Tag Archives: fake news

The Fake News Economy

The stock market is becoming increasingly disconnected from underlying main street reality. Corporate profits have been declining since the third quarter of 2018. However, pre-tax corporate profits have been declining since the Q3 2014 (this data is available on the St. Louis Fed FRED website). Real corporate profits (adjusted for CPI and including inventory write-downs and capex) are the lowest since the financial crisis. Remarkably, rather than the usual “hockey stick” forecasts, Wall St analysts have revised lower their consensus earnings estimates for the Dow Jones Industrials. In fact, per the chart above, I think you can say that Wall Street’s forward EPS estimates have gone off a cliff.

The “narrative” architects and fairytale spinners are desperately looking for evidence to fit their “consumer is still healthy/economy still fine” propaganda. But a look under “the hood,” starting with the employment report, reveals a reality that is in stark contrast to the manipulated headline numbers.

There’s no b.s. like the BLS (Bureau of Labor Statistics). The BLS publishes the monthly non-farm payroll report.  Predictably, the headline number reporting that 225k “jobs” created was well above the consensus forecast of 160k. But the benchmark revision removed 514,000 jobs reported to have been created between April 2018 and March 2019. This is visually what it looks like when 20% of the prior year’s job “growth” is erased:

The black line shows the number of jobs originally reported between April 2018 and March 2019. The light blue line shows the revised data. The two lines are lined up prior to April 2018 reflecting prior benchmark revisions, which is why they’re in sync. A large portion of the revision came from the BLS’ seasonal “adjustments” model over-estimating job creation related to consumer spending, primarily the retail sector and leisure/hospitality.

The benchmark revision does not apply to the current report, which is largely not credible. As an example, the BLS attributed 44,000 new jobs to construction. But the December construction spending report showed 0.2% decline from November. Private construction spending was 0.1% below November.

The total value of construction spending in 2019 was 0.3% below 2018. Private construction spending for the entire year in 2019 was 2.5% below 2018, with residential construction 4.7% below 2018. Removing construction inflation from the numbers, private residential construction spending in 2019 fell 8.8% from 2018 (per John Williams’ Shadowstats.com).

I glean three conclusions from the construction spending data. First, the BLS attribution for 44k new construction jobs in January is egregiously incorrect. No way construction firms are hiring with construction spending in decline. Recall I mentioned in the last issue (the Short Seller’s Journal) that Caterpillar’s CEO had forecast a further decline in residential construction spending in 2020.

Second, without the increase in Government spending, the decline in construction spending would have been worse. Third, per the CAT CEO’s outlook for lower residential spending in 2020 (and I’m certain his view is derived from residential construction equipment orders) it would seem that homebuilders are not backing their optimism per the homebuilder sentiment report with real money if they are planning to spend less in 2020 than they did in 2019.

Notwithstanding the BLS fantasy employment report this past Friday, here’s a good leading indicator of labor market weakness:

When businesses start reducing payroll to cut expenses in response to expected business weakness, the temp labor goes first. You’ll note that this data series went negative briefly in 2015,  but recovered somewhat. In all probability businesses responded to the Trump election hopium and the stimulative effect from Trump’s massive corporate tax cut. But businesses prematurely implemented expansion and capex spending and now they’re back to using cash for stock buybacks into which insiders are selling.

While December retail sales, released in mid-January, showed a 0.3% increase over November, ex-autos retail holiday spending was slightly better than expected. December retail sales not including autos increased 0.7%. However, if you exclude gasoline and auto sales, retail spending increased 0.5%. Auto sales took a hit in December (predictably) and gasoline price inflation boosted the headline number. Surprisingly, considering all of the hoopla in the mainstream financial media about “strong” online sales for the holidays, online sales only increased 0.2%.

Underlying the “good” holiday retail sales number, is a troubling reality. The Fed reported this past Friday (Feb 7th) that consumer credit soared by $22.1 billion in December ($15 billion was the consensus forecast). Most of that increase is attributable to credit card spending, which accounted for $12.6 billion of the $22 billion. This was the biggest one-month jump in credit card debt since 1998. Total consumer credit outstanding hit a record $4.2 trillion in December.

