wordss here: we missed the em

mployment rep
port badly. No
o,
we m
missed it entirrely, for after several montths of hitting
g
the n umbers quite
e close to the
e reports, and
d after months
s
of hittting the weekly jobless claims numbe
ers even more
e
close
ely to their eve
entual reporting, we misse
ed this numbe
er
by a h
huge and una
acceptable margin.

Let uss then consid

der this reportt and how bad
dly we missed
d
it, and
d then let us consider the
e response to
o the report by
y
M
Monday,A
April9th,2012 the fforex markett... which we
e think utterrly illogical of
o
DeennisGartmaan:Editor/Pub blisher
coursse, but which weve no ch hoice but to aaccept, for the
e
Phonee75723893 346Fax7572389546 markeet is the final arbiter of all ssuch circumsstances.
Emaaildennis@th hegartmanlettter.com
LondoonSales:Don naldBerman,Alberdon Firstlyy, of course, the non-farm m payrolls rosse by a scan nt
Internatio ne:01144(0)7986221110
onalPhon 0
120 thousand, down from th
he upwardly revised 240
0
thoussand reporte
ed in Februa
ary [Ed. Notte: Originally
y,
Februaryss number was reported as
THEEUR//C$CROSS: +227 tho
ousand, so it rose 3
13
EventhennewsofFriday
cannotsppoilthetrend thousand.]] and down frrom Januarys
whichisstoamuch again-revissed +275 th
housand [Ed
d.
weakerEU URrelativeto
theCanadiiandollar.We Note: Janu
uarys numbe
er was revised
d
sittight, lookingfor down byy 9 thousa
and, so the
e
newanddlowerlows
revisions ffor January and February
y
soonerrratherthan
later,anddwehopeto were a verry, very mode
est 4 thousand
d
beaddinggtothetrade for the be
etter.]. Going into Fridays
evensoonnerthanthat.
report we made it perfe
ectly clear tha
at
we exxpected non-ffarms to be u
up by 245 thousand, stating
g
OVERNIGHT
TNEWS: all the
e more idioticcally in retrosspect that if w
we are wrong
g
we arre low. We w
were wrong badly. Furth
her, we looked
d
THE
E YEN HAS SOARE
ED BUT
T for th
he average h
hourly work w
week to be 34.6 hours, up
p
OTH
HERWISE
E THE DO
OLLARS
S STABLE
E from the previouss months 34
4.5; instead, the previous
s
and iin some insta
ances is actua
ally a bit stronger following hs number was revised to 34.6 and
month d the curren
nt
Frida
ays surprising
gly weak Em
mployment Sittuation Report month
h came in at 34.5 instead. So, we misssed that too.
and iits incumbentt non-farm pa
ayrolls. We shall
s mince no
Worsse still, we had the unemployment rate holding
g
stead
dy because we thought it
THEDOW
WINDUSTRIA
ALS: likelyy that more people migh
ht
Fridayseemploymentrep port have
e been retu
urning to the
e
sentashocckwavethroughhthe labou
ur pool, so that even with a
futuresanndintheprocesssthe
Dowhasbrokenitsupw ward much
h higher non-farm payrolls
slopingtreend.Themarkethad the distortion would work
betterboounceandbouunce
hardfrromitsmostreccent nst
again the u
unemploymen
nt
lowsorthhebullmarketittself rate. Instea
ad, the
e
shall beinjeopardy.
