Category Archives: Housing Market

Short Rallies, Cover Sell-Offs

I think we can all agree, it was an interesting week last week in the stock market, to say the least. For the week, the Dow was down 2.9%, the SPX was down 3.9% and the Nasdaq was down 3.8%. All three indices closed below their 200 dma. It can be argued that, on a short-term basis, the stock market is “oversold” using the MACD as an indicator. However, it appears that hedge fund algos are being re-programmed to start selling the “V” rallies that have characterized this stock market for the last ten years – something I suggested in a previous SSJ would eventually happen.

An argument can easily be made that the stock market could be cut in half from the current level and still be overvalued. I made this argument in 2007 to friends and colleagues. Back then the SPX dropped from 1,576 to 666 – more than cut in half (57%). And if would have fallen farther if the Fed and the Bush/Obama Governments had not intervened. If the SPX drops 57% this time around, it would take the SPX down to 1,274. I believe it could easily fall farther than that.

Despite the abrupt nature of the sell-off over the past month, the stock market potentially still has a long way to fall:

The chart above is a weekly time-frame that encompasses the 2007-2009 decline. The stock bubble this time around is significantly more extreme than the previous bubble. In fact, by many measures, this is the most overvalued stock market in history. I included the MACD to illustrate that, on a weekly basis, the SPX is not even remotely oversold. I sketched in a white line of “support.” While I’m sure every market analyst their favorite “technically-based” area of support, the line I drew is around the 2,550 area on the SPX.  Below that line, there’s about 400 points of “air.”

The above commentary is an excerpt from the latest Short Seller’s Journal. Some of my recent home run shorts include Tilray, Wayfair and Netflix. The issues includes strategies for shorting Tesla, Amazon and several semiconductor stocks. You learn more about this newsletter here:   Short Seller’s Journal information.

“I’m up about $40k because of your short ideas. So thanks for that!” – Subscriber who joined in mid-June, 2018

Overvalued Stocks, Undervalued Gold And Silver, Insolvent Tesla

Craig Hemke, the well-known proprietor of the TF Metals Report  invited me on this his new “Thursday Conversation” podcast to discuss the stock market,  economy, precious metals and Tesla.

“If you adjusted the current S&P 500 earnings stream using the same GAAP accounting standard that were applied in 1999, the current S&P 500 P/E ratio – expressed in 1999 GAAP accounting terms – would be the most overvalued in history.”

“Deutsche Bank is a zombie bank that would have blown up in 2012 if the Bundesbank, ECB and German Government hadn’t bailed it out.”

“Elon Musk used a Halloween bag full of accounting tricks to generate GAAP ‘net income.'” The fact remains that Tesla is closer to insolvency this quarter than it has been at any point in the history of the Company.

“Mining stocks are cheaper now in relation to the S&P 500 and to the price of g old than they were at the bottom of the 20-year gold bear market in 2001”

You can listen to my conversation with Craig “Turd Ferguson” Hemke by clicking on the graphic below:

(NOTE: You can download the MP3 by using this LINK and right clicking on the audio bar)

************************

If you are interested in ideas for taking advantage of the inevitable systemic reset that  will hit the U.S. financial and economic system, check out either of these newsletters:   Short Seller’s Journal  information and more about the Mining Stock Journal here:   Mining Stock Journal information.

Financial Market Collapse: Not an “IF” But A “When?”

“’DON’T PANIC!!!!’ Just 6.9% off of the most offensive valuation extreme in history.” – Tweet from John Hussman, Hussman Funds

The above quote from John Hussman was a shot at the financial media, which was freaking out over the sell-off in the stock market on Wednesday and Thursday last week. As stock bubbles become more irrational, the rationalizations concocted to explain why stocks are still cheap and can go higher become more outrageous. The financial media was devised to function as a “credible” conduit for Wall Street’s deceitful, if not often fraudulent, sales-pitch.