What makes this statistic even more troubling is the fact that credit card delinquency and default rates are starting to accelerate per the Discover Financial (DFS) data I presented in January 26th SSJ issue. PNC Bank (PNC) also reported rising credit delinquencies and charge-offs when it reported its Q4. Its stock tanked 7% over the next eight trading days. Credit Acceptance Corporation (CACC – subprime auto loans) reported rising delinquencies, defaults and charge-offs on January 30th. It’s stock fell 8.1% the next day though it’s recouped about half of that loss through Friday (Feb 7th).

The chart above shows CPI-adjusted retail sales (blue line) vs consumer credit outstanding (red line) for the last 5 years. CPI-adjusted retail sales declined slightly in 2019, which means “unit volume” declined slightly, while consumer credit continued to rise. Now imagine if a real inflation adjustment was applied to retail sales instead of the phony CPI. Real retail sales would show a decline in 2019. The chart above is not a “friend” of perma-bulls and economic fantasy promoters, which is probably why you will never see a chart like that in the mainstream financial media.

Target (TGT, $115) said its same-store-sales were up just 1.4% during the holidays vs 5.7% a year ago. Toy sales were flat, electronics sales were down 6% and home items sales were down 1% (apparel was up 5%, food/beverage up 3% and beauty items up 7%). Macy’s, Kohl’s and JC Penney all reported same-store-sales declines for the holiday period. Macy’s announced earlier this past week that it was going to cut 2,000 jobs and shutter 125 stores.

While it’s clear e-commerce is slowly taking market share from brick/mortar, the latter’s troubles are derived primarily from the deteriorating financial condition of the average household. A study released this past week from a survey taken in late November showed that nearly 70% of all respondents said they had less than $1,000 in savings.

The economy is contracting in most sectors. Any area of the economy that still has pulse is being driven by debt issuance.  Any media reports or official proclamations that the economy is “doing  well” are nothing more than fake news and propaganda.

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The commentary above is  excerpted from the February 9th is of the Short Seller’s Journal. Each weekly issue contains macro economic analysis, market analysis, and short ideas.  I  To learn more about this short-sell focused newsletter, click here:  Short Seller’s Journal info

MSM Gold Reporting Becomes More Absurd By The Day

I sent this article linked to Chris Powell and Bill Murphy at GATA for a good chuckle.  Chris has turned it into worthwhile commentary:

Practially every day prompts those who consider themselves market analysts to contrive explanations for movements in the gold price, no matter how implausible. Zaner Metals in Chicago attributed today’s slight decline in the gold price to concerns about the new virus that has appeared in China:

Investors in gold are undecided about the coronavirus, with early indications that it could hurt bullion demand in China as much as boost safe-haven buying. So the yellow metal dipped again today, while palladium rebounded, making a new record high in futures trade…

“The world is reacting in a deflationary manner to the news of a spread of the pneumonia-like virus in China,” Zaner Metals said in a note. “The trade is justified in factoring in some slowing fears and that in turn has applied pressure to gold, silver, and nearly every physical commodity.

There is no indication in Investing.com’s story that Zaner Metals talked today with anyone buying or selling gold.  [I’ll add that, notwithstanding the poor quality of reporting, the idea that the spread of a virus in China is “deflationary” is outright silly.]

More important, there is no indication that before drawing any conclusions about the gold price Zaner Metals inquired with, for example, the Bank for International Settlements about any surreptitious intervention undertaken in the gold market this week by the bank or its member central banks, though such surreptitious intervention can be discerned in the footnotes of the bank’s monthly reports, like the most recent report, November’s, analyzed by GATA consultant Robert Lambourne here:

http://www.gata.org/node/19693

Central banks are the biggest participants in the gold market and yet rare is the gold market analyst who ever puts a critical question to them or reports that they refuse to answer questions about their interventions.

Rarer still is the journalist who poses such questions himself instead of merely repeating the silly contrivances offered by the market analysts. The power to create and dispense infinite money in secret helps central banks rule the world, but most of all they require the negligence of financial journalism.

