Tag Archives: non-farm payroll report

BLS B.S.: 93% Of New Jobs Since 2008 Were Birth/Death Model Estimates

A research report from Morningside Hill Capital sourced from Zerohedge shows that 93% of the jobs “created” since 2008 were Birth/Death model estimates.  While some portion of those jobs were no doubt legitimately created, the issue is over-estimation of jobs created by new businesses net of jobs lost from failed businesses.  As it turns out, most of the job growth that has been reported by the Government since 2008 – and which in turn fueled some massive stock rallies – never existed.

Ronald Reagan’s administration was the “culprit” behind the creation of the Birth/Death model because apparently Reagan was complaining that the BLS was undercounting the jobs he “created” (from the link above, pg 11).

The source of estimation error derived from the methodology used by the Census Bureau is highly flawed because it extrapolates B/D growth estimates based on historical experience.  When the economic activity in the current period is below the historical rate of economic activity (real economic activity, not inflation-generated growth or growth fashioned from data manipulation), the slow-down in new business formation that occurs in reality is not picked up by the B/D model.

BLS Admits High Error Potential – If you bother to sift through the section of the BLS website that describes the Birth/Death model methodology – something which Wall Street analysts and financial news reporters have never bothered to do – the BLS admits the high potential for error.  From the BLS website:

The primary limitation stems from the fact that the model is, of necessity, based on historical data. If there is a substantial departure from historical patterns of employment changes in net business births and deaths, as occurred from 2008 into 2009 during the 2009 benchmark, the model’s contribution to error reduction can erode. As with any model that is based on historical data, turning points that do not resemble historical patterns are difficult to incorporate in real time. Because there is no current monthly information available on business births, and because only incomplete sample data is available on business deaths, estimation of this component will always be potentially more problematic than estimation of change from continuing businesses.

Perhaps the biggest source of error comes from the Census Bureau’s estimate of jobs from workers not covered by UI tax reports (employers required to pay out unemployment insurance). These are part-time workers (primarily independent contractors). As the BLS admits:

There are some types of employees that are exempt from UI tax law, but are still within scope for the CES estimates. Examples of the types of employees that are exempt are students paid by their school as part of a work study program; interns of hospitals paid by the hospital for which they work; employees paid by State and local government and elected officials; independent or contract insurance agents; employees of non-profits and religious organizations (this is the largest group of employees not covered); and railroad employees covered under a different system of UI administered by the Railroad Retirement Board (RRB). This employment needs to be accounted for in order to set the benchmark level for CES employment.

Over time some sources from which CES draws input data have become unreliable.

Thus, even the BLS admits that the B/D model is B.S. Furthermore, in all probability, the “Death” component of the B/D model likely has outweighed the “Birth” component of the B/D guesstimates, as new business formation is at a 40-yr low based on two studies, one from the Census Bureau and one from Gallup.  Per Gallup, the rate of firms closing began to exceed the number of new businesses in 2008.  Thus, by the BLS’ and Census Bureau’s own admission, the B/D model has grossly over-stated the number of net jobs created since 2008.  In fact, in all probability, the number of jobs from business “births” and “deaths” has declined.

It is likely that the U.S. economy has lost jobs since 2008.  This would explain why the Labor Force Participation Rate has declined to a level not experienced since the late 1970’s when household’s were primarily composed of one income providers.   The concept that the number of jobs since 2008 has, in reality, declined is reinforced by the fact that 94.98 million of the 254.77 million civilian non-institutional population – over 37% of the 15-yr old to 64-yr old population – is no longer considered to be part of the Labor Force.

Employment Report Farce And More On The Comey/Clinton Connection

The non-farm payroll is nearly as corrupted as the James Comey/FBI and Loretta Lynch/Justice Dept cover-up of Hillary Clinton’s crimes.  A poll done by the ABC New affiliate out of Virginia showed that nearly 95% of those polled thought that Hillary should be criminally prosecuted:  8 News Daily Poll.

I suspect that a large portion of the public is beginning to understand how tragically and catastrophically corrupted the entire U.S. political and financial system has become, which means I doubt many people believe today’s non-farm payroll report either.  I’m not going to “legitimize” it by analyzing the numbers other than to say that the headline report conflicts drastically with every single private-sector economic survey that includes an employment measurement index.  Drastically.

