December Jobs Report Is Disappointing!

Chuck Butler’s: A Pfennig For Your Thoughts  

  January 8, 2017

* It’s an Opposites Day!

* Eurozone prints strong data!  

Good Day… And a Marvelous Monday to you ! Well, I know right from the start today that this will be late… not as late as Friday’s letter, which ran into technical difficulties, but late, as I did something this morning that I’m not proud of… I hit “snooze” when the alarm went off…  That’s not something I hope begins to happen on a regular basis!  The frigid cold finally lost its grip on us yesterday, and we saw temps above freezing for the first time in a fortnight.  All my bags are packed, I’m ready to go, I’m standing here outside your door, already I’m so lonesome I could cry…  Yeah, I head south tomorrow, so no Pfennig tomorrow, and I’ll pick it up from S. Florida on Wednesday morning.. Eric Burdon & the Animals greet me this morning with their song, that’s very apropos for me… We Gotta Get Out of This Place..   

Well, what can I say? the markets played a game of “opposites day” on Friday and in the overnight markets last night… What am I talking about? Well, Friday saw the Jobs Jamboree disappoint BIG TIME, with only 148,000 jobs created in December, when 290,00 was expected.. That, in the old days of trading on fundamentals, would have sent the dollar to the woodshed for the day and more until something brought it back out. But that’s not what happened… Instead we saw the dollar rally on Friday, and through the overnight markets last night…  UGH!  

The BLS jobs report was very disappointing on Friday, and on top of that the BLS kind of came clean on their birth/ death model as they actually subtracted jobs in December to the turn of 38,000…  Recall on Friday, I was proposing a scenario that had the BLS coming completely clean and wiping out a large portion of the jobs they had added for no apparent reason during 2017.  The BLS did surprise me with a negative number of jobs for the month, but only 38,000?  In Rocktober they added 216,000 jobs!  So, to just take away 38,000 was like removing a bucket of sand from a beach…  Or me losing 10 lbs.. nobody notices! 

If I were a BIG TIME trader on Wall Street, I would have seen the disappointing number and the fact that the BLS “kind of admitted” that they were overanxious with their additions each month, as a sign that the dollar needed to get sold…  But that’s not what happened! 

What is going on here? SERENITY NOW! I’m dead serious here folks! Oh! But wait, Chuck! Don’t forget that there are “powers that be” out there lurking in the dark, ready to defend the dollar whenever it appears that its headed for a the woodshed.   Oh, silly me! Of course that’s what has happened, because there’s no other explanation for this market reaction…

Someday, this will al come crashing down on the dollar and those “players that lurk in the dark” Until then, we have to deal with them, and the dollar that refuses to go directly to jail, without passing Go, and without collecting $200!  And that brings us to this morning, where the euro has lost the 1.20 handle, and Gold lost $3.20 on Friday and is down another couple of bucks in the early morning trading today. 

This is a far cry from where we began last week, with the currencies, metals and Oil all chasing the dollar down the street. But it is what it is, and I can’t do anything about it, so I’ll leave that stress for someone else to feel!  

The Eurozone printed some encouraging data this morning, which should be underpinning the euro right now, but as I said above the markets are playing a game of opposites…  November Eurozone Retail Sales beat the expectations as they rose 1.5% vs 1.3% expected, this from the Rocktober print. The Year-on-year Retail Sales were strong too with a 2.8% increase VS 2.2% expected.  In addition, Business Climate as measured by a German think tank also beat expectations on the upside.  So, as you can see, the euro should be basking in the warmth provided by the sun’s rays shining on it this morning…  

We’ll have to wait until Thursday for any additional economic data from the Eurozone, so it’s on its own until then.  Speaking of Thursday, we’ll see the Aussie Retail Sales for November (I know, these reports seem so old and stale at this point, eh? ) The data prints for Australia in recent weeks have been good and bad, and the Aussie dollar (A$) needs a good strong Retail Sales report to help it continue its current rally. 

The GATA folks were kind enough to send me a note on Saturday highlighting another weak COT weekly report. COT stands for Commitment of Traders, and is used to get the pulse of how traders feel about an asset. In this case we’re talking about Silver…  And they got it from my longtime friend, Ed Steer!  Ed wrote the piece for his newsletter on Saturday, so I received it twice!   The COT report showed the number of short positions in Silver dropped last week… Not by the total it should drop, but it dropped nonetheless, and that’s a good thing in my book! 

