Gold Daily and Silver Weekly Charts - Belabored and Befuddled - 'Error and Repair'

"Andrew Jackson was compelled to fight every inch of the way for the ideals and the policies of the Democratic Republic which was his ideal. An overwhelming proportion of the material power of the Nation was arrayed against him. The great media for the dissemination of information and the molding of public opinion fought him. Haughty and sterile intellectualism opposed him. Musty reaction disapproved him. Hollow and outworn traditionalism shook a trembling finger at him. It seemed sometimes that all were against him— all but the people of the United States."

Franklin D. Roosevelt

The Non-Farm Payrolls report came in much weaker than expected, but the quixotic drop in the unemployment rate to 5.1% gives the Fed cover to take a policy action  of 25 basis points, which is exactly what they would like to do at their next meeting on September 16-17.

And I suspect they will, unless the wheels fall off global markets.  They are caught in a vicious cycle of 'error and repair.'

There will be a summary of the economic situation and a press conference with the Lady Yellen afterwards.

The hit on the metals was a bit half-hearted today, considering that China was still on holiday celebrating the end of WW II.  The three day weekend may have put the junior manipulators off their feed a bit.   No telling what those crazy Asians might do on Monday with pet rocks priced too cheaply.

And besides, the metals manipulation is probably getting a bit overdone on the paper leverage side, as demonstrated by the steady drain of bullion out of the Comex warehouses which continues.

I hear that there was a larger drain out of the LBMA which was far more important. But we will have to wait and see about the physical markets next week.

The US will be on holiday on Monday, celebrating 'Labor Day.' It is a quaint holdover from when the nation used to hold honest work in high regard.

The holiday abbreviated economic calendar for next week is included below.

Have a pleasant weekend.

SP 500 and NDX Futures Daily Charts - Dog Day Afternoons

The Fed got what they wanted today besides the much weaker than expected jobs report.

The Unemployment Rate dropped to 5.1%, largely on the number of people who have been unemployed for so long that they are no longer counted as part of the workforce. Hence the record low 'Labor Participation Rate.'

The Fed is running on its own clock now, and wants to raise rates badly for policy reasons. Stan Lacker alluded to as much today.

And I suspect that unless the wheels fall off the stock markets in the next couple of weeks that is exactly what they will do.

Have a pleasant and long Labor Day weekend.

Gold Daily and Silver Weekly Charts - The Fed's Fugue For Tinhorns - Can Do, Can Do

I got the horse right here
The name is Paul Revere
And here's a guy that says that the weather's clear
Can do, can do, this guy says the horse can do
If he says the horse can do, can do, can do.

I tell you Paul Revere
Now this is no bum steer
It's from a handicapper that's real sincere
Can do, can do, this guy says the horse can do.
If he says the horse can do - can do - can do.
Paul Revere. I got the horse right here.

Can do - can do - this guy says the horse can do
If he says the horse can do - can do, can do.

Guys and Dolls, Fugue for Tinhorns

Gold was hit by selling early in the New York trade and stayed there, while silver, which is now in its active month, showed a little more resilience.

Things were remarkably quiet at The Bucket Shop yesterday.

There was intraday commentary about the steady increase in leverage of physical gold over a greater number of paper claims in New York, and most likely in London.  You may read that here.

I do not look for a proper overt default on the Comex.   I also doubt it will be the initial locus of any dislocation in the gold market.   I would look eastward towards London and the physical markets of Asia for that sort of situation to manifest.    Those who are just looking at the US markets are likely to get hit with a world class blindside if something breaks in the gold pool operation.

Tomorrow is the Non-Farm Payrolls Report.

This report takes on a special significance because the Fed has the itch to raise its benchmark interest rate in its September meeting. They want to get themselves off the zero bound in the worst way because they do not have enough ammunition for the next phase of policy action they will need to take, most likely to correct the asset bubbles that they have created, again, in financial paper.

The commentary on the financial network from the usual suspects was enlightening.

Jeremy Siegel says that the Fed should only look at the unemployment rate tomorrow. It is 5.3% now. The Wombat of Wharton thinks that a drop to 5.2 is good, but a drop to 5.1% would be a clear 'go' signal for the Fed to raise in September, without regard to any other economic data such as number of jobs added, hours worked, Labor Participation, Wages, Demand, etc. Hmm.

The commentary from the institutional carnies like Deutsche Bank's talking head on Bloomberg is that the economic recovery is robust, and he rattled off a long string of reasons why the Fed should raise now because employment and the recovery are so good. Meanwhile Dean Baker sat there listening to this bilious balderdash like someone had just served up some funk beer with refried wiener schnitzel from last week.

The Fed is shooting themselves in the foot if they try to make the case that raising rates is a good idea because the economic recovery is so great that it is time to start worrying about inflation.

No one is going to believe that, except for those whose paychecks depend on their agreement.  And it will be especially hard to maintain that story when the economy craters again, even if they try to blame it all on China, or whatever else is handy.

But they cannot keep delaying it because next year is a Presidential election year and the Fed has a long standing rule to cool it with the monetary policy changes close to key elections, since they are supposed to be 'independent.'

The otherwise widely discredited IMF has served up a 'too soon' caution for the Fed.   It's a no lose derriere covering piece of advice for Madame Lagarde, one of the Valkyries of global wealth destruction.  

Let's see how the Jobs Report comes out. wink wink, nod nod.

I still think that the Fed is going to raise rates before year end, but that they will be doing it between a rock and a hard place, and a race with a devil of their own creation.

Did I mention that we will be seeing another Non-Farm Payrolls report tomorrow morning?

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Non-Farm Payrolls Tomorrow

The usual suspects are out there banging the drum for the Fed to hike rates in September today.

Let's see how the Non-Farm Payrolls report comes out tomorrow morning.

The rest of the data today was nothing to cheer about.

I think the Fed might be in a race with the equity markets.    They do not look healthy at all, for all the reasons we have discussed, and mostly been ignored.

The risks will be especially greater in the next eight to ten weeks.

US Financial Markets:  Theater of the Aburd

Have a pleasant evening.