In This Issue…

* Currencies trade in tight ranges…
* Except for francs which surge higher!
* Gold rallies $27…
* Waiting on Chinese manufacturing…

And, Now, Today’s Pfennig For Your Thoughts!

A Jobs Jamboree Friday!

Good day… And a Happy Friday to one and all! I’m feeling much better this morning, so let’s go ahead and call this a Fantastico Friday! I mean, what the heck! We’ve got a 3-day Holiday Weekend to celebrate, and we will close early today, just like the Big Boys on Wall Street! HA! So, let’s get going, and working toward what should be a Super-duper Weekend! My beloved Missouri Tigers have their first football game of the year tomorrow too… WOW!

Well… front and center this morning, the currencies are looking very much like they did yesterday morning… Gold however, has taken a flyer to a higher ground, and is up $27 as I write. The currencies did seem to gather some momentum yesterday during the day, but that didn’t last… The U.S. data wasn’t “as bad” as forecast, so the global growth campers still have a pulse.

Speaking of still having a pulse… We’re waiting for China to print their August Manufacturing Index report… It should have been out by now, but a quick check on the Bloomberg shows me the report has not printed yet… The Chinese Manufacturing index saw some weakness in July, so it will be important for the global growth campers to see the report holding steady Eddie. I guess we will all have to wait till this weekend to see the report, when everyone’s backyards will have the aromas of smoked meat, charcoal, and barbeque sauce… In other words… this report will fly right under the radar, until all the boys and girls return to their places with bright shiny faces on Tuesday!

And OH! Today is a Jobs Jamboree Friday! How could I go this long into the letter without mentioning that? Well… first of all, the ADP Report that printed yesterday showed jobs created at +91,000, which was weaker than forecast. This report, which is supposed to be a good indicator for the Jobs Jamboree, usually doesn’t give us many good clues… Could it be because the BLS cooks the books? Well… of course!

The Jobs Jamboree should be a real BIG Event this morning… Because, with the Fed Heads already discussion “options” to stimulate the economy, those options could be dialed up very quickly, should this jobs report pull a stinkeroo! For the record, the “experts” believe the total jobs created will be 68,000, which should be enough on its own to push the Fed Heads toward more stimulus… I have to think that the risks here are to the downside… As my trader friend at Morgan Stanley told me yesterday, the ADP report didn’t count the impact of the Verizon strike, which could affect about 45,000 jobs… So… here’s my take on the report… The actual numbers are difficult to nail down, given the “adjustments” the BLS makes… but even with their meddling, I believe the report will be disappointing to the degree that the Fed Heads dial up one of those “options” they’ve discussed…

So… that’s why the currencies are trading in a tight range this morning, as traders don’t want to make a trade in either direction until they see the color of the Jobs Jamboree… So, really two heavyweights to report today… U.S. Jobs, and Chinese Manufacturing… Talk about a day that could see some wild swings! Good thing the markets will close down around noon today, so that the boys and girls in NY can head to the Hamptons.

Yesterday, I told you about the “surprise” rate cut by Brazil… I thought about this quite a bit yesterday… The new president there, is willing to bet that GDP gains will make people forget inflation… I think she’s playing with fire, here folks… And you know what happens when you play with fire don’t you? Yes, you get burned! And I truly believe that’s what’s going to happen to Brazil’s President… But, we’ll have to wait-n-see… The other thing to think about, is that even if Brazil cuts their internal rate by 3% (which is rumored for next year), their internal rates will still be double those found around the world… So, the flow of investment into the country will only have the doubts on the currency as a speed bump.

And all this talk of a disappointing Jobs Jamboree has the Swiss franc surging higher this morning… Yes, much stronger than just a couple of days ago, when it was $1.23… this morning the franc is $1.28! I’ve explained this many times in the past, but let me go through this once again… The Swiss franc, is viewed as a safe haven currency, because…. Investors around the world still view the franc as being backed by Gold… So, this misconception leads to Gold’s status as a Safe Haven currency… it IS a tiny country, with a tiny economy, folks… but, the markets aren’t wrong, and francs get bought… Of course, I believe in the franc as a safe haven currency more than I do, the dollar or yen! But, if we really got down to the brass knuckles of this, I would say that the Chinese renminbi should be a safe haven currency, with Australia, and Canada as the alternatives…

It was 104 degrees here yesterday, which means this office is like a sauna this morning… Good thing I’m one cool cat to deal with it! HAHAHAHAHAHA!

