Good day… And a Marvelous Monday to you! A very nice, but hot weekend here… But hey! It’s August, it’s supposed to be hot! Friday was an awful day for most of the currencies, and there was a HUGE surprise in the Jobs Jamboree (according to the BLS, of course!)… And, at the end of updates, I’ve got a story for you about stealth QE, you’ll not want to miss a minute of that! So… Let’s go!

Well, Friday’s Jobs Jamboree was quite interesting to say the least… I had already told you about the forecasts for a HUGE drop in job losses for July from 467,000 to 325,000… But the number, according to the BLS, was 247,000!!!!!!! Way to Go Corporate America! Geez Louise, I wish it were that full of seashells and balloons! This smells of yesterday’s fish folks… OK, let me get this straight… The forecast was for 325,000 job losses, and an unemployment rate of 9.6% (up from 9.5% in June)… And the jobs lost were 247,000, a difference of 78,000, and the unemployment rate fell to 9.4%… So, the BLS is telling me, and you, that 78,000 jobs not being lost, was equal to .2% (9.6 to 9.4)? Come on! I didn’t just fall off the turnip truck!

So… You know what? I’m not even going to go down the road I usually travel of digging into the numbers, and pointing out what buffoons the BLS people are… No! I’m going to take the road that tells me to smile, and be happy about the fact that the job losses have peaked, and maybe, just maybe, we’re on the road to recovery… How about that?

Of course the little guy on my other shoulder is telling me to say something about how Corporate America rushed to the exit doors with jobs cuts to prepare for the tough row to hoe, which was to be 2009, and therefore maybe, just maybe, cause you never know, all the jobs that can be cut have been cut, there are no more to cut, without going out of business!

But you won’t hear that from U.S. officials, who took Friday’s Jobs Jamboree as an opportunity to remind everyone that this wouldn’t have happened without the stimulus… Hmmm The current administration is in real bad need of a “win” , you know something that makes them look like they know what they are doing, so they can get the Health Care shoved down our throats… I won’t say anything else about this, because it’s not for this discussion… But in my backyard with neighbors all around, I let them all know how I feel, for sure!

So… Last week, I told you that given the way currencies and stocks had traded together as risk assets for the last 9 months, that should the Jobs Jamboree print as forecast that the it would be negative for the dollar. I WAS WRONG! OK… Let me play this out for you… For the last 6 months, any time a piece of data gave the impression that the U.S. could weather the recession / depression, the dollar got sold… Remember, the only reason people / investors were holding dollars was as a “safe haven” play with Treasury purchases… So, if things were looking brighter there was no reason to hold the “safe haven” purchase. Treasuries were unwound, and dollars were sold…

But… Friday’s Jobs Jamboree, played out differently! The strong (I know, there were still 247,000 jobs lost, it’s not like it was 0!) data caused this HUGE dollar buying binge, and it went fast, and furious, and all day on Friday! The euro traded through the 1.43 and 1.42 handles like a hot knife goes through butter… Japanese yen fell through 2 big figures too, along with pound sterling… It was ugly for the Big 3… The selling carried over to the Swiss franc, and Canadian dollars… Not as ugly as the Big 3, but a noticeable loss just the same…

Not all currencies got sold though… The high yielders like Aussie, and kiwi, Brazil, all held onto and in some cases added to gains VS the dollar… I have to clarify something I wrote about on Friday, as I had more than a few questions about what I was saying… In speaking about the Australian Gov’t issuing inflation-indexed bonds again after a 6-year hiatus, I said that it was a sign… Well, I should have gone further and explained that if the Australian Gov’t is going to sell inflation-indexed bonds, then they see the need to do so based on their inflation projections, and if they see inflation, the Reserve Bank of Australia (RBA) will see inflation and adjust interest rates higher accordingly… Higher interest rates for Australia is like manna from heaven for the A$…

So… Risk asset appetite is changing… It’s getting picky… And only wants yield… Tired of the paltry yields that Treasuries provide, or most Gov’t bonds for that matter! Our Foreign Bond Trader, Don Ries, tells me that he is swamped with calls for Brazilian bonds, that have a nice yield advantage.

To prove this further… Gold and Silver were sold, along with the currencies I already talked about, that have no yield! Shoot Rudy! Even the Mexican peso is on the rally tracks, and that they don’t even have a huge yield advantage! But they have a yield advantage, and that seems to be the line in the sand right now… So, currency traders should be wearing shirts that say: Got Yield?

Speaking of Australia… I also noticed that they had a bond issue last week… They did a 4+ year Treasury auction of $800 Million 6.5% bonds… The reason I mention this is to point out the difference of the auction size between Australia and the U.S. and the yield… Hmmm…

I guess I can’t avoid saying this, so I might as well get it out there… Equities are certainly the choice of investors right now too… I just can’t help but think this is a one HUGE trap for equity investors… But that would involve more conspiracy theory, and I’m not going there today…

There is no data scheduled to be printed today, so the markets will deal with Friday’s trading, and begin to look at the Central Bank meetings this week, which are dominated by the Fed meeting on Wednesday… Norway’s Norges Bank will also meet on Wednesday. It will be interesting to hear what the Fed has to say after their meeting on Wednesday…

And then there was this… I call this: Stealth QE… Let me see what you call it after reading…

Well… Have you ever wondered who was buying all those Treasuries that the U.S. keeps forcing on the markets? If we follow the results of the auctions we know they were all bought… And the markets continue to think… “I guess deficits aren’t anything to worry about”… BUZZZZZZZZ! Wrong! Thank you for playing, there’s a nice parting gift for you at the door… Johnny… Tell them what they won! You see…

It was uncovered this past weekend by a guy named Chris Mortenson that the past auction of $28 Billion in 7-year Treasuries had a twist to it… A large chunk was purchased by Primary Dealers to the tune of $10 Billion worth of the auction, and then, very quietly, without fanfare, and right under the noses of the currency traders and media that are supposed to be following up on this stuff… The Fed bought it all back from the Primary Dealers… That’s Quantitative Easing folks, they monetized the debt, and with all the fanfare of being more transparent, they did it under the dark of night in a back alley… Shame, Shame, Shame!