Dr. Paul Craig Roberts posted by commentary on James Comey yesterday.  His readership globally is bigger than either the online NY TImes or the Wall St. Journal issues.  One of his readers sent Dr. Roberts this additional on James Comey:

In 2003, Comey became the deputy attorney general at the Department of Justice (DOJ). In 2005 he signed on to serve as general counsel and senior vice president at defense contractor Lockheed Martin. In 2010 he joined Bridgewater Associates, a Connecticut-based investment fund, as its general counsel. On September 4, 2013, James B. Comey was sworn in as the seventh Director of the FBI. Talk about the revolving door in and out of government ! A shill for the private defense industry and later a wall street investment firm, two of the groups that support Hillary\’s assent to the Throne.

Today’s thoroughly rigged labor report and the cover-up of Hillary Clinton’s crimes further supports my thesis that the U.S. has fully descended into a Banana Republic – welcome to Hell.

Gold/Silver Ready To Run Now That The Fed Can’t Hike Rates

Doc invited me on Silver Doctor’s Weekly Gold and Silver Market update this week. The Fed’s threat to raise rates in June were largely targeted at cooling off the big move in gold and silver, which were about to take off like a runaway freight train. We discuss:

  • Is the Correction Over? Bullion Buyers “Shellshocked” As Gold & Silver Prices Jump Higher
  • “There Was Never Any Intent to Raise Rates” – It Was All About Targeting Gold!
  • Unprecedented Development in Gold – RECORD Amount of Gold Standing for June COMEX Delivery
  • Friday Was A Shift in Sentiment: “I Think We’re Going to Go Alot Higher”
  • The Most Heavily Shorted Mining Stock in the World Jumps Over 15% – Hedgies & Algos Jump Back On the TrainDoc, Dubin, & PM Fund Manager Dave Kranzler Break Down Gold & Silver‘s Huge Moves Friday:

mining-stock-journal-header-border

The junior mining stocks are more undervalued right now in relation to the price of gold and silver than at any time in history. Some of the companies that I present in my Mining Stock Journal will turn into lifestyle-changing investments. Click on the image above or on this link to subscribe: Mining Stock Journal

I’m enjoying and am really pleased with the results so I wanted to say thanks. – Subscriber “Jason”

Non-Farm Payroll: Economy Is Collapsing

The Government’s “non-farm payroll” report – aka “the employment situation” – reported an alleged 160k jobs added to the economy in April.  I am loathe to even discuss this fairy-tale report out of disdain for ascribing any legitimacy to a complete work of fiction.  It is mind-blowing to me that economic “experts” like Mark Zandi jump on the financial market propaganda networks and attempt to conduct a serious discussion about the numbers (I remember when Zandi was a mediocre analyst for Moody’s – he was hack then and he’s a bigger hack now).

Having swept aside those reservations I want to point out that, of the 160k jobs Untitledallegedly added to the economy in April, the Government whipped up 233k jobs from its “birth/death model” statistical plug metric  (click image to enlarge).  Without this fictitious numerical addition to the overall report, the economy in April lost jobs (the 233k number is pre-seasonal adjustments so it’s not mathematically correct to subtract 233k from the 160k, but it is correct to infer that the pre-birth/death number was negative).

The birth/death model is the Government’s estimate of the number of new businesses that were created in April net of the number of businesses that closed.   There’s not really words available that can describe the absurdity of the B/D model.  I’ll let the reader scan through the numbers in the graphic above to decide whether or not – in the context of every other economic report released in April – if the economy produced enough new businesses to affect the amount of hiring reflected in the Government’s report.

Ironically, Goldman Sachs has raised its forecast for the U.S. non farm payrolls (NFP) on Thursday,  expecting the employment report to crush expectations with a number closer to 250,000.  This is despite the fact that Goldman itself has slashed its payroll this year, cutting its fixed income division employment by 10%.  It’s just amazing how fraudulent the entire U.S. system has become.  It would be interesting to see the motivation behind Goldman’s highly misleading research reports, specifically the bank’s jobs forecast and its interminable forecast of sub-$1000 gold.

