02/20/09 St. Louis, Missouri Good day… And a Happy Friday to one and all! It got cold here again. I can’t wait for my March trip to a warmer climate! GM’s Swedish unit Saab is filing for protection from creditors, so that it can reorganize into a business independent of GM… Hmmm… Everyone is jumping the GM ship.
Well, it’s Friday, and that means yesterday we saw the print of the Weekly Initial Jobless Claims… And once again, the rot on labor’s vine was exposed. The total claims filed last week were 627K, the experts had forecast 600K… But here’s the thing that really hits home… The number of Americans collecting unemployment benefits has jumped to 4.99 million, and each week a new record number is established. It certainly tells me that the labor market is still deteriorating.
At this rate… Obama’s hope that his $787 billion stimulus would create 3.5 million jobs, might fall well short even if it’s a smashing success!
There was a boat-load of other data yesterday, of which none of it was good, except the Leading Indicators, which again will be goosed up by stuff that ends up being no good to the economy!
Today, we end the week with the “stupid” CPI data for January. Long-time readers know my dislike for CPI and what it does to people who depend on checks each month, and to our pocketbooks… WE all know inflation is higher than CPI says it is, but the government, and the markets go with CPI as the “official” inflation gauge. Dolts… All of them!
Well… The euro (EUR) had a day in the sun, and today the clouds are forming over the single unit once again. Yesterday, I left you with a rallying euro, based on a rumor that Germany would step in to ease the financial turmoil in Europe (Eastern & Western). Well, Germany’s Chancellor Angela Merkel left the markets “wanting” more… She acknowledged that Germany “could” help… But didn’t have a plan; didn’t have an idea of what to do; didn’t do squat! Why have the stupid press conference if that’s all you’re going to do! Get up there, have your plan, and act like you know what you’re doing… People will follow! Geez Louise! Now I have to rip on the dolts overseas too? I’m getting too old for this stuff!
So… The euro is back to 1.26 and change this morning, and the other currencies are following along. Risk aversion has plopped right down, smack dab in the middle of what appeared to be a risk takers “sighting”.
Gold even saw selling as the day went along and the risk aversion crowd won the battle… That is until the overnight markets saw the lower prices in gold, and you should have seen the “rush” into buying gold! The shiny metal is up $13 this morning to $988.30. I heard one our sales people talking to a prospective buyer on the phone… The prospective buyer admitted wanting to buy gold below $900, and was very upset to learn it had leaped over $900 a couple of weeks ago, and not looked back. Shoot, Rudy! You never know, it could fall back there again… But the view from the cheap seats, where I sit, is a changing landscape, where fiat currencies are traded in for hard assets, like gold… I’ve mentioned this for the past couple of weeks now, so this shouldn’t come as any shock to you dear reader… That is unless… You just “delete” the Pfennig each day! OH! The Shock! The Horror! The Humanity!
On a sidebar… I mention that, because one day about four years ago, Chris Gaffney and I were meeting with some investment advisors that we knew from Mark Twain Bank days… And I told them they should sign up for the Pfennig… Chris then said, “If you don’t want to read it you can always just delete it”. Of course, he didn’t mean it the way it sounded, but I give him a very difficult time still today… As evidenced by the above!
One currency that had moved stealth-like to higher ground versus the dollar since the beginning of 2009, was Indian rupees (INR)… Notice, I said “was”… As all those stealth-like moves to higher ground versus the dollar were wiped out this week. I saw a headline last night that said this was the worst performance week by the rupee… OUCH! Time for the central bank to get back on the intervention horse, and repair this damage.
While I wrote those last two paragraphs, gold has moved up another $2!
There was more selling in stocks yesterday as the Dow fell 1.2% to a new five-and-a-half year low, breaking through the previous bear-market closing low of 7552.29 hit on November 20, 2008.
And during my radio interview yesterday, I was asked about the comments from former Fed Chairman, Greenspan, that he “favored nationalization of banks”. I had seen that comment a day earlier and even commented to the Big Boss, Frank Trotter, that he sure didn’t make comments like that when he was the Fed Chairman… And was referred to as the “Maestro” and “Mr. Free Markets”. But now that he is retired and looking at the mess he created – and yes, folks, he wasn’t the sole culprit, but he was the “provider”… Well, now that he’s looking at the mess he created, he thinks we’re in a huge pile of dookie, and had better do something, fast!
