Chuck's Spider Sense Tingling Was Bang On!
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Chuck's Spider Sense Tingling Was Bang On!

Good Day! . And a Marvelous Monday to you! Well, ½ of the weekend was good weather-wise, so we had that going for us here in St. Louis, home of the 11-time World Champion Cardinals! Speaking of the Cardinals, I'll get my first up close glimpse of the 2014 team on Thursday this week, I'm only wishing that it was today! Well, Friday's Jobs Jamboree was interesting, the Trade Deficit widened, and all kinds of things happened on Friday, so, let's get moving this morning! The band Missouri, is playing their great song: Movin' On. Which is what we need to get to doing this morning!

Front and Center this morning, is the news from China that their February Trade Balance was a Deficit! ARE YOU KIDDING ME? No, I'm not kidding. Export growth fell 18.1% in the month, and the Deficit hit $23 Billion in dollar terms. WOW! But wait a minute here, didn't we have a disruption at the beginning of the month? Well, it was a carryover from the Chinese new year week long celebrations. So, before we begin to dig a grave for the Chinese economy, let's take a step back and wait for next month's data.

The Chinese Gov't didn't waste any time waiting for next month's data, they took that Trade Deficit Report and marked down the renminbi/ yuan by a large margin! That's a game the Chinese are playing with the markets folks. Later this week, while I'm sitting in my seat at Roger Dean Stadium, you all will get to see the color of the latest reports from China on Industrial Production, Retail Sales, Credit and Money Supply. So, the economic data hits will just keep coming in China this week.

OK.. Friday morning, I tried to warn you that things were getting scary for the U.S. Authorities, watching the dollar get whacked. Well, once again my spider sense tingling was bang on. Last Friday, the Jobs Jamboree produced an employment report that, even after a weak ADP jobs report, and a weak employment component of the ISM, surprised the markets to the upside! WOW! But what did I tell you on Friday morning, that I thought could happen with the Jobs report? I told you that the Gov't might be viewing the dollar on the tenterhooks and realizing they needed to "do something" to stop the bleeding, and what better thing to produce than a trumped up Jobs report? Ask and you shall receive, I guess, eh?

Oh, and for the Unemployment Rate rising. This is what I envision happened. Cut to a smoky, dimly lit, back room and the Fed Heads all have beads of sweat rolling down their foreheads, as they discuss what they are going to do and say when the Unemployment Rate hits their previous goal of 6.5% (recall last month it was 6.6%) And then one of them says. Hey! Why don't we just get the BLS on the horn, and explain to them that they can't let the Unemployment Rate fall to 6.5%, just yet? Then they all high five each other, and slap each other's backs, for their hard work was over!

There were two things I found interesting in the report. 1. That during months when the jobs created numbers were falling, so was the unemployment rate, but when jobs created numbers went up, so too did the unemployment rate? So, we finally got our arms around why the Unemployment rate was falling, and now when it should fall because the jobs numbers went up, it too goes up! You know, when you tell a lie, then you have to keep telling lies, and sooner or later you don't remember what lie you did tell.

The second thing that I found interesting was that fact that those 55 and older (like me!) continue to be the main benefactors of jobs! The largest job growth last month was for the group 55 and older. And since the start of the depression in 2007, those 55 and older have gained 4.9 million jobs. Those under 55 are still some 3.1 million jobs below their pre-2007 level. (I got some of this data from

So, after the Jobs #'s printed, the dollar rebounded, and the lofty 1.39-ish figure for the euro was toast! Gold got whacked, and the rest of the currencies didn't see the light of day for the remainder of the NY trading session. The euro did attempt to recover, but was thwarted time after time throughout Friday.

So, why did the dollar rally so strongly on the Jobs numbers? Because, the markets are convinced that the Fed Heads, when they are not in their smoky back room, are keying on what the BLS says about Jobs, when in reality, I would think that's far from the truth. Look, I like to poke fun at times, but these Fed Heads didn't just fall off a turnip truck. And I doubt that they are buffaloed into thinking that some trumped up survey by the BLS is the end-all for a pulse of jobs in the U.S. I also don't think they are Einstein-like in going to and seeing that before all the hedonic adjustments, and book cooking that pre-1990, we would be calculating Unemployment at 23%...

OK, let's talk about something else, as the Jobs Jamboree talk is beginning to give me a rash! So, that was Friday. Overnight we had the Chinese surprise, and mark down of the currency, but the euro is flat with a bias to push forward this morning. The single unit has been higher overnight, but is sitting flat right now. So, without any push in any direction the rest of the currencies are drifting this morning. But, much lower than their lofty Friday morning, pre-Jobs Jamboree, figures.

