A Jobs Jamboree Friday

Good day… And a Happy Friday to one and all! As usual, I hope this to be a Fantastico Friday too!

It’s a Jobs Jamboree Friday also! So, we’ve got that going for us! I’ll come back to the Jobs Jamboree in a minute… But first, I’ve got to talk about the data yesterday that the media slobbered over, and goosed the stock market, and that is – factory orders…

On first glance, factory orders rose more than expected at +1.5%, and the prior report was revised higher from 0.5% to 0.7%… However, upon further review, we see that without aircraft and defense orders, which when taken out is a considered a “better” barometer of main street business investment, factory orders would have fallen… And on a year on year basis, factory orders fell 2.4%

And in a report that your local media outlet probably didn’t carry… U.S. auto sales are drying up. Even Toyota suffers along with Ford and GM! It finally looks like the U.S. consumer is getting pinched. Auto sales for the year were down for all except Honda and Hyundai. I would say that the structural decline for the U.S. automakers is quite pronounced… And it looks to me that another subprime/mortgage meltdown tentacle has wrapped around another economic sector!

OK… So the dollar bounced around a bit on Thursday, and with stocks rebounding, risk came back into the markets thus taking the shine off of Japanese yen (JPY) again. The good thing about the back and forth in yen is that it gives buyers a chance to buy on some days that are better/cheaper!

I received an email from a technical/charts friend yesterday that really threw me for a loop! He tells me that not only do the fundamentals tell him the dollar should continue to weaken, but so do the charts! WOW! It’s not often that the stars align like that!

Now, for the Jobs Jamboree for today… Remember last month when the markets got all excited about a 94K job increase? Imagine their delight when only 70K jobs were created in December! HA! What dolts! But then, we carry on despite their doltness! As usual, I will throw my hat in the ring of those that forecast the jobs number. The experts believe 70K will be the total… And I’m in agreement with that. In my opinion, this should be a very disappointing number… But, who knows what tricks the Bureau of Labor Statistics (BLS) has up their sleeve! Remember Bullwinkle and his famous line, “Hey Rocky watch me pull a rabbit out of my hat”? Funny stuff!

Seriously though, the Jobs data should send us off into the weekend either smiling or frowning, not zombie like as with some other reports. This will be the first Friday in a couple of weeks that everyone will be staying around for (except our trading desk, that’s always staying around!) and I get the feeling the markets want to cut loose after weeks of not having the right people in place to cut loose. There’s been a ton of volatility this week already. For instance, when I went to bed last night the euro (EUR) was inching higher at 1.4760; this morning it’s back down to 1.4705… Back and forth all week, like a horse at the starting gate.

Anyway, when I look at the Jobs Jamboree, I can’t help but think this is the “difference maker”. This report will determine if the dollar recovers in January or not… I sure would like to see “raw numbers”, you know, not shot up with an injection of steroids administered by the BLS.

You know… A month ago, while I was in Florida on Marco Island speaking at the Wealth Masters Conference, my colleague, Chris Gaffney, told everyone that pound sterling (GBP) had seen better days, and he looked for pound weakness. He was quite bang on, eh? I have to say that I truly believe the United Kingdom has similar problems as us with regards to housing. The one thing they don’t share with us is rising inflation! Interest rates will come down in the U.K. this year, and that will end pound sterling’s run as a financing currency of the carry trade.

So… If pounds get sold on one side of the carry trade, investors will be looking for other high yielders, like Aussie dollars (AUD)… Where interest rates aren’t coming down, and, in fact, could be going higher as we go along in 2008.

Remember all the hype over the U.A.E. talking about breaking their currency peg to the dollar? Well, that’s not happening… The U.A.E. announced yesterday that they will keep their 30-year peg to the dollar. Hmmm… I wonder what made them change their minds? Could it be… Satan? I just couldn’t pass up that Church Lady line from Saturday Night Live, there… Sorry.

My friend, the Mogambo Guru, has called Big Al Greenspan, “the true living Satan”… I laugh so hard whenever I see that! The Mogambo has a way with words and phrases!

Remember the other day when I said that I thought commodities would rebound in 2008? Well… The first two trading days in 2008 have really seen that thought come into play! Gold trades near its all-time high… Oil hits $100… Copper and zinc rise to their limits yesterday.

Worries about inflation in 2008 are really driving commodity prices higher… Wanna take you higher… Baby, baby, baby, light my fire… Wanna take you higher… A little Sly Stone on a Friday morning!

And under the category of “Wow! I could’ve had a V-8!” Or… I should’ve listened to Chuck years ago… Chinese Central Bank Vice Governor Su Ning, was quoted in a local newspaper regarding the renminbi (CNY)… Let’s listen in… “The economic backdrop is arguing for a faster renminbi appreciation” and that, here’s where the V-8, and yours truly come into play… “Flexibility of the exchange rate will increase this year to help CURB INFLATION” That’s right! After all these years of harping in the Pfennig that the Chinese should allow the renminbi to appreciate faster to help fight inflation, I think they’ve finally come around to “Chuck’s way of thinking”… By Joe, I think they’ve got it! (You have to say that in your best English accent)

Currencies today: A$.8815, kiwi .7730, C$ 1.0110, euro 1.4710, sterling 1.9790, Swiss .8975, ISK 61.50, rand 6.8440, krone 5.3550, SEK 6.37, forint 172.63, zloty 2.4535, koruna 17.7975, yen 109.50, baht 29.79, sing 1.4320, HKD 7.7870, INR 39.34, China 7.2720, pesos 10.8770, BRL 1.75, dollar index 76, Oil $98.82, Silver $15.35, and Gold… $861.80

That’s it for today… I received a note from our old Corporate FX guru, Ashish, yesterday. He still sends me thoughts on the currencies… Great stuff! We’re supposed to see a warming trend to get us out of the deep freeze we’ve been in… I heard last night that there were snow showers in Daytona, Florida! BRRRR! So, bring us the heat! In a month I’ll be heading down to Orlando Florida for the World Money Show that’s held at the Gaylord Palms Convention Center. Why not get away from the cold and head down to Orlando? This is a great investment show (even with all the stock guys running around! HA!) Wanna know more? Click here.

Time to get ready for my trip to the office… I sure hope you have a Fantastico Friday, and a wonderful weekend!

Chuck Butler
January 4, 2008

The Daily Reckoning