"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat

Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput


Friday, November 7, 2014

Payrolls Friday - Lots of Volatility

Payrolls number disappoints Wall Street could be the headline for today's trading session. The always volatile number came in at +214K against expectations of a +233K. The rate of unemployment fell to 5.8% versus market expectations of 5.9%.

The numbers for September were adjusted upwards to +256K from +248K. Also, the August numbers were kicked up as well going from +180K to +203K.

As always, the data unleashed a round of furious price action across the currency markets, and by default, the gold market. Most are seeing the numbers as having a bit of something for all sides.

Those reacting to the headline number registered their disappointment by selling the Dollar, especially in favor of the Euro.

However, those who were looking at the monthly average since the beginning of the year, were doing the opposite. Analysts pointed out that the average number of jobs created this year has been +220K/month, something not seen since nearly a decade ago.

A key data point inside the report was the fact that average hourly wages rose 3 cents to $24.57. A lot of traders, including yours truly here, are closely watching that important number. Remember, it is my view that the reason inflationary pressures have yet to show up in the economy is because wages have been flat/stagnant. If, and this is a HUGE "IF", we were to see a trend in rising hourly wages develop, that might be the catalyst that could shift the current deflationary psyche to one more of an inflationary bias. It is certainly not here now but we are all watching.

The data did little to convince market players that the Fed is going to move on the interest rate sooner rather than later. Most still expect something to happen on the front mid year next year. Shortly after the data was released however, one of the Fed governor's, Mr. Mester was quoted as saying that the report was: " a pretty solid jobs report across the Board". He also noted that the "unemployment rate is a pretty good indicator of improvement in the Labor Markets".

The Fed has been very vocal about stating its close scrutiny of the labor markets ahead of today's reports in their various statements coming out of the FOMC meetings.

I am interested in seeing how the dust settles today before making too much of the early price action. As I said, there is a little of something for everyone in this report.

The Dollar moved slightly lower as an initial reaction to the report but in the tmie it has taken me to type these comments, it has since stabilized and remains slightly higher. Gold is taking its cues directly from movements in the Forex markets.

No telling where all this will end today so buckle your seat belts and stay tuned.


  1. meats Bottom line: Short covering on Thursday buoyed the cattle complex after selling off sharply earlier this week. Some traders sense that down move was overdone and took profits. However, hogs slumping back to year ago levels, while beef stays in the thin air atmosphere, fuels thoughts among the oxygen-starved that consumers may well be backing away from beef in favor of lower-priced pork and chicken.

    blurbs are out there that china is doing a cattle deal with australia.

    Ags Bottom Line: Not much else to discuss as we await updated balance sheets on Monday. Trade expectations are looking for a tighter soybean carryout on higher demand, while corn is seen with a higher carryout due a slight yield bump.

    well GC SI new lows as america sleeps. at his point at least they aren't having a terrible day, which has been the usual on friday for many moons. 10pm pt is the heart of the hong kong/china morning hours.

    ES new all time high this morning, so the 'trend is your friend' looks to continue in stocks and currencies.


  2. Thanks Dan, I completely agree on your higher wages/inflationary impact sentiments.

    When the minimum wage rises significantly so to does the prospect of gradual inflation from it.

  3. rail transportation statistics from the surface transportation board: There remains a 1,385 car deficit to fill agriculture orders on the Norfolk Southern. Until we see these performance measures improve markedly, support should remain under premiums and spreads, and therefore futures.

    Dec #Hogs halfway to LIMIT UP!!

    only Dan can trade meats they are 'widowmakers' ... the same is said for NatGAS futs... looking for heating oil to finally look over at natgas and bounce, the weather is 'arctic' in usa next week!

    USDX into the 88 round number test, eur/usd needs over 124.30 to 'regain the range that was lost'.. russia central bank 'going banans' over the weak ruble!