Please recall that when gasoline prices were falling the story-line pitched by Wall Street was that it would create a big bounce in consumer spending. This big bounce never materialized per retail and restaurant sales reports over the last several months. But also notice that Wall Street and the financial media market promoters are dead silent on the effect that higher gasoline prices will have on the consumer.

The non-farm payroll report with the birth/death model job additions stripped away  – i.e. significant job losses in April – is likely the accurate reflection of the level of economic activity in this country.   This assessment is reinforced and confirmed by the number of recent bankruptcies in the retail and energy sectors.   The 16% plunge in rail traffic during April reported by the Association of American Railroads further confirms this assessment – LINK.  Rail carload traffic reflects the level of business activity at the manufacturing and wholesale distribution level of our economy.   If activity in that sector is collapsing, it means that retail demand in every sector of the economy is collapsing.  Housing is next…

 

Buy Silver With Both Hands On This Manipulated Sell-Off

The monthly non-farm payroll report has become a fraud of epic proportions.  The Government is claiming that 215k new jobs were created in March.   In the goods producing category it claims that 37k jobs were created in construction.  But there’s a problem with this – it doesn’t correlate with construction spending and housing starts:

Untitled Anyone who follows the housing market knows that for the last year that new housing starts – notwithstanding the conspicuous manipulation embedded in the Government’s reporting methodologies – have been largely drivenUntitled by multi-family dwellings (big apartment buildings).  But the graph on the right shows that multi-family dwelling “starts” have been declining as well.

In other words, the Government would have us believe that 37k jobs in construction were created in March despite the fact that construction spending is in a downturn.  It’s laughable. Keep in mind that the Census Bureau collects the data for the employment report, construction spending and housing starts.  It’s no surprise that even its own data is inconsistent.

The same idea applies to all of the areas in which the Government is reporting there to be new jobs created except maybe healthcare.  Healthcare has indeed been the one area of growth in the economy because Obamacare has triggered a massive increase in Government-backed healthcare spending which is being financed by additional Treasury issuance and a massive transfer of wealth from the middle class to the disadvantaged class and to all of the private companies associated with healthcare (big pharma, hospitals incorporated, insurance, etc).

I turned up the volume – regrettably – on Fox Business this morning after the jobs report because I wanted to get some amusement from listening to the so-called “experts” explain why the economy was supposedly producing an unbelievable number of jobs.  Interestingly, Maria “Money Honey” Bartiromo was unable to disguise the look of total disbelief on her face in response to the employment report.  Some dope by the name of Steve Moore tried to justify the data by claiming that the big reduction in the cost of gasoline has created higher disposable income for consumers to spend in discretionary areas  – he specifically cited restaurants – which has offset the jobs loss in energy and mining.

Steve, where are you getting your views?  The facts, unfortunately for you, do not support your thesis.  For instance, retailers have been laying off thousands and closing down stores en Untitledmasse since the end of December.  As you can see from the graph to the left, the restaurant industry, like the retail industry, is shedding jobs hand over fist.

Steve, I would suggest that next time you spew your garbage on a public forum, you better do some fact-checking in case there’s some viewers who know the facts.

Then there’s financial services, which the Government claims added 15k jobs.  Tell that to the several thousand who were fired last month from big Wall Street firms.  Not sure where the Census Bureau found the 15k new jobs.  I suspect that the data collectors turned over some rocks and made up the numbers.

And then there’s the biggest problem.  The Government produces several different versions of the employment situation in one report.  There’s the Household Survey and the Establishment Survey.  Then there’s the U-3 report and the U-6 report, each of which shows substantially different unemployment rates.  U-3 shows 5% unemployment and U-6 shows 9.8% unemployment.  Which one is it?   John Williams of Shadowstats.com hasUntitled tracked the employment reports for many years.  His work shows that the true unemployment rate is well north of 20%.  This is validated in the context of the massive number of people who are no longer considered to be part of the labor force.