Perhaps the biggest fraud in the last 10 years perpetrated on investors was the Dodd-Frank financial “reform” legislation. The Dodd-Frank Act was promoted by the Obama Government as legislation that would protect the public from the risky and often fraudulent business practices of the big financial institutions – primarily the Too Big To Fail Banks. It was supposed to prevent another 2008 financial crisis (de facto financial collapse).

However, in effect, the Act made it easier for big banks to disguise or hide their predatory business operations. Ten years later it is glaringly apparent to anyone who bothers to study the facts, that Dodd-frank has been nothing of short of a catastrophic failure. Debt, and especially risky debt, is at record levels at every level of the economic system (Government, corporate, individual). OTC derivatives are at higher levels than 2008. This is without adjusting for accounting changes that enabled banks to understate their derivatives risk exposure. The stock market bubble is the most extreme in history by most measures and housing prices as a ratio to household income are at an all-time record level.

A lot of skeletons in the closet suddenly pop out of “hiding” when the stock market has a week like this past week. An article published by Bloomberg titled, “A $1 trillion Powder Keg Threatens the Corporate Bond Market” highlights the fact that corporate America took advantage of the Fed’s money printing to issue a record amount of debt. Over the last couple of years, the credit quality of this debt has deteriorated. More than 50% of the “investment grade” debt is rated at the lowest level of investment grade (Moody’s Baa3/S&P BBB-).

However, the ratings tell only half the story. Just like the last time around, the credit rating agencies have been over-rating much of this debt. In other words, a growing portion of the debt that is judged investment grade by the ratings agencies likely would have been given junk bond ratings 20 years ago. In fact, FTI Consulting (a global business advisory firm) concluded based on its research that corporate credit quality as measured by ratings distribution is far weaker than at the previous cycle peaks in 2000 and 2007. FTI goes as far as to assert, “it isn’t even close.”

I’ll note that FTI’s work is based using corporate credit ratings as given. However, because credit ratings agencies once again have become scandalously lenient in assigning ratings, there are consequences from relying on the judgment of those who are getting paid by the same companies they rate. In reality, the overall credit quality of corporate debt is likely even worse than FTI has determined.

The debt “skeleton” is a scary one. But even worse is the derivatives “skeleton.” This one not only hides in the closet but, thanks to regulatory “reform,” it’s been stashed in the attic above the closet. An article appeared in the Asia Times a few days ago titled, “Has The Derivatives Volcano Already Begun To Erupt?” I doubt this one will be reprinted by the Wall Street Journal or Barron’s. This article goes into the details about the imminent risk of foreign exchange derivatives to the global financial system. There’s a notional amount of $90 trillion in FX derivatives outstanding, which is up from $60 trillion in 2010.

Many of you have heard about the growing dollar “shortage” in Europe and Japan. Foreign entities issue dollar-denominated debt but transact in local currency. FX derivatives enable these entities to swap local currency for dollars with banks. However, these banks have to borrow the dollars. European banks are now running out of capacity to borrow dollars, a natural economic consequence of the reckless financial risks that these banks have taken, as enabled by the Central Bank money printing.

As it becomes more difficult for European and Japanese banks to borrow dollars, it drives up the cost to hedge local currency/dollar swaps. Compounding this, U.S. banks with exposure to the European banks are required to put up more reserves against their exposure, which in turn acts to tighten credit availability.  It’s a vicious self-perpetuating circle that is more than partially responsible for driving 10yr and 30yr Treasury bond yields higher recently.  Perhaps this explains why the direction of the Dow/SPX and the 10-yr Treasury have been moving in correlation for the past few weeks rather than inversely.

But it’s not just FX derivatives. There’s been $10’s of trillions on credit default swaps underwritten in the last 8 years. The swaps are based on the value of debt securities. For instance, Tesla bonds or home mortgage securities. As the economy deteriorates, the ability of debtors to service their debt becomes compromised and the market value of the debt declines. As delinquencies turn into defaults, credit default swaps are exercised. If the counter-party is unable to pay (AIG/Goldman in 2008), the credit default swap blows up.

