The Jobs Jamboree Disappoints
"The forecast was for 200,000, and the actual was 108,000. Really, as I've asked over and over again through the years, does it really matter how many jobs are created when we don't know what types of jobs they are?"
In this issue… Don't place bets on the Jobs Jamboree! Soros chimes in! The worst week for the dollar in 3 years! An "all clear" for loonies!
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And now…today's Pfennig! The Jobs Jamboree Disappoints Good day. Well, I trust your weekend was grand. The weather here in St. Louis was unseasonably warm, which is fine with me! As my mentor, Jimmy Buffett, says, "I've gotta go where it's warm." Sorry to have missed class on Friday, but as always, Chris did a fine job of taking over! Friday's Jobs Jamboree was really a disappointment, with regard to the number of jobs created in December. The forecast was for 200,000, and the actual was 108,000. Really, as I've asked over and over again through the years, does it really matter how many jobs are created when we don't know what types of jobs they are? Instead, as many of you know, I prefer to look at the average hourly earnings and hours worked, as an indication of inflation, and here, things looked normal. What the "media" jumped all over was the announcement that the "unemployment rate" had "fallen" to 4.9%. We've been all through this before; the "unemployment rate" does not count people that are unemployed whose unemployment benefits have run out. According to the Bureau of Labor Statistics these people just fall off the books. They don't exist. It sounds like a good way to figure your unemployment rate, eh? Not! Well, anyway, the currencies all had a nice rally after the Jobs Jamboree numbers were printed. The markets took the Jobs Jamboree outcome as an indication that there will be no further wage pressures and the Fed will end the rate-hike cycle ahead of schedule. First of all, I think that a rally is great, but I just can't get my arms around placing bets on the outcome of the Jobs Jamboree. The books there are so cooked, and skewered. I wouldn't be surprised if the 108,000 figure isn't revised up quite a bit next month, then what? The good news is that whether or not the Fed does stop early, doesn't matter at this point. The general thought in the marketplace is that the Fed is near the end, and that's all that matters. This morning, Bloomberg is reporting that 44% of 50 traders, strategists and investors surveyed last Friday from Sydney to New York, advised selling the dollar versus the euro. This 44% is up versus 28% the previous week. The numbers for selling the dollar versus the yen fall in the same general range. Last week, the dollar had the worst week versus the euro in more than three tears. Overnight, we've seen some profit taking, as the single unit had moved to 1.2155. It is back to 1.2080 right now, but I look at that type of trading as healthy. All it does is give buyers who are opening their eyes once again to the overall fundamentals of the United States, a better entry point! There has been yet another sign that the Eurozone economy is on the rebound this morning. December Retail Sales for the Eurozone rose by the most in two years and will probably give the ECB another rate-hike arrow for their quiver. So, the profit taking in the euro probably isn't going to last long, after a report like this! Well, the Japanese yen is really beginning to get some legs underneath it as it rebounds versus the dollar. This morning, the yen is attempting to trade below the 114 handle for the first time in three months, a 2.9% gain just last week. The good news is that Japanese Finance Minister Tanigaki, has been quoted as saying that he's comfortable with the move, and that it is in line with fundamentals. You bet it is, Mr. Fin Min! We've got a long way to go still, to get yen where I believe it should be trading, and that is less than 100. For new readers, or anyone new to currency pricing. There are two pricing conventions in currencies. There's the American Style (you know whenever I say "American Style" or type it, that silly song from the TV show pops into my head: "Love American Style") Oh, wait, American Style pricing is priced like dollars, and the higher the number, the greater return in dollars to the investors. Then there's European Style, which is the mirror image of American Style. Here you are counting how many of the foreign unit you get for a dollar, so as the currency price goes down, it returns more value to you in dollars. Hope that's a good explanation for you. George Soros is expecting a recession for the U.S. economy in 2007, based on his thoughts that the Fed will overshoot rate hikes, and thus cool the housing sector, which has been a major component to economic growth in the United States. You know, this falls right in line with what I've been saying for over a year now. I think the "all clear" siren is about to go off for Canadian dollars. The poor loonie has been drug through the mud recently due to getting ahead of itself with an election around the corner. Yes, about a week ago, the loonie was touting 87 cents, which I believe we'll see again, but it had gone too far, too fast with the uncertainties of an upcoming election around the corner. So, major profit taking set in, and the loonie lost about two cents. I think it's safe to get back into the water now. Look at the kiwi above 69 cents again! It certainly is resilient, eh? And, don't look now, but the price of crude oil has reached a three-month high. Currencies today: A$ .7525, kiwi .6940, C$ .8560, euro 1.2085, sterling 1.7680, Swiss .7830, ISK 61.09, rand 6.0860, krone 6.5650, forint 206.82, zloty 3.12, koruna 23.85, yen 114, baht 39.75, sing 1.6340, China 8.0641, pesos 10.53, dollar index 89.30 and gold $540.52 That's it for today. The trade and budget deficit data is due later this week should put the markets in a dollar-selling mood! The folks in the home office in Jacksonville should know that I tried to help the Jags. I wore my Jaguars shirt for Saturday's game (it didn't help!). Only three more weeks to go before I head to Orlando and the World Money Show, there's still time to make plans. Have a great Monday and week! |