Is this not a sad state of affairs, that not only did the Fed HAVE to monetize the debt, they did so in a way to manipulate the markets, and pull the wool over the eyes of the public! Would this have been a “failed auction” if the Fed hadn’t worked out this deal with the Primary Dealers? I think so! And the Fed, dealt a blow to currency holders by pulling off this shell game! And the calls for the current administration to be transparent, along with the Fed… All comes back to haunt them… So… I hope the major media picks this story up… I know for a fact that some of them read the Pfennig, and laugh at my claims of market manipulation… Let them all laugh, one day they will be crying…

I shake my head in disgust… Oh, and for all you who think I’m trying to tell you something that isn’t true… I’ve got facts, so don’t even think about calling me out on this!

OK… Enough of that! OH! I see that Paul Krugman thinks that Big Ben Bernanke should be approved for another term as Fed Chairman… If I were Big Ben, I don’t know how I would take that… Hmmm… I better think about that one!

Of course, if I had any say in the matter, I would fire them all! Anyone that had anything to do with the bailouts, stimulus, brokering banks and broker deals, deciding who remains open and who closes their doors… Fire them all I say! I won’t even go down the road regarding the politicians…

Data this week will include the Trade Deficit, Productivity, Unit Labor Costs, Monthly Budget statement, which ought to be something to see… We’ll also see Retail Sales, which you would think would be better, but given the Chain Store retailers report last week, Retail Sales would certainly be a question mark…

Currencies today 8/10/09: A$ .8425, kiwi .6765, C$ .9255, euro 1.4205, sterling 1.6630, Swiss .9250, rand 8.02, krone 6.1220, SEK 7.1770, forint 189.65, zloty 2.9025, koruna 18.14, yen 97.10, sing 1.4410, HKD 7.75, INR 47.8225, China 6.8343, pesos 12.88, BRL 1.82, dollar index 78.82, Oil $70.81, 10-yr 3.86%, Silver $14.49, and Gold… $954.35

Chuck Butler

Source: A Big Jobs Surprise!

There’s no question that the U.S. job market is tough across the board right now. But not all pain is created equal: There are regions of the country – and sectors of the U.S. economy – that haven’t been hit quite as hard as others.

Indeed, some regions – and some sectors – that are proving quite resilient.

So, if you’re in the market for a job, it might be a good idea to target those areas and sectors that have demonstrated flexibility over several decades and are best able adapt to 21st century trends.

For job-seekers, it all comes down to this: You have to know what’s hot – and what’s not.

The three graphs below – based on data from the Federal Reserve Bank of St. Louis – show the number of people working in the 12 different sectors of the U.S. economy since 1939. The shaded areas represent periods of recession.

Virtually all of the sectors have grown consistently over the past 70 years. The one noticeable exception is manufacturing, which peaked in the late 1970s and has been in decline ever since.

Government jobs and jobs in education and healthcare – referred to as “Eds & Meds” in economic parlance – have provided the most consistent growth, even in the current recession, which has also been the most severe in the time period studied. However, the biggest supplier of jobs continues to be the trade, transportation and utilities sector.

In the current recession – which began in December 2007 – job losses were severe in the commercial and resident real estate business, but more recently have shown signs of stabilizing. Employment in construction decreased by 59,000 in May, compared with an average monthly job loss of 117,000 in the industry for the previous six months, according to the U.S. Labor Department.

Job losses in professional and business services also moderated in May. The industry shed 51,000 jobs, compared with an average loss of 136,000 jobs per month in the prior six months.

Employment in the leisure-and-hospitality and government sectors was about flat, but the manufacturing sector continued to deteriorate— with employment falling by 156,000 for the month.

But the healthcare sector continued to display resilience, increasing by 24,000 jobs. That makes sense: Long term, as the U.S. population continues to “gray,” the healthcare sector figures to keep adding workers in order to keep pace.

Job Growth in the ‘Clean Energy Economy’

While healthcare and education, along with the government, continue to be the most consistent employers of the American public, increased environmental awareness and more government incentives have made the clean energy sector a viable option for steady employment.

In fact, from 1998 to 2007, the number of jobs in the “clean energy economy,” grew nearly two and a half times faster than the overall job market, according to a recent study by the Pew Center on the States.

Jobs in the clean energy economy grew at a rate of 9.1% during that time, compared to a rate of 3.7% for traditional jobs. By 2007, more than 68,200 clean energy businesses across the United States accounted for about 770,000 jobs.

The clean energy economy includes jobs in clean energy, energy efficiency, environmentally friendly production, conservation and pollution mitigation, and training and support.

The report found that 65% of jobs in the clean energy economy are in the category of conservation and pollution mitigation. However, jobs in the categories of clean energy, energy efficiency, and environmentally friendly production are growing at the fastest rate.

California has more jobs in the clean-energy economy – more than 125,000 – than any other state, and that number has grown at an average annual rate of 0.9% between 1998 and 2007. Other states in the Pacific Northwest – Oregon and Washington – also have large and growing clean energy industries. Florida, Texas, Tennessee, and Colorado are also notable for their large and growing clean energy industries.

The St. Louis Fed report notes that venture capital was a driving force behind clean energy before the global financial crisis struck. In 2008, investors directed $5.9 billion, or 15% of all global venture capital investments, into the clean energy economy, a 48% increase over 2007. Between 1998 and the end of 2008, a total of about $12.6 billion in venture capital money had been directed into the clean-energy economy.
Of course, venture capital investment has declined considerably since the collapse of the global economy. The Pew Center study found that during the first three months of 2009, investment in clean energy was down 48% compared to a year earlier. However, the report also found that investment in clean energy still outpaced such investment elsewhere. During the same time period, total venture capital investment decreased by 61%, and that trend is expected to continue.

“Analysts suspect that the green industry will weather the downturn better than other market segments, both because of stimulus and because the drivers for growth are still there,” Kil Huh, Project Director for the Pew Center on the States and a principal author of the study, told Social Funds.com. “Consumers continue to call for a viable alternative to traditional energy sources.”