My friend, Bill Bonner here at The Daily Reckoning had this to say about Greenspan’s comments…
“‘Greenspan backs nationalization,’ says a headline.
“Well, that does it for us here at The Daily Reckoning. If Greenspan is in favor of it, we’re against it. No one man bears more responsibility for the present worldwide financial crisis and coming depression than Alan Greenspan.
“The Fed’s job is to take the punchbowl away when the party gets too wild, said former Fed chairman William McChesney Martin. Greenspan did no such thing. As soon as the party began to quiet down and people began fumbling for their car keys, Greenspan added more rum to the punch and turned up the music. By the time the credit cops finally shut it down, people were dancing on tabletops all over the world.”
This “nationalization” cry is a very bad idea, folks… Very bad… How bad? Very bad! Did I say that it was a very bad idea? OK… Is that clear? Crystal… I hope!
Ty Keough sent me a note on something he saw while watching Jay Leno the other night. So, let me set the stage for this note… It’s Monday night; the country had just celebrated President’s Day… Which President Obama celebrated by signing the $787 billion stimulus bill… OK.. Here’s what Jay Leno had to say…
“Today was President’s Day. Congress commemorated George Washington’s throwing a dollar across the Potomac by throwing $780 billion down a rat hole.”
I see where the New York State’s Attorney is taking a run at the Bank of America/Merrill Lynch merger that took place last year… NY State’s Attorney, Mr. Cuomo’s office is trying to determine if investors were misled about the depth of Merrill’s losses in late 2008 and whether details of the bonuses to Merrill employees, contained in a nonpublic document, should have been disclosed to investors. Now… I’m not saying that there was anything misleading or scandalous here… But it reminds me of about eight years ago… Remember?
Remember about eight years ago, when the tech-bubble burst, and we had one corporate scandal after another? Well, we’re not doing too well these days either… Madoff… Stanford… And there will be more… I shake my head in disgust…
Time to head to the Big Finish…
Currencies today 2/20/09: A$ .6415, kiwi .5075, C$ .7950, euro 1.2640, sterling 1.4350, Swiss .8450, rand 10.1650, krone 6.9125, SEK 8.7365, forint 241.50, zloty 3.76, koruna 22.8825, yen 94, sing 1.5360, HKD 7.7540, INR 49.77, China 6.8370, pesos 14.77, BRL 2.3850, dollar index 87.63, Oil $37.75, Silver $14.36, and Gold… $993.65 (still moving higher this morning!)
That’s it for today… Had a great interview on the radio yesterday, about 20 minutes long. You give me 20 minutes to talk, and I’ll fill your airwaves! And besides, I’ve always said that I had a “face for radio”! I made the Big Boss, Frank Trotter, wait outside his own office, as I used his office to do the interview. Hey! I sit on the trading desk, it’s too loud to do an interview there! My “Les Nessman” office was converted into our studio, so, whenever I have an interview, and this week I had four of them, I have to go find an empty office. Tomorrow is the 2nd largest Mardi Gras party in the country, right here in St. Louis! It’s going to be a COLD one too, unfortunately! But I doubt it slows down the revelers that are die-hard Mardi Gras partiers. I used to go… But I can’t do all that walking around any longer… And… I got too old! I hope everyone has a great time! But BE Careful! I hope, you have a Wonderful Weekend!
Chuck Butler is President of EverBank® World Markets and the author of the popular Daily Pfennig newsletter, which is reposted here at The Daily Reckoning. With a career in investment services and currencies extending over 35 years, Mr. Butler oversees all aspects of customer service and the trading desk for EverBank World Markets. A respected analyst of the currency market, Mr. Butler has frequently made appearances or been quoted by the national media. These include the Wall Street Journal, US News and World Report, MarketWatch, USAToday, CNNfn, Bloomberg TV, CNBC, and the Chicago Tribune. Mr. Butler was previously the Chief International Bond Trader and Director of Risk Management for Mark Twain Bank, and has held significant positions in the investment industry since 1973.
The Daily Reckoning is your premier source for making sense of the news Washington and Wall Street generate. Each business day, The Daily Reckoning calls on its stable of world-class writers and thinkers to show you how to get ahead.
