Jobs “Created” Sends The Dollar Higher

August 8, 2022 

* Currencies & metals get sold on Friday

* Chuck points out the problem with the jobs report… 

Good Day… And a Marvelous Monday to you! WOW, What a weekend of great baseball was played this past weekend, as the mighty Yankees came to town, and got swept by my beloved Cardinals! The only bad part of the weekend was the awful home plate umpiring in yesterday’s game… Electric balls and strike callers were in need badly!  The Temps were very hot here, but that’s going away for a week or so… The Stone Temple Pilots greet me this morning with their song: Interstate Love Song

OK, what the heck happened to Gold on Friday? I was doing my crosswords puzzles and decided to look in on Gold and saw that it was up $23!  Then just for grins I decided to check it at the end of the day, only to be greatly disappointed, in that Gold had lost $14.80 on the day to close the week at $1,776.41. Silver traded in the same manner being up early and then losing it as the day went on. Silver lost 24-cents to close the week at $19.91

So, here’s the skinny, right or wrong, mostly wrong, but here goes anyway…  The Jobs Jamboree showed that 528,000 jobs were created in July, and that pretty much put the kyboshes on the thoughts in the markets, that the Fed was nearing an end to their rate hike campaign, for inflation was going to be still soaring if there were 528,000 jobs created in July, right? 

Let’s see… 340,000 of those jobs were added by the BLS after the surveys came in…  So, using my new math skills, 528,000 minus 340,000 equals 188,000 real jobs were created… Now 188,000 doesn’t sound like anything that would get the Fed to stop hiking rates, does it? NO…  I can’t begin to explain my frustration with the BLS (Bureau of Labor Statistics) … They see a weak number of 188,000 come in through the surveys of businesses across the country, and they decide to goose it higher, but in this case, they not only goosed it higher, they also leap frogged it higher! 

The currencies didn’t fare any better after the BLS trumped up jobs report, and the BBDXY gained 6 Index points on the day, and that was after it had gained 4 Index Points on Thursday.  The euro dropped back below 1.02, and all the currencies followed suit. Well, technically, not all of the currencies lost ground… The Russian ruble didn’t crack, and the British pound sterling, got a boost when the Bank of England hike rates 50 Basis Points… The boost was more like a goose… but the BOE decided that they would finally take inflation seriously, and the pound sterling trades liked it… 

The price Of Oil continues to get slapped around like a, oh never mind, the last time I used the phrase I was going to use, I received tons of emails from red heads…  The demand question is still hanging over the price of Oil like the Sword of Damocles…  Oil trades this morning with a $88 handle… 

Bonds saw some selling on Friday, and the 10-year Treasury, the bellwether bond, saw its yield rise… 

In the overnight markets last night… The dollar got sold, and looks like it was simply a case of “the dollar was overbought on Friday, time to correct that”, and the BDDXY has given back 4 Index Points, and Gold is up $7 in the early trading, while Silver out performs, as usual, gaining 41-cents! 

I was scanning yesterday, and came across this article that talks about how the European Union (EU) is retreating on their sanctions to Russia…  Well, if you ask me, it’s about time! They have poked the bear, and the bear fought back, and now it’s time to retreat…  here’s a snippet of the article: “The EU has begun its retreat: It has taken the first steps in unraveling energy and food sanctions on Russia. Will other steps follow? Or will the pan-West, Russia-phobic axis strike back with further belligerence? Nothing is settled yet, but were the retreat to continue, and the separate Ukraine grain export accord hold together, it will be generally good news for the Region.

The bigger issue is of whether – even a more substantive EU retreat ensues – this will make a difference to the larger economic paradigm. Unfortunately, the answer is very probably not.

The EU’s seventh package of sanctions on Russia, whilst ostensibly posing as an increase in sanctions (which it is for certain gold imports into the EU that have no real impact on Russia) – and with a small extension of the list of controlled (mainly tech) items – the package represents, in reality, a concealed retreat.”

Germany and the Eurozone have 3 months to figure out how to get Russia to return to sending them oil to heat their homes…  And this is the first step of their plan…  

In fact, it is my humble country boy opinion, that the U.S. and Europe’s plan to isolate Russia and to that end, China too, have failed miserably, and it’s time to reconsider… 

Speaking of China, they continued to buzz the island of Taiwan over the weekend, with war planes and missiles…  If I’ve learned one thing about China through the years it is this… When the Chinese say they are going to do something, they aren’t kidding, they aren’t pulling one’s leg, they aren’t going to fail…   So, it will be a test of will power… The U.S. says they will defend Taiwan, And the Chinese say, no you won’t…   Uh-Oh!

Oh, Boy! we’ve got another spending plan that’s just been approved by the Senate…  We’re talking about a $437 billion climate, health and tax package, that in my humble opinion is nothing more than a help the wealthy, claptrap, stuffing the pockets of lobbyists, private equity firms, electric car makers, and more pork barrel spending…  

Longtime friend, and publishing / newsletter guru, Bill Bonner has this to say in his daily letter: “And so it came to pass last week, the Democratic Establishment unveiled legislation supposedly designed to help “hard working American families” and advertised as the “Inflation Reduction Act.”