Furthermore, increased government investment should help compensate for the dearth of venture capital. The American Recovery and Reinvestment Act of 2009 (ARRA) provides $85 billion in spending for energy and transportation, and includes $21 billion in tax incentives for renewable energy, as well as more than $30 billion for spending on a variety of clean energy programs.

Additionally, 29 states and the District of Columbia have established renewable portfolio standards, Social Funds reported. And 19 states have established Energy Efficiency Resource Standards that encourage a continual increase in energy savings on the part of utilities.

While venture capital was abundant in the years leading up to the financial crisis, government funding was absent. Huh believes this new wave of political support will continue to carry the industry until private sector investment rebounds.

“The growth happened with a lack of sustained government support, and we suspect that recent government actions will help job growth in the green economy significantly,” Huh said. “Federal proposals for a market-based system for climate control will help shape consumer demand. The legislation would move the entire industry in that direction of clean energy. The green energy economy seems poised for continued growth.”

Location, Location, Location

Just as some sectors have fared better than others, the financial crisis has had an unequal impact on various metro areas across the country. Parts of the country that had overly inflated property markets suffered greatly from the collapse of the housing market. Similarly, local economies in the Midwest were devastated by bankruptcies in the American auto industry.

On the other hand, metro areas with high concentrations of government jobs or jobs in health and education have been much better off.

The Brookings Institution’s MetroMonitor examined such economic indicators as employment, unemployment, wages, output, home prices and foreclosures throughout the first quarter of 2009.

“Economic pain is widespread in Midwestern metro areas that depend heavily on the auto industry and its supply chain,” the report said. “Most metro areas in Michigan and Ohio have experienced employment and output declines exceeding national averages. Several, including Dayton, Detroit, and Youngstown, began losing jobs two to three years earlier than the U.S. economy as a whole.”

These areas are likely to continue to struggle as both General Motors Corp. (OTC: GMGMQ) and Chrysler LLC engage in lengthy restructuring processes.

Additionally, large portions of the South and West – including such states as Florida, Arizona, Nevada and California – continue to suffer the fallout from the housing collapse.

However, the effects of the financial crisis have been far more muted in other parts of the country.

“Job losses have been more modest, and housing prices have risen slightly, in many Northeastern metro areas that have less auto-oriented manufacturing sectors (e.g., aerospace in Hartford [Connecticut], photonics in Rochester [Upstate New York], plastics in Scranton [Eastern Pennsylvania]),” according to the MetroMonitor. “Parts of the Southwest and Deep South—including metro areas in New Mexico, Texas, Oklahoma, Arkansas, and Louisiana—have performed relatively well, experiencing less severe job losses, relatively large wage gains, and modest home price increases.”

The report attributes buoyancy in the Southwest – particularly Texas – to a strong specialization in energy. It also points out that large amounts of hurricane recovery funding for the Gulf Coast and smaller increases in housing prices in the earlier part of the decade could also be factors in that region’s resilience.

Predictably, city centers with large educational and medical labor forces performed better than the broader job market. Metro areas with specializations in education and healthcare saw employment drop by an average of 2% from the fourth quarter of 2007 through the first quarter of 2009. That compares to a national employment decline of 3.7% over that same period.

Metro areas with a specialization in government/military employment – such as Washington D.C., El Paso, Texas, and Honolulu Hawaii – saw average job losses of 1.3%.

Some of the areas that were most susceptible to the housing collapse were also hit by a decline in tourism, as metro areas specializing in entertainment and recreation – such as Orlando, FL and Las Vegas, NV – experienced a 4% average drop in employment.

Source: Where to Find Jobs in a Jobless Recovery ]]> http://www.contrarianprofits.com/articles/where-to-find-jobs-in-a-jobless-recovery/18473/feed 0 http://www.contrarianprofits.com/articles/whos-foolin-who/17624 http://www.contrarianprofits.com/articles/whos-foolin-who/17624#comments Mon, 08 Jun 2009 17:12:30 +0000 Chuck Butler http://www.contrarianprofits.com/?p=17624 Jobs Jamboree gets a lift…  The real numbers…  The dollar comes back with vengeance!  RBNZ to meet this week…
And Now… Today’s Pfennig!

Good day… And a Marvelous Monday to you! You know the Jobs Jamboree data that printed on Friday, and created some HUGE euphoria among the media types that love to just “read the news” and not actually do the research to report it? Yes… It was a very good number, on the outside… Not that losing 345,000 jobs in a month is a good thing, but it is far better than the near 700,000 jobs lost a couple of months ago.

So… I’ve got that to talk about today… And the rebound by the dollar that has taken the euro to the 1.38…

Fortunately for us, the report wasn’t as bad as expected. However, the job losses are still significant and still approaching historical levels.

Before I get to the historical aspects of the job losses, there’s something else to consider when looking at the job losses: where the losses are occurring.

The losses aren’t simply blue-collar workers. They are also white-collar. And the hard part for many of the individuals who have lost their jobs recently is that their jobs may never come back. So it isn’t a matter of waiting around until a new job opens up when the economy turns around. The jobs will simply never be there again. For example, last month the economy lost approximately 149,000 jobs in the manufacturing sector. Many of the plants that closed will never open again. The same goes for some of the 110,000 construction jobs that were lost last month. Even white-collar employees are facing grim prospects. Last month, professional and business services lost 122,000 jobs. Whether the company went out of business, consolidated with another one, or simply trimmed ranks, these jobs are gone for a long time, perhaps forever.

Adding to the problem, many of these workers are not easily transitioned to ‘burgeoning’ job fields. For example, an autoworker who has worked for years in plants can’t simply transition over to the healthcare sector to find employment. They need time to take classes, learn, and become proficient in their new fields. Never mind older workers who have no desire to switch jobs at such a late stage in their careers.

So how historically bad have the job losses been? It depends on the comparison.

In terms of the shear number of jobs lost, the last 16 months have been staggering. We have doubled the previous number of jobs lost in consecutive months.

