Agoracom

even though the EU raised rates:

The big “news” in today’s session was from Euroland where the ECB raised short term rates by 25 basis points.

ECB President Trichet forgot to include the magic words, “strong vigilance” or “heightened alertness”, a faux pas which he immediately corrected by stating that because he did not use the words it did not mean anything! Glad he cleared that up. That sent the Forex lemmings into a real tizzy who responded by dumping the Euro on the assumption that the ECB is now finished its rate hikes forever and will never, ever, mention the subject again for as long as the heavens and the earth remains! Central Banks the world over are attempting to deal with the inflation genie but not to worry - the ECB left out two itty bitty phrases! Ah yes – the efficient markets and their wondrous price discovery mechanism! Personally I am ready to go back to trading wampum or tobacco leaves for goods and services – at least we would not have to put up with the Central Bankers or the dipsticks who now infest the Forex world.

Gold of course was dutifully clocked as a result of the collapsing Euro as once again the bulls managed to snatch defeat from the jaws of victory by surrendering the technical advantage that they had worked so hard to gain. For now it appears that the effort to thwart its rise at $950 has been successful. Only for now however as it still looks technically strong. Silver is actually faring pretty well. It will needs to clear 1850 (basis September) to set up a run at 1900. For the week, Silver tacked on around 65 cents turning its weekly chart friendly. A strong showing early next week will generate some excitement in the Silver pit. Gold gained a bit more than $2.00 for the week after all of the early week excitement as it fizzled out its fireworks show for the July 4th holiday.

I am actually impressed with the action in some of the mining shares which are so far showing very strong buying at their lows today. Perhaps the bulls are growing a bit of backbone for a change and beginning to stand their ground. Crude oil, while higher, was not particularly strong today and with the falling Euro, I would have thought that it was “turn out the lights – the party’s over” time for the gold shares but some have managed to hold up very well at this point in the trading session. The XAU in particular has rebounded quite sharply off its worst levels of the day. The day is yet young however so the closes will be important.

In an overlooked data release, the US somehow mysteriously managed to show an actual LOSS of 62,000 jobs according to the Labor Department. It is obvious that someone over there screwed up and forgot to massage the data appropriately. Look for the culprit to be canned next month and replaced with a more compliant drone. But guess what – the number was BETTER than the whisper number that was floating around, so why not buy the Dollar since things are really terrific! Idiots!

I’ll tell you when Wall Street will finally realize that the number is bad – when the guys who are quoted by the wire service writers who constantly spin these reports for us look up from their desk one day and realize that they and their entire desk have been moved outside onto the sidewalk after having been laid off. Regardless of the BS spin, the trend in payrolls has not been positive. This is the SIXTH straight month of declines, something that has not happened since 2002. If that was not worrisome enough, first time applications for job benefits jumped to 404,000 – this is a level commensurate with recession.

Another minor detail was that the ISM services number came out at 48.2 for the month of June compared to 51.7 for May. Any reading under 50 signifies contraction. Hey – I thought that services were strong even while manufacturing was weak and was going to keep us from recession? The usual analysts had been looking for a number of 51. Maybe the Whisper number was 35 so a 48.2 reading means things are going like gangbusters!

Combine these two sets of data, the jobs number and the ISM services number, and it just underscores that the Fed CANNOT raise rates without crippling the economy. That is why the reaction of the Forex markets to the ECB rate hike is so ridiculously mindless. To see the Dollar get jammed to the moon on a day in which we get this kind of data is especially “entertaining”.

In what has to be the comic relief story of the day – this one is reported from Reuters… I am so relieved to learn this that I am going to run right out and open a lemonade and cookie stand seeing that these low prices have left consumers with gobs of disposable income to spend on my goods. I may not be the brightest light bulb on the planet but I have to wonder about a comment which states that “commodity prices have made disinflationary moves” while both the CCI and the CRB go straight up! Do the folks that put together this index ever leave their homes and go to the grocery store and fill up their gas tanks? If this is a product of the American educational system then we are in deep doo-doo in this nation! No wonder the bureaucrats, judges and politicians can siphon off our liberties. We are becoming a nation of idiotic clods who can no longer think or analyze.