Most of those close 100 million not in the labor force are the ones who “fell off” unemployment insurance and stopped looking for work.  Many are now on welfare of some type.  Since 2001, the number of people who “qualify” for Social Security Disability Insurance has more than doubled to nearly 9 million.  They are considered not part of the labor force and there’s law firms who have built their practice around getting people qualified.  Then there’s the student loan factor.  If you can’t find a job, apply to an online university and get a student loan.   Since Obama took office the amount of student loans outstanding nearly doubled from $700 billion to $1.3 trillion.  Once you get approve for that loan, the Government does not have to count you as being unemployed.

The market response to the employment report is just as absurd as the report itself.  The stock and the precious metals were slammed initially.  If stocks and metals were hit because the employment report implies that the Fed will raise rates this year, then why has the S&P 500 and Dow rallied to go green on the day and gold and silver are still down $16 and 53 cents respectively?

Corporate revenues are showing no growth and GAAP net income has declined four quarters in a row.  I’ve got news for the Government, when companies are not producing revenue growth and their net income declines, they get rid of workers, not hire them.

Gold has been hit for as much as $23 today and silver for 66 cents (over 3%).  Currently silver is down about 51 cents to $14.94.   The bullion banks have been having a lot of trouble getting silver to cooperate with their manipulative efforts.  On many days when gold is being hit, silver will trade higher on the day.  I suggested at the beginning of the year that buying silver now would prove to be the trade of the decade.  I maintain that call NewSSJ Graphicand silver currently is up over 8% YTD.  I would suggest that all sell-offs in silver should be bought.   You can leverage your trade in silver with mining stocks.   The latest issue of the Mining Stock Journal is now out and my current idea is what I believe to the best idea I’ve come across in 15 years (it’s gold exploration junior).   You can subscribe to the MSJ by clicking on this LINK or on the graphic to the left.

You subscription will include the latest issue, the first two issues published – the March 4th debut issue features an emerging silver producing company and includes call option recommendations – plus a glossary of mining industry terms to help you better understand the research presented.

2008 Redux Times 10 Is Brewing

Using the “jobless claims” metric,  the financial media and snake oil salesmen would have us believe that the Government-compiled jobs market metrics indicate “sustained strength in the labor market that should further dispel fears of a recession”  – Reuters’ Animal Farm.

A reader asks:  “if the jobs market is so good why did my bilingual daughter, who graduated with a 3.8 GPA from Ga. Tech [Dr. Paul Craig Roberts’ undergrad school], not get a job offer for two months until someone I know hired her?”

A funny thing, those Government compiled, manipulated and propagated reports.  I answered with:   “She was fishing in the wrong fishing hole for jobs – she should have been sending her resume to Burger King and Starbucks.  But it sounds like the service sector is starting to shed jobs as well.  I honestly don’t know how they are coming up with their jobs reports.  As for the jobless claims, it makes sense that the claims are dropping like this.  As the labor force shrinks, especially the component that would qualify for jobless benefits, the number of people who file for jobless benefits shrinks, right?”

The first time I read “1984,”  I tried to imagine Orwell’s vision superimposed on the United States.  Now I don’t have to imagine.  Instead of Big Brother spying on us through our televisions (and they might through “smart” tvs), the Government monitors us through our cell phones, emails and web-browsing.  It’s truly frightening and it’s quite stunning how so few in this country understand – or are willing to accept – the degree to which it occurs on a daily basis.

While the Ministry of Propaganda spins its wheels convincing the public of a new bull market in stocks and a robust economic recovery are both in process – bolstered by a job market with more alleged openings than bodies willing to fill those alleged openings – the underlying structure of the economic and financial system is quickly rotting away.

Zerohedge reports today that the yield spread between 2-yr and 30-yr Treasuries is at its lowest (the difference between the yield on the 2yr Treasury and the 30yr Treasury) since its low-point in 2008 – A Flat Yield Curve Spells Recession.  There’s yet another comparison between 2008 and now.

The fundamental problems which caused the 2008 de facto financial collapse were never fixed.  Instead, they were “treated” with money printing and the massive expansion of credit.  While this enabled the operators benefiting from these subtle and insidious this wealth transfer mechanisms, it also seeded the next big systemic earthquake, which has the potential to be 10x worse than 2008.