And thus the fuse on the global derivatives bomb is lit. The global web of derivatives is extremely fragile and highly dependent on the value of the assets and securities used as collateral. As the asset values decline, more collateral is required (a “collateral call”). As defaults by those required to post more collateral occur, the fuses that have been lit begin to hit gunpowder. This is how the 2008 financial crisis was ignited.

In fact, given the financial turmoil in Italy, India and several other important emerging market countries, I find it hard to believe that we have not seen evidence yet of FX derivative accidents connected to those situations. My best guess is that the Central Banks have been able to diffuse derivative problems thus-far. However, the drop in the stock market on Wednesday surely must have triggered some equity-related derivatives mishaps. At some point, the derivative fires will become too large s they  ignite from unforeseen sources – i.e.the derivatives skeletons come down from hiding in the attic – and that’s when the real fun begins, at least if you are short the market.

I would suggest that the anticipation of an unavoidable derivatives-driven crisis is the reason high-profile market realists like Jim Rogers and Peter Schiff have recently issued warnings that the coming economic and financial crisis will be much worse than what hit in 2008.

The Cracks In The Market’s Floor Grow Wider

“The only time we’ve ever seen a confluence of risk factors anywhere close to those of today was the week of March 24, 2000, which marked the peak of the technology bubble.” – John Hussman, Hussman Funds, in his October Market Commentary

The yield on the 10-yr Treasury has broken out, hitting its highest level since July 2011:

By the end of June 2011, the Fed had only reached its half-way mark in money printing. It was shortly thereafter that the Fed had implemented its “operation twist.” Operation twist consisted of selling the Fed’s short term holdings and using the proceeds plus extra printed money to buy Treasuries at the long-end of the curve – primarily 10-yr bonds. That program is what drove the 10-yr bond yield from 3.40% in July 2011 to as low as 1.33% by mid-2016. At one point the Fed owned more than 50% of all outstanding 10-yr Treasuries. The Fed’s massive money hyper-stimulated the housing and auto markets.

What should frighten market participants and policy-makers – and really, everyone – is that the 10-yr yield has soared the last Thursday and Friday despite the big sell-off in the Dow/SPX. I say “despite” because typically when stocks tank like that, the money flows into Treasuries as a “flight-to-safety” thereby driving yields lower. When stocks drop like last Thursday and Friday in conjunction with the sharp rise in the 10-yr yield (also the 30-yr yield), it reflects the development of financial market problems that are not superficially apparent.

The media narrative attributed Friday’s jump in Treasury yields to the “strong” jobs report. But this is nonsense. The number reported missed expectations. Moreover, the number of working age people “not in the labor force” rose to an all-time high,which is indicative of substantial slack in the labor market.

More likely, yields are soaring on the long end of the curve (10yrs to 30yrs) because it was quietly reported that the amount of outstanding Treasuries jumped by $1.25 trillion in the Government’s 2018 Fiscal Year (October thru September). This means that the Government’s spending deficit soared by that same amount during FY 2018. To make matters worse, the Trump tax cut will likely cause the spending deficit – and therefore the amount of Treasury issuance required to cover that deficit – to well to north of $1.5 trillion in FY 2019.

Who is going to buy all that new Treasury issuance? Based on the Treasury’s TIC report, which shows major foreign holders of Treasury securities, over the last 12 months through July (the report lags by 2 months), foreign holdings of Treasuries increased by only $2.1 billion. The point here is that, in all likelihood, the biggest factor causing Treasuries to spike up in yield is the market’s anticipation of a massive amount of new issuance. Secondarily, the rising yields likely reflect the market’s expectation of accelerating inflation attributable to the deleterious consequences of the trade war and the lascivious monetary policies of the Fed. The market is assuming control of interest rate policy.

On Tuesday last week (October 3rd), the Dow closed at a record high (26,828). Yet, on that day three times as many stocks in NYSE closed at 52-week lows as those that closed at 52-week highs. Since 1965, this happened on just one other day: December 28, 1999. The Dow peaked shortly thereafter (11,722 on January 10, 2000) and began a 21 month sell-off that took the Dow down 32%.