unem
mployment rate fell
precissely for the o
opposite reasson: more pe
eople dropped
d
from the labour po
ool! Finally iin our favourr, we did think
 2

that tthe revision to

t last month
h would be ffor the better, pushiing so violently through our stops tthat massive
e,
but e
even then we
e thought the revision upw
ward would be gapin
ng holes were
e torn in our e
equity!!!... sho
ort of the Yen
n,
he order of 15-20 thousan
on th nd. It was not. In all and prediccated upon sstrengthening
g economic a
activity here in
n
again aring wise we suddenly
n after montths of appea the U
US and long, term dedicatted economicc weakness in
n
appe
eared to be quite
q monly foolish First orde
uncomm er Japan
n predicated
d upon the collapsing d
demographics
foolissh and first orrder wrong. As
A in golf whe
ere one is only there . At one time, only mome
ents before the report was
as go
ood as ones last short, he
ere one is on
nly as good as made
e public, ourr Yen related currency ccrosses were
e
oness last trade or forecast and this time we
w were horrid
d. nearlyy at new hig
ghs in our fa
avor, for the Y
Yen/C$ cross
We ttake no solace in the fact that
t others may
m have been was ttrading 83.05
5, only 1.4 Y
Yen below itss recent multii-
worse, or that many were equa
ally as bad. We
W missed this year highs in the C$s favour. It plunged to
o 81.50 at one
e
reporrt and we mis
ssed it badly. time Friday, clearrly below ourr 82.00 stop. Even though
h
this w
was only a 1.9% move, in the worrld of foreign
n
Whatt caused us to miss the report
r dly as we did?
as bad excha
ange this wass material ind
deed. In the w
world of equity
y
Perhaps we paid too much atttention to the
e ADP figures
s, tradin
ng, 2.0% is ra
andom noise; but in the wo
orld of Foreign
n
erhaps we pa
or pe aid too much
h attention to the historica
al excha
ange it is tecttonic:
relationship betw
ween weekly jobless cla
aims and the
montthly employment report but perhaps most of all we 0
04/09 04/066
paid a great deall of heed to the Canadian
n employmen
nt Mkt C urrent Prev
v US$Changge
Japan 8
81.30 82.355 - 1.05 Yen
n
situation report made
m public th
he day before
e the US data
a, EC 1.3081 1.3066
6 - .15 Cennts
for a
as everyone shall rememb
ber, Canada reported tha
at CHf .9185 .91955 - .10 CHf
82,40
00 non-farm payroll jobs
s were creatted in March
h, UK 1.5870 1.5850
0 - .20 Pennce
C$ .9975 .99200 + .55 Cennts
nearlly all of whic
ch were full-time rather than
t part-time A$ 1.0285 1.0310
0 + .25 Cennts
jobs. This comparres to Bay Streets expecta
ation that only NZ$ .8180 .81755 - .05 Cennts
Mexico 1
13.03 12.888 + .15 Cenntavos
10-15
5 thousand jo
obs had been
n created. Th
hus the miss
s
Brazil 1.8210 1.8210
0 unch Cen ntavos
in C
Canada so much
m for the better tha
an had been Russia 2
29.65 29.466 + .19 Rubbles
expe
ected caused us to revise our figures also much fo
or India 5
51.29 51.033 + .26 Ruppees
China 6.3090 6.3090
0 + .20 Rennminbi
the b
better. We tho
ought it quite reasonable that
t if the ADP
P
had jjob creation in
i the US ram
mped and if Canada
C did in Movin
ng on, our on
nly saving gra
ace this morn
ning is that the
e
fact see its job creation
c truly ramped up, then the US
S EUR
R has responded hardly at all to the
e
data had to be ffor the betterr. It was no
ot. non--farm numbers; that is we
e had had the
e
The Yen/C$ Crooss
Mea culpa; me
ea culpa; mea good forrtune to have
e gotten shorrt
maxima culpa. of the EUR rela
ative to the
e
Canadia
an dollar Thurrsday morning
g
In tthe illiquid conditions that ahead o
of the employyment numbe
er
ailed after the release off the
preva in Cana
ada and saw it move
e
reporrt, the Yen soared, to our pleasanttly in our ffavour, falling
g
chagrin. Should the yen have
h from 1.3
3110 to 1.29
950, or 1.2%
%.
soare
ed? Is there any rea
ason We added to the tra
ade, and for a
incum
mbent in th
he Employm
ment oments Frida
few mo ay it worked
d
Repo e US that the Yen
ort here in the rather horribly against us, trading
g
should rise even modestly? No, 075.
to 1.30 Howe
ever, in the
e
d and that is the
and no; but it did aftermatth of the trading and as the
e
h reality.
harsh Ou osition have all been Yen
ur biggest po politiccal/economic circumstancce in Europe
e continue to
o
nted, for we are or more properly werre, for the Yen
orien deterriorate, the crross is trading
g back down
n to 1.3010 as
relate
ed currency crosses
c all moved
m violenttly against us
s,
 3

we write and the EUR itself relative to the US dollar is
trading 1.3065, down from 1.3100 late Friday.
