Jobs Jamboree Friday

Good day… And a Happy Friday to one and all! A Fantastico Friday, and Jobs Jamboree Friday to boot! You should have seen the crowd that gathered for my second presentation yesterday… WOW! Jason tells me that he had to turn away about 50 people that couldn’t jam into the room! I guess people are still interested in what I have to say… Either that, or no one else was speaking at that time! HA!

Another very tight trading range for the currencies yesterday, with a bias to buy dollars… And for once this bias to buy dollars didn’t include buying Japanese yen (JPY), as yen fell 2 whole figures yesterday! You have to wonder – with Capitol Hill saying that they will vote on the stimulus package soon, and the risk takers dipping their toes back into carry trades – if that’s why yen is weaker and the Aussie dollar (a high yielder, even in today’s zero rate environment) is stronger… It’s not just a co-inky-dink!

The Bank of England (BOE) did not aggressively cut rates, as I thought they would, and opted for a 50 BPS rate cut to 1%… I guess the BOE wanted to keep an arrow or two in their quiver, eh?

The European Central Bank (ECB) did keep rates unchanged as suspected. Look for the next move at their March 5th meeting.

Yesterday, the Weekly Initial Jobless Claims really showed some additional rot on labor’s vine, as Jobless Claims surged, spiked, soared, and any other word you want to use to describe this move higher by 35K to a new 26-year high of 626K! UGH! The continuing rot shows that continuing claims moved to a new record of 4.78 million! This is really getting sad folks…

Today, we’ll see the color of the latest Jobs Jamboree – the monthly labor report… The experts believe that we’ll see another +500K month of unemployed individuals, with the consensus coming in at 524K. I think that once again this report will be even more disappointing, and that we’ll see the unemployment rate tick up to 7.5% (from 7.2%)

I doubt that the rot on this vine will move the dollar lower though, as the markets have become comfortably numb with all this bad data in the United States.

There’s a rumor going around that the SEC is considering suspending mark-to-market accounting. OK, now we’re really reaching into the bag of tricks, aren’t we? So… Then we would have even less of a clue of what’s on the books of brokers, and investment bankers… Great, where do I sign up for this approval?

Speaking of changing reports… Did you hear that Wal-Mart has suspended their weekly sales reports, and has gone to a monthly reporting schedule… That’s all fine and dandy, but you have to think that they did that to keep them from having to show weekly rot on the vine, don’t you think?

The Wall Street Journal reported, “Retailers reported another month of lower same-store sales in January. Target said its quarterly earnings won’t meet analysts’ expectations because of markdowns and account-receivables woes. Gap reported a 23% same-store sales slump, led by a 34% plunge at its ailing Old Navy brand. J.C. Penney same-store sales fell 16.4%.”

Could it be that we have now moved from a recession to a depression? My friend, Bill Bonner, here at The Daily Reckoning thinks so. He was also the first to write about the idea that the United States was following Japan’s decade of funk, with his book Financial Reckoning Day – which was published about 6 years ago! So… I stop to listen to what he has to say. I don’t always agree, but I sure do listen, because his track record is good. Recall, he also coined the phrase “Trade of the Decade” at the turn of the millennium… To “sell the DOW, and buy gold on dips”… That’s worked out quite nicely, eh?

Here’s a snippet Bill’s piece, where he does a great job of showing the difference between a recession and a depression. You can read the entire story here… But here’s a snippet…

“In a recession, the basic plan or formula for the economy is still valid. The economy just needs a little time…and maybe a little monetary boost…before it continues growing. Typically, inventories are sold down…so a new burst of production can begin.

“But in a depression, the problems are structural.

“One way of understanding this is just to look at balance sheets. Whether you are a business or a family, you can only afford so much debt. When you get too much, you have stop and pay it down. And when it becomes so great you can’t pay if off – because you don’t have enough income – you have to declare bankruptcy. A depression is when a whole economy declares bankruptcy…or should. Because it can’t pay its debts. Businesses, for example, have been built for a level of demand that no longer exists. It is not a question of waiting a few months. By the time consumers are ready to buy again, the whole economy will have moved on. Imagine, for example, a guy who built a nationwide chain of stores just to sell iPods to teenagers. The business may have been a great success – for a while. And he took out huge loans so he could expand…and take advantage of the demand. But then comes a depression. He says to himself: ‘I’ll just get some more financing…and wait it out.’ But who’s going to lend to him? By the time the kids begin buying again, iPods will be like vinyl LPs. His business is history. His lenders have lost money. The loans should be written off and the business should be destroyed, not mummified and preserved.

“A depression is when the whole economy changes its business plan, in other words. And that takes time…and creative destruction.

“How much time? Well, in the United States alone there is about $6 trillion too much private debt…$1 trillion too much output capacity…and millions of ‘excess’ workers. How long will it take to retrain, retool, and re-absorb these excesses?

“We don’t know. The last depression took about 20 years…and a major war (talk about creative destruction!) Then, the United States was making the structural shift from a Japan-like capital investment-led economy…to a post-WWII consumer-led economy.”

That’s scary stuff, folks…

Let’s get on to a “Friday story”… One that’s uplifting and gets us in a good mood to head into the weekend!

Gold… A store of wealth… An inflation fighter… And it’s shiny to boot! Kristin sent me these two stories… Here’s the first one…

Legendary investor Eric Sprott, of Sprott Asset Management in Toronto, said that the United States is at the beginning of an economic depression that will help gold prices more than double, exceeding $2,000 amid a series of financial catastrophes.

And then this… Of interest to coin fanciers will be stats from the U.S. Mint showing that it stamped out 94,500 gold Eagles in January. Well, if so, then where are they? That is not a small number, especially for January, but none of the several dealers we contacted has seen any, nor have they been informed as to when the 2009 Eagles will be available. Very peculiar, as they say …

Yes… The demand for physical gold is still strong… And with the gold ETF’s growing, the demand for gold increases daily…

Currencies today 2/6/09: A$ .6595, kiwi .5195, C$ .7990, euro 1.2815, sterling 1.4670, Swiss .8545, rand 9.9575, krone 6.8360, SEK 8.2340, forint 228.20, zloty 3.5865, koruna 21.82, yen 91.10, sing 1.5190, HKD 7.7550, INR 48.67, China 6.8344, pesos 14.32, BRL 2.2850, dollar index 86.08, Oil $40.83, Silver $12.86, and Gold… $918.20

That’s it for today… I talk one more time today, late this afternoon. I call it my “Happy Hour” Talk! It’s still cold here in Orlando! UGH! Had a great dinner last night with colleagues and guests, Mary Anne Aden, Erika Nolan and Kat Von Rohr… A good time was had by all! No big plans tonight for our last night here… Maybe we can get out of the bio-dome, which is what I call the Gaylord Palms here in Kissimmee. (If you’ve ever been here, you know what I’m talking about!) I’ve been on my feet and walking way too much here; I can see swelling again… No worries, when I get home, I’ll get my feet up and rest! OK… The Jobs Jamboree will print in about 45 minutes. Hope it’s not as bad as I think it will be… I hope it’s warm where you are, but if it’s cold here, it’s probably cold just about everywhere! UGH! Oh well… Nothing you can do about it, so you might as well, have a Fantastico Friday, and Wonderful weekend!