Tag Archives: non-farm payroll

More B.S. From The BLS Leads To A Blatant Attack On Gold & Silver

With the release of the latest BLSBS at 8:30am EST, the market interventionists were set up for a spectacular effort today. The S&P was first out of the gate, to the upside of course, and the precious metals were slammed. Ironically, the impulse triggered by the headline jobs report should have effected the stock market and the precious metals similarly.

How are 100’s of thousands of working age people leaving the labor force yet, somehow, the BLS can report hundreds of thousands of new jobs that were filled? Well, there is the “Birth/Death Model”. The Birth/Death Model, much like the Federal Reserve Note, is just made up out of thin air. A number is determined by the Bureau of Labor Statistics and then entered into the BLS report. It has nothing to do with reality. But someone forgot to tell the BLS that construction spending in June was down nearly 10% year over year from last June because the BLS reports that new construction businesses added 11,000 new jobs to the economy – an economic and statistical extreme improbability.

If there were any markets that actually moved in accordance with fundamentals, natural price discovery or anything associated with reality the S&P and Dow Jones would be moving to the downside as well. Why? Because as Dave explains in the latest Shadow of Truth, if the [equities] markets were sensing the Fed was going to raise interest rates, and if the employment report were based in reality the Fed would be forced to raise interest rates, this would be negative for those indices. But, alas, everything is rigged, so it doesn’t matter. The “market saved us again…”

Non-Farm Payroll Propaganda – Aka Fake News

“If you tell a lie big enough and keep repeating it, people will eventually come to believe it.” Joseph Goebbels

I dislike giving the employment report any acknowledgment because the report is constructed for the purposes of political expedience. But I can’t help posting a few comments because, once again, the non-farm payroll report for June showed significant growth in sectors of the economy for which real world business economic reports showed economic contraction. The headline number purports that the 222k new jobs were created in June. This wailed on the consensus estimate of 170k.

The Government attributes 16k in new jobs to the construction industry. How can this possibly have been the case when construction spending declined 4.4% on a quarterly basis for April and May? Moreover, housing starts have been declining for the past few months, including June. Unless there’s a new model for running a business, contracting economic activity is accompanied by payroll cost-cutting. The number is just not credible. Same with retail, for which the Government wants us to believe that 8100 jobs miraculously were created despite the fact that retail stores are being closed at one of the fast rates in history.

Then there’s the nefarious “birth/death” model, which guesstimates the number of jobs created by new companies started in June net of jobs lost from new businesses closed in June. I have news for the Bureau of Labor Statistics: new business formation, according to Gallop, is at a 40-yr low. Furthermore, potential business owners are less likely to risk borrowing money for a new business when the cost of borrowing is increasing. Maybe the BLS statisticians forgot about the Fed interest rate hikes and forgot to plug the higher cost of capital in to their new business formations blender. The B/D model attributes 102k new jobs from new businesses net of business deaths. To convolute their reporting Hmmm…23k of those came from construction…need I say more?

The above commentary is a preview of this week’s Short Seller’s Journal.

Another Fraudulent Jobs Report

“Willing suspension of disbelief” is defined as a willingness to suspend one’s critical faculties and believe the unbelievable; sacrifice of realism and logic for the sake of enjoyment.  First off, I want to state upfront that there’s nothing enjoyable about the monthly non-farm payroll report unless you enjoy being subjected to brain damage.

Each month the Government asks us to suspend our critical faculties and accept the headline-reported number of new jobs created by the economy as well as the unemployment rate.   Once again the Government did not disappoint, as it headline-flashed the alleged creation of 211,000 jobs and an unemployment rate of 4.4%.

Unfortunately, for the mindless masses who consume fast-food style news from mainstream news sources, once the headline numbers are absorbed and the “experts” reaffirm them with their idiotic psycho-babble, the numbers as reported miraculously become The Numbers.

To say that the latest non-farm payroll report stretches the ability to suspend one’s disbelief is an understatement.  The Government wants us to believe that 211,000 new jobs were created in April – “seasonally adjusted,” of course.    A cursory glance reveals that 162,000 working age civilians decided to just leave the labor force, which explains the alleged decline in the unemployment rate.  Either those folks who walked away were bequeathed with Social Security disability, took out a big student loan and enrolled for an online degree program at one of the many online universities or, most likely, their jobless benefits expired and they simply gave up looking for a job that pays more than minimum wage (Note:  the latter explanation is supported by the recent spike up in auto loan, credit card and mortgage delinquency rates).