Sentiment has replaced the combing through of the COT reports each week, but they’re still useful.  For, if this dropping of short positions in Silver continued week after week, one would get the warm and fuzzy that they should be long Silver…   Of, course, in my humble country bumpkin opinion, everyone should be long Silver!  

Speaking of being a country bumpkin I got back to my roots last night… I was going through the cable channels and came across the old TV show, Hee Haw! My mind immediately flipped to Saturday nights in my parents home, where at the kitchen table they watched Hee Haw! So, I kept it on the channel for a couple of minutes, in their honor…  

At our old house in S. St. Louis, life revolved around the kitchen table.  Our house was small, and the “dining room” was actually a bedroom! 7 kids, a couple of adopted one in addition, in a 2-family flat… So, the kitchen table was the only place we could gather…  

And meanwhile, back at the ranch, the dollar continues to gain VS the currencies this morning!  I would look at this as a potential opportunity to buy the dips.. 

Today’s U.S. Data Cupboard only has one print, and it’s Consumer Credit (read debt) for November, the pre-December buying bonanza that I think will really add to this number which showed $21 Trillion in Rocktober…   We won’t see “real economic data” here in the U.S. until Friday, when Retail Sales will print. PPI (wholesale inflation), which really shot higher in November will see if it can match that rise of 0.4% (I doubt it) And the stupid CPI (consumer inflation) will follow the next day. But like I said, no real data until Friday.   

To recap…  The Jobs report for December showed that only 148,000 jobs were created in the month, which was far below the 290,000 expected, but the dollar didn’t lose ground. Instead it has rallied since the jobs report, and has Chuck all frenzied!  The Eurozone printed some strong data reports this morning, but it hasn’t helped the euro, and Gold has lost some ground since Friday.  

For What It’s Worth… the link to this story was sent to me by dear reader Bernard, and I thank him for that… It’s an article on that discusses Pakistan ditching the dollar, and can be found here:  

Or, here’s your snippet…  “Less than a day after President Trump slammed Pakistan on Twitter for failure to combat terrorism, stating, “It’s not only Pakistan that we pay billions of dollars to for nothing, but also many other countries, and others,” and after it was revealed that the US will withhold $255 million in aid, Pakistan’s central bank announced it will be replacing the dollar with the yuan for bilateral trade and investment with China.

“SBP has already put in place the required regulatory framework which facilitates use of CNY in trade and investment transactions,” the State Bank of Pakistan (SBP) said in a press release late Tuesday, ensuring that imports, exports and financing transactions can be denominated in the Chinese currency.

“The SBP, in the capacity of the policy maker of financial and currency markets, has taken comprehensive policy related measures to ensure that imports, exports and financing transactions can be denominated in yuan,” Dawn news, Pakistan’s most widely read English-language daily, announced while quoting the SBP press release.”  

Chuck Again…  And we can thank China for making this available to countries… Longtime readers will recall me telling them about 7 years ago that the Chinese leaders were calling for an end to the “dollar standard”, and me saying that the Chinese don’t say things they don’t mean…  

Currencies today 1/8/18… American Style: A$ .7837, kiwi .7178, C$ .8047, euro 1.1970, sterling 1.3547, Swiss $1.0228, … European Style: rand 12.4263, krone 8.08, SEK 8.2058, forint 257.98, zloty 3.48, koruna, 21.3216, RUB 56.91, yen 112.92, sing 1.3320, HKD 7.8221, INR 63.42, China 6.4884, peso 19.26, BRL 3.2280, Dollar Index 93.30, Oil $ 61.70, 10yr 2.46%, Silver $17.19, Platinum $ 970.44, Palladium $1,093, and Gold… $1,321.60   

That’s it for today and tomorrow, talk to you again on Wednesday… Well, the PICC-line came out on Friday morning, and I have no more getting up in the middle of the night to administer antibiotics to myself. YAHOO! It was a bad day for our local teams on Saturday with the Blues, and Mizzou both losing, and  the day was saved when  the St. Louis U Billikens won their game.  We had a nice family lunch yesterday to celebrate oldest son, Andrew’s birthday which will be this Friday (we’ll be gone!). Everyone was there except Alex, who was in Arkansas this past weekend… I gave my little Delaney Grace an extra long hug yesterday when we said goodbye, as I won’t see her until March, when they come down for spring training games! She is so darling to me, and I love her to pieces!  And with that, the Little River Band takes us to the finish line today with their song: Lonesome Loser…  I hope you have a Marvelous Monday, and be Good To Yourself!   

Chuck Butler