Tag Archives: unemployment rate

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.

There IS No B.S. Like The BLS

Bureau of Labor Statistics. It has an Orwellian ring to it. I guess it should stand for “Bureau of Lying Statistics.” A quick glance at today’s non-farm payroll report suggests that the economy likely lost hundreds of thousands of jobs in May. The headline 138k number was well below Wall St’s consensus estimate and below even the lowest estimate (140k).

The highly deceitful “Birth/Death” model gave the BLS 238k “newly created” jobs from alleged new business formation in excess of jobs lost from failed businesses in May. This number is shown before it’s sent through the BLS’ “X‑13ARIMA‑SEATS software developed by the U.S. Census Bureau.” No one knows exactly how that statistical sausage grinder produces the alleged jobs added and lost by new business formation – not even the Census Bureau. Then that number is blended into the overall headline number.

In truth, it’s quite likely that the U.S. economy lost jobs in May. A report showing less working age people employed would be a better fit with the state of the economy as reflected by private-sector reports, such as retail sales and construction/capital formation spending. The BLS covers up this fact by “finding” a large number of “new” part-time jobs to offset the loss of 367,000 full-time jobs.

And for its coup de grace, the BLS reports that 608,000 people in the working age population decide to stop looking for a job, for whatever reason, and quit working. They are no longer considered to be part of the labor force. This concept makes absolutely no sense when privately-generated surveys show that less than 50% of all households do not have the ability to write a check for $500 in the event of an emergency. Perhaps 608,000 people just decided that they were tired of buying food and paying bills and quit working altogether.

Regardless of how you want to slice and dice the phony numbers, the “labor force participation rate” fell to 62.7% of the working age population. This means that 37.3% of the entire U.S. population between the ages of 15 and 64 decided that they couldn’t be bothered with working or looking for a job. That metric alone completely invalidates anything the BLS reports about the U.S. “employment situation.” Perhaps a better title for the monthly report would be “The Government’s Interpretation of U.S. Employment.”

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).

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.