If the EUR cannot rally in this environment, it cannot rally.
If the EUR is unable to conjure up support following a
report such as the Employment Situation Report on
Friday, it cannot conjure up support from anywhere. If the
EUR is given then at or below 1.3025 to which it had
fallen at one time in Asian dealing earlier today later
today in European or N. American dealing, we fear that
there shall be stop-loss selling that shall indeed be
formidable and it will be our hope then soon thereafter to
add to our long Canadian dollar/short EUR crosses.
However, after the drubbing we took Friday in our Yen
related crosses, some triage shall be needed before we
are well-enough to enter the fray with some sense of joi
de vivre.
Moving on then, today shall be a very quiet day regarding
economic news here in the States. Indeed, the only
important news shall be a speech by Dr. Bernanke late
this evening 7:30 P.M EDT to be precise in Stone
Mountain, Georgia at a conference sponsored by the
Atlanta Federal Reserve Bank. The President of the Fed
Atlanta, Mr. Lockhart, will speak also, as shall the
President of the Boston Fed, Mr. Rosengren. Mr.
Lockhart is a voting member of the FOMC this year; Mr.
Rosengren is an alternate.
Scanning through Finviz.coms very excellent charting
service this morning, nothing strikes us as manifestly
bullish nor bearish. The softs do appear weak, but the
grains, as noted above, are quite strong. Precious and
base metals are either trading higher or holding steady,
while energies are generally weaker. In all, the tone shall
be set later this morning when everyone returns to the
desks after the long Easter/Passover holiday.
As for grains, we shall have yet another USDA WASDE
report due for release tomorrow [Ed. Note: For those who
do not know, WASDE stands for World Agricultural
Supply and Demand Estimates.]. WE look for the corn
portion of the report to revise upward previous estimates
on feed-and-residual usage by 250-350 million bushels
from previous estimates, if we are to believe the March 1
stocks-in-positions report, and weve no choice but to do
so. As such, corn supplies from the old crop to the new
shall become uncommonly tight.
Regarding soybeans, exports have been a good deal
higher than the USDAs previous guess-timates, and
that shall almost certainly require that the Department cut
its ending stocks positions somewhat. Perhaps even
more importantly, we shall likely see the USDA cut its
estimates of Argentine and Brazilian soybean production
materially perhaps by 1.25 million metric tonnes on
average for both countries:

COMMODITIES PRICES ARE TRYING 04/09 04/06

Gold 1641.2 1631.7 + 9.50
TO MOVE HIGHER, and we note that gold has Silver 31.72 31.72 unch
Palladium 643.00 638.00 + 5.00
bounced from last weeks lows and that the grains too are Platinum 1618.0 1599.0 + 19.00
a good deal stronger this morning, led by soybeans, Gold/silver 51.75 51.45 + .30%
Reuters/CRB n.a. 306.49 + 0.5%
followed by corn, with wheat trailing as is seasonally
DJ/UBS n.a. 141.66 + 0.6%
proper. However, it shall be difficult to sustain much
strength given the weakness in equities prices and given Turning to gold, we were and we have been bullish of
the confusion still stemming from Fridays non-farm gold, but only in Yen terms in recent weeks, and until
payrolls, which has far too many traders/investors et al Friday that proved wise. Following Fridays non-farm
suddenly fearing that the US economy is far weaker than payroll report not only did that no longer appear wise, it
previous thought. We are not of that mind-set, believing appeared foolish. Those owning gold in dollar terms over
that the economy is in fact doing better, for no matter the course of the past three months have suffered losses
where we go, nor to whom we speak regarding the of 5.2%; those owning gold in EUR terms over the same
economy, the anecdotes are for the better, rather than period have suffered losses of 6.1% while those owning
the modestly worse. gold in Yen terms have actually been profitably, albeit
microscopically so for three months ago gold was trading
 4

132
2,000 oz. This
T morning it is trading at or nea
ar drift a
as new, large
e supplies of nat-gas conttinue to come
e
134
4,000. That is
i of little ben
nefit to us, however, for in on lin
ne even as the likes off Chesapeake
e and Devon
n
the p
past two wee
eks, gold in Yen
Y terms ha
as fallen from
m Energ
gy continue to
o shutter-in so
ome productio
on.
appro
oximately 14
43,000 to this
s mornings 13
34!
