

So, the cautious tone, has really cast the net of worry over the currencies this morning, which tells me that once we find out for sure what went on at the Third Plenum, the currencies will have a clear direction, which I feel will be upward, for like I've said all along, I truly believe that China will open their economy on a larger scale.

And that brings me back to the euro. What a horrible week for the euro last week, it began the week already reeling from the lower inflation reports the week before, and then had to suffer through a rate cut, and dovish talk from the European Central Bank (ECB). I see more problems in the near future for the euro, in that we could very well see the ECB opt for another round of the LTRO bond buys, and, or announce negative deposit rates. But once that's all done, I see a rebound in the euro, and the ability to recover to at least the 1.38 level it held before all the bad news began to hit it like a ton of bricks.

Why? Because I just don't see the winter months being kind to the dollar. We'll go right back to the problems of the debt ceiling and budget cuts. Oh, that's right, the lawmakers are working diligently to iron out all their problems so this can be resolved in January with no problems, right? Well, I'm from Missouri, so they'll have to show me. For I don't believe this can be worked out without problems.

So, with the cautious tone in China, as you would guess, the Aussie dollar (A$) is not in favor right now. You know, I see the weakness in the A$ as a benefit to the A$ right now. I can hear you saying, "yeah, Chuck, I wanna see you explain this one!" And, grasshopper, that's what I'll do! The Reserve Bank of Australia (RBA) has been adamant about how the A$ has been too strong, but it was doing its job of fighting inflation, which means a rate cut wouldn't be necessary. But. if the A$ loses its grip on controlling inflation because it has gotten weaker, then the RBA will be pressed to either, talk up the A$, or hike rates, either way, the A$ benefits from its current weakness.

So. IF you believe that the stars are in alignment, the karma is flowing once again, and all is right on the night for the U.S. economy then you probably don't want to hear what I'm going to say and bring others into the conversation. But, I'm telling you now so you can listen to me later. The economic reports are all cooked to make you feel better, they have no basis of truth to them! And I believe that we're heading right back to circling the bowl again, for we've made the same mistakes we made prior to the financial meltdown of 2008. But you don't have to hear from just me. Here's Dr. Marc Faber talking on CNBC..

"If I am telling you that we had a credit crisis in 2008 because we had too much credit in the economy, then there is that much more credit as a percent of the economy now. It will end badly and the question is whether we will have a minor economic crisis...and then huge money printing, or get into an inflationary spiral first." - Marc Faber

Gold got whacked on Friday along with Silver, Platinum and Palladium. I just knew that once that 204,000 trumped up jobs number printed on Friday, that the price manipulators would be hitting the metals strongly, for this was an excellent opportunity for them to do so! And they did! The $30 takedown in Gold's price on Friday was classic price manipulator stuff, for the takedown started ahead of the jobs Jamboree print. yes, that's right. somehow, somebody found out ahead of time.

Speaking of the price manipulators. I was reading Ed Steer's letter on Saturday, and saw a chart that he provided that showed the "days to cover short positions" in the metals, from the concentration of traders (COT) in the CFTC. So. for Gold the number of days of world production to cover the short positions of the 8 largest traders would be. nearly 70 days. but that's not the worse one! Platinum would take 105 days, Silver would take 125 days, and Palladium would take 140 days! ARE YOU KIDDING ME? How is this possible? And that's just the 8 largest traders!

The U.S. data cupboard gets a breather this week, with nothing but 2nd and 3rd tier reports due. The highlights of the week will be Fed Heads speaking, so I guess that tells you what to expect this week! Fed Head Lockhart will speak this afternoon, and on Thursday, Janet Yellen is due to speak, which should be interesting given her appointment as the next chair of the Fed!

For What It's Worth. I found this when I was searching on CNBC for the Marc Faber quote. And it plays well in the sandbox with what I was talking about earlier today regarding what I expect to see from the Chinese Third Plenum. So, here we go.

"With China expected to unveil some of its biggest economic reforms for 35 years following a meeting of its ruling Communist Party, many analysts have speculated that the price of gold could benefit from this weekend's summit.

Meaningful reform will be painful and disruptive, and I suspect a lot of Chinese will seek the perceived safety and portability of gold," Patrick Chovanec, the managing director and chief strategist at Silvercrest Asset Management told CNBC.

That will be particularly true if the bubble in China's property market pops. For the Chinese, buying and stockpiling empty properties serves much the same function as investing in gold, since they are both unproductive stores of value, so if real estate sees a major correction, many Chinese will turn to gold.

The Third Plenum of the Communist Party is expected to delve into issue of urbanization. Land ownership reforms are likely to be met with a surge in social housing but a property market tax is also being touted, hoping to reduce the chance of any housing bubbles.

The expansion of the property tax may make people less willing to invest in property and gold would be an obvious alternative," Miranda Carr, head of China Research at North Square Blue Oak told CNBC."

Chuck again. OK. So, that's a lot of pressure on the Chinese leaders to push through with the reforms, eh? But I think they can do it! And the world as we know it, now. will begin to change. are you ready?

To recap. The Jobs Jamboree was the Big Kahuna print on Friday, and carried with it a lot of garbage weight that Chuck exposes to the best of his ability. The currencies and metals got whacked big time, and when they tried to rebound on Monday's thinly traded holiday, they met resistance overnight, as the markets have taken a cautious tone since they have not heard one word from the Chinese Third Plenum. Friday was all about the trumped up Jobs report. Today is all about the Third Plenum.

Currencies today 11/12/13. American Style: A$ .9320, kiwi .8220, C$ .9530, euro 1.3405, sterling 1.5885, Swiss $1.0875, . European Style: rand 10.4165, krone 6.1985, SEK 6.6540, forint 222.75, zloty 3.1405, koruna 20.1590, RUB 32.88, yen 99.75, sing 1.2510, HKD 7.7530, INR 63.73, China (sorry, I don't have the fixing at home), pesos 13.25, BRL 2.3415, Dollar Index 81.28, Oil $94.83, 10-year 2.78%, Silver $21.16, Platinum $1,432.90, Palladium $749.00, and Gold. $1,279.30

That's it for today. Pretty wordy today, but it was two days in one! Two for the price of one! Now that's a bargain! As I said above, I head south today, and it looks like I'm getting out of Dodge at the right time! I'll be writing from the road all week, so be patient with me, for I never know how the "connections will be"! It was a good weekend, sports-wise here in St. Louis / Missouri this past weekend, so we have that going for us! My beloved Mizzou Tigers fell a place in the BCS standings to #9, which was strange given that they won big! Two games left in the regular season. Big games too! They are 9-1 so far. could be a record year wins wise for them if they can find a way to win in two weeks.. OK. good stuff. I need to go pack! So, I hope you have a Tom Terrific Tuesday!

Chuck Butler
EverBank World Markets

Posted 11-12-2013 12:18 PM by Chuck Butler