Don’t Let The CPM Group Feed You A Bag Of Brown Stuff About Silver

The CPM Group and its proprietor, Jeffrey Christian, has operated as one of the “analytic” fronts for the western Central Banks’ paper derivative gold and silver manipulation scheme for many years.  Someone sent me the CPM Group’s latest commentary on silver in which it expresses the view that the price of silver will “fall dramatically” after the September silver contract “roll” on the Comex is over. You can read the brief report here:

CPM Market Commentary 2019-5, Who Is Buying Silver, It’s The Comex Shorts, 2019-08-28

To begin with, the paper price of silver is not being driven higher by short-covering on the Comex. In fact, the big banks/commercials, as well as the “other reportables” and retail traders per the last COT report added over 10,000 contracts to their short position last week. Let’s be clear on one thing, and the years of evidence supporting this is overwhelming, the only time “short covering” drove the price of silver higher was in early 2011 when the big banks were forced to scramble for cover and ran the price of silver close to $50.

The price of silver drops when the big banks short thousands of contracts in an effort to cap a price rally or drive the price lower.

CPM makes the argument that physical demand for silver is not a factor in the recent move higher in the price of silver based on demand for US Silver Eagles per the U.S. Mint report.  This assertion is an insult to the intelligence of anyone who studies the silver market thoroughly. U.S. retail investor silver eagle demand represents less than 5% of the amount of silver produced annually. Industrial demand plus jewelry/ silverware use accounts for roughly 75% of the amount of silver “consumed” annually. It can be argued that U.S. retail demand for coins has very little, if any, influence on the price movement in silver.

Finally, the “roll” of Comex silver open interest from the expiring front month to the next front month – in this case September to December – affects the price of silver maybe to the extent that a significant portion of the expiring front  month open interest does not “roll” out to December and instead sells outright.  First notice day is tomorrow, which means any account holding contracts must either roll or have its account funded to receive delivery of physical silver as early as this evening (the day before official 1st notice).

You’ll note in the report that Christian states that there’s “226.5 million ounces of September open interest to be rolled forward…” This is incorrect – egregiously incorrect in fact. As of Wednesday’s close per the CME’s open interest report, there were 91,109 contracts open in September. Anyone who’s traded Comex paper silver knows each contract represents 5,000 ozs. The o/i at the end of Wednesday was 97,109 contracts, or 485.5 million ozs of paper silver. In all likelihood at least 1/3 to a half of that – or more – will have rolled or sold by the close of Comex pit trading today.

But Christian uses the big numbers to make the situation sound extremely bearish for silver. It’s not. In fact, it will be interesting to see how many contracts will be left standing after today.  Liquidation of September silver contracts by hedge funds (“managed money”) is likely causing the price decline in silver and gold today.  We’ll know for sure tomorrow when the CME o/i report is released. I would not be surprised if more the 50% of the September o/i has liquidated today.

The amount of silver designated as available for delivery (“registered”) as of Wednesday was 91 million ozs.  If just 20% of the open September silver contracts stand for delivery (which is unlikely) the Comex will have a supply problem. However, in all likelihood, most of the open contracts after today’s close will either liquidate – if they are not noticed – or agree to settle in cash (an EFP or PNT). The bottom line is that the September/December “roll” will  have little to no affect on the directional movement of the silver price.

Jeffrey Christian’s CPM Report on silver is little more than  fear propaganda which is woefully short on  facts and long on fairytale-based analysis.  He concludes that “weak investment demand created short positions on the Comex and weak investment demand suggests that prices will not continue to rise.”  Not one letter of one word in that assertion contains even the smallest shred of truth.  Certainly just the flow of capital into the various silver ETFs over the summer contradicts Christian’s absurd claim.

What is driving the price of silver higher? Physical demand from India and China.  Both countries are implementing large-scale solar power build-outs.  Furthermore, India’s population has shifted a considerable amount of demand from gold buying to silver purchases since the Government raised the import duty on gold bars.

Similarly, China’s consumption of silver has likely soared after the Government restricted the supply of gold into the SGE in order to “feed the beast” –  i.e. what is likely massive unreported gold accumulation by the PBoC.  It’s impossible to track China’s real demand for gold and silver since 2014, when the Government opened up Shanghai and Beijing for gold and silver importation.  The amount of metal that flows through those ports is not published by design.