Rig counts arre falling, as they should be
e.
We h aken to task by some who argued tha
have been ta at Bake rHughes.com
m reports thatt the US rig count is now
w
our ffocus upon gold in Yen
n down to 658 rigs w
working, down
n
termss is foolish; that no one
e 11 this week from last. For the
e
trade
es gold in Yen terms and
d past yyear, the num
mber of rigs at
a
that tthe world only
y trades gold
d work is down 242 a
and it is worth
h
in do
ollars. We, however,
h beg
g g that back in
noting n the summe
er
very much to differ, forr of 08
8 there were
e more than
n
altho
ough Japanes
se may trade
e 1500 rigs at work compared to
o
gold in dollar term
ms, in reality
y the 65
58 presently. There will be
e
they must eventually translate
e fewer next week an
nd next month
h
their profits or loss
ses back into
o hree months ffrom now.
and th
yen, and it is then that Gold/Yen plays its role
e.
Commodities are
e in fact tra
aded eventu
ually in othe
er Brentts premium tto WTI has co
ontinued to w
widen, with the
e
curre
encies, althou
ugh they are firstly
f traded in the reserve June//June spread
d trading +$19
9.25 this morrning and with
h
curre
ency the do
ollar with th ated back into
he P/L transla the Ju
uly/July sprea
ad trading +18
8.22 as we w
write.
each respective currency. Crude in EURs is
s as importan
nt
e European as
to the a crude is in
n dollar terms
s; indeed, it is MayWTI down 120 102
2.11-16
Jun WTI down 120 102
2.63-68
more
e so and that is as it should
d be. JulyWTI down 120 102
2.15-20
AugWTI down 120 102
2.59-64
That said, we are wrong at this
s point being long of gold in
any ccurrency term
m, and with th
he damage wrought
w Frida
ay MayBrent down 103 122
2.40-45
JunBrent down 103 121
1.80-85
follow
wing the no
on-farm payrolls, we sh
hall use this JulBrent down 103 121
1.24-29
morn
nings boun
nce in gold
d/dollars to reduce ur
ou AugBrent down 103 120
0.66-71
expo
osure. Weve really no choice, given that
t weve no
ot OPEC Basket $121.94 0 04/04
He
enry Hub Natt-gas: $1.99
seen new interim highs since the mer of 10 and
t late summ
have
e seen lower lows far too many
m times since. Well no
ot
SHA
ARE PR
RICES A
ARE GO
OING TO
O
cut the entire pos
sition, but ce
ertainly well cut it by half.
d trading technique and the
Good t urge to preserve both OPE
EN MARK
KEDLY L
LOWER T
TODAY as
s
real a
and mental ca ct, even as we
apital mandattes that we ac the ccash markett catches up
p with the ma
assive sell-offf
know
w that we shall take a grea
at good deal of
o harsh words that ttook place Frriday in the ffew hours that the futures
s
from the Gold bug
g community
y. So be it; tha
ats our lot. were open followin
ng the releasse of the non-farm payrolls
and a
as European markets trad
de lower this morning also
o.
WT
TI AND BRENT CRUDE
ES ARE
E have been net neutral of equities for the
We h e past severa
al
weekks, having be
een manifesttly bullish off shares from
m
WE
EAKER; AND SO
S TOO
O THEIR
R Dece
ember on into mid-Februarry, but from w
which we stood
d
PRO
ODUCTS, and so also
a Nat-gas, which simply down
n two and thre
ee weeks ago
o premature
ely it now had
d
continues to make wnward eventtually toward a
e its way dow appea
ared but now
w it appears prresciently.
