Inconclusive Jobs Report - Dollar Down , Metals & Miners Up

Morning Miners!

It is 5:52AM. Have a welcome cup of Raine's New Double-Dip TGIF coffee. What's that you say? Scott told me last night his latest brew is twice as good if you add an extra dip in the filter. Maybe some of you were thinking about a double-dip recession looming on the horizon. That has been the buzz from talking heads all this week given a crescendo of downbeat economic data leading up to this morning's Labor Department Nonfarm Payroll Report. I just came back from watching the jobs report on CNBC Business News which a lead reporter characterized as "confusing and inconclusive". A noted equity trader called it "lame but also lame for Armageddon." I like this second characterization which was reinforced by a PIMCO bond trader who noted that the latest jobs numbers reduced the likelihood of the dreaded double-dip.

OK, so what did the report say? The "confusing" part comes from the loss of 225,000 temporary government workers that were hired for the 2010 census. On a positive note, the data shows that this is the sixth consecutive month of private sector jobs growth. The "inconclusive" bit arises from a growth rate that falls below expectation. Here is how the Wall Street Journal reported the news:

WASHINGTON -- The U.S. economy shed jobs in June for the first time this year and the unemployment rate remained high, moves that will likely add to concerns that the pace of the recovery could slow in the second half.

Nonfarm payrolls fell by 125,000 last month, as 225,000 government workers that were hired for the 2010 census in recent months lost their temporary jobs, the U.S. Labor Department said Friday. Only 83,000 private-sector jobs were added last month...The jobless rate, which is calculated using a separate household survey, edged down to 9.5% in June from 9.7% the previous month. Economists were expecting it to edge up to 9.8%. (WSJ, 7/2/2010)

Here's what Doctor Copper thinks about the report:



A nice bounce but still below our key $3/lb level. Some of this is no doubt dollar weakness as the euro continues to rally ($1.2578). Gold has been hit pretty hard too (COMEX gold $1204.2/oz) as the "short euro, long gold" trade unwinds on improving economic news coming from Europe this week. European Banks borrowed less money than expected; American-style stress tests on these banks will be the next event to watch. Interestingly, the dollar and gold are now back to moving in the same direction - this time the trend is down. We are also entering the summer period which is typically lackluster for our lustrous friend. I've been throwing a bit of pan shine in the buckboard throughout the week - just in case things go bad, pardner.

So the morning before the big holiday weekend metals & miners are up for the most part and our newly minted Eureka Miner's Market Index (EMI - what's this?) has popped up to an encouraging 73.1 from yesterday's dismal 57.1 - an EMI of greater than 100 signals a return to good times for our sector. We've got a bit to go but still have a good margin from the 6/7 low of 50.7. Stay tuned buckaroos and have a great Fourth of July!


Enough talk, let's walk the walk:

4-WD is ON - rough roads in the marketplace; The VIX or "fear index" is above 25; metals & miners remain on shaky timber with benchmark FCX trading in the the high-$50s well below its 200-day average of $76 (our new warning level), 10-year Treasurys are safely below 4% preserving a low-interest rate environment

The YELLOW light is turned back on for Commodity Reflation with copper trading below $3/lb

The YELLOW light is turned on for Stable Markets the VIX above the 30 level (what's this?)

The YELLOW light is turned back on for Investor Confidence as further market corrections are likely

The GREEN light remains turned on our Fuel Gauge with oil below $80

A ORANGE light is ON for possible adverse regulation/legislation: Mine Safety Violations, Miner's claim fee, Miner taxation, Cortez Hills, mercury emissions &
General Moly Mt. Hope Water Rights

Otherwise, all lights are green on the Eureka Outlook Dashboard (upper right, what's this?)

NYMEX/COMEX: Oil is down $0.40 in early trading to $72.55 (August contract, most active); Gold is down $2.5 to $1204.2 (August contract, most active); Silver is up $0.015 to $17.805 (July contract, most active); Copper is up $0.0595 to $2.9365 (September contract, most active)

Western Molybdenum Oxide is at $16.00; European Molybdenum Oxide is at $14.50; LME moly 3-month seller's contract is $15.42, LME cash seller is $15.19

The DOW is down 2.45 points to 9,730.08; the S&P 500 is up 1.17 to 1028.54. The miners are up except for TC:

Barrick (ABX) $43.52 up 0.97%
Newmont (NEM) $59.46 up 0.79%
US Gold (UXG) $4.87 up 1.46%
General Moly (Eureka Moly, LLC) (GMO) $3.13 up 1.95%
Thompson Creek (TC) $8.97 down 1.32%
Freeport-McMoRan (FCX) $58.73 up 0.95% (a bellwether mining stock spanning copper, gold & molybdenum)

The Steels are up, (a "tell" for General Moly & Thompson Creek):

ArcelorMittal (MT) $27.72 up 1.46% - global steel producer
POSCO (PKX) $96.10 up 1.51% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is up 0.80% to $1,319,492.28 (what's this?).

Cheers,

Colonel Possum

Write Colonel Possum at colonelpossum@gmail.com for answers to your questions or to request e-mail updates on the market

Headline photograph by Mariana Titus