Notwithstanding the Fed’s omnipresent intervention in the interest rate markets (Treasuries, repos, Fed funds and interest rate swap derivatives), the Fed has been unable to prevent a “flattening” of the yield curve.   A flat yield curve is the Treasury market’s signal that the U.S. is going into a recession.  Without that Fed intervention the Treasury would be inverted, a market event that verifies a deep recession in process.

While treating the problems with negative interest rates, money printing, debt creation and the continuous effort to systematically control the markets may temporarily cover up the symptoms of the underlying problems,  it is analogous to rubbing Neosporin on melanoma.  Eventually that cancerous mole will manifest as untreatable lymphoma.

The U.S. economic and political system is on the verge of a systemic disruption that will make life difficult for the entire population.  It’s anyone’s guess when the catalyst hits that pushes that button, but the force with which the next 2008 times 10 hits will likely even shock and awe those of us who can see that something ugly is about to hit.

Precious Metals Are Ripping Higher As The Government Jobs Report Loses All Credibility

The Government’s non-farm payroll report announced the creation of 242,000 news jobs in February. When the numbers hit the newswires, the Fed trading algos triggered a 12 point spike up in the S&P 500 futures and a $14 cliff dive in Comex gold futures.

The Government’s propagandized economic reporting has deteriorated into nothing more than an epic insult to anyone with two brain cells to rub together. Beyond that, the reports are nothing more than a source of embarrassment for the “experts” who gather on the financial networks to dissect and analyze the numbers for the purpose of “baptizing” the report.

But once the momentum from the Fed’s intervention had subsided, the SPX futures quickly retreated into a loss for the day and gold spiked up as much as $20.  The response to the Fed’s “invisible hand” in the market reflects the fact that these blatantly rigged Government-produced economic reports have lost all credibility with the market’s smart money:

UntitledUntitled

Gold and silver this week have traded in complete defiance of Wall Street’s “siren call” for a big price correction. The Goldman Sachs analyst, Jeff Currie, incessantly insists on embarrassing himself with a forecast of $800 for Wall Street’s Pet Rock. Contacts at Goldman told me he was instructed under no uncertain terms wipe some of the rotten egg off his face and get on CNBC to raise his target to $1000.

The behavior of gold this past week reflects an increasing loss of credibility in not just Government economic reports, but also a deteriorating faith in the fiat nature of the U.S. dollar. How can anyone place any faith in a Government which is comprised of nothing but thieves have any “credit” to back its currency?  As it stands now, the U.S. dollar is backed by a technically bankrupt Government run by corrupt politicians who serve as well-paid human puppets for the banking and corporate interests who control them.

On an interesting note, it was reported today that is suspending issuance of new shares in its physical gold ETF (ticker: IAU) due to a shortage of registered shares: LINK.  This is highly misleading because market makers can borrow shares and short them to buyers. Currently there’s only 2.4 million shares short in IAU out of 635 million shares issued. That’s only .3% of the float, which means there’s 10’s of millions of shares available to borrow and short in order to satiate buyer demand.  Compare this to GLD, which has 4.5% of the float shorted right now.

The real reason Blackrock had to suspend issuance of shares is because it is seeing something in the physical market that is stopping the firm from creating new share “baskets” which require the procurement of physical gold to back those “baskets.”  The best bet is that Blackrock knows it will ultimately be unable to buy enough physical gold on a timely basis to back the registration of new shares if called upon to do so.   In other words, there is a short of Pet Rocks.

Gold and silver are moving higher because all signs indicate that the markets are broken and the Government is beginning to lose control over the system.   The flow of capital out of paper assets and in to physical gold and silver is further evidence that the Government, Wall Street and the financial markets are both quickly losing credibility.

Non Farm Payroll Report: “Good Grief, These Guys Are Shameless”

The manipulation of markets (witness today) and the overt lying about the economy intensify as we move inexorably towards the precipice.  – John Embry

Short Seller’s Journal update:  My “Quick Hit” pick is now down 27% from its Dec 31 close.   Subscribers who took the plunge on my put option play are up over 500%.  The put expires today and is a little over $5 in the money (it was a slightly out of the money put on 12/31/15).  My long term short sell play is up (down) over 14%.  This is a stock that I believe will go from $30 (12/31) to $10 by 2017.  Short Seller’s Journal

The headline quote is from John Embry, who had emailed this morning asking me my opinion on the jobs report released this morning.   Here’s my response, verbatim:

John, I woke up late this a.m., about 8:40 EST – that’s how much I care about the employment report.  I turned on the tv to check the markets and saw the 292k and literally laughed out loud.  It’s beyond shameless – it’s a full frontal assault on our intelligence.  The Govt claims 45k new jobs in construction? But we find out earlier in the week that the Govt admits to rigging the construction spending number for the last 10 years. Is this some kind of joke? 