Big Figure $1 something.
s In
ndeed, in the case of spo
ot
Henry Hub nat--gas we alrea
ady are there
e as it trade
es We h
have been bu
ullish of VLC
CCs, dry bulkk carriers and
d
9/MBtu. There is nothing yet to stem the
$1.99 t downwarrd LNG oriented ship
ppers, but we
e have had th
hose positions
ed with S&P
hedge P futures, raiising or lowe
er our futures
s
 5

positions from beta hedged when weve wished to err the very foolish do not at least pay some respect to his
somewhat bearishly or to dollar equivalency hedged actions. We may be foolish witness our inaccuracy in
when wed wished to err ever-so-modestly bullishly. As forecasting non-farm payrolls... but we are not very
of Thursday we were beta hedged thankfully but on foolish; or at least we hope we are not. Couple continued
balance we were neutral. insider selling which we admit may well be capital
gains tax motivated rather than economically motivated
In our commentary last Thursday we posited the notion with Mr. Biggs' decision to cut risk and it is wise for us to
that the S&P futures could make their way downward do the same.
toward 1370. Quoting ourselves, we said that as the
minor trend to the upside has been broken and it is ON THE POLITICAL FRONT, the situation in
reasonable to assume that we shall see the S&P
Syria grows more and more serious with each passing
make its way down toward 1370 or so to test the
day, as the cease-fire that is set to go into effect one day
validity of the long term bullish trend. It may be there
hence now appears almost certainly to fail as the
sooner than one wants to believe possible. In
government has pressed ahead with its military against
retrospect that now appears to have been prescient,
the rebels, killing another seventy civilians yesterday
although we are more than willing to ascribe it to luck.
alone. We are told that over the weekend, at least 180
We, however, are more than willing to take luck and run
civilians were killed in fighting between the rebels and
with it.
the government. To date, it appears that close to 9,000
people have been killed in fighting there.
Nonetheless, we are there this morning, for we shall be
putting 1370 to test almost immediately. We hope it shall
The peace plan/cease-fire organized by the Arab League,
hold; we fear, however, it wont; but again, we certainly
along with the UN, was to go into effect tomorrow, and
hope that it shall for if it does not it means that much
would mean that government troops were to pull back
more weakness lies ahead, and that we would find
from heavily populated areas of the country; however,
disconcerting:
yesterday the Assad regime said that it shall not allow the
rebels to use the cease fire as a means to expanding
S&P holiday 1,398
CanS&P/TSX holiday 12,103 their control over areas of the country; that is, the regime
FTSE holiday 5,725 has made it clear that it has no intention of withdrawing
CAC holiday 3,320 its forces.
DAX holiday 6,775
NIKKEI down 126 9,562
HangSeng holiday 20,593 Further, the government has said that it will not abide by
AusSP/ASX holiday 4,320 the cease-fire unless it has assurances written
Shanghai down 7 2,294
Brazil holiday 63,691 assurances by the governments of Qatar, Saudi Arabia
TGL INDEX down 0.1% 7,873 and Turkey that they will stop funding the rebel cause.

Finally, over the years we have learned to pay heed to
Barton Biggs when he makes important statements
regarding the economy and the stock market, and late
last week Mr. Biggs said that after a rather long while
during which he was aggressively bullish of equities he is
now moving to reduce his exposure materially.
Explaining that he had raised his net exposure to equities
from 65% long in January to 90% recently, he is taking
some risk off the table at this point, fearing a 5-7%
correction. When Barton Biggs acts in this manner, only
Kofi Annan, the UN peace negotiator and former UN
Secy General, said yesterday that the Assad regimes
escalation of fighting in cities such as Homs was wholly
unacceptable, and demanded that the regime abide by
the cease fire. That will not happen.
Turning to the Republican Presidential race here in the
US, things have turned sadly for the worse for Mr.
Santorum as news of his young daughters ill-health have
forced him and his wife to fall from the campaign trail in
 6

order to be with Bella in hospital. Bella, the youngest
child, has had terrible health problems since birth and is
once again fighting for her young life. Mr. Santorum is
facing the political fight of his life as the primaries in
Pennsylvania and New York loom larger, along with
several smaller state primaries, later this month, and Mr.
