Good afternoon Ladies and Gentlemen:
Gold closed up by 30 cents to 854.00. Silver rose by 18 cents to 11.27. The open interest on gold and silver remained constant on Thursday so the selling was short sale related as opposed to liquidation.
The big news of the day came from the BLS (Bureau of Labour Statistics). The
For the whole year 2008 a total of 2.6 million jobs were lost. The unemployment rate skyrocketed to 7.2%. First I will give you the official release and then discuss the implications:
08:30 Dec non farm payrolls reported (524K) vs. consensus (525K); unemployment rate 7.2% vs. consensus 7.0%
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08:30 Nov non-farm payrolls revised to (584K) from (533K)
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08:30 Dec average hourly earnings 0.3% vs. consensus 0.2%; average weekly hours 33.3 vs. consensus 33.5
Nov average hourly earnings unrevised from 0.4%; average weekly hours unrevised from 33.5.
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US Dec payrolls fall 524,000, jobless rate 7.2 pct
WASHINGTON, Jan 9 (Reuters) - U.S. employers slashed payrolls by 524,000 in December, driving the unemployment rate to its highest level in almost 16 years, a government report showed on Friday, suggesting that the year-long recession was deepening.
The Labor Department said the national unemployment rate rose to 7.2 percent in December, the highest level since January 1993. The jobless rate was 6.8 percent in November.
Analysts polled by Reuters predicted a reduction of 550,000 jobs in December. November's job losses were revised to show a cut of 584,000, previously reported as a 533,000 loss, while October's losses were revised to 423,000 from a decline of 320,000. With those revisions, the total reduction in
The largest number of job losses in December was in services-providing businesses, which shed 273,000 jobs.
However, their high chancery continues as the BLS added 72000 of phoney jobs for December.
Bill King reports:
Taking the revisions into account, the number was as bad as anyone feared. Now for the real number and story, the story which The Muppets never report … Bill King this morning…
Stocks are tanking even though the headline NFP is in-line because the BLS employed seasonal adjusting chicanery to mitigate job losses. Not seasonally adjusted (NSA) 954,000 jobs were lost. Additionally, the BLS's hokey Net Business Birth/Death Model unfathomably created 72k jobs in December. For December 2007, the model created 70k jobs….
For December 2007, 216,000 jobs were lost.
More importantly, the U6, or comprehensive unemployment rate, surged to 13.5%. If 'discouraged workers' are added the total unemployment rate would be about 17.5% as estimated by John Williams.
The breakdown of the phantom jobs number…
Howdy, Bill !!!
The good ol' Birth/Death model did it again, by ADDING 72,000 phantom jobs. If you can believe it, they actually added MORE jobs than this time in 2007, when they ADDED 70,000 phantom jobs.
Look at the ridiculous sectors in which the jobs were ADDED (first figure is Dec 2007 and second is Dec 2008)
>Trade, Transportation & Utilities: 19,000/20,000
>Financial Activities: 17,000/18,000
>Professional & Business Services: 9,000/10,000
>Leisure & Hospitality: 16,000/12,000
If you first take off the seasonal adjustments and just use the plain numbers, then 954000 lost their jobs last month. In the NSA numbers you include part time employment that seek full time employment.
In the Williams Shadow statistics the unemployment rate in the
If you use NSA numbers which is called underemployment statistics the unemployment rate is 13.5%.
Here is another article written by Ambrose Evans-Pritchard on the state of the economy in
Please press down on the blue to read the whole article and it will give you a sense of the deterioration spread throughout the world:
Have a good day and this article by Mr Evans-Pritchard reinforces what I was hearing yesterday in
Then we received this article from John Browne of Euro Pacific Capital. This article is a dandy and a must read:
Panic could herald dollar rout
By John Browne
One of the few things more troubling for an economy than government intervention is government intervention driven by panic. Time and again, history has shown that when governments rush to engineer solutions to pressing problems, unintended difficulties arise.
In the current crisis, there is growing evidence that
Although there are many parallels between the current crisis and the crash of 1929, one key difference is the global profile of the US dollar. In 1929, the dollar was on the rise, and would soon eclipse the British pound sterling as the world's reserve currency. Furthermore, the American economy was fundamentally so strong that in 1934
Ever since, the US dollar's privileged "reserve" status has been a principal factor in
In today's crisis however, the dollar is likely making its last star turn as the leading man in the global financial drama. Other stronger, less-burdened currencies are waiting in the wings for the old gent to take his final bows.
The dollar's demise is being catalyzed by the neglect of the Federal government. Instead of enacting policies that would restructure the
Faced with the growing realization that
There is now the prospect (inconceivable until recently), that
Many of the foreign governments who hold huge amounts of US dollar Treasury debt, such as China and Japan, have announced plans to spend money on their own ailing economies. Should these foreign central banks divert to domestic initiatives some of the funds used to buy US Treasuries, serious upward pressure on US interest rates will result. Should they actually sell parts or all of their holdings they will likely put serious downward pressure on the US dollar. Last week, a Chinese official claimed the US dollar should be phased out as the world's reserve currency.
In the short term, as dollar carry-trades continue to be unwound and questions of political will and falling interest rates haunt the euro and some other currencies, the US dollar may be the recipient of some upward appreciation. But with the American government appearing increasingly to be in panic mode, a run on the US dollar could develop rapidly into cascading devaluation. Even if no such panic run materializes, the long-term outlook for the US dollar is one of high risk and low return. This beckons major upward pressure on precious metals.
John Browne is senior market strategist, Euro Pacific Capital. Euro Pacific Capital commentary and market news is available at http://www.europac.net/">. It has a free on-line investment newsletter. end
Today, we find that
Expect that in 2009, the
Where on earth are they going to get the money?. The entire globe are in deficits, from
You can bet that an additional 1 trillion dollars will be cashed to help offset foreign deficits.
Who will now buy this debt (4 trillion dollars)? Answer: nobody. It must now be printed.
The banks which have so far hoarded 3 trillion dollars and have a facility for 5.5 more trillion dollars will start and compete for assets as we go into hyperinflation.
There is no way around this.
However please remember that they were a net creditor nation, The world owed more money to the
Two years ago Warren Buffet said it best:” the
My bet now is that the
So in an economy of 10 trillion dollars, the
You can bet the farm that the
On one final note, JPMorgan stock closed badly down to $25.96. There have been quite a few rumours that they experienced derivative problems. I will keep you informed on this situation.
See you on Monday