I don’t necessarily expect to see the stock market tank in the next few weeks though, based on watching the intra-day trading action the past couple of weeks leads me to believe that the market is vulnerable at any time to a huge sell-off. The abrupt spike in Treasury yields plus market technicals – like the statistic cited above – lead me to believe that the cracks in the stock market’s “floor” are widening.

The above commentary is an excerpt from the latest Short Seller’s Journal. In that issue I presented LULU as short at $153. It’s already dropped $8 and several subscribers and I have more than doubled our money on put ideas.  You can learn more about this newsletter here:  Short Seller’s Journal information.

The Housing Market Goes Down The Drain

The Denver Post published an article last week titled, “Major cold front slams Denver housing market in September” (note, weather-wise, September was one of the warmest and driest in many years). Single-family home sales in September plunged 30.5% from August and 21.7% from September 2017. Condo sales fell off a cliff, dropping 43% from August and 17.3% from August 2017. Normally inventory drops slightly in September. This year inventory in September soared. The median price of homes sold fell 3.8%. The article said the high-end of the market – homes worth over $1 million – fell 44.4% from August to September.

In terms of economic trends, Denver historically has been representative of the same
economic and demographic trends nationwide. Based on subscriber emails and articles I’ve read from around the country, the activity in the housing market nationwide is similar to Denver’s.

New home sales for August, which were released last week, showed another year-over-year decline on a SAAR basis and missed the Street’s expectations. In addition, the 627,000 SAAR print for July was revised down 3% from 627,000 to 608,000. Revisions for June and July together were taken down by 39,000. The fact that new homebuilders are sitting on a near-record level of inventory (measured both by value and units) contradicts the NAR’s contention that home sales are declining because of a lack of affordable inventory. Recent results from lower-end, lower-priced homes (Beazer, DR Horton and Pulte) show demand for “affordable” homes is waning.

One indicator supporting my view is the response of KBH’s stock after it reported earnings on September 25th . The past several quarters KBH stock staged a multi-day rally after it reported earnings.  Although KBH reported a revenue and net income “beat” and spiked up at the open the next day, the stock closed down 3% from Tuesday’s close.  KBH’s stock closed 5.8% lower on the week.

While KBH’s revenues, operation income and units delivered showed impressive gains over the same quarter last year, its new orders showed very little growth and the value of the new orders declined year-over-year for the quarter. Furthermore, the Company’s order cancellation rate increased to 26% from 25% in the year earlier quarter. While KBH’s income statement looks impressive in the “rear-view” mirror, the operating statistics that give us insight into future quarters are showing a definitive slow-down.

KBH is trading at a 14x P/E ratio. Historically, homebuilders trade with a 5-8x P/E when they actually manage to generate “E.” I believe it’s safe to assume that KBH’s earnings will decline for at least the next several quarters. This means that KBH’s stock price will drop from both lower earnings and P/E ratio compression. In fact, I believe this will occur with all the homebuilder stocks.

KBH stock is down 37% from high in mid-January this year. I believe over the next 12-24 months, the stock price will be at least cut in half.

The commentary above is an excerpt from the latest Short Seller’s Journal. My subscribers and I have made easy money shorting KBH and other homebuilders. This week I feature a little-known homebuilder and explain why its disclosure last week shoots a hole in the National Association of Realtors’ propaganda that the falling home sales is attributable to low inventory. I also feature two other great short ideas – one in retail and one in auto finance. You can learn more about this newsletter here:   Short Seller’s Journal information.