As for the 211k alleged jobs created…The Government appears to have generated those jobs via its “create-a-job” program otherwise known as the “birth/death model.”  The birth/death model assumes that every month new businesses are created and terminated. New businesses hire employees and terminated businesses fire employees.  You can read more about it here:  birth/death modelling technique.   The b/d sausage grinder for April produced 255,000 new jobs, before seasonal adjustments (note:  most people assume the 255k jobs were the actual number of jobs added into the headline count, but the 255k is run through the “seasonally adjusted” total jobs blender and folded into the final number).

On the surface, the Government wants us suspend our disbelief and buy into the assumption that significantly more new businesses were started in April than were shuttered.  Unfortunately, according to the Census Bureau’s own numbers, new business creation is at a 40-year low.  In other words, the number of jobs that can be accounted for in the 211k headline number by the b/d model were never really created.  In fact, judging from the estimated 8,640 retail stores to be closed in 2017, added to the 10 retail chains that have already closed down this year, it’s more likely that more jobs were lost by deaths than were created by start-ups.    Yet, here’s the Government’s b/d estimate for retailing:

As you can see, the Government credits the retail industry with creating 5,000 new jobs in April from new business start-ups. But look at the leisure/hospitality category. It shows 84,000 jobs created by that sector. Again, suspension of disbelief is impossible when you consider that the restaurant industry alone is shedding jobs on a “net” basis, as private data sources show that restaurant sales have declined in 11 of the last 12 months (LINK). In fact, the restaurant industry is experiencing its worst period of sales since 2009.  I could go through each line item and annihilate the report, but for the sake of time  I would urge the Government to take a closer look at its assumptions underlying the b/d model job creation calculus.

John Williams of Shadow Government Statistics has been presenting the Conference Board Help Wanted Online Index (HWOL).  This  is the online transformation of a data series that measures help-wanted advertising going back to 1919.  This series has accurately correlated with every economic recessionary period in the post-WW1 era.  The graph presented by Williams in his latest newsletter shows that the HWOL index peaked in mid-2010 and has been declining ever since – both total HWOL ads and new HWOL ads.  Rate of year over year growth for the metric went negative in 2016, suggesting that the economy has not only not produced jobs since the beginning of 2016 but has in fact lost jobs.   The rate of decline in HWOL advertising  currently is contracting at a 20% year over year rate.  The last time it was contracting at this rate was in 2008.

Without question, it can be shown even with cursory analysis that the Government’s monthly non-farm payroll is fraudulent, serving no purpose than other than for political propaganda.  Looked  at another way, if the true unemployment rate was truly 4.4%, not only would the Fed be raising interest rates at a rapid pace, but it would also be shrinking its balance sheet in order to remove the threat of an accelerating rate of inflation stimulated by an acute labor shortage (4.4% is well below the economically defined long-run 5% natural rate of unemployment).

A Preposterous Jobs Report And Preposterous AMZN Earnings

On a trailing twelve month quarterly basis, AMZN’s operating income growth has plunged from 30.2% in Q2 2015 to just 3.6% in Q4 2016.  This is a stunning drop in growth considering that AMZN’s stock is trading at 92x operating income and 134x net income. That’s before accounting manipulations are stripped away.

The fake news abounds.  It’s seeping from cracks in every part of the U.S. system.  It’s one of the hallmarks of a collapsing economic and social system and, even worse, the onslaught of totalitarianism.   Orwell’s vision was stunningly prophetic.  Of course, he was simply reconstituting history and warning us about the lessons which everyone seems to forget.

The latest non-farm payroll report, the data for which is compiled by the Census Bureau and manufactured into fake news by the Bureau of Labor Statistics, wants us to believe that the economy produced 227,000 jobs in January.  If you look at the “not seasonally adjusted” employment numbers, the number of people employed dropped by 1.25 million.

This is in an economy in which retail and auto sales plunged in January, which means retailers and domestic OEM’s cut back on employment – two major sources of employment in the economy.

In fact, according to the BLS fake news jobs report, “retail trade” was largest component of job “adds” in January. This is quite interesting given that retailers have been dumping employees en masse plus big box and mall anchor concepts like Macy’s are shuttering stores by the 100’s.  In short, that statistic is simply not credible nor supported by the facts. By the same token, auto manufacturers have been cutting shifts and shuttering production lines, as dealer inventories are ballooning and used car prices are plummeting, with a flood of low-mileage, well-maintained leased cars coming off lease.

The BLS is making the claim that “construction” was the 2nd largest category of job adds in January.  No way.  An apartment building and commercial real estate glut has formed. The default rate on CMBS (commercial mortgage-backed securities) is climbing as loans mature and borrowers are unable to repay or refi them – LINK.  Furthermore, the issuance of CMBS in 2016 was the lowest in the last 4 years.  If commercial r/e loans are not being sourced and therefore projects are slowing down, how can construction employment increase?