Speaking of what's going on in the U.S.. So, there I was on Sunday morning, scarfing down some bacon and eggs, and drinking my coffee, while reading the local Sunday Paper, when I saw this headline, and it caught my eye. "Still a lack of homes for sale" So, I read the article, to see what they thought was the reason for this lack of home for sale, and all that they could come up with was "bad weather". Hmmm, I thought to myself, did it ever occur to them that the lack of homes for sale could be something other than "bad weather"? Like, let's say. maybe homes are still so far underwater, that they can't be sold. Or, that with 23% Real Unemployment, that selling a house with no bread earners, would be crazy? I find this lack of research in journalism a big void in today's writing for newspapers and cable TV news.

Moving on. from town to town. No wait, that's the Missouri song. Here, we just need to Move on to another topic, as I could really get myself into trouble if I carried on with the previous discussion for too much longer. Well, with the Chinese bad Trade report and the large markdown of their currency, the Aussie dollar (A$) lost its mojo that it had found late last week, when economic data prints helped to boost the currency. The A$ remains above 90-cents this morning, but you can just tell from the trading that is going on, that its mojo has been lost, and unless the data later this week from China is stronger, 90-cents is in jeopardy. Our love's in Jeopardy, ooh, ooh.

The New Zealand dollar / kiwi is flat this morning, but lower than it was Friday morning, pre-Jobs Jamboree. The Reserve Bank of New Zealand (RBNZ) meets this Thursday, and it now appears that the rest of the world has caught up with Chuck on thinking that this week's meeting will be the one where the RBNZ hikes rates. I'm telling you this now, so you can hear me later. But this won't be a "one and done" for rate hikes from the RBNZ. I'm thinking that we'll see them make 3-25 Basis Points moves this year. Ending the year 75 Basis Points higher in their internal rate, or 3/4's of a percent higher. Their internal rate will end the year around 3 to 3.25%... (the internal rate, called the OCR, Official Cash Rate, is like our Fed Funds rate, deposit rates are lower, but the OCR has to go higher before deposit rates can!)

I spent a lot of time last week explaining Gold's psychological figure of $1,350 and its attempts to move past that figure. Well, when the Jobs report printed on Friday, Gold immediately lost that figure, and has yet to recover any lost ground, showing up at the post this morning, already down $3.50. I read a report over the weekend that Hedge Fund Managers are the most bullish they've been about Gold since 2012. That's good. And then there's the boys and girls over at Goldman Sachs, who believe that Gold's 11% gain so far this year, is about to fizzle, and the shiny metal will see a fall to $1,000 oz this year. OUCH!

So, when I was a youngster, my dad used to have a saying. He would say, "you can't beat City Hall" And when I saw this call by Goldman Sachs, I immediately thought of my dad's old saying. For when Goldman Sachs calls for something, they usually get it. But. and that's a Big But, and not the kind that Sir Mix-A-Lot rapped about. For the Hedge Funds have some deep pockets, so this battle will be interesting to observe. Right now, it's a toss-up as to who wins out. Goldman or the Hedge Funds. I don't think I have to tell you which one I've pinned my colors to the mast of. (Oh, and the Sir Mix-A-Lot reference was just being silly, I am the furthest thing from someone that listens to rap!, Enough said, eh?)

And before you think I'm finished talking about Gold, I have this thought for you to think about. I've told you all this before, but just wanted to throw it out there again, since Goldman decided to try and cut Gold off at the knees. China continues to buy Gold in addition to the Gold they produce, and are hoarding all that Gold, in attempt to offset the U.S.'s willingness to allow the dollar to weaken, through, zero interest rates, $128 Trillion in Unfunded Liabilities, Quantitative Easing, and other scandals. I don't think the Chinese will take too kindly to having their Gold holdings lose ground like Goldman is calling for.

The Canadian dollar / loonie took it on the chin on Friday, after a mild jobs report for February printed Friday morning alongside the U.S. jobs report. Guess which one got all the hype? HA! Canada posted job losses of 7,000 for February, which was better than the estimate at -15,000. But just the sight of a negative number alongside the cooked up numbers of the U.S. put the loonie on the chopping block. Apparently, traders weren't noticing that Canada also printed a narrowing of their Trade Deficit. UGH! When will these guys ever learn that while jobs are important, if you print Deficits, it all brings the wolf to the door.. So, to me, a narrowing Trade Deficit from $900 Million to $200 Million tells me more about how this country is doing than the jobs report. But then I'm not KING, and I don't decide what values traders put on currencies.

On a sidebar. wouldn't that be tre' cool if I were KING of the Currency values? I know, I know, that would be a lot of work, and I would have to make tough calls, but I think I'm up to the task! HA!

