Lies, And Other Things Dominate The Jobs Jamboree!

July 8, 2019 

* Congrats to the USWNT for their World Cup victory!

* Currencies and Gold get whacked badly on Friday! 

Good Day… And a Marvelous Monday to you! No short week for me this week, but I have to say that I really enjoyed my 4th of July holiday weekend so much, that… Nah… Better hold that thought for some later time, Chuck… We enjoyed a marvelous sunny day on the 4th until later that night, and had an old fashioned fish fry, with all the fish that my youngest son Alex caught while in Alabama… Yummy! My beloved Cardinals ended the 1st half at .500… Which is basically what I see for this team the rest of the year… they break my heart each time they blow a game, and either it will have to stop, or I’ll begin to not stay up late to watch them! I watched a TV show last night that was a tribute to one of my fave musical artists of all time, the late Dan Fogelberg… The Outlaws greet me this morning with their near 10-minute song: Green Grass And High Tides…

Well, lies, hedonic adjustments, and all other kinds of names I could call the BLS report were on the agenda on Friday, after the BLS said that 224,000 jobs were created in June… When will these lies ever stop? OK, move along here Chuck… there’s a bit to talk about today!

Well, the dollar rebounded VS the currencies, and Gold got whacked by more than $16, and what do you suppose was the cause of these moves? The Jobs Jamboree surprised the markets, and had the dollar bugs dancing in the streets, when it printed a report that showed 224,000 jobs were created in June… Well, one could say, that June traditionally is strong because of all the graduating college students finding jobs… And then on the other hand you could point to the 102,000 jobs that were added to the total after the surveys were received, showing that only 122,000 jobs were created…. And then you could just throw up your hands, ala Marvin Gaye, and just say forget about it, because it’s all hogwash! And that’s where you’ll find me… It’s too darn bad that markets don’t see things they way I do… Even the usually gung-ho market web site, Bloomberg, said, “Don’t let the June numbers fool you; the job market is weak” Couldn’t have said it better myself!

The markets immediately took the stance that this jobs report would put the Fed’s rate hike in July on hold… Really? As I said last week, before we broke for the independence day holiday weekend, that I really didn’t think it would behoove the Fed Heads to only pay attention to the hedonically adjusted BLS Jobs report… For instance, on Wednesday U.S. Factory Orders in May fell 0.7% and marked the 3rd decline in the past 4 months, and to top it off May’s negative was revised downward to -1.2%… But don’t let that get in the way of a trumped up jobs report!

So the currencies got hit badly on Friday, but not as badly as Gold… I knew when I saw the jobs number being bandied about on cable TV that it was going to be a bad day for Gold… And it ended up being as such… Throw in the fact that the markets had thought it was a sure bet that the Fed heads would cut rates later this month… Throw in the fact that the markets were blindsided by the jobs number, which came out of nowhere, and the swallowed it hook, line and sinker… And then throw in the price manipulators, and some profit takers, and you mixed up a recipe for a sell off in Gold…

But, not to worry, folks… In fact, use this dip in price to buy… I think that’s what I’ll do, well… maybe not… I think I have enough! But I doubt you do, so use this dip in price to your advantage! There! That’s my public service announcement for you today!

Funny story…. A week ago, I was heading into the local grocery store, when I bumped into a neighbor, who reads the Pfennig… She had her mother with her, and introduced me to her mother… After pleasant greetings, I walked away and when I did I heard her tell her mom… he’s the man that wirites the market letter I read, and he’s always telling us to buy Gold… I laughed… and kept walking… At least somebody is listening to me, although they might not hear me till later!

So… did you hear that Deutsche Bank (Germany’s largest bank) is going to send 14,000 employees home with a pink slip?  That includes their U.S. offices folks…  A couple of years ago, I wrote in the now defunct Review & Focus about Deutsche Bank’s problems, and how I thought that this time would have come before now…   I would think a bank the size of Deutsche Bank would have a major impact on the markets should the problems continue after the layoffs, which I’m sure they will… This is window-dressing folks… It makes them look like they’re on top of a their costs, but in reality all they’re doing is dressing up the house for sale…  of course that’s my opinion, and I could be wrong. 

Fed Chairman, Jerome Powell, will be speaking this week (tomorrow) and I would suspect the markets will get more out of what he has to say, as opposed to gleaning anything out of a stupid hedonically adjusted BLS labor report…  What do I expect him to talk about?  Well, this would simply be me shooting in the dark, for I have no idea what Powell will be talking about… But just for grins, let’s say, I was Jerome Powell, what would I be preparing to say tomorrow?  Ahhh…  

Thank you for this opportunity to speak to you today, I’m always amazed that anyone listens to us any longer…  But since you’re here, you might as well know that the Fed intends to reverse its rate hike cycle, and it could come this month at our meeting, and if not, then definitely 6 weeks from our July meeting. We badly miscalculated the economy’s strength, and that’s our bad… But we’re willing to swallow our pride and reverse our rate hike cycle to address this ongoing problem with little to no growth in the U.S. economy…  Yes, we truly believe that we are the Masters of the economy, and all we have to do is apply a little magic elixir, and sprinkle some eye of newt on the economy and voila! 