  4. How nice it would be if workers' wages actually started to rise!

    Here's some funny ticker news on Kinross Gold, the first came out @ 2am, the 2nd @6:36am, the third @ 9:35 am:
    -Jeffries cuts price target to $1.8 from $2.25
    -Cowen raises price target to $3.09 to $3.07
    -UBS upgraded w/ target of $3.25

    Do you think Algorithms write these press releases?

  5. I think Armstrong puts its nicely,

    “The Gold Promoters are just desperate for bullish news and will craft whatever they can to continue their delusional bubble in which they live.”

    And Martin goes on…”They will never admit being wrong.” I could not agree more here.

    Amen to this statement!!!

    And what about the upcoming Swiss vote, “There are actually people claiming a yes vote will send gold up 20%…”

    And so these Gold deceivers who are trying the best they can muster to “suck” all into their black pit of hell before the metals actually hit bottom are probably the same group that behind the scenes “…are begging the Swiss voters to pass the Save Our Swiss Gold initiative on November 30th

    1. Shem Blue;

      Martin is one of the few people out there worth listening to. The gold cult hates him because he too can read a price chart. I am guessing that his emails from them look a lot like the ones I get. Many of these people are extremely vile and worthy of nothing but contempt and disdain.
      It's sad but expected - you get a $120 plunge in the price of the metal in two weeks and the first pop higher back out the gold cult members come with their "this is it". It is like reading a stuck DVD in your XBOX when playing HALO....the picture never changes - it just sits there.

      I think his choice of words to describe them is very apt " delusional". I prefer my term, "gold cult" however. They will hang on until the bitter end.

    2. Amen Dan.

      And thank you so very much for helping me to wake up to the "gold cult" people.

      You have helped people like me out very much.

      Thank you again Dan.

  6. The average salary purchases 23% less than it did say six years ago. Perhaps this is why; we are consuming 1/3 the amount of refined gasoline than we did eight years ago, but the price has doubled per unit since then. So it consumes more of the salary at the pump and beyond.


    This has been spread out throughout the household budget, so we are not just loosing the purchasing power of wages, we are actually consuming less for more money. This is were the inflation is. IMO Gold cant be positively effected by this maneuvered inflation. We are supposedly at now 5.8% unemployment calculated with new math that has maneuvered 92 million people away from the calculus. It is still above 10%. Recently the 92 million has been parsed in a unique way, its been done by age, as in yeas old of the 92 million. It shows that people who are 24 have a 50% unemployment rate. Those are the ones with debt equivalent to almost two times the average salary, some much higher if they went to grad school. What is the decrease in your purchasing power if your salary is 0%? -100%. Workers in this country earning minimum wage is less that 4% of the work force. The minimum wade increase proposed by the administration is not being proposed for that 4% only, it is for all the union contracts that say that if minimum wages are increased by 40% then the union wage in the contract goes up 40%. So if you have one of those contracts, and are making $50 an hour, it will go up to $70. Nice for you, but it will eventually move down stream to the product you make and onto the consumer, so that the average salary buys even less. Again IMO Gold cant be positively effected by this maneuvered inflation. Does anyone see what is going on? Or am I wrong here? This is so Soviet.

  7. The forecast for Brazil continues to point to a better opportunity for rains in northern regions and a drier bias in southern regions, both which would be welcomed.

    it's funny, USDX and Ags went up together in oct., now they are down together today!

    today's action now looks like the shorts were packed into commodities, so the USDX losing 88 has provoked short covering.
    gold needs above 1179-83 to 'regain the range that was lost'
    silver today's close will be interesting with the high volume former low at 15.635.

    bonds the bulls are takn 'outside key reversal' but it's unimpressive as long as US(ZB) futs stays under the 142-00 peak on the continuation chart.


  8. As bearish as I am, even bear mkts are entitled to pops and therefore I went flat the pm's today. Have a good weekend all.

  9. Good morning; Im new to blog. Could someone tell me more info on "Martin". I am very interested in PM. Thank you

  10. http://armstrongeconomics.com/armstrong_economics_blog/

  11. This comment has been removed by the author.


Note: Only a member of this blog may post a comment.