The Fed: Lies, Propaganda And Motive

The agenda of the Fed is to hold up the system for as long as possible. The biggest stock bubble in U.S. history has been fueled by 10 years of negative real interest rates. The only way to justify that policy is to create phony inflation statistics. Based on historical interest rates and based on the alleged unemployment rate, a “normalized” Fed funds rate should be set at 9%, which reflects a more accurate inflation rate plus a 3% premium. The last time the unemployment rate was measured at 3.7% was October 1969. Guess what? The Fed funds rate was 9%. I guess if you live an a cave and only buy TV’s and laptops, then the inflation rate is probably 2%…

Silver Doctor’s Elijah Johnson invited me to discuss the FOMC policy decision released on Wednesday afternoon:

****************************

If you are interested in ideas for taking advantage of the inevitable systemic reset that  will hit the U.S. financial and economic system, check out either of these newsletters:  Short Seller’s Journal information and more about the Mining Stock Journal here:  Mining Stock Journal information.

Fundamentals Supporting Stock Market Further Deteriorate

The Bureau of Economic Analysis calculates and publishes an earnings metric known as the National Income and Products Accounts which presents the value and composition of national output and the types of incomes generated in its production. One of the NIPA accounts is “corporate profits.” From the NIPA handbook: “Corporate profits represents the portion of the total income earned from current production that is accounted for by U.S. corporations.”

The BEA’s measurement of corporate profits is somewhat similar to using operating income from GAAP financial statements rather than net income. The BEA is attempting to isolate “profits from current production” from non-production noised introduced by GAAP accounting standards. “Profits from current production provide a comprehensive and consistent economic measure of the net income earned by all U.S. corporations. As such, it is unaffected by the changes in tax laws, and it is adjusted for non-reported and misreported income” (emphasis is mine).

Why do I bring this up – what is the punch line? Because the NIPA measurement of corporate profits is currently showing no growth. Contrast this with the net income “growth” that is generate from share buybacks, GAAP tax rate reductions and other non-cash GAAP gimmicks used to generate GAAP net income on financial statements. This does not surprise me because I use operating income when judging whether or not companies that are reported as “beating” estimates are “beating” with accounting gimmicks or actual products derived from the underlying business.

It’s quite easy for companies to manufacture net income “beats.” But it’s more difficult – though possible – to manipulate operating income. The deferment of expenses via capitalizing them (taking a current cost incurred and sticking it on the balance sheet where the cost is amortized as an expense over time) is one trick to manage operating income because expense capitalization reduces the quarterly GAAP expense that is connected to that particular expenditure (capex, interest, etc).

The point here is that corporate operating profits – or “profits from production” per the BEA – are not growing despite the propaganda from Wall Street and the President that the economy is “booming.” Furthermore, if we were to adjust the BEA numbers by a true inflation number, the resulting calculation would show that “real” (net of price inflation) corporate profits have been declining. Using this measure of corporate profitability as one of the measures of economic health, the economy is not doing well.

August Auto Sales – August auto sales reported the first week of September showed, on a SAAR (Seasonally Adjusted Annualized Rate basis), a slight decline from the July SAAR. The positive spin on the numbers was that the SAAR was 0.4% percent above August 2017. However, recall that all economic activity was negatively affected by the two huge hurricanes that hit south Texas and Florida. The SAAR for this August was reported at 16.5 million. This is 11.2% below the record SAAR of 18.6 million in October 2017. It was noted by LMC Automotive, an auto industry consulting firm, that “retail demand is deteriorating” (“retail” is differentiated from “fleet” sales). Sedan sales continue to plummet, offset partially by a continued demand for pick-up trucks and SUVs.

Casting aside the statistically manipulated SAAR, the industry itself per Automotive News reported 1.481 million vehicles sold in August, a number which is 0.2% below August 2017. In other words, despite the hurricane-depressed sales in August 2017, automobile manufacturers are reporting a year over year decline in sales for August. This was lead by a stunning 12.7% drop in sales at GM. I’ll note that GM no longer reports monthly sales (only quarterly). But apparently an insider at GM fed that number to Bloomberg News.  Automotive News asterisks the number as “an estimate.” Apparently GM pulled back on incentives. On a separate note, I’m wondering what will happen to consumer discretionary spending if the price of gasoline continues to move higher. It now costs me about 35% more a year ago to fill the tank in my car.

