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What does the poor Jobs Report mean for the Dollar and Fed inflation?

*Jim Sinclair's MineSet, by James Sinclair, May 6, 2006

“There is no question about the lineage of loyalty that got Professor Bernanke where he is and to whom his actions will be structured to please. With the resignation of the Vice Chairman of the Federal Reserve, the way is clear for new appointees to make unopposed policy. It is unlikely there will be significant restrictive action by the Fed in either short term interest rate increases or any meaningful drainage of insular liquidity.

Please keep firmly in mind that reduced business activity = reduced tax receipts = a larger Federal Budget Deficit + in the company of a major Trade Deficit = a large increase in the Current Account Deficit = A substantially lower US dollar.

We need to continually remind ourselves of the extreme increase in world liquidity as a product of the Bernanke Helicopter drop of electronically transferred dollars produced in Japan by currency intervention cannot be withdrawn from the world system by any practical technique. It is the behemoth of highly mobile funds that are chasing markets, moving from one arena of positive momentum to the next.

As far as the economy is concerned the fiscal stimulation caused by multiple military actions and lower tax rates will continue for the foreseeable future. This is causing the mixed economic reports as an aged economic recovery by natural economic law attempts to roll over, prevented by artificial injection of demand and liquidity. This is why we have the Cinderella Economy. Bad news such as the Job Report is good news for the equity market based on the Professor not raising short term rates much more. Who said there was sound logic in markets that have become pure casinos?”

*This information is solely a highlight of the opinion of a third-party publication and is incomplete.  Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.

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