Greece Drama Turns To a Jobs Jamboree Day

Today’s Pfennigfor your thoughts…

Good day, and a tub thumpin’ Thursday to you!

Well, once again this morning, the dollar has the conn, and it isn’t a pretty thing, unless you’re a dollar bug. The euro is up, but given where it had fallen to yesterday, “up” is all relative. Gold is down in price again, and the price of oil is also down again. So, there you have it all for you to take in this morning.

There’s no news of any negotiations with Greece and the eurozone, there was another poll/survey taken on the Greek referendum, and this time the results of the poll were different, with those surveyed saying they would vote “yes” at 47% and “no” at 43%…

Of course like I said yesterday, polls aren’t always the “end all” of how people will vote when it gets down to the actual vote.

We did get a surprise from Sweden’s Riksbank this morning. The Riksbank decided to take their repo rate further into negative territory folks at -0.35%, and increased their QE with an additional amount of SEK 45 billion.  Now, you may recall me telling you that I didn’t see the Riksbank doing anything at this meeting because they told us that inflation was their worry, and the inflation has ticked higher recently.

So apparently, the Riksbank wasn’t just tracking inflation. I don’t like it when Central Banks tell you to watch something, and then they do the old statue of liberty play in football and end up running around the end with the ball.

UGH! Central banks… they are my arch enemy these days, for they just don’t get it, and the problem is they have tons of economists and analysts working for them and they still do these Jedi Mind Tricks with monetary policy. OK, like I said yesterday, someone get me a sucker, I’m about to throw a temper tantrum!

So, when a central bank pulls a rabbit out the hat, sorry wrong hat, HA! But when they do dolt things like this, their currency gets whacked, and that’s what’s happened to the Swedish krona overnight. And when the krona gets whacked like this, the Norwegian krone sells of in sympathy.

It’s a two for the price of one, if you will.

And down in New Zealand, it got really ugly folks. The latest auction for dairy prices came in at a negative -5.9%, the 8th consecutive auction where prices declined. Now, we’ve been over this many times in the past.

Wool, lumber, and dairy are the 3 major exports of New Zealand, so when one of the three takes a hit like this, you can bet the N.Z. dollar/kiwi bears were all out roaming the picnic grounds and scaring the poor families that were trying to have a nice day in the park! And just like Sweden and Norway, you can usually bet that wen kiwi gets sold, the Aussie dollar (A$) sees selling drift across the Tasman.

But today’s price action in the A$ isn’t just about sympathy with kiwi selling. The Aussie Trade Balance, that I talked to you about yesterday, saw an improvement in the deficit, but unfortunately, most of that improvement was due to weak imports that fell -4%, and that points to soft domestic demand, and that’s not a good thing.

In the “mother country”, the U.K., yesterday I told you about the soft PMI (manufacturing) print, but this morning, we saw construction spending data that was quite strong from the U.K. So, things aren’t “all bad” in the U.K., just “most things”. Which means interest rates aren’t going anywhere, I don’t care what Bank of England Gov. Mark Carney, says! He’s proven to be just what I said he was, a central bank Gov. that promises rate hikes, and never delivers them.

The Swiss National Bank (SNB) is probably smiling like the cheshire cat this morning, as the franc has dropped 2-full cents this week. And again, with all that’s going on in the world, one would think the franc, and its safe haven status, would be cooking with gas this week.

I haven’t heard of any intervention by the SNB, but I wouldn’t rule that out, as the drop has been swift, which normally indicates central bank selling.

The Chinese renminbi reversed the appreciation it saw the previous night, and weakened last night. I have to say for the first time since I’ve been following the Chinese renminbi, that I am growing disappointed with the Chinese authorities over how the renminbi is being handled. But I’m certain that the Chinese leaders aren’t losing any sleep over that! HA!

The currency wars are going on all over, and two places we didn’t have to worry about (in the past) were the eurozone and China, where their leaders promised not to join the currency wars. But that’s all water under the bridge now folks.