The commentary above is an excerpt from the latest Short Seller’s Journal.  I  recommended shorting GM at $42 in an early November 2017 issue of the Short Seller’s Journal. It hit $34 earlier this past week. That’s a 19% ROR over the time period. In the last issue of the Short Short Seller’s Journal, I recommended shorting Wayfair (W) at $149.92, last Friday’s close. W is down $3.50 – or 2.3% – despite the rising stock market. My recommendation include put option ideas You can learn more about this newsletter here:  Short Seller’s Journal Information

Precious Metals, Mining Stocks, Housing Market – What’s Next?

“The housing market is 100% a function of the Fed’s money printing.  Half the money the Fed printed, $2.2 trillion, went directly into the housing market.”

Analysts and financial media meatheads look at the $4.5 trillion created by the Fed and truly believe that it wasn’t money printing because it’s “backed” by Treasury bonds and mortgages.  But this is pure ignorance.  Not taken into consideration is the amount of credit and debt issuance enabled by using the $4.5 trillion as the “reserve capital.”  It’s fractional banking on steroids.

As the U.S. financial system reaches its limit on the amount of debt that can be serviced from the current level of wealth output, what happens next?  We’re already seeing what happens in the housing market per the fact that the homebuilder  stocks are in an “official” bear market, with some of them down over 30% since late January.

Then what?  The Fed will have to print multiples of the original amount it printed or face systemic collapse. At that point the precious metals sector will soar beyond anyone’s imagination at this point in time.

Phil Kennedy (Kennedy Financial) invited me to discuss these issues on his podcast.  Phil’s podcasts blend truthseeking, facts, humor, humility and sarcasm.  It’s  well-worth the time spent to listen:

****************************

If you are interested in ideas for taking advantage of the inevitable systemic reset that  will hit the U.S. financial and economic system, check out either of these newsletters:  Short Seller’s Journal information and more about the Mining Stock Journal here:  Mining Stock Journal information.

Will The Housing Market Fall This Fall?

“The number of homes on the market surged, the number of sales dropped, and price reductions were abundant last month, all signs that buyers are pulling back in metro Denver” – Denver Post (September 6, 2018) citing the Denver Metro Association of Realtors.

Buy a home now if you must if you manage to qualify for one of the de facto sub-prime mortgages sponsored by the Government Taxpayer. But I guarantee that if you wait 6-12 months, you’ll be able to buy the same home or a better home for a lower price…

Denver has been one of the top-10 hottest housing markets in the past few years, largely driven by an enormous inflow of households moving to Denver from California. However, I started seeing signs developing of a market top that were similar to the indicators I noticed leading up to the popping of the last housing bubble.

As reported by the Denver Metro Association of Realtors (NAR-affiliate) single-family home sales dropped 7.5% in August from July and were down 9.8% from August 2017.Condo sales dropped 5% in August from July and fell 15.6% year over year. At least 30% of the sales were below the original listing price. The inventory of listed homes rose at a record rate for the month of August. Normally inventory from July to August drops a small amount.

Based on articles I encounter in my research or sent to me by subscribers, most if not all of the hottest markets are experiencing a similar development. The spokesman for the Denver affiliate of the National Association of Realtors, like a good salesman, attributes the declining sales to “push-back” from buyers. But, as you might well have expected, I disagree with that assessment.

As I’ve discussed previously, the Government lowered the bar on mortgage qualification requirements for its mortgage programs starting in 2015 in order to counter, what was then, a deteriorating housing market. The Government has lowered the bar on its guaranteed mortgages each successive year since 2015. A growing portion of the home-buyers using Government guaranteed mortgages would have been considered “sub-prime” in the previous mortgage/housing bubble.

In effect, the Government has kept “juicing” the housing market by enabling a larger population of people to buy a home that they otherwise could not afford unless they could get a low-down-payment, rate-subsidized, sub-prime quality Government mortgage. At some point, the limit will be reached on the number of people who can qualify under the current requirements. I would argue that the system is approaching that point.