Restaurant sales are in freefall – a fact of which I have detailed meticulously in my Short Seller’s Journal – which means the standard plug used to goal-seek a specific employment number,  part-time waitresses and bartenders, is a fraud.  Moreover, with wage growth slowing down and real inflation wreaking havoc on non-discretionary expense items, it would seem highly improbable that “leisure and hospitality” would be the 3rd biggest contributor to the employment rolls.

In short, the Government employment report is once again not even remotely credible. But this should be expected.  First, the Census Bureau’s data collection apparatus not only is called into question constantly, but the CB has been caught submitting fraudulent data collection reports.  Some of the data collectors decide to take extra long lunches or visit the pot dispensaries in States where applicable and then submit fraudulent reports rather than conduct actual data collection.   Then the BLS takes the questionable data and pushes it through a seasonal adjustments and annual benchmark revision meat grinder. The data goes in as rat poison and comes out as nuclear waste.

As for Amazon…Amazon is the archetypal accounting fraud poster child.  Whether or  not you are willing to accept my analysis of their accounting practices, let ‘s look just at some surface indicators that AMZN is running off the rails to nirvana.   I wrote a comprehensive report on AMZN in which I drilled down to the core of AMZN’s highly misleading accounting practices.  The report is dated by a year but the “proof of concept” is still valid – maybe even more valid now than over the past 10 years.  I’ll send a copy to anyone who subscribes to the Short Seller’s Journal (I’ll send a copy to existing subscribers along with Sunday’s weekly issue).  You can subscribe here:  Short Seller’s Journal.

AMZN’s quarterly revenue growth rate has been slowing for several quarters.  Its revenue growth rate peaked in 2011 at 41%.   Since Q3 2015 to Q4 2016, the year over year quarterly growth rate has slowed from 30% to 24%.  This is despite the heady growth rate attributed to its cloud computing division (AWS – which I eviscerate in the AMZN report).   Operating income is worse.  Over the last 6 quarters, its year over year quarterly operating income growth has plunged from 84% to 13%. This excludes F/X effects, the application of which would make it worse.  Net income?  Forget net income.  By the time the numbers flow through AMZN’s waterfall of misleading accounting practices, the net income number is completely useless and highly manufactured.  I detail this fact in the AMZN report.

AMZN’s AWS segement (cloud computing) is highly touted by Wall Street snake-oil salesmen.  Don’t poison your view by looking at AMZN’s highly massaged and highly misleading earning presentation slide-show.  Go directly to the SEC-filed 8K/10Q, which itself is riddled with suspect accounting.

The growth of AWS has slowed considerably and will continue to do so.  Especially if Trump cuts back on Deep State funding, which is significant source of revenues for AMZN’s cloud computing services.  On a year over year quarterly revenue growth basis, AWS’ sales growth has gone from 82% in Q2 2015 to 47% in Q4 2016.  It’s been nearly cut in half.  It’s not a scale phenomenon either, as its Q4 revenues for AWS were $3.5 billion, which was just 8% of total revenues for the quarter.  I can remember when Wall St. stock jockeys were forecasting an explosion in AWS’s contribution to AMZN’s revenues and income.   But AWS sales have been running between 7% to 9.5% of total revenues since Q2 2015.  It was 8% of revenues in the latest quarter.

I will say that AWS produced 73.7% of AMZN’s operating income in Q4.  But that’s more a damnation of AMZN’s retail sales business, if anything.  With $1.255 billion in total operating income, that means AMZN generated just $329 million of operating income on $40.1 billion of retail sales.  That’s a “sweltering” 0.8% operating margin (zero point eight percent).   For comparison purposes, Walmart and Target generate an operating margin of about 5% on similar product sales.  So much for the argument that cyber-sales are more profitable than “brick and mortar.”

There’s a lot more analysis that I can present showing the misleading to fraudulent nature of AMZN’s financials, but that’s for subscribers.  Suffice it to say that the Free Cash Flow number presented by Jeff Bezos every quarter in his ridiculous slide presentation is completely fraudulent except for that fact that he discloses deep in the bowels of the AMZN 10Q – a place where Wall Street analysts never venture – that AMZN’s definition of “free cash flow” is not based on generally accepted accounting principles.

Why Do Central Banks Need To Exist?

The short answer is, they  don’t.   Central Banks function as “legititmized” price control mechanisms.  They control the price of money in order to help the elitists confiscate your wealth.  That’s it.   But price controls never last very long and neither do Central Banks.   The U.S. is on its third CB in less than 300 years of existence and there’s been in a movement in place to get rid of the Fed for at least the last 8 years.

