Currencies Trad in a Tight Range... Again

There are a few things to discuss this morning, but none so important as the Jobs Jamboree that will happen in a couple of hours. I told you yesterday that the economists surveyed believe that the jobs lost number will make a big move downward from 476,000 in June to 325,000 in July… That’s a HUGE jump, folks! Ty Keough responded to that note in the Pfennig yesterday by saying, “That’s because there are no more jobs to cut!” Now, that’s one way of looking at it… We have to hope that it’s not that, but instead be a reflection of jobs being added… Come on! We can hope!

Yesterday, the Weekly Initial Jobless Claims printed what I think is a worse than expected number… The media however, looked at it differently… Here’s the skinny… The Claims filed last week hit 550,000, and were expected to be as bad as 580,000, which is why the media began firing off headlines about Jobless Claims falling… And that’s fine… But the thing that caught my eye was the rot on the Continuing Claims part of the data. This is the number of people who are unemployed and are currently receiving unemployment benefits, and that number jumped to 6,310,000… That’s over 6 million people that are still receiving unemployment benefits; it does not count those that have had their benefits expire… It’s not a pretty picture, folks…

And… This might give you an idea of the total unemployed… The number of Americans receiving food stamps pushed to a new record-high in May. 34.4 million people, or one in nine Americans received food stamps, and this was the 6th consecutive month on increases, so we have June and July to catch up with here… UGH!

OK… Enough of that labor talk! The currencies once again traded in a tight range yesterday, but this time the bias was to buy dollars, for the first time this week. But like I said, the trading range was tight. The euro (EUR), for instance, popped up to 1.4425, then down to 1.4335, then back to 1.44, only to spend the rest of the day in the 1.43 handle.

Pound sterling (GBP) was knocked off its perch as the star performer currency yesterday when the Bank of England (BOE) decided to EXPAND their bond buying. Recall, I had told you earlier this week that the recent stronger economic data had the market participants thinking the BOE would call off the bond buying/quantitative easing (QE)… But the BOE had other plans! And the currency got taken to the woodshed, and rightly so! QE is bad… Say that out loud… QE is bad… And more QE is even worse!

In the overnight market I noticed something that I’m sure most people will not even take the time to read… Here’s the skinny… I’ll give you the headline, and then you try to figure out how this plays well with what I’ve been writing about… “Australia to Resume Sales of Inflation-Indexed Bonds”

OK… If you said… Australian officials must see inflation pressures in the future, which plays well with what Chuck told us earlier this week about how the Reserve Bank of Australia (RBA) raised their bias for interest rates from accommodating to neutral. If you said that, then you get a Gold Star today! You’ve been paying attention in class! To the Head of the Class you go!

Seriously, though… This is the first time in six years that Australia will issue inflation-indexed bonds… That’s a warning signal we just heard, folks.

Did you happen to see the BIG BOSS, Frank Trotter on CNBC yesterday? Our PR people sent out a note last week and asked both Frank and myself if we wanted to do a shot on CNBC… Having been ambushed there twice in the past two years, I pleaded with Frank to do it, and he graciously accepted the mission. And he executed the mission to a “T”! He told people that they needed to diversify with currencies, and talked about Norway and Australia as key components of a diversified portfolio, and then added in Brazil for those with a speculative axe to grind. He even mentioned our new 100% principal protected MarketSafe BRIC CD! Way to go Boss! As it turns out, I should have done the piece, as no ambush took place, but who knew?

Speaking of Brazil… Our newest guy on the desk, Aaron, sent me a note yesterday afternoon, with Martin Weiss’s latest letter… It seems that even Martin Weiss believes that Brazil will be one of the first countries to recover from the global recession, and that it is a good place to invest… At least that’s what I got from the letter. When someone as well read and respected as Martin Weiss talks about Brazil, then we should take notice, eh?

In the Eurozone this morning, German industrial orders increased for the second consecutive month, rising 4.5% in June. The forecasts were for a 1% gain, so this move was unexpected to say the least! The data is old though, and did not give the euro any reason to move higher.

And the Swiss franc (CHF) continues to move higher despite warning and warning about these moves by the central bank. I find this to be funny… Like funny , HA, HA… The Swiss central bank began warning the markets to not take the franc higher and for five consecutive weeks the franc has moved higher versus the dollar. You see, if the central bank doesn’t make the money talk, then their verbal warnings don’t amount to a hill of beans! My dad used to tell me… Money talks… BS walks… I think that plays well here in Switzerland!

Hmmm… Did you see the retail sales data yesterday? The ICSC Chain Store Sales for July fell 5%. I guess the real problems for retailers will come this month, for if they are unable to push higher with the back-to-school sales, then I think the pundits and economists that are calling for an end of the recession now, will have to go back to their drawing boards!

And… You knew I would eventually get around to this… But the Cash for Clunkers or CARS program got $2 billion more yesterday. This is being hailed as a great program to get Americans buying more fuel-efficient cars, while euthanizing their old cars, and stimulating the economy. Apparently, dealers are running out of inventory… That sure seems to be strange to me. Here’s what I think is going on… People trade in cars for new cars all the time. According to, Americans would have traded in about 200,000 clunker-type vehicles in a typical three-month period. So… Have we just taken that 3-month period and crammed it into two weeks to take advantage of the CARS program? For an industry that was expecting to sell about 10 million cars and trucks this year, that’s a 0.5 percent sales boost. I don’t see the euphoria… But then I’m not trading in a car right now!

The Daily Reckoning