The second factor in reduced buyer demand is the potential buyers who can qualify for and afford a mortgage from any issuer (Government or private-label) are starting to see a lot more inventory come on the market accompanied by falling prices. Many will hold off on the decision to sell their existing home and “move-up” in order to see if prices come down. It doesn’t take a genius to understand that the prices are going to go lower when you drive around desirable neighborhoods and see a lot of “for sale” signs.

Once the buyers are in full-retreat, we’ll start to see sellers get more aggressive on pricing and we’ll see motivated sellers panic. Similar to the last bubble, the motivated sellers will primarily be “investors” who are stuck with a home they can’t rent at a rate that covers their expenses and flippers who can’t sell at a price that covers the costs of buying the home and preparing it to flip. Just like 2008, this is when the “price wars” will start (as opposed to the buyer “bidding wars” in a bull market) and prices spiral south.

This is why the stock chart of the Dow Jones Home Construction Index looks like this:

The homebuilder stocks have been in a bear market since the end of January. Many homebuilders are down over 30% since then. If that fact surprises you, it’s likely because you get your news from CNBC, Bloomberg, Fox Biz or the Wall St Journal, none of which have reported the bear market in home construction stocks. This is just like the mid-2000’s bubble leading up to the financial crisis. The homebuilders peaked in July 2005 and were in a full-fledged bear market before 2007.

The Employment Report Has Become Orwellian In The Extreme

“Today’s job numbers might be the biggest disaster I’ve ever seen reported. This Fall could get real ugly real fast. The deterioration of the participation rate is so big it makes me suspicious of earlier numbers.” – John Titus, producer of Best Evidence videos.

Titus goes on to say, “”The Household Survey” is showing a net loss of 1.47 million jobs year-over-year and a Labor Force reduction north of 2 million [YoY]. CNBC headline: ‘Economy adds more jobs than expected.'”

The employment report is unquestionably the most manipulated economic report issued by the Government. The content of the the headline on which the mainstream media bases its  broadcast and analysis of the report is entirely disconnected from the actual data contained in the report. The damning data that no one in the financial media or Wall Street seems to be able to find is at the top of the BLS’ report:

As you can see, the “civilian labor force”declined by 469,000 people in August from July. The number of “employed” dropped 423,000. The “not in labor force” increased by nearly 700,000. With these facts in mind (“facts” at least as far as the BLS numbers contain any shards of credibility),  how can the Government claim that 201,000 “jobs were created” in August? How can CNBC say the “economy created more jobs than expected?”  Based on the numbers in the details of the BLS report, it looks like, between the decline in the number of people employed and the decline in those not counted as part of the labor force, the economy shed over 1 million jobs.

Titus remarked to me that, in terms of manipulating the data to make the headline report look positive, this is the worst report he’s ever scrutinized: “In terms of people leaving the labor force, it sure looks like earlier data was was manipulated to hell and back and the BLS just couldn’t hide it any longer. The deltas are f—ing crazy.”

By the way, has anyone besides me noticed that the BLS calls this report the, “Employment Situation Report?”  What does that even mean?

On another note, my colleague and Mining Stock Daily collaborator, Trevor Hall, posted a fascinating interview with Scott Close and Dr. Eric Jensen of EMX Royalties.  EMX employs a project generator royalty  model and has 92 assets, three of which are current-pay royalty assets. One topic covered is what EMX will do with the cash proceeds from the sale of its giant Malmyzh copper-gold project in eastern Russia. EMX will receive a cash payment ($68 million) that is approximately two-thirds of EMX’s current market cap ($98 million).  You can listen this interview by clicking on the image below (or this link: MSD / EMX Royalty):

*******************
The Mining Stock Journal has featured EMX Royalties as strong as recently as early May, when EMX was trading at 80 cents. You can learn more about this newsletter service here: Mining Stock Journal subscription information.