However, there are simply more workers today than ever before, so for an ‘apples to apples’ comparison, let’s look at the number of jobs lost in relation to workers. To do this, I pulled up the historical data, and looked at the number of workers the month before the losses started. For example, the number of non-farm workers in November 2007 was just over 139 million. The number of jobs lost so far is 5.73 million, so the economy has shed nearly 4.13% of the workforce during the last 16 months. As you can see, we are nearly identical to the percentage of jobs lost during the 1957-1958 time period. We would only need to lose 30,500 jobs in May to eclipse the 1957-1958 period, and become the worst percentage loss ever. Unfortunately, it would take a miracle for that not to happen.

So how do the huge monthly losses we have seen stack up? Surprisingly, not too bad. To determine this number, I took the number of jobs lost and compared that to the previous months payroll figures. For example, in April, the economy lost 539,000 jobs out of the roughly 132 million jobs that were on the payrolls in March. That’s 0.55% of the jobs that were available the month before. Historically, despite the huge numbers of jobs lost recently, only January ranks in the top 10 in terms of overall percentages.

Hopefully this gives you a good frame of reference to compare the mounting job losses we are seeing right now. In terms of shear numbers and percentages we are looking at the worst or almost the worst period in history. There have been much worse monthly losses, but not extended periods.

Another record we will set very soon is the number of consecutive months of jobs lost. We currently stand at 16 months, one shy of the record. It will take divine intervention to not set the record in June.

Source: A Look At The Recent Employment Figures And How They Match Up Against Other Recessions

Last week’s report could have been worse if the numbers hadn’t been held in check by a burst of federal government hiring of temporary workers to prepare for the 2010 Census.

The report was also skewed by the way the government categorizes the unemployed.  As Money Morning previously reported, if laid-off workers who have given up looking for new jobs or have settled for part-time work are included, the numbers skyrocket.

In fact, if the latest unemployment report had included those workers, the rate would have soared to 15.8% in April, the highest on records dating back to 1994. The total number of  unemployed now stands at 13.7 million, up from 13.2 million in March.

The data released Friday wasn’t as high as the 620,000 job cuts that economists were expecting, but the payroll figures for March and February were revised to show 66,000 more job losses than previously reported.

The report showed job losses across almost all sectors of the economy, but at a slower pace than previous months.  The manufacturing sector lost 149,000 jobs in April, after cutting 167,000 the prior month. Construction industries cut 110,000 jobs after shedding 135,000 in March.

The service industry, responsible for roughly 90% of economic activity lost 269,000 jobs after eliminating 381,000 in March.

The one bright spot was government hiring, with public payrolls soaring by 72,000 after the U.S. Census Bureau began hiring 140,000 temporary workers last month to produce the population count that comes once every 10 years. It will hire more than 1.4 million people to conduct the survey over the next year.

Even though unemployment rolls are now at the highest level since September 1983, many analysts believe the numbers signaled the economy’s steep decline may be easing.

“We appear to have passed the point of the most severe job losses,” Dean Maki, co-head of U.S. economic research at Barclays Capital PLC (ADR NYSE: BCS) in New York told Bloomberg News. “It’s still a weakening labor market but it’s weakening less fast. There are a few headwinds to growth, and a recovery will” likely be “modest.”

The worst financial crisis since the 1930’s has taken a steep toll on U.S. workers and companies, and most economists expect the unemployment numbers will get worse as the housing, credit and financial sectors sort out the mess. The jobs numbers usually don’t rebound until well after an economic recovery begins.

Government “stress tests” to determine whether 19 of the largest U.S. banks had enough capital to weather further economic turmoil used an “adverse scenario” that included an average unemployment rate of 8.9% in 2009 and 10.3% next year.  But economists projected in an April survey that the jobless rate would rise to 9.5% by year-end, Bloomberg reported.

In the coming months, economists expect job losses to continue for most — if not all — of this year. But some are hopeful the cuts won’t be as deep.
“There are glimmers of hope. We are moving in the right direction in terms of layoffs. They are measurably less bad than what we’ve been through,” Mark Zandi, chief economist at Moody’s Economy.com, told the Associated Press.

The biggest impact of job losses on the economy is the threat to consumer spending, the engine that drives 70% of Gross Domestic Product (GDP).  After a first-quarter rebound, Americans could retrench again this quarter before spending shows sustained gains in the second half of 2009, according to economists surveyed by Bloomberg last month.

Joel Naroff of Holland, Pennsylvania-based Naroff Economic Advisors, thinks the numbers will be good for consumer confidence, which should help spending. In a note to investors, Naroff said the unemployment numbers are the latest in a long string of good news/bad news economic reports.

“This is a truly awful report that will likely be taken as a good report because the job losses have slowed,”he said. “As long as we continue to see the silver lining in the black clouds that overhang the data, then confidence will build.  It does look as if we are falling more slowly and we are likely to hit bottom reasonably soon, at least as far as economic growth,”

The job cuts continued this week as steelmaker Severstal International (MCX: CHMF) said it’s shutting plants in Wheeling, W.Va., and Warren, Ohio, forcing 3,100 layoffs due to the  pullback in the steel industry.

E.I. duPont Nemours & Co. (NYSE: DD), the third-biggest U.S. chemical maker, plans to eliminate an additional 2,000 positions, while Microsoft Corp. (NASDAQ: MSFT) started laying off some of the 5,000 job cuts it announced earlier this year and left the door open for more in the future.

“We will continue to closely monitor the impact of the economic downturn,” Microsoft Chief Executive Officer Steve Ballmer said in a e-mail obtained by Bloomberg News. Redmond, Washington-based Microsoft will, “if necessary, take further actions on our cost structure including additional job eliminations.”