Speaking of Japan… well, the new Prime Minister (PM) Noda, announced his cabinet, and in the new cabinet a new Finance Minister was named… And get this… the guy named as FM is a former journalist, with no parliament experience! What the heck is going on here? Oh… I know… Noda, who was the FM, is going to continue to have his hands on the controls of the Finance Ministry… Which means, nothing changes here folks… New Cabinet, same-o policies… And boy those policies have really worked out well for the Japanese eh?

Well.. the Aussie dollar (A$) saw the bright side of $1.07 for most of the day yesterday, but has slipped back to just below the figure this morning. At this point, I would have to say that all those writers, economists, and mostly the traders that swallowed the thought of a rate cut hook, line and sinker… have egg all over their collective faces after this week… They were wrong… and now they have to pay the price, as the A$ trades at $1.07… will it keep going from here? Difficult to say for sure, but here’s something to keep in mind… If the Chinese manufacturing report is strong, then that will play well with the A$ being underpinned by the Chinese economy.

And our renminbi –alternative, the Singapore dollar (S$) is seeing its first weekly loss in five months this week… but don’t panic, the loss is negligible… And the S$’s direction is also tied to what goes on in China… So, take a break from the barbeque pit this weekend, and take a look to see what the color of the Chinese manufacturing report was…

Ok… yesterday’s data here in the U.S., as I said, was not as bad as forecast… The U.S. manufacturing index (ISM) expanded in August, but not as much as it did the previous month… The report showed the index remained above the 50 level that is the demarcation line between expansion and contraction, and printed at 50.6… So, hanging on by a thread, folks…

And the Weekly Initial Jobless claims held to above 400,000 at 409,000, falling from 421,000 the previous week. But remaining above 400,000 is the important thing that weighs on the U.S. economy week, after week… That was yesterday, and today, is the Jobs Jamboree!

Then there was this… from Reuters… “The White House lowered its forecast for 2011 gross domestic product growth to 1.7%, compared with 2.7% in February. Unemployment will hold at 9.1% this year and decline to 9% in 2012, according to a budget review.”

Chuck again… 1.7%? Ahem… have you seen the recent reports on GDP? 1% is what we grew in the 2nd QTR… Oh! That’s right, the White House budget people must subscribe to the Fed Reserve forecast for a strong rebound in the economy in the 2nd half of this year… The White House budget people are also not of the belief that there is a chance for a double-dip recession… And yes, the shipment of rose colored glasses for them did arrive in time for this report!

To recap… well… it’s a Jobs Jamboree Friday! need I say more? The currencies are trading in the same clothes as yesterday, except for the Swiss franc, which is surging higher and higher, Sly Stone style this morning. Gold is also surging gaining $27 already this morning. And we’re waiting on the Chinese Manufacturing report which is due today…

Currencies today 9/2/11… American Style: A$ $1.07, kiwi .8510, C$ $1.0230, euro 1.4255, sterling 1.6215, Swiss $1.2820, … European Style: rand 7.00, krone 5.3955, SEK 6.40, forint 193.60, zloty 2.93, koruna 17.0460, RUB 29.07, yen 76.75, sing 1.2030, HKD 7.7878, INR 45.93, China 6.3818, pesos 12.33, BRL 1.62, dollar index 74.50, Oil $88.15, 10-year 2.13%, Silver $42.26, and Gold… $1,852.35 and with it being a Friday, let’s check on the debt clock… click here:

That’s it for today… Well… the Jobs report will be out first thing this morning, and then traders will take positions and send things on a direction before they head out the door. I’ll be heading out the door then too! I attended my first High School Swim Meet in 11 years last night… 11 years ago, my oldest son, Andrew was setting records at Lindbergh High School, where he now teaches and coaches. My youngest son, Alex, decided to swim this year, instead of playing football. He’s a young swimmer, and I had to adjust the dial down from 11 years ago… but he swam fine, and improved his times, which is the most important thing… The whole family was there to watch… The grandkids were with us, which was quite a site walking in the pool, with me holding Everett, Kathy carrying Braden, and Delaney walking with us… I said, to Kathy… “I thought we were out of this business”! HA! OK… I’m carrying on too much… I hope you’re Friday is Fantastico, and you’re holiday weekend is just fabulosio! (I just made up that word!)

Chuck Butler
EverBank World Markets