We admire bald-faced lying as much as anyone. If we could get away with it, we’d probably do it too.

Still, it is shocking how brazenly dishonest the feds can be. The deal struck between Senators Manchin and Schumer could be honestly described in many different ways. It is a pot-pourri of graft, corruption, giveaways, bribes, waste… counterproductive tax increases… green energy boondoggles… subsidies to pill poppers… a few billion here… and a few billion there…”

Wages in the U.S. are not keeping up with inflation… The latest data on Wages had then increasing more than 5% in the last year, but, with inflation running at 16%, or even the Fed’s watered down inflation figure of 9.1%, there’s a deficit… And that’s not a good thing for the middle class folks that are the motor of this country… 

The U.S. Data Cupboard this week is very lacking… We only have the stupid CPI print for July on Wednesday on the docket this week… All the other data is 2nd and 3rd tier stuff that the markets don’t care about…  The CPI is a hedonically adjusted print of what consumer inflation is in this country, and it’s basically worthless!  Well, that’s my opinion on it! I prefer to check was John Williams over at has computed inflation to be. He uses the same math that they used in the 70’s and 80’s before, Bill Clinton and Alan Greenspan and the Boston Commission decided that the data needed some “adjustments”… 

To recap… The Jobs Jamboree on Friday really sent the dollar soaring, and the currencies to the woodshed, along with Gold & Silver.  Chuck points out that 340,000 of the 528,000 jobs created in July were just that “created” out of thin air!  Gold & Silver are up in the early trading today, reversing Friday’s sell off… Bonds got sold on Friday, along with Oil, which is trading this morning with a $88 handle…  The Gov’t is spending money they don’t have again… UGH!

For What It’s Worth…  Well, I’m a longtime reader of the 5 Minute Forecast, that’s so excellently put together by friend, Dave Gonigam. He put together a report on Student Loans that was printed on Saturday, and I’m going to use it as the FWIW article today…  To read the 5 Minute Forecast, you have to subscribe to one of the Agora publishing letters… 

Here it is… “Uncle Sam is owed $1.4 trillion in student loan debt… and will likely have to write off 14% of that total, or about $197 billion.
So concludes the Government Accountability Office — which recently crunched the numbers to reflect the reality of the pandemic relief enacted by Donald Trump and continued by Joe Biden.

“Suspending payments, freezing interest rates at 0% and stopping collections on defaulted loans added $102 billion in costs to the loan program,” says a Wall Street Journal summary of the GAO’s findings.
The bizarre thing — the Journal piece doesn’t mention this, but we pointed it out in 2016 — is that the accountants at the Department of Education assume the government will never incur student loan losses via the borrower’s default… because under a 2005 law, student loans can’t be wiped out in bankruptcy.

That was fantasy then — and delusion now.

Meanwhile, we ran across figures recently from the Student Loan Justice organization: The median age of a student loan borrower is 35. And the half that’s over 35 owes a lot more money on average — about $41,900. The under-35 set owes an average $25,300.

Hmmm… Is that accumulated interest, the pursuit of advanced degrees or both?

We imagine Joe Biden’s minions will factor these numbers into their political calculations: Do they extend the current loan-payment pause past its current deadline — Aug. 31? Stay tuned.”

Chuck again… I just love the way Dave doesn’t beat around any bushes when he writes… Reminds me of someone that I know real well… I just can’t think of his name right now! HA! 

Market Prices 8/8/2022: American Style: A$ .6988,  kiwi .6294, C$ .7796, euro 1.0197, sterling 1.2116, Swiss $1.0442, European Style: rand 16.6156, krone 9.7407, SEK 10.1616,  forint 386.23,  zloty 4.6137,  koruna 24.0385, RUB 60.72, yen 134.90, sing 1.3782, HKD 7.8499, INR 79.65, China 6.7577, peso 20.26, BRL 5.1188,  BBDXY 1,271.21,  Dollar Index 106.24,  Oil $88.18, 10-year 2.80%, Silver $20.30, Platinum $941.00, Palladium $2,208.00, Copper $3.54, and Gold… $1,782.8O

That’s it for today, except to send out a Great Big Happy Birthday to my dear friend, Mike Karvas…  Mike and Chuck have been best friends since the 2nd Grade… You don’t get many lifelong friends to share you trials and tribulations with, and I cherish this lifelong friend!  Yesterday, would have been my mom’s birthday… it’s been 24 years since she passed and I still miss her…  OK… Cardinals are in first place and sport a 7-game win streak! Now, they’re playing baseball! hitting pitching, defense, base running!  The Yankees are a great team, but they ran into a buzz saw in the Cardinals…  The great Johnny Rivers takes us to the finish line today with his song: Poor Side of Town…  I hope you have a Marvelous Monday today, and please Be Good To Yourself!

Chuck Butler