The Daily Coin featured a useful analysis – LINK – of the latest attempt by the western Central Banks to build a “currency sandbox” for everyone to play in because they know the U.S. dollar’s role as the reserve currency is coming to an end.  The Utility Settlement  Coin” is an act of desperation to head off the move by eastern hemisphere emerging economic powers, led by China and Russia, to create a level playing field.

Almost every year the precious metals sector experiences a price correction late in the summer.   And almost every year the anti-gold propaganda floods the internet and media. This year is no exception.  But the current pullback in the sector has about run its course.   This was a healthy pullback after the huge run up in the sector.   The next leg higher should be even more exciting.

Finally, the U.S. economy is starting to collapse.  Blow away the propaganda smoke being blown by the likes of Janet Yellen, Stanley Fisher and Hillary Clinton and a clear view of the real economic data will show a nasty downturn emerging in housing, autos, general manufacturing and discretionary consumption.   In the latest episode of the Shadow of Truth, we discuss these issues and infuse some humor to make it easier to digest – enjoy the podcast and enjoy your  long holiday weekend – it could get ugly in Q4:

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The Birth-Death Model Plug Theory Predicts New All-Time SPX High Friday

THERE’S NO B.S. LIKE THE BLS – decide what you want you want the non-farm payroll headline number to be and then use the Birth-Death model “plug” function to make that number happen.  – Investment Research Dynamics

The first Friday of the month means it’s the Government’s Bureau of Labor Statistics turn to dazzle us with a statistical magic show.  With 1st quarter GDP now revised into negative territory and the economic statistics reported for April and May showing even more economic contraction occurring in the first two months of Q2, the BLS statisticians will be forced to push the Birth-Dead plug number to a farcical extreme.

In fact, my bet is that on Friday the S&P 500 will scream to a new all-time high on an impressive “beat” of the consensus May payroll estimates that will have been fueled by a huge Birth-Death plug number.

My friend and colleague Mark Kellstrom has penned another amusing commentary about the Freak Show otherwise known as Non-Farm Payroll Friday:

It’s That Time of the Month Again:  May Non-Farm Payrolls

For the 9,000 (or how ever many are left) viewers, the debate by CNBC “experts” over their Non-farm Payroll forecasts minutes before the release of the numbers on Friday morning can provide exciting theater.  Viewers are treated to Steve Liesman’s detailed analysis used to back into an “estimate” based on a complex econometric model tracking monthly stats of all shapes and sizes.  For the rest of us, the exercise is a waste of time and as laughable as anything found on the comedy channel:   Watch Steve Liesman Bite The Head Off Of A Chicken

This Friday, June 5th, we get this ritual of the absurd again with the release of the May Non-Farm Payrolls and Unemployment data from the Bureau of Labor Statistics (BLS).  Estimates for May seem to vary around the +/-220,000 jobs “created” number and if we go with MarketWatch, the consensus estimate is 210,000, down from 223,000 previously.  Like the April NFP reported in May, Commentators have to be nervous eyeballing another month and another raft of soft economic data releases—the “expert” calls may surely be for a miss.

However, once again, if theory holds, the May Non-Farm Payrolls report will beat consensus expectations with no problem.  In fact, if 210k is the consensus hurdle, a beat on the high side may be an easy slam dunk.  History shows that the BLS “Birth Death” plug model will “add” – i.e. fictitiously create – at least 205,000 jobs this month.  So unless the BLS actually “marks to market” the true number of oil patch jobs lost during May (a lot more than the supposed paltry 3,000 oil patch jobs lost in April), then count on another BLS “beat”….much cheerleading…..and a 1Q negative GDP print sent well into the rear view mirror.

BD Plug

 

 

America’s Structural Job Depression Is Here To Stay

My co-producer, John Titus, made a fascinating and stunning statistical discovery discovery buried right in the monthly non-farm payroll statistics.  Regardless of whether the Government numbers are bona fide or fraudulent, it shows why even the data itself shows that the U.S. has been net-net losing jobs since 1992.

We video’d this early Saturday morning so please bear with any presentation issues lol:

It’s not very long and John’s presentation is worth the time spent.

After you see the video, you’ll understand why I believe that the U.S. housing market is about to enter Collapse 2.0. I have a short-sell idea posted in my research section that I think is an easy 60% ROR play over the next 6-12 months:   Research Reports

I think particular report, I show accounting and financial analysis that NO ONE on Wall Street has uncovered or presented.