The U.S. Data Cupboard is empty today, but will get restocked, and prepared for the rest of the week. Earlier I told you that the other piece of data that printed on Friday, was the Trade Deficit, which widened in January from December. January's Trade Deficit was $39.1 Billion from December's revised number of $39 Billion. The so-called experts had called for a narrowing of the Deficit to $38.5 Billion. But that didn't happen. I have to tell you that around June this year, we'll finally know what the 1st QTR GDP tallied, but as far as I can see right now, if we count all the chickens correctly, we'll see 1st QTR GDP drop from the 4th QTR, which currently stands at 2.4%

Remember, though, the 2.4% was recently revised downward from 3.2% and also don't forget that about .75% of that figure is derived from the Gov't's new calculation for GDP, in which they added things like Research and Development, and other crazy ideas. So, if we were counting the chickens like we did last year, 4th QTR GDP was really 1.65%, which is about where I see the 1st QTR printing even with the .75 addition.

For What It's Worth. I was doing some reading on Saturday, the bad ½ of the weekend, and I'm always pleased to see that Ed Steer sends out his letter on Saturdays. I found this in his letter, and he pulled it from the website. It's a commentary from Dr. Jeffrey Lewis, who in case you're not aware of him, he's a practicing physician, but also the editor of the website. So, let's listen to what he had to say on Saturday.

"There is something rather absurd about the ever-so-slightly loosening death grip that the mainstream financial media has around the issue of precious metals price manipulation. The painfully reluctant (and largely incomplete) reports on the subject have fueled a series of seemingly derivative-like conspiracies.

It's not as if the issue is really that complicated. Therefore, it must be part and parcel - an extension of the mechanism. Perhaps the hope is that partially educating or entertaining the masses, followed by rebuttals from a string of authorities, would put the issue to bed? But clearly, it cannot be that complex.

Most of you are familiar with the core issues. It would take approximately 15 minutes to explain and demonstrate to a well-trained financial journalist the conspiracy facts surrounding precious metals price manipulation. It is the same management that occurs every day in all directions, intended for profit and to control the rate of interest, perception of currencies, and the value of money."

Chuck again. You tell 'em Doc! And in other news from a Doctor. I have a friend, Dr. Dave Janda, that also has a radio show on WAAM in Michigan, of which I've been a guest on a few times. Doc Dave, sent out a note to his friends yesterday, telling us the ordeal he has had to endure with the IRS ever since starting his radio show in 2011. You know, I can't think of any better way to make the Gov't uneasy here than to get as many listeners to Dave's radio show, in which you can pick it up on the web, Sunday afternoons.

To recap. The lofty figures the currencies and Gold had on Friday morning, were washed away when the BLS's trumped up Jobs Report printed and showed that 175,000 jobs were created in February. Apparently the "bad weather" wasn't bad enough to keep companies from hiring! The euro sank on the news, and the rest of the currencies followed. The Big News overnight is that China printed a Trade Deficit last month, and responded to the print by marking down the renminbi by a large margin.

Currencies today 3/10/14. American Style: A$ .9035, kiwi .8470, C$ .9010, euro 1.3875, sterling 1.6650, Swiss $1.1385, . European Style: rand 10.7290, krone 5.9740, SEK 6.3895, forint 225, zloty 3.0265, koruna 19.7050, RUB 36.41, yen 103.40, sing 1.2670, HKD 7.7615, INR 60.85, China 6.1312, pesos 13.19, BRL 2.3395, Dollar Index 79.79, Oil $101.43, 10-year 2.78% (this yield has really risen since last week, eh? ) Silver $20.99, Platinum $1,469.88, Palladium $775.00, and Gold. $1,338.70

That's it for today. Our family fish fry on Friday was fun, and the "fun" for the weekend went downhill from there! 2 songs in a row from Elton John just played on the IPod, I don't think Mike appreciates Elton! I finally got to get outside and pick up some stuff in the yard yesterday, it was a very nice day, and I didn't have to be bundled up like Ralphie's brother, Randy, in the Christmas Story! HA! This will be a short work week for me, with tomorrow being the last day you have me to kick around for a couple of weeks! HA! My visit last week to the doctor that saved my life 7 years ago, was great. After talking about the world, and currencies, he said that he wished he had known me before he had to cut me in half! A couple of years ago, when the euro was getting dissed left and right, I told him that was the time to buy, when it was weak. He reminds me of that, and how he wished he has done what I told him to do, every time I see him now! Oh well, we live and learn, eh? Today is my good friend, Rick's birthday. So Happy Birthday Rick. Rick came out to have lunch with me on Friday, it's an annual tradition to celebrate his birthday. Rick is one of my Spring Training amigos. And with that. I'm down to 1 day. I hope you have a Marvelous Monday!

Chuck Butler
EverBank World Markets

Posted 03-10-2014 11:39 AM by Chuck Butler
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