A couple of Fed Chairmen ago, Big Al Greenspan used to have this magic elixir named for him… The markets called him “The Maestro” and said that he had the “Greenspan put” in his back pocket…   I’m here to tell you that too much praise was bestowed on Alan Greenspan, but I’m now here to make everything right….   

Chuck back to being Chuck… Man, that was fun! I had Powell, admitting the Fed’s blunder, swallowing their pride, and dissing Big Al!  

The markets for the currencies this morning hasn’t changed, and the dollar bugs are still roaming the floor…  I have a funny for you… How many roaches does it take to change a light bulb?  No one knows, because when you turn on the lights they all scatter!  HA!   A little bug humor this morning… 

The U.S. Data Cupboard gets a pause for the cause this week, and doesn’t have much for us… The Fed’s Meeting Minutes from their June meeting will print tomorrow, the same day that Jerome Powell speaks…  Consumer Credit (read debt) will print today… This number just boggles the mind at how large it has become…  And unless we had an election, and someone that wants to give away everything including the kitchen sink, for free, this Consumer debt will just continue to grow… and grow… and grow… 

To recap…  The Jobs Jamboree sent the currencies to the woodshed on Friday, along with Gold, and the currencies are still getting sold this morning, as the markets now believe that Fed’s rate cut is on hold… The stock jockeys saw a bad day, but Gold was the biggest loser, which Chuck says is OK, as it is now a dip in price that should be taken advantage of! And Chuck plays Jerome Powell, just for grins… 

For What It’s Worth… This article was sent to me from longtime reader Bob (thanks!) and it’s an article from Paul Craig Roberts, that talks about how weak the current expansion is, and it can be found here:

(Don’t be surprised if he says something that you’ve heard me talk about for years)

Or, here’s your snippet: “Since June 2009 Americans have lived in the false reality of a recovered economy. Various fake news and manipulated statistics have been used to create this false impression. However, indicators that really count have not supported the false picture and were ignored.

For example, it is normal in a recovering or expanding economy for the labor force participation rate to rise as people enter the work force to take advantage of the job opportunities. During the decade of the long recovery, from June 2009 through May 2019, the labor force participation rate consistently fell from 65.7 to 62.8 percent.

Another characteristic of a long expansion is high and rising business investment. However, American corporations have used their profits not for expansion, but to reduce their market capitalization by buying back their stock. Moreover, many have gone further and borrowed money in order to repurchase their shares, thus indebting their companies as they reduced their capitalization! That boards, executives, and shareholders chose to loot their own companies indicates that the executives and owners do not perceive an economy that warrants new investment.

How is the alleged 10-year boom reconciled with an economy in which corporations see no investment opportunities?

Over the course of the alleged recovery, real retail sales growth has declined, standing today at 1.3%. This figure is an overstatement, because the measurement of inflation has been revised in ways that understate inflation. As an example, the consumer price index, which formerly measured the cost of a constant standard of living, now measures the cost of a variable standard of living. If the cost of an item in the index rises, the item is replaced by a lower cost alternative, thus reducing the measured rate of inflation. Other price increases are redefined as quality improvements, and their impact on inflation is neutralized.

Real retail sales cannot grow when “for most U.S. workers, real wages have barely budged in decades.”

Chuck Again… Mr Roberts continues on and on in the article listing several things that I’ve been through with you before on… But I thought it was a good thing to let you hear this from someone other than me every now and then!

Currencies today 7/8/19 American Style: A$.6983, kiwi .6640, C$ .7653, euro 1.1218, sterling 1.2515, Swiss $.9919, European Style: rand 14.1537, krone 8.6240, SEK 9.4405, forint 289.36, zloty 3.7917, koruna 22.7403, RUB 63.73, yen 108.60, sing 1.3597, HKD 7.8004, INR 68.53, China 6.8926, peso 18.98, BRL 3.8203, Dollar Index 97.29, Oil $57.43, 10-year 2.04%, Silver $15.08, Platinum $814.39, Palladium $1,562.58, and Gold… $1,405.41

That’s it for today… Except to congratulate the U.S. Women’s National Team for their World Cup victory yesterday… They Women’s team is the Gold standard for Women’s soccer, that is certain!  The All Star proceedings got started last night with the Futures game, tonight is the Home Run Derby, and then the All-Star Game is tomorrow night. There will only be one Cardinal on the All-Star team…  Congrats to Paul DeJong for being named to the team…  A chance to dry out this week, for the weather is in store, and it’ll be nice to have days without rain!  Cheap Trick takes us to the finish line today with their song: The Flame…    I hope you have a Marvelous Monday, and please Be Good To Yourself!

Chuck Butler