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Labor Market Continues to Deteriorate
By Chuck Butler
02/20/09 St. Louis, Missouri Good day… And a Happy Friday to one and all! It got cold here again. I can’t wait for my March trip to a warmer climate! GM’s Swedish unit Saab is filing for protection from creditors, so that it can reorganize into a business independent of GM… Hmmm… Everyone is jumping the GM ship.
Well, it’s Friday, and that means yesterday we saw the print of the Weekly Initial Jobless Claims… And once again, the rot on labor’s vine was exposed. The total claims filed last week were 627K, the experts had forecast 600K… But here’s the thing that really hits home… The number of Americans collecting unemployment benefits has jumped to 4.99 million, and each week a new record number is established. It certainly tells me that the labor market is still deteriorating.
At this rate… Obama’s hope that his $787 billion stimulus would create 3.5 million jobs, might fall well short even if it’s a smashing success!
There was a boat-load of other data yesterday, of which none of it was good, except the Leading Indicators, which again will be goosed up by stuff that ends up being no good to the economy!
Today, we end the week with the “stupid” CPI data for January. Long-time readers know my dislike for CPI and what it does to people who depend on checks each month, and to our pocketbooks… WE all know inflation is higher than CPI says it is, but the government, and the markets go with CPI as the “official” inflation gauge. Dolts… All of them!
Well… The euro (EUR) had a day in the sun, and today the clouds are forming over the single unit once again. Yesterday, I left you with a rallying euro, based on a rumor that Germany would step in to ease the financial turmoil in Europe (Eastern & Western). Well, Germany’s Chancellor Angela Merkel left the markets “wanting” more… She acknowledged that Germany “could” help… But didn’t have a plan; didn’t have an idea of what to do; didn’t do squat! Why have the stupid press conference if that’s all you’re going to do! Get up there, have your plan, and act like you know what you’re doing… People will follow! Geez Louise! Now I have to rip on the dolts overseas too? I’m getting too old for this stuff!
So… The euro is back to 1.26 and change this morning, and the other currencies are following along. Risk aversion has plopped right down, smack dab in the middle of what appeared to be a risk takers “sighting”.
Gold even saw selling as the day went along and the risk aversion crowd won the battle… That is until the overnight markets saw the lower prices in gold, and you should have seen the “rush” into buying gold! The shiny metal is up $13 this morning to $988.30. I heard one our sales people talking to a prospective buyer on the phone… The prospective buyer admitted wanting to buy gold below $900, and was very upset to learn it had leaped over $900 a couple of weeks ago, and not looked back. Shoot, Rudy! You never know, it could fall back there again… But the view from the cheap seats, where I sit, is a changing landscape, where fiat currencies are traded in for hard assets, like gold… I’ve mentioned this for the past couple of weeks now, so this shouldn’t come as any shock to you dear reader… That is unless… You just “delete” the Pfennig each day! OH! The Shock! The Horror! The Humanity!
On a sidebar… I mention that, because one day about four years ago, Chris Gaffney and I were meeting with some investment advisors that we knew from Mark Twain Bank days… And I told them they should sign up for the Pfennig… Chris then said, “If you don’t want to read it you can always just delete it”. Of course, he didn’t mean it the way it sounded, but I give him a very difficult time still today… As evidenced by the above!
One currency that had moved stealth-like to higher ground versus the dollar since the beginning of 2009, was Indian rupees (INR)… Notice, I said “was”… As all those stealth-like moves to higher ground versus the dollar were wiped out this week. I saw a headline last night that said this was the worst performance week by the rupee… OUCH! Time for the central bank to get back on the intervention horse, and repair this damage.
While I wrote those last two paragraphs, gold has moved up another $2!
There was more selling in stocks yesterday as the Dow fell 1.2% to a new five-and-a-half year low, breaking through the previous bear-market closing low of 7552.29 hit on November 20, 2008.
And during my radio interview yesterday, I was asked about the comments from former Fed Chairman, Greenspan, that he “favored nationalization of banks”. I had seen that comment a day earlier and even commented to the Big Boss, Frank Trotter, that he sure didn’t make comments like that when he was the Fed Chairman… And was referred to as the “Maestro” and “Mr. Free Markets”. But now that he is retired and looking at the mess he created – and yes, folks, he wasn’t the sole culprit, but he was the “provider”… Well, now that he’s looking at the mess he created, he thinks we’re in a huge pile of dookie, and had better do something, fast!