[Editor's Note: Money Morning Investment Director Keith Fitz-Gerald is the editor of the new Geiger Index trading service. As the whipsaw trading patterns investors have endured this year have shown, the ongoing global financial crisis has changed the investment game forever. Uncertainty is now the norm and that new reality alone has created a whole set of new rules that will help determine who profits and who loses. Investors who ignore this "New Reality" will struggle, and will find their financial forays to be frustrating and unrewarding. But investors who embrace this change will not only survive - they will thrive. With the Geiger Index, Fitz-Gerald has already isolated these new rules and has unlocked the key to what he refers to as "The Golden Age of Wealth Creation". "The Geiger Index system allows Fitz-Gerald to predict the price movements of broad indexes, or of individual stocks, with a high degree of certainty. And it's particularly well suited to the kind of market we're all facing right now. Check out the latest report and find out how you can profit.]

Source: Census Hiring and Reporting Methods Minimize April Unemployment Numbers

Good day… And a Happy Friday to one and all! Let’s make it a Fantastico Friday, eh? Why not! It’s the Friday to kick off Mother’s Day weekend! More on that later, but first, let’s talk about the Stress Tests.

Personally I could just as easily forget about them, because as I’ve said over and over again, The Gov’t wasn’t going to “spook” the markets with “true results”… This whole “exercise” is a just another effort to make us all “feel good”…

OK, the rumor mill has finally been shut down, and the facts, as the Gov’t would let us know them to be, are out… Let’s take a gander at the results!

The Wall Street Journal (WSJ) reported it like this: 10 of the 19 largest U.S. Financial Institutions will be required to raise a combined $75 Billion in new capital.

The Washington Post (WP) reported it like this: Nine of the 19 banks do not need any new capital at all.

It’s all in the way you word it… Both of them are correct… The WSJ tells it like I think most people would want to hear it, while the WP, is for the Polly Annas of the world!

When it’s all said and done… This feel good circus is now over, and we can get back to dealing with the financial meltdown, deficit spending, China, and other things that are easier for us to deal with, like the story that came across the screens yesterday regarding credit card charge offs, than a feel good circus! Yes, the credit card charge offs are up 44% VS last year… Now, isn’t that one of those things that make you go, oooooooohhhhhh nooooooooo!

The currencies drifted most of the day yesterday waiting for the stress tests results, and then rallied at the end of the day with the euro pushing past 1.34 once again. The euro has fallen back below that figure again this morning, but remains close to the 1.34 figure.

Yesterday, the European Central Bank (ECB) did what I said would be the prudent thing to do, if you “had” to do it, and cut rates only 25 BPS, instead of the 50 BPS the markets were expecting. The euro had to deal with the dolts that think larger rate cuts are what values a currency… But, as I said before, the ECB wants to be able to come back to the rate cut table, if needed, and cut rates again.

Unfortunately for the euro going forward is the fact that ECB President Trichet, finally gave in to the “weak links” in the European Union, and announced that the ECB would begin to buy bonds to support the credit markets. This move was fiercely opposed by Germany’s Central Bank, the Bundesbank and it’s President, Axel Weber. I’m with the Bundesbank on this one… To bad Trichet “gave in”… This move now throws the European Union on the roster of nations employing Quantitative Easing… And you know where I stand with that!

Well… Today is the Jobs Jamboree for April… Yesterday, the Initial Jobless Claims fell from 635K the previous week to 601K… And, just like I said they would… The media was all over this move, pointing out that this is mostly likely an indication that the recession is coming to an end. Well… Today’s Jobs Jamboree is expected to show a fall in jobs lost too… I guess they haven’t polled Chrysler and GM workers… But any way, the “experts” believe April’s figure will be right at 600,000, down from last month’s 663,000… That’s quite a ride down the slippery slope don’t you think? I’m going to say that 600,000 is too “pie in the sky” and actual number will be disappointing compared to 600K. But, if it shows a figure below last month’s 663K, then again, we’ll hear about how all is right on the night, and happy days are here again…

That should boost risk assets… Should…

OK… About two months ago, I wrote to you all, and said I wanted to hear from the people that owned or worked at businesses that were doing well… I called them feel good stories, and this time “feel good” had a good connotation! First I was gone for March, then in April I kept forgetting to deal with it on a Friday… But not today! Today, I give you the first feel good story during this recession… A company that’s doing well, despite all the rot on the vine in the economy…

So, here’s how it will work… After the currency round-up, and final sign off, I’ll tell you about this week’s choice… So… Let’s go to the Big Finish, and get this Fantastico Friday started!

Currencies today 5/8/09: A$ .7590, kiwi .5965, C$ .8610, euro 1.3405, sterling 1.5050, Swiss .8860, rand 8.4075, krone 6.4675, SEK 7.85, forint 208, zloty 3.25, koruna 19.88, yen 99.40, sing 1.4650, HKD 7.75, INR 49.34, China 6.8217, pesos 13.10, BRL 2.110, dollar index 83.78, Oil $57.71, Silver $13.96, and Gold… $916.80
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>>>>> hope you liked it!

Source: A Jobs Jamboree Friday!

Needless to say, when the number of jobs lost every month is in excess of 600k, we aren’t going to see an abrupt stop. We will unfortunately set the record for consecutive months of job losses in the next few months.

Monday

Economic Reports: Pending Home Sales

The Pending Home Sales report for March comes out this morning at 10:00 am, and I am a little surprised by the expectations (flat). With all the foreclosures continuing, and prices still sliding, I think this report will show a modest increase in Pending Home Sales.

Earnings Announcements: S

Tuesday

Economic Reports: ISM Services

This could be another month of contraction in the services sector if expectations are accurate. One thing to note when the report is released is if any sectors are expanding versus contracting. Last month the only sector to display expansion was in real estate rental and leasing. In any event, until more sectors are expanding than contracting the economy will continue to languish.

Earnings Announcements: KFT, UBS

Wednesday

Earnings Announcements: CSCO

Thursday

Earnings Announcements: GM, VRSN

Friday

Economic Reports: Non-Farm Payrolls, Unemployment Rate

Earnings Announcements: TM

Source:Employment Numbers Are About To Get Historically Bad

Good day… Yesterday was a big day in St. Louis as President Obama came to visit on his 100th day in office. I can’t believe it has been 100 days since the inauguration. Time sure does fly! I’m sure Obama and the rest of his administration would like the calendar to move even faster as this recession will likely last through the end of 2009. While the government has thrown trillions of dollars at the markets in an attempt to turn them around, the key ingredient for recessionary cycles to reverse is time. There is now ‘quick fix’ for the problems we are in, and the policies the administration has begun will take time to have an impact on our shrinking economy. Obama said as much in his nationally televised press conference last night.

