Strong Jobs Revision

Good day…Well, with the baseball season over…I get to concentrate more on my beloved Missouri Tigers, and the Rams…neither of which performed very well this past weekend. So, when do pitchers and catchers report?

The Jobs Jamboree on Friday was interesting to say the least! As I said on Friday, I thought it would be interesting to see the revision to the awful showing of 51K jobs created the previous month… And guess what? That’s exactly what happened! A very interesting revision of 97K was made, bringing the total for September to 148K. Now…how could the previous month’s number be off by 97K? Who’s doing the bean counting at the Bureau of Labor Statistics (BLS) anyway? My little buddy, Alex, could count the jobs better than that! But then, given the fact that the BLS has already told us that they will add 810K “found” jobs next year, it gives you a good idea of the poor shape of the abacus the BLS is using!

This revision, and the fact that the BLS tells us that the unemployment rate fell to 4.6% from 4.8% was just too much for the markets to pass up. The dollar rebounded by three quarters of a cent versus the euro, and we went into the weekend on a sour note for the currencies after spending most of the week in rally mode.

Now I don’t want to get on my soapbox already on a Monday, but this unemployment rate stuff is just too easy a target for someone like me to let slip by. Did you know that the BLS does not count individuals who have had their unemployment benefits expire as unemployed? How about those individuals in jail? Not that they have any chance of getting a job…but again, not counted as unemployed. And then finally, those that have disabilities that do not allow them to work – again, not counted as unemployed. What a crock!

OK…leave that alone, and get back, get back, get back to where you once belonged…over in the Eurozone. The European Commission has raised their forecast for the economic growth next year to 2.1% versus the previous forecast of 1.8 percent. They also lowered their inflation forecast to 2.1 percent. Hmmm…growth of 2.1% and inflation of 2.1 percent – doesn’t sound like they want to go out on any limbs, eh? And it certainly doesn’t sound like the hawkish sounds coming from the European Central Bank (ECB) ministers.

In the United Kingdom this morning, U.K. manufacturing slowed unexpectedly in September after gaining the previous four months. I’m not sold on the idea that many are harboring right now, and that is that the U.K. economy is slowing down. There’s been no other data that suggests this, so until I see some that does, I just put this down as a rogue report – nothing more, nothing less. I still say interest rates in the United Kingdom are going higher this month, and that should underpin the pound sterling allowing it to move higher versus the dollar.

Did you see the employment number in Canada on Friday? The Canadian economy added 50K jobs in October! That’s a banner number for Canada!

And in South Africa, there are rumors that the South African Reserve Bank (SARB) is going to raise rates two more times in the current rate hike cycle taking rates to 9.5 percent. With the carry trades back in favor with the markets, I would have to think that the rand would rebound. And then we have the price of gold…

How about that price of gold? The price was set at $625 at the London Morning Fixing. That’s a 9% rise in the past month! I read more and more every day from economists and traders that the price of Gold should continue to go higher, due to what they believe will be a continuing weakening of the dollar. As I said last Friday, there has been a veritable Whitman’s sampler of weak U.S. economic data, and even with the trumped up unemployment data, the U.S. economy is teetering.

Yesterday, I listened to a speech by Jimmy Rogers, who was speaking in Asia. The investment biker said that the U.S. economy may already be entering a recession. He went on to talk about his favorite subject, commodities. I’ve talked about how Jimmy Rogers explains the history of Bull Market Commodity trends, but for those of you who are new to class…in his book, Hot Commodities, Jimmy Rogers tells about the research he did going back 200 years. The shortest Bull Markets Commodity trend lasted 15 years, while the longest one lasted 22 years. He then reminded the crowd that we have only been in this Bull Market Commodity trend for six years.

Of course, you may be one of those naysayers, that don’t believe in trends but are intrigued by commodities. However, you don’t want to experience a loss. Hmmm…have I got a product for you! The EverBank MarketSafe Resource/Commodity CD…100% principal protection, and 100% of the average upside as measured by the Dow Jones AIG Commodity Index. How can you go wrong? You don’t experience “market risk” and the term is only three years!

OK…I just couldn’t pass that opportunity up. We have this incredible product, and there are still investors out there that don’t know about it!

The data cupboard in the United States is bare today, but will yield a key report on Wednesday. The September trade deficit report will print on Wednesday, and I can see and hear the dolts spinning the number already. Here’s the skinny…it looks like the experts are forecasting a monthly deficit of $66 billion versus the August record number of $69.9 billion. The media will be all over this “narrowing” like a cheap suit! Never mind the fact that at $66 billion, we’re still pushing the $800 billion annual trade deficit number! Oh no…we’ll hear all about how the stars are in alignment, the karma is flowing and everything is as good as gold with the trade deficit! Hogwash!

Currencies today: A$ .77, kiwi .6665, C$ .8810, euro 1.27, sterling 1.8970, Swiss .7860, ISK 68.10, rand 7.3950, krone 6.50, SEK 7.20, forint 204.28, zloty 3.01, koruna 21.98, yen 118.25, baht 36.70, sing 1.5670, HKD 7.7822, INR 44.90, China 7.8811, pesos 10.82, dollar index 85.90, Silver $12.53, and Gold… $625

That’s it for today…Tomorrow is Election Day, thank goodness! My poor remote is getting worn out from me changing channels every time a political ad comes on! These political ads are ridiculous. I can’t wait for the national election in two years! NOT! Don’t get me wrong, I love the fact that I have choices, and get to vote…I just can’t stand the non-ending political ads on TV and radio! Have a great Monday and week!

Chuck Butler
November 6, 2006

The Daily Reckoning