Santorum has to absolutely has to win in
Pennsylvania or his campaign shall be over.
Partys candidate, by the slimmest of margins: 30% to
29%, when all of the potential candidates are included.
Ms. LePen, the candidate of the far right National Front,
has the support of 13%, and is fading. Mr. Melenchon, of
the far-to-the-left and aptly named Left Party, has the
support of 15%, and has been rising of late, and Mr.
Bayrou of the Mouvement Democratique has the support
of 10% of those intending to vote.

We should remember that Mr. Santorum was once the Thus, with neither President Sarkozy or Mr. Hollande
junior senator from Pennsylvania, but lost his last election capable of winning 50% +1 of the votes cast in this first
there by a stunning 17%. Were he to lose again in his round, a 2nd round shall be held two weeks later and the
home state the embarrassment would be manifest and polls pitting these two against one another has Mr.
his campaign would be ended on the saddest of notes. Hollande defeating President Sarkozy 54-46%
Arithmetically, it is nearly impossible for Mr. Santorum to
deny Mr. Romney the nomination at this point, and were CAPITAL MARKETS
he to lose in Pennsylvania it would indeed be impossible.
Further, even if he were to win in Pennsylvania, that ON THE DEBATE OVER REFINING:
would only allow him to fall even farther behind Mr. Finally, our friends at Valero a long standing, and fully
Romney in the delegate count, for Romney will win New paid up subscriber, and a company for whom weve
York, Connecticut, Delaware and Rhode Island that same spoken several times over the past several years were
day. Thus, as Mr. Santorum kind enough to take us to
The Fisher-Gartman Risk Index (FGRISK):
were winning 72 delegates, Yesterdays close price: 99.51 vs. 99.12 task regarding a statement
Mr. Romney would be we made last week on the
The Fisher-Gartman Indices are calculated by Dow Jones Index, the marketing
winning perhaps 159. name and a license trademark of CME Group Index Services LLC (CME US crude oil refining
Indexes). Dow Jones Indexes is a service mark of Dow Jones Trademark
Holdings LLC (Dow Jones) Investment product[s] base on The Fisher- situation. WE are always
As for the delegate count to Gartman Indices are not sponsored, endorsed, sold or promoted by CME
Indexes, Dow Jones or their respective affiliates, and CME Indexes Dow Jones grateful when clients correct
date, The NY Times has Mr. and their respective affiliates make no representation regarding the advisability
of investing in such product[s]. us, for in so doing we learn
Romney with 660; Mr.
and we can pass that newly
Santorum with 281; Mr. Closing price: ONN(RiskON):$28.14 + .06
Closing Price: OFF (Risk OFF): $21.50 - .04 gained wisdom on to others,
Gingrich with 135 and Mr.
as is our want. That said, we
Paul with 51. Once again, a candidate needs 1144
note that Mr. Richard Grisson, Valeros Vice President for
delegates to the convention to win the nomination. By
Strategic Planning and Market Analysis, sent us the
months end, Mr. Romney will have just over 800
following note:
delegates in his column. As we say here in the South,
Throw some water on the fire, boys; this hunt is over. Dear Dennis,

Thus, we would not be at all surprised to see Mr. We read your morning letter with great
interest and always find it interesting and of
Santorum use his daughters ill-health as a means and value. In your morning letter, dated March
reason to stand down. His Quixotic campaign is all but 30th on page 4, you mentioned the shortage
ended; it is time to acknowledge that fact. of refining capacity as a cause of high
gasoline prices. We see the high gasoline
prices as a reflection of the high crude oil
Finally, with the 1st round of the French Presidential cost and not due to refining capacity.
election now only two weeks away the 22nd of this
U.S. petroleum products demand, including
month is the date for the election the latest polls have gasoline, has dropped significantly since
President Sarkozy leading Mr. Hollande, the Socialist 2007 due to a combination of the Great
 7
Recession and more recently as a result of
high prices leading consumers to curtail their
gasoline use. While refinery capacity has
declined recently in the U.S., Western Europe
and the Caribbean, the reduction in demand
has far exceeded the reduction in refining
capacity such that unutilized U.S. refinery
capacity has averaged 2.5 Million Barrels Per
Day over the last year (see Chart I). This is far
above historical norms with the exception of
the period during the depths of the Great
Recession. As a result, U.S. refinery
utilization has averaged slightly over 85%
over the last few years, much below historic
norms (Chart II).