Well, the U.S. data cupboard was kind to the dollar yesterday. the ADP Employment Change, which as I’ve told you previously, is supposed to be an indicator of what the Jobs Jamboree will have for us, was stronger than expected with 237,000 jobs created according to ADP in June, when only 218,000 were expected.

The ISM Manufacturing Index printed at 53.6, when it was expected to print at 53.4, so a slight improvement, over expectations and the previous month which was also 53.4. I guess the so-called “experts” got caught up in the same reasoning I used yesterday, when I told you that the regional manufacturing indexes had all printed weak, so therefore that should indicate that the National Index would be weak.

But NOOOOOOOO!  Forget all those regionals! And that’s what I’m going to do from now on! I don’t care about the Philly Fed, the Empire State and so on, they don’t mean a hill of beans!

The Fed members must be feeling it right now. Feeling the pressure to hike rates. But, they know in their heart of hearts that something just isn’t right here, the economy is so uneven, and today, we’ll get a taste of that, when May Factory Orders print negative once again. In 7 of the last 8 months, this data has printed negative, with the only positive month of March of 2.2% printing.

So, there you are!  Yesterday’s data, and today’s data all rolled into this discussion. Who else out there in “writer-land” does that for you?

And I’ve gone this far today, and have not mentioned what today is all about for the markets. The BLS Jobs Jamboree, which will print on our tub thumpin’ Thursday this month instead of tomorrow, because, well, the powers that be, don’t think there will be anyone around tomorrow.

I know I just told you that the ADP report was stronger than expected, but I don’t think that will spill over to the BLS Jobs report.

Now, a couple of months ago, I told you that I was finished with the BLS Jobs report, that I just didn’t think it reflected the real picture of the labor sector in the U.S. The BLS report has so many hedonic adjustments, that I just grew tired of dealing with it.  But it’s those adjustments that might make today’s report look somewhat strange.

So, let me set this up. The so-called experts have forecast a rise of 233,000 jobs in June, and the ADP report reported 237,000 jobs in June. But, I’m going to go out on a limb here and say that this month’s report could print below 200,000. And the lower number would all be tied to “seasonal adjustments”.

What will the markets do with a print that misses expectations on the downside?  Who knows?  The way things are going right now, all signs point to dollar strength, and it wouldn’t surprise me on iota to see someone say to not worry that the jobs creation will come back strong in July, and the dollar rally further.

Gold still can’t find any wind for its sails, but that doesn’t mean investors are leaving in droves from the shiny metal. In fact, according to the U.S. Mint., sales of gold American Eagle coins jumped to 76,000 ounces in June, the highest since January and more than triple the 21,000 ounces sold in May.

I found it very interesting that the gold exchange traded funds dropped 0.8% in June, falling for the 4th consecutive month.  So, were people selling the paper and buying the physical?  It sure looked like it, and it wasn’t just American Eagle gold coins.  The American Eagle silver coins was sales surge to 4.84 million ounces in June vs. 2 million ounces sold in May.

I could go into a real rant here about how when every investor decides to sell the paper trade and buy the physical the price manipulators would get smashed. But I’ve done that, been there and bought the t-shirt.  It’s time to move on to something else before I begin to get a rash.

Well, the announcement of EverBank World Markets’ new MarketSafe CD has been somewhat stealth-like. I don’t know what’s going on with this, but I did notice that our friends over at Agora Publishing put out two notices about the new 5-Year MarketSafe PowerMetals (sm) CD. It’s the first metals-based CD EverBank has issued since 2011.

Well, I never really left you today, doesn’t that give you a warm and fuzzy?  I wanted to thank Joe over at Agora Financial for jumping on this offering and getting the word out the door. Of course if this is not your cup-o-tea, then you don’t have to go check it out, but if it is, then here you go!

That’s it for today. Let’s go make this a tub thumpin’ Thursday, eh?

Regards,

Chuck Butler
for The Daily Reckoning

P.S. The Daily Pfennig is first published everyday, right here.

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