Speaking of shrinking economies, US GDP showed an even steeper contraction in the first quarter than that predicted by economists. US GDP fell 6.1% compared to the 6.3% fall during the last quarter of 2008. This drop confirms that we are now in the worst recession since the Great Depression. There report showed a record slump in inventories and further declines in housing. But another report released by the Commerce Department showed a surprising 2.2% gain in consumer spending in the first quarter, the most in two years. So we have consumers who increased their spending and confidence, while the US economy was contracting at near record pace.

Another report which didn’t get much press was the GDP Price Index and the Core PCE which are measures of price inflation. These numbers rose more than expected, with the GDP price index rising 2.9%, nearly doubling economists predictions of a 1.8% increase, and substantially higher than last quarters .5% rise. This sets up the possibility that we could see what many consider the worst case scenario, falling GDP with rising inflation (STAGFLATION). With inventories at very low levels, a slight increase in consumption can lead to a very quick rise in prices. But the Fed doesn’t seem to be bothered too much by that scenario, as they continue to focus on efforts to get the economy growing, with no apparent concern about inflation.

The Fed’s Open Market Committee voted unanimously yesterday to leave its target interest rate unchanged at between 0 and .25% (they really can’t go much lower!!). They also voted to continue to their purchases of long-term Treasuries and housing debt which they began last month. The FOMC statement said the contraction has slowed and the outlook “improved modestly” but the economy may “remain weak”. Job losses and a very tight credit market will likely inhibit consumer spending in the coming quarters.

As I said earlier, there was no mention whatsoever of an exit strategy on how the Fed plans to pull in the record amount of money supply it has unleashed on the economy. The Fed said they will continue to monetize the debt at an unbelievable pace: as much as $1.25 trillion of mortgage-backed securities, $200 billion of federal agency debt, and $300 billion of Treasuries. They are making these purchases in an attempt to keep interest rates at below market levels to fabricate a refinancing boom. While they have been somewhat successful in keeping rates lower than they would be under normal market conditions, these purchases are extremely inflationary and won’t be easily reversed. But the FOMC believes they will have plenty of time to worry about inflation and have decided to basically ignore it for now. Problem is, inflation can spike pretty quickly, and the FOMC will be hard pressed to raise interest rates just as the economy is starting to pull out of recession. I just don’t believe they will have the guts to be proactive with inflation, and will probably see a major spike in prices on the other side of this recession.

Inflationary concerns are at the forefront of the ECB as they prepare for next weeks policy meeting. ECB President Jean-Claude Trichet has imposed a gag order on council members as they argue over what to do next to rescue the European economy. Some members had been taking their cases to the media recently in an attempt to push the ECB into following the UK, US, and Japan down the quantitative easing path. But more conservative members don’t believe the ECB should use these untested methods, and are worried about the eventual inflationary impact of them. The ECB cut rates less than expected in April, and pushed a decision to use other methods off to next week’s meeting. Germany’s Axel Weber wants to make 1% the floor for the benchmark rates, and is against buying debt to pump additional money into the economy, while other council members want to begin asset purchases to force rates lower.

Data released this morning show Europe’s unemployment rate rose to the highest in more than three years, and inflation held at a record low, which will increase pressure for the ECB to continue to cut rates. The March unemployment rate jumped to 8.9% in the Euro area, and inflation held steady at .6% in April. Other reports released this week suggested confidence in Europe is stabilizing which could counter some of the pressure to take additional measures. Chuck will bring you the details of the ECB meeting, which will occur a week from today.

The dollar sold off on safe haven reversals, but then moved back up in European trading. So after a bit of a roller coaster ride, we are pretty much right where we started yesterday morning. But the overall market sentiment seems to be shifting back to dollar negative. Two separate reports released by currency trading desks yesterday revised their currency forecasts down for the US$. Bank of America (NYSE:BAC) – Merrill Lynch revised their forecasts for the dollar, yen, euro, and pound on the ‘rising probability’ the global recession has passed its lowest point. Their report stated the euro would recover faster than previously predicted as the global economy turns. A separate report by Citigroup said the dollar would fall if/when the 10 year Treasury note yields rise above 3.06%. Technical analysts at Citigroup (NYSE:C) wrote that past trading patterns look like they are repeating. “Buying the dollar and US Treasuries was the trade of choice toward the end of 2008 and is now unraveling,” they said.

Global deleveraging pushed investors back into US$, but as the global economy recovers (led by an increase in consumption in China), investors will move these funds out of this safe haven. Yield differentials will again determine investment direction, and growing economies will be able to attract more speculative capital. The US$, which has benefitted from the global downturn, will be sold. In order to protect your portfolio, investors should have some exposure to the currencies and metals.

One currency which has turned in one of the best performances vs. the US$ this week has been the Canadian dollar. The loonie touched the strongest level in two weeks on a move up in the price of oil. Equity markets are up, as investors have become much more confident regarding a global turn around. This confidence has carried over to the commodity markets, where oil and some of the industrial metals have been rising again. Canada relies on shipments of raw materials including oil, natural gas, copper, and lumber for more than half of its export revenues.

A report released by TD Securities, a large Canadian trading desk, predicted the Canadian dollar would appreciate by as much as 14 percent by November if it breaks through a key technical level. If the US dollar breaks below 1.1764 CAD$/$ (or above .85 UScents/CAD$) the upside opens up hugely over the next few months. The report puts a target of 1.04 CAD$/US$ (or .9615 US$/CAD$) for the loonie, a 14% increase from today’s levels.

As I touched on above, the commodity currencies turned in one of their best performances in weeks as the price of oil shot back above $50. Both Norway’s krone and the Australian dollar rallied along with the Canadian dollar. The AUD$ actually rose to the highest level in more than six months against the US$. The Norwegian krone, Australian dollar, and Canadian dollar are three of the best four currencies vs. the US$ on a YTD basis. The top performer vs. the US$ in 2009 has been the South African Rand, but recent rate cuts there may start eating into its recent strength.