Actually, we would support a more
constructive regulatory environment for
refining, as you mentioned, but today,
refining capacity in Western Europe and
North America is in surplus, relative to
demand. Thus, refineries are closing in these
areas. The global growth for refined products
is in the developing world and these markets
are setting world prices for crude oil and
adding refining capacity.
When looking at the components that make
up the retail price for gasoline and diesel, the
U.S. Department of Energy provides helpful
data. The portion of retail prices that come
from refining, marketing and distribution
remains comparable to that seen historically.
Recently, it has been averaging between 50 to
75 cents per gallon with a dip at year end and
in January when refining margins were very
poor. On Chart III, the green line represents
the difference between crude oil cost plus
taxes (blue line) and average regular gasoline
price (red line). Crude oil price alone is
making up nearly $2.50 per gallon of the retail
price. Add in state and federal taxes on fuel
and you are at almost $3 per gallon before
any costs or profits for the refining, marketing
and distribution companies are incurred
(Chart III blue line).
To sum up, the world market is setting crude
oil prices and global demand for oil remains
strong while supplies continue to be affected
by issues such as turmoil in Libya, Syria,
Yemen, Sudan, Iraq and noise around Iran.
More crude oil production, relative to
demand, is needed to reduce prices paid by
U.S. consumers for fuels.
Thank you for considering our view.
Richard.
We always learn from our clients, and we are especially
grateful when we do. In this case we are especially so.
ON THE PECULIARITIES OF THE
EMPLOYMENT FIGURE: We have gone on at
some length about the confusion we have had regarding
Fridays Employment Situation Report, and it was indeed
confusing; but when digging into the data on Friday we
came across a rather startling bit of news: the massive
skewing of the employment and unemployment numbers
that are both enlightening and unsettling. For example,
the unemployment rate amongst young, black,
uneducated males is a stunning 48.5%, while that for
college educated women over the age of 45 is 3.7%. That
we find interesting; that everyone should find interesting.
ON PLAYING DEFENSE: We fear, sadly, that
President Obamas re-election is a given, for the
Republicans have wrought so much damage upon one
another during the bruising primaries that the President
has escaped unscathed. The same cannot be said of Mr.
Romney. However, all is not lost for the Republicans shall
very likely retain control of the House and still have an
outside chance to take control of the Senate, providing
that nothing truly untoward happens between now and
the first week of November.
The problem that the Democrats have is that they have a
math problems: They have 23 seats in the Senate they
must defend in what is shaping up to be a rather archly
anti-incumbent psychology while the Republicans have
only 10 Senates seats that they need to defend. Given
the Democrats small majority in the Senate at the
moment, having to defend this many seats is a very real
problem. We can imagine the Republicans defending 8 of
their 10 seats, losing 2, but we can imagine the
Democrats defending only 17 of their seats, losing
perhaps 6 but more likely losing 4 seats net. That would
be sufficient to turn the Senate to a Republican majority
of one. twill be better than nothing.
RECOMMENDATIONS
1. Long of Four Units of the Canadian dollar
and Three Units of the Aussie dollar/short of
Seven Units of the Yen: We have been long of Canada
and Aussie/short of Yen for quite some while and we are still very
comfortable as the crosses moved rather nicely in our favour. Several
weeks ago, and obviously to our dismay, the Yen/C$ cross traded to
and above 84.75 for more than an hour, and on that we added to the
trade. In retrospect obviously we wish that we hadnt, but we did.