My friend, Bill Bonner here at The Daily Reckoning had this to say about Greenspan’s comments…
“‘Greenspan backs nationalization,’ says a headline.
“Well, that does it for us here at The Daily Reckoning. If Greenspan is in favor of it, we’re against it. No one man bears more responsibility for the present worldwide financial crisis and coming depression than Alan Greenspan.
“The Fed’s job is to take the punchbowl away when the party gets too wild, said former Fed chairman William McChesney Martin. Greenspan did no such thing. As soon as the party began to quiet down and people began fumbling for their car keys, Greenspan added more rum to the punch and turned up the music. By the time the credit cops finally shut it down, people were dancing on tabletops all over the world.”
This “nationalization” cry is a very bad idea, folks… Very bad… How bad? Very bad! Did I say that it was a very bad idea? OK… Is that clear? Crystal… I hope!
Ty Keough sent me a note on something he saw while watching Jay Leno the other night. So, let me set the stage for this note… It’s Monday night; the country had just celebrated President’s Day… Which President Obama celebrated by signing the $787 billion stimulus bill… OK.. Here’s what Jay Leno had to say…
“Today was President’s Day. Congress commemorated George Washington’s throwing a dollar across the Potomac by throwing $780 billion down a rat hole.”
I see where the New York State’s Attorney is taking a run at the Bank of America/Merrill Lynch merger that took place last year… NY State’s Attorney, Mr. Cuomo’s office is trying to determine if investors were misled about the depth of Merrill’s losses in late 2008 and whether details of the bonuses to Merrill employees, contained in a nonpublic document, should have been disclosed to investors. Now… I’m not saying that there was anything misleading or scandalous here… But it reminds me of about eight years ago… Remember?
Remember about eight years ago, when the tech-bubble burst, and we had one corporate scandal after another? Well, we’re not doing too well these days either… Madoff… Stanford… And there will be more… I shake my head in disgust…
Time to head to the Big Finish…
Currencies today 2/20/09: A$ .6415, kiwi .5075, C$ .7950, euro 1.2640, sterling 1.4350, Swiss .8450, rand 10.1650, krone 6.9125, SEK 8.7365, forint 241.50, zloty 3.76, koruna 22.8825, yen 94, sing 1.5360, HKD 7.7540, INR 49.77, China 6.8370, pesos 14.77, BRL 2.3850, dollar index 87.63, Oil $37.75, Silver $14.36, and Gold… $993.65 (still moving higher this morning!)
That’s it for today… Had a great interview on the radio yesterday, about 20 minutes long. You give me 20 minutes to talk, and I’ll fill your airwaves! And besides, I’ve always said that I had a “face for radio”! I made the Big Boss, Frank Trotter, wait outside his own office, as I used his office to do the interview. Hey! I sit on the trading desk, it’s too loud to do an interview there! My “Les Nessman” office was converted into our studio, so, whenever I have an interview, and this week I had four of them, I have to go find an empty office. Tomorrow is the 2nd largest Mardi Gras party in the country, right here in St. Louis! It’s going to be a COLD one too, unfortunately! But I doubt it slows down the revelers that are die-hard Mardi Gras partiers. I used to go… But I can’t do all that walking around any longer… And… I got too old! I hope everyone has a great time! But BE Careful! I hope, you have a Wonderful Weekend!
Chuck Butler
Chuck Butler is President of EverBank® World Markets and the author of the popular Daily Pfennig newsletter, which is reposted here at The Daily Reckoning. With a career in investment services and currencies extending over 35 years, Mr. Butler oversees all aspects of customer service and the trading desk for EverBank World Markets. A respected analyst of the currency market, Mr. Butler has frequently made appearances or been quoted by the national media. These include the Wall Street Journal, US News and World Report, MarketWatch, USAToday, CNNfn, Bloomberg TV, CNBC, and the Chicago Tribune. Mr. Butler was previously the Chief International Bond Trader and Director of Risk Management for Mark Twain Bank, and has held significant positions in the investment industry since 1973.
For additional information visit EverBank
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