The NFP is a completely fictitious number and it truly confounds me every month to see how much time, energy and money is spent by the financial mafia discussing a number that is indisputably 100% fabrication.

I don’t want to tossed into the cesspool of analysts who get sucked in to dissecting and discussing an economic report that is entirely fictitious.  Let’s face it, it’s a made up number.   The number reported is not even remotely credible when put in the context of what’s happening to the U.S. economy.

I have better things to do with my time, like discuss this weekend’s NFL playoff games.  I can assure you, Embry’s knowledge and analysis of NFL football is at least on par with his high level of insight – and the ability to communicate that insight – on the financial markets.

To me the more interesting and relevant conversation encompasses how much longer can the insiders keep the financial markets propped up and how much longer will it be before the Government imposes complete totalitarian control over our system.

The response to today’s payroll by the stock and precious metals markets tells us that the market does not believe the NFP report.  When the headline hit, the S&P 500 futures spiked up 14 pts to go up 30 pts from where they were at yesterday’s 4 p.m. NYSE close.  Gold was smashed $8.   Currently, three hours later, the S&P 500 cash market is down 8 from yesterday’s close and gold has snapped back $13 from post NFP low print.

I will point out that the homebuilder stocks have dropped over 11% this year to date.  By the financial media’s yardstick, they are halfway to being considered in a “bear market.” If the NFP number had any fathomable degree of credibility, the homebuilder stocks would have staged a big rally today.  They are down 2.2% today alone.   Nothing more needs to be said on this matter.

Please have a good weekend – enjoy what you can, as much as you can, while you still can. The rug is being pulled out from under us and the landing will not be pleasant.

Extreme And Blatant Gold Futures Manipulation: Bad Jobs Report Ahead?

These guys are seriously overplaying their hand so something must be up.  – John Embry email to me in reference to the blatant intervention in the stock and gold futures markets

The Cliff’s Notes explanation to John’s comment:  The Fed knows the economy is technically in a recession and will be forced to take Fed Funds negative sometime in early 2016.  Yellen floated that trial balloon earlier today.   That’s an event that should launch gold.

First, in reference to the extreme degree of anti-gold propaganda currently being vomited by the western media – see this article from Mark Hulbert LINK and this article from the new Jon Nadler LINK – here is what is going on in the physical gold market:

Reuters has reported that the China Gold Association has announced that Jan/Sept gold production was up 1.48% to 356.9 tonnes and consumption was up 7.83% to 813.89 tonnes. This is the biggest gap between production and consumption growth that JBGJ can remember. The huge Chinese output growth has been going on for well over 10 years and with the early mines getting old sustaining the trend must be getting increasingly difficult. A leveling off or even more a decline in Chinese gold output could increase import demand dramatically.  – John Brimelow from his Gold Jottings report

Typically when there’s bad news coming, the Fed/banks engage in an extreme degree of market intervention to keep the stock market aloft and a heavy lid on the price gold.  After all, they can’t have a rising price of gold alert the world to the degree to which the U.S. system is one big fraud.

The stock market has become historically overvalued.  David Stockman discusses this in his latest article – This Time Is The Same – And Worse.  In his analysis, he reports that the trailing 12-month P/E ratio on the S&P 500 is 22.49x, or higher than it was at the peak of the stock market in 2007.

However, there’s one big flaw in Stockman’s analysis.  He’s using current GAAP accounting numbers.  In order to compare current S&P earnings with earnings and P/E ratios, we have to adjust the earnings by employing “apples to apples” GAAP standards.   Generically, the latest significant GAAP changes in 2010 enabled the big banks to include a significant amount of non-cash “adjustments” as part of their reported net income.  In some quarters, more than 90% of the GAAP net income reported by major banks and financial firms is based on non-cash, discretionary “adjustments.”

