A Jobs Jamboree Friday

Good day. And a Happy Friday to one and all! It’s Super Bowl XL weekend, with two teams playing that should result in a good game. I get back home on Sunday in time to watch my taped episode of 24. Then I’ll tune in for the Super Bowl! I’ll be back in the saddle on Monday. I’ll be worn out, but I’ll carry on despite my physical state!

Well, yesterday was a real boring range-bound day in the currencies from what I can see. The range went to 1.2112, and backed off to 1.2060. Of course, I was at our booth all day, with a presentation at the end of the day, so I had no opportunity to check on things throughout the day. But I’ve tried to catch up this morning, and things look about the same to me. The dollar does seem to want to strengthen on the Jobs Jamboree number that is expected this morning. But there have been so many surprises in the last year with the Jobs Jamboree, I’m sure the dollar bulls will want to see the color of the report before extending themselves any further.

The Jobs Jamboree is expected to see 250,000 jobs created in the United States during a warm January. That sounds about right to me, so I won’t be climbing out on any limbs this month. Good thing too, after that meal I had last night!

So, we could see dollar strength heading into the weekend. I would certainly look to see if it affects the Canadian dollar/loonie. I’ve been telling people down here that ask me about buying loonies that they should see if there is a pull-back…a dip…a mini-correction to maybe 86 cents, which would be a much better level to buy. But if we don’t see any opportunity today, (if the jobs number is as strong as expected) than you had better not wait, because this locomotive will have left the station, and you might miss hopping aboard as it goes by!

You know, late last week, I told you about a former Fed Reserve Bank president coming clean and talking about the imbalances in the world and how the U.S. dollar was heading for tough times. Well, I see where another semi-official person has spoken out. Let’s listen in to see what he has to say!

This is Tim Adams, the U.S. Treasury’s top international official speaking about the IMF’s failure to stop these imbalances: “A strong IMF role on exchange rate issues is central to the stability and health of the international economy, the fund’s leaders should endorse such an enhanced role for the IMF, restoring its central role on exchange rates.”

Ok. What he’s talking about here is the IMF’s failure to step in and force China to float their currency. So, when you circle the wagons, it all come back to the fact that U.S. officials are in dire need of a weaker dollar. They are begging for it! This is absolutely, a message that I don’t think the markets get the picture. Well, at least not now. They will eventually, and some loud mouth will start doing a Chicken Little imitation, and claiming that he was the first to see the coming of a weaker dollar! Non-sense! We all know the truth!

I did see where the price of gold reached a 25-year high in the Asian trading session of $575.35, yesterday. Awesome!

There was some good news for New Zealand on Wednesday, as their trade deficit for the last quarter of 2005 actually narrowed. Good news here has been hard to find lately, and this certainly does qualify as just that. In addition, there was also a Euro/kiwi bond issue done for $100 million from a Nordic Investment Bank. Those types of issues had really dried up lately, which had been a huge source of kiwi strength over the past four years. So, it was nice to see one again.

You know, the kiwi has been very resilient in the face of a current account deficit that threatens to go as high as 9% of GDP by next year. The high interest rates keep foreign investors intrigued, but I’m going to continue to say that I think kiwi is surviving on borrowed time. The first perception by the markets that the interest rates may be cut will be the fuel that lights kiwi-selling fire. So, be careful! Oh, and I’m not saying to break CDs! Just talk to us when you receive your maturity notice, and we’ll discuss the options with you. I’m also not saying that there will be a rate cut soon! No, this is something that is down the road.

Putting this together from the road has become a real challenging task. So, with all the time that it takes me to get this saved and sent, I had better cut this off here, and head to the big finish.

Currencies today: A$ .7540, kiwi .69, C$ .8725, euro 1.2070, sterling 1.7760, Swiss .7760, ISK 62.95, rand 6.0750, krone 6.6475, forint 207.90, zloty 3.17, koruna 23.6050, yen 118.50, baht 39.40, sing 1.6330, China 8.0608, pesos 10.49, silver $9.84, and gold $576.20

That’s it for today. Don’t forget that our presentation at 2:30 EST this afternoon is going to be Web cast. This ought to be really interesting. I certainly hope I don’t freeze up in front of a camera! As many times as I have done these, one would think I could do them in my sleep…which is what I would like to be doing right now – sleeping! But I carry on. Have a great Friday, and a wonderful Super Bowl weekend!       

Chuck Butler
February 3, 2006

The Daily Reckoning