South Africa cut its benchmark rate a full percentage point, the fourth reduction since December to help spur their economy. New Zealand’s central bank also cut rates to a record low yesterday. Reserve Bank Governor Alan Bollard reduced the overnight rate by 50 basis points to counter the nation’s worst recession in more than three decades. He indicated that rates may go lower, and will stay down for the foreseeable future. The kiwi sold off after the announcement.

Good economic news out of Japan has been rare, so yesterdays report that Japan’s factory output rose for the first time in six months was a surprise. And even more surprising was the fact that the pace of the output rise was nearly double that predicted by economists. Factory production climbed 1.6% in March from February, when it dropped 9.4%. In a separate report, the Bank of Japan said the world’s second largest economy will resume growth in 2010 after shrinking 3.1% this fiscal year. But I still caution investors regarding investments into the yen. The Japanese yen benefitted from the reversal of the carry trade, but global markets seem to be substantially less leveraged than before. The Japanese yen is not going to be able to benefit from another large push by additional deleveraging.

Got to go now, as we have our quarterly officers meeting in a few minutes. Sounds like it will be all good news, as EverBank continues to hit on all cylinders. It really is another Great Day at EverBank!!

Currencies today 4/30/09: A$ .7289, kiwi .5666, C$ .8383, euro 1.3263, sterling 1.4812, Swiss .8790, rand 8.4585, krone 6.5931, SEK 8.0664, forint 218.38, zloty 3.323, koruna 20.125, yen 98.15, sing 1.4775, HKD 7.75, INR 50.035, China 6.8210, pesos 13.74, BRL 2.1796, dollar index 84.49, Oil $51.81, Silver $12.62, and Gold… $889.20

Source: Shrinking U.S. Economy Puts Pressure on the Dollar

Employment will make or break this depression. Today, it’s not looking so good. 12.5 million Americans are out of work, and counting. Here’s the quick and dirty on the rest of the employment numbers this morning:

• The economy shed 651,000 jobs in February, right in line with Wall Street’s expectations. That’s the 14th month in a row of net job losses
• January and December jobs losses were revised down heavily. January was bumped down another 57,000 jobs, to a 655,000 loss. And the BLS altered Decembers by more than 100,000, to a 59-year high of 681,000 lost jobs. (Proof that these guys either put the numbers wherever they want, or that they aren’t very good at keeping track)
• Thus, over 4.4 million jobs have been lost since the official beginning of the downturn in late 2007.

The “official” unemployment rate is up to 8.1%, thanks to those revisions — a 25-year high. And you know that if the government is willing to cop to that number… it’s really much worse.

At the same time, over 7.8% of all U.S. mortgages are now delinquent, the Mortgage Bankers Association reports today. That’s the highest since at least 1972, when the MBA started keeping track. 3.3% of U.S. mortgages are in foreclosure, also a record.

The stock market is taking the news in stride… so far. Dow futures perked up about 50 points after the jobs number, and managed to open this morning up by nearly the same amount.

Then again, traders might just be taking a break from relentless selling. Major indexes were slammed yesterday. Most fell over 4%. There was the usual gloom, but traders got particularly depressed after China failed to go the way of I.O.U.S.A. and pump an extra trillion bucks into its struggling economy.

“The whole world now turns its weary eyes,” recounts Bill Bonner, “not to that bastion of free-market leadership, the United States of America, but to a country that has only had a quasi-free market in goods and services for less than a quarter century… a country still run by Maoists. It is to them that we supposedly look to save the world economy!”

The Dow’s 4% yesterday brings this year’s losses to 25%, just a bear’s hot breath away from the 33% slump the Dow suffered through all of 2008. The old lady finished closed the day at 6,594, a fresh 12-year low… and right in line with our initial forecast.

From its peak, that’s a 53% decline. As much as the media have worn out the phrase “The worst since the Great Depression” now it’s true:

Even before yesterday’s close, we were looking at the worst 41-day open in over 100 years.

In the Dow’s history, the closest to our own downer year was 1920, which registered a 14% decline. We’re in uncharted territory.

“In 1933,” Chris Mayer comments, “the Dow finished up 66% for the year! With all the similarities between now and the 1930s, let’s hope we see that kind of rally. It would be our last chance to sell down to some core positions that we’d be willing to hang onto through the march through the desert — should we follow form with the rest of the 1930s with a Great Depression 2.0.”

SPECIAL ANNOUNCEMENT: As you can see, we’ve been digging deep looking for what’s worked in other eras. Mr. Mayer does such a fine job with that kind of key research, we’re gearing up to launch a brand-new weekly service with him at the helm. It’s tentatively called the Crisis Recovery Report and yes, we’re thinking about sending it out… free… for as long as this unraveling crisis demands. That is, until we’ve reached the other side of this mess — if there is indeed another side.

We’ll let you know the details as they come. We haven’t even set up an official web presence for the report yet… but if you want to get on the early list for the announcement, send your request to: crisisrecovery@gmail.com

There’s was only one new high on the entire NYSE today: Sturm, Ruger… they make guns. The stock is up 71% so far this year and is at a 52-week high. Smith & Wesson is up 75% this year, too.

As confidence left the market yesterday, traders turned to gold. The spot price jumped about $30 from Thursday’s low, now at around $940 an ounce.

Oil managed to avoid the madness yesterday, too. The front-month contract took a brief dive during the session, but quickly returned to credit crisis highs just below $45 a barrel.

Even the mighty dollar couldn’t withstand the swell of selling pressure yesterday. After hitting three-year highs of nearly 90 this week, the dollar index has backed down to 88.3.

“A strange thing is happening in the currencies,” notes Chuck Butler. “While currency investors have had to live with this trading theme that rewards the dollar with every deep, dark, dangerous data report, this time it appears to be different. The dollar is getting sold on all corners overnight… traders looked at the size of the forecast for job losses and ran for the hills.