In truth, and admittedly this is somewhat imprecise but not wholly inaccurate because the same dynamic applies to the tech sector S&P 500 companies as well (note: IBM is currently being investigated by the SEC for revenue recognition issues – this fact supports my assertion), it is highly probable that the $93.80 per share EPS cited by David Stockman is substantially less than $93.80 using 2007 or 2000 or 1987 GAAP standards.   I would hazard a highly educated guess that if we did the exercise of adjusting today’s S&P 500 earnning using the GAAP rules in place in 2000 that the $93.80 EPS would be cut in half.

In fact, I know of someone who did that exercise back in 1998, using 1987 GAAP standards, and this person determined that the reported earnings in 1998 were less than half of what was reported that year if 1987 GAAP standards were employed.

In other words, the true P/E ratio on this current stock market is, in all probability, the highest in history.

I want to show the gold market intervention that occurred blatantly today and then I’ll suggest a good possibility for the current extreme degree of market intervention (click on each to enlarge):

5minGoldoneYrGold

The ratio of paper gold to deliverable physical gold reported to be in Comex vaults almost hit 300 earlier this week.  After yesterday’s long-side liquidation/bullion bank short-covering operation the ratio “mellowed” out a mere 278x.

As you can see, gold moved higher after a series of gold-friendly comments from the ECB’s Mario Draghi. It was promptly slapped back down about 10 minutes before he Comex floor trading in gold commenced. This occurs about 90% of the time. No news or events occurred that would have prompted the sell-off in gold. After starting to recover from the obligatory Comex floor trading smack, Janet Yellen issued tourettes syndom outbursts loaded with incoherent nonsense about how great the economy was doing, the labor market was tight and the FOMC was going hike rates in December.

Yellen’s comments, other than being the drool of a babbling idiot, had no basis in provable fact. Nearly every private-sector compiled economic data series is reflecting a precipitous decline in economic activity that is back down the activity levels of 2008/2009.  As for a “tight” labor market?  Yes, I suppose if you just ignore the 93 million who have left the labor force – i.e. 28% of the total U.S. population – then I suppose it’s a bit easier to manipulate the data to reflect a low rate of unemployment.  Make no mistake, the unemployment rate number being reported is an unmitigated fraud, which makes Janet Yellen an unmitigated fraud.

This brings me back to my explanation for the extreme and blatant stock/gold market manipulation this week.  A friend and colleague of mine from NYC does great work on how the BLS uses its fraudulent “birth/death” model to manipulate the non-farm payroll report every month.  The employment report for October comes out Friday this week.  Historically the BLS inserts a big bump up in the birth/death jobs additions in October.  My colleague believes that the number reported will be manipulated higher than the 177k estimate in order to support Janet “Tourettes Syndrome” Yellen’s rate-hike in December fairytale:

BD model adds 145,000 jobs. NFP for October comes in at 190,000. Mark Zandi gets quoted in every wire service saying it’s a clear indicator of the underlying strength and improvement in the economy All jump even harder on the consensus December Fed rate hike band wagon Stock market rips lower and Gold gets hammered to under $1100 Stock market rips at 3:30pm into the Friday close as they force massive short covering into green and Gold goes unchanged on the day. A bullish comment from Jim Bullard is optional…

This view is well-crafted and will likely be right.  However, with each passing non-Government economic report which shows jobs being cut, especially in the manufacturing, energy and financial sectors, the big job additions reported by the BLS take the Government numbers deeper into the credibility hole.   The extreme manipulation and intervention in the U.S. stock/gold market reflects the extreme degree of desperation which the Fed/Treasury/banks are exerting in order to prevent the markets from revealing the truth about the degree to which the U.S. political/financial/economic system has been completely engulfed in fraud and corruption.

Expect a big “beat” on Friday from the NFP report, followed by beat-down of gold.  That smack in gold should be bought with both hands.

One more point, Yellen referenced the possibility of taking rates negative. Talk about an obvious trial balloon.  This tells us that she and her band of FOMC stooges understand the truth about the economy.   This is an event that should send gold on a moonshot.  They are working to make sure that the lift-off platform is as low as possible.