The cross is trading 81.75 as we write, and as noted previously,
the 82.00 level in the Yen/C$ cross has served as our defense point
for the entire position using our usual hour or so approach to
the market; that is the cross must trade downward through that
stop for an hour or so before we shall exit the trade. It has traded
through there and we are wrong in our position those not yet out
should exit immediately and the storm we thought we had
weathered proved only to be biding its time before it turned,
Friday, into a fully-fledged hurricane!!!
2. Long of Four Units of Gold/short of Four
Units of the Yen: Given our antipathy toward the Yen, it
seemed a reasonable risk/reward to buy gold in Yen terms, swapping
out of gold/EUR several weeks ago to focus solely on Gold/Yen. It is
this morning 133,600/oz. Better trading technique forced us to cut this
position by half several days ago, and the same brought us back to the
th
market Monday, March 26 adding back that which we had sold: one
unit of gold vs. one unit of the Yen upon receipt of this commentary.
Lets not mince words, last week and this have hurt badly; and
as noted Friday we were and are prepared to sell any reasonable
rally in the course of the next several days. We are seeing a rally
this morning and as a result we are hoving to the sidlines
wishing to cut our position by half upon receipt of this
commentary.
At least we are not long of 7 or 8 units as we were at one time; that
would have been an insufferable perhaps even an
insurmountable loss.
3. Short of Four Units of the US long bond:
We ventured back into the bond market for the first time in a very, very
long while six weeks ago as a seller of the Ten year notes. Five weeks
ago we rolled those positions over into the June Notes and then into the
June long bond future Friday of four weeks ago. At the time, the trade
looked perfect. Now it is a disaster.
Worse, Friday of two weeks ago, the bond market reversed to
the downside and again we thought wed weathered the storm,
only to be hit full force by the gale on Friday following the release
of the non-farm payrolls. Again, weve no choice but to cut this
trade and we shall... by half upon receipt of this commentary.
4. Long of Two Units of the Canadian
dollar/short of Two Units of the EUR: Given our
empathy with the government in Canada and the strength of the
economy there and given our concerns about the situation in Europe,
th
we thought it wise on Thursday, April 5 to buy the C$ and to sell the
EUR, and so we did. As we wrote, the cross was trading 1.3095. It is
this morning trading 1.3075.
The cross has been consolidating over a rather broad range
between 1.2900-1.3500 in recent months, and this consolidation
is, we hope, a mid-point, arguing that eventually we shall see the
cross make its way toward 1.2000 if not lower.
The following is not a recommendation, a solicitation or an offer to sell
the securities and reflects publicly available pricing information provided
for informational purposes only. The Gartman Letter L.C. serves as a
sub adviser to the products mentioned below. Investors in the CIBC
Gartman Global Allocation Deposit Notes should go to:
https://cibcppn.com/ScreensCA/CANProductUnderlyings.aspx?ProductID=221&N
umFixings=3 Existing investors in HAG should go to:
http://jovian.transmissionmedia.ca/fundprofile_hap.aspx?f=HAG&c=&l
The following positions are indications only of what we hold in our ETF
in Canada, the Horizons AlphaPro Gartman Fund, at the end of the
previous trading day. We reserve the right to take positions opposite of
what maybe in our Notes and ETF from time to time as market
conditions warrant.
Long: We own an Asian short term government bond fund, the C$,
the A$, gold, and the S&P 500 Index.
Short: We are short the Euro, Yen, and 10yr US Treasury Notes.
The CIBC Gartman Global Allocation Notes portfolio for
April is as follows:
Long: 10% Canadian Dollars; 10% Australian Dollars; 20% Gold; 10%
S&P 500 Index
Short: 20% Euro; 20% Japanese Yen; 10% 10yr US Treasury Note
Horizons Gartman Fund (TSX: HAG): Yesterdays Closing Price on
the TSX: $7.84 vs. $7.82 Yesterdays Closing NAV: $7.87 vs. $7.85
CIBC Gartman Global Allocation Deposit Notes Series 1-4; The
Gartman Index: 131.86 vs. 133.06 previously. The Gartman Index II:
109.43 vs. 110.44 previously.
For the year-to-date, the NAV on our ETF is 1.0% while the value on
our notes series 1-4 is up 1.8%.
Good luck and good trading, Dennis Gartman
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