“The euro is leading the way higher, with a huge gain overnight… As I walked out the door yesterday afternoon, the euro was barely holding onto the 1.25 handle… When I woke up this morning with a wine glass in my hand — what wine, whose wine, where the hell did I dine? The euro was 1.2675! And we all know what happens when the BIG DOG gets off the porch to chase the dollar down the street… all the little dogs get to chase the dollar too!

“And Japanese yen was one of the best performers, which tells me that the risk takers were back!

“So… Is this a change in the trading theme? Well, one overnight rally doesn’t lend itself to a convincing argument of such. But it certainly points out that the dollar is vulnerable at the margins, and once we get back to fundamentals… watch out!”

In Washington, a whole new $500 billion legislation is in the works. Congresspeople are pushing through legislation this week that would allow the FDIC to borrow up to $500 from Uncle Sam’s coffer over the next two years. The FDIC’s war chest to rescue failed banks shrank from $52 billion to $19 billion in 2008. Chairwoman Sheila Bair recently said that fund “could become insolvent this year.” Thus — naturally — the House is moving to increase the FDIC’s fund more than 10-fold.

“Within six years,” Chris Mayer also writes, ending today’s issue with a megatrend worth your attention, “New York will no longer be among the world’s five largest cities. The new top five? Tokyo is No. 1, with a population (35 million) greater than all of Canada. Then follows Mumbai, Sao Paulo, Delhi… and Dhaka. Dhaka? Yes, Dhaka. It’s the capital of Bangladesh.

“‘All cities are cities of the moment,’ says Richard Wurman, the celebrated American architect. He is right. No city stays on top for long. In the year 1000, the most populous city in the world was Cordova, Spain. Beijing was tops in 1500 and 1800. London was the biggest in 1900, New York the biggest in 1950. Today, Tokyo.

“The pace of urbanization is particularly swift in China and India. More than 25 million people move to cities each year (see the chart below).

“Some of the numbers are hard to fathom. As U.S. Global Investors points out in a recent presentation, China will add more people in 15 years than the entire population of the United States. ‘There will be up to 50,000 new skyscrapers,’ the company notes, ‘the equivalent of building 10 New Yorks. There could be up to 170 new mass transit systems. There are only about 70 in Europe today.’

“This massive population shift has enormous effects on infrastructure spending. Trillions of dollars will have to go toward building power systems, roads, water and wastewater systems, ports and more. It’s like what the U.S. went through in the early 20th century — only on a much more massive scale… these changes will create enormous opportunities for investors that a previous generation could barely imagine.”

“Are you really as simple-minded as your slanted editorializing infers?” asks a reader. “In slamming Sen. Harry Reid for his opposition to the nuclear waste dump at Yucca Mountain and suggesting he’s only interested in spending ‘trillions’ for energy independence, you overlook the most basic requirement for gaining, then retaining, elected office: Make your constituents’ best interests your own. As a citizen of Nevada, specifically Summerlin, I can assure you that most of us who live within 100 miles of Yucca Mountain have made it crystal clear to the senator that we oppose this location as a depository for the nation’s nuclear waste.”

“Personally, I would favor a location about halfway between Baltimore and D.C. Would that be all right with you? We could save those trillions you believe the Democrats want to spend on ‘energy independence.’ (I assume you put the term in quotes so readers would understand that you sneer at the very concept of such self-reliance.)

“Your condescending right-wing babbling may find a ready audience among many readers of The 5, but certainly not all. I wouldn’t find your bias so objectionable if you had even a modicum of Bill Bonner’s charm and wit. Alas, if you haven’t found a way to express yourself as winningly as Mr. Bonner does by this point in your career, I’m certain it will never happen.

“Oh, by the way, I’m sure you find Sen. John Ensign — the current holder of the most conservative voting record in Congress — much more to your liking. Surely, he must get how important it is to dump the country’s radioactive waste on a deserted place like Nevada.

“Sorry to be the one to shatter your dream — Ensign can also read a poll, apparently. He, too, is opposed to opening Yucca Mountain to the nation’s nuclear poison. Heh.”

The 5: Wow… we give in. You caught us.

You did a masterful job at seeing right through our attempt to inform you about a coming investment opportunity in thorium and related companies. Alas, it was just a thinly veiled shot at Sen. Reid and the truly ridiculous concept of “energy independence.” Why on Earth would we want to be self-reliant? In fact, the only purpose of The 5 — hell, all of Agora Financial — is to undermine confidence in legislation, prop up foreign oil companies and promote right-wing agendas.

Phew, it feels great to get that of our chests. What a heavy burden it’s been… all these years. We had to write three books and make a full-length documentary on what a disaster Republican control of Congress and the White House was just to provide adequate cover. But now… you’ve exposed us. We thank you…we can finally end this ridiculous charade. Bring back the neocons! Get Rush on the phone!

We love your idea, by the way, about dumping nuclear refuse between Baltimore and DC. A little toxic waste would actually improve the place.

The national debt might hit the $11 trillion mark over the weekend. Hope you can still enjoy it.

Source:Jobs Rundown, Market Records, Coming Megatrend, a Special Announcement and More!

One of the few reports to watch this week is the Retail Sales report for February. This report is released on Thursday morning, and in what seems like a repeat of the last few months, it is expected to show a decline.

This really shouldn’t come as a surprise given the worsening economy. While I am fairly sure the report will show a decline, I am not sure if it will be greater than expected or not as bad. The reason to expect a larger decline than anticipated is simple: the economy keeps getting worse. On the other hand the report may not be as bad as expected because Personal Spending rose in January, and could have a carry-over effect on the retail report. For example, last Thursday Wal-Mart (WMT) announced that sales more than doubled in February versus a year ago. Wal-Mart is large enough to rescue the whole sector, if it can remains to be seen.

The other report to look at is the preliminary Michigan Sentiment report for March. This is expected to show no change from the February reading. I doubt very much that it comes in unchanged, and with all the job losses and bailouts, I would expect a lower reading than 56.3.

Source: Retail Sales The Most Important Report On The Calendar