Big Data Week

Good day. Let the NCAA bracket stress begin! Yes, the next couple of weeks will be quite exciting for college basketball fans. So, let the games begin! Friday is St. Patrick’s Day, so start looking for that green derby! This week will be interesting given the data last week, and the data to come. So, hold on tight.

The Jobs Jamboree on Friday saw job creation jump to 243,000, with last month’s 193,000 revised down to 170,000 and the unemployment rate tick back up to 4.8%. But, the dollar bulls basked in the sun anyway! Of course, there’s no idea how many of those jobs were “good paying” jobs, and how many were minimum-wage material. That’s why I do not like the Jobs Jamboree job creation part. I do not like it in a tree, I do not like it on water skis!

So, we had a big sell off in the currencies, only to see them come back in the afternoon, and actually end the day higher than before the Jobs Jamboree data was printed! But, this is still in a range. No excursions out of the range either! The range is beginning to look a little worn for the wear, and a breakout should be in the cards soon. Of course, I think the breakout will be to the euro’s advantage.

The data cupboard is empty today, but will be restocked in time for tomorrow’s forth quarter current account deficit, which is expected to come in at $218 billion, surpassing the third quarter’s $193.8 billion deficit! This is most likely going to buy the current account deficit at 7% of GDP! Ouch! That should hurt! It just needs to find the chink in the dollar’s armor! Yes, the unprotected spot that would cause the dollar bulls much pain, and keep them from underpinning an overvalued currency, based on the fundamentals!

We’ll also see retail sales for February, tomorrow. And here, I’ve got to believe that if it weren’t for Valentine’s Day, February’s number would be really weak! The Butler Household Index (BHI) tells me that retail sales should come in around -1%! Oh, but don’t let that awful showing in retail sales get in the way of the dollar bulls! They will find some good in the number to warrant (in their minds) support for the dollar.

I was reading a story over the weekend about the next G-8 meeting that will be held in Washington next month. There’s already talk going around that the G-8 finance ministers will be talking “Global Imbalances.” Central bankers and economists have long cautioned that the gaping U.S. current account deficit could lead to a sudden drop in the dollar. One source said, “We haven’t decided anything but we are likely to talk about global imbalances.”

Well, it is about time, guys! Come on. If these guys were chicken farmers, they would have allowed the fox to eat all the chickens before they would have a meeting to decide to secure the hen house! G-8 should have dealt with this growing unsustainable problem years ago. It will be very interesting to see what comes of that meeting. I sure hope it’s not all about China bashing!

Recall last week, when I wrote to you about the Port Gate? I said then that I didn’t see the decision as favorable for the dollar. Well, there are stories going around that some of the Middle East countries are talking about converting a larger portion of their dollar reserves to euros. Of course, they could also be doing that to have a large euro reserve ready for the opening of the Iranian oil bourse. It is hard to say what the reason is, but I’m sure that the protectionism that the United States has now put in place is the number one answer. Survey says!

Looks like the strong economy in China and the stronger renminbi are having the right affect on Chinese trade surplus. Or is it a case of window dressing? China’s February trade surplus fell to $2.45 billion from $9.49 billion in January. Imports really boomed, while exports slowed during the month. However, I think this is all window dressing. China is doing everything they can to keep U.S. lawmakers from imposing tariffs on their exports. So, what would stop them from dressing up the books to keep the U.S. lawmakers at bay? Nothing! Either way, February’s trade surplus took quite a drop from the previous month, eh?

Gold and silver really had a rough week, didn’t they? Of course, I could have told you that would happen since I bought both on our first day of trading! Recall, I’m the laughing stock that owns silver over $20 an ounce! So, now I’m averaging in! Ha! But seriously, I would look for both precious metals to rebound this week, as the prices they reached last week, should begin to look quite nice for funds, and large holders.

The base metals like copper have come back strong already, and that’s a good sign for all metals, including gold and silver. Oil is also on the rebound as the words get a little heated between the U.N. and Iran over their nuclear program. Iran has said the “international community may suffer if the U.N. imposes sanctions.” Hmmm. Here we go again with the tough rhetoric.

So, with oil seeing some higher price pressure and base metals on the rebound, the selling of Canadian loonies should be about over. It looked really overdone to me on Friday, so… If you’re still looking for the Blue Light special, I think it has time to run, but it won’t last forever! (Geez, Louise – that sounded like a car commercial!)

Currencies today: A$ .7330, kiwi .6420, C$ .8620, euro 1.1933, sterling 1.7290, Swiss .76, ISK 71.70, rand 6.24, krone 6.6820, forint 218.50, zloty 3.2940, koruna 24.18, yen 118.90, baht 39.18, sing 1.6270, China 8.0505, pesos 10.70, dollar index 80.75, silver $10.035, and gold… $545.02

That’s it for today, and this week for me. Chris Gaffney will guide this ship the rest of the week, as I head to Florida. I’ll pick it back up next Monday from my hotel room, before I head back to St. Louis. The Metals Select product is really taking off for us. You can’t beat that “pooled account” for value! Now, where’s that NCAA bracket? What no Mizzou? Ha! Have a great Monday and week!

Chuck Butler
March 13, 2006