In truth, the inexorable rise this summer in the price of gold and silver is being driven by enormous physical demand not from retail minnows but by large entities primarily in the eastern hemisphere which are accumulating an enormous amount of physical gold and silver. Certainly “footprints” in the snow on the LBMA would support this conclusion.  Do not be bamboozled or scared into selling your physical gold and silver or your mining stocks by charlatans like Jeffrey Christian.

Paul Craig Roberts: Without Truth, Government Becomes Totalitarian

“THE conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country.” – Edward Bernays, the Godfather of Propaganda

It’s stunning to me the number of highly educated people I know who are blinded by the Orwellian fog that now engulfs the United States. Even if the Russian election meddling accusations were true, and there’s not been one shred of court-admissible evidence produced yet, so what? The U.S. interferes in elections and governments all over the world, including Russia. Thus is the power of propaganda. It’s difficult to know what’s real and what’s fiction because the accepted purveyors of “truth” and “news” have been captured by the political and corporate elitists, who use the traditional media outlets to advance their political and economic objectives.

“Today in America no member of the print and TV media or NPR dares to get within a hundred miles of the truth. It would be a career-ending event. Without a media dedicated to truth, there can be no control over government.” – Paul Craig Roberts. The following essay is a must-read from Paul Craig Roberts

On September 17, I posted my column, “Evidence is no longer a Western value.” I used as an example the blame that has been put on Russia for the shot down Malaysian airliner. No evidence whatsoever exists for the accusation, and massive evidence has been presented that the airliner was shot down by the neonazis that seized power as a result of the Washington-organized coup in Ukraine.

Blame was fixed on Russia not by any evidence but by continuous evidence-free accusations that began the moment the airliner was shot down. Anyone who asked for evidence was treated as a “Putin apologist.” This took evidence out of the picture.

Wherever we look in these times, we see evidence-free accusations established as absolute facts: Saddam Hussein’s “weapons of mass destruction,” “Iranian nukes,” “Russian invasion of Ukraine,” the Trump/Putin conspiracy that stole the 2016 US presidential election, Syrian use of poison gas. Not a scrap of evidence exists for any of these accusations, but the truth of the accusations is established in many minds worldwide.

Science gave the world the principle of evidence-based fact, which did away with the burning of witches and political decisions based in superstitution. Truth became a force.

But truth can get in the way of agendas, and as elites recovered their power from the social, political, and economic reforms of a previous era, truth was divided into categories and cut so fine that it disappeared. For the elite truth became identical to their economic interests, and Identity Politics stripped truth of its universal meaning and reduced truth to self-pleading race and gender truth.

The result is that today truth is established not by evidence but by repetition of accusations and falsehoods.

This made it easy to destroy people and countries by lies alone. Who remembers Dominique Strauss-Kahn, the head of the International Monetary Fund and at the time the likely future president of France? Strauss-Kahn was out of step with Washington which wanted its puppet Sarkozy reelected. Strauss-Kahn came to New York and was accused by a hotel maid of sexual assault. He was arrested and jailed. The New York district attorney and media whores pronounced him guillty. Simultaneously, on cue, a French woman made the same claim. Case closed. No evidence. Just claims. Then it emerged that the hotel maid had just had very large sums of money far above her income level deposited to her bank account. Even more damning, it was revealed that Sarkozy knew of Strauss-Kahn’s arrest before the police announced it. The case fell apart, and the New York district attorney publicly apologized. But Strauss-Kahn had been forced to resign as Director of the IMF and was out of the French presidential election. So Washington won.

Today it is a common, routine tactic for both US political parties to produce a woman to bring accusations of sexual harassment, abuse, or assault against any heterosexual male appointee or nominee that either party regards to be out of step with its agenda. It happens so regularly that no sentinent person can possibly believe the woman. Sexual assault has been reduced to one of the dirty tricks of politics.

As hard as false accusations can be on individuals, they destroy entire countries. Just consider the destruction of Afghanistan, Iraq, Libya, currently Yemen, and Washington has not given up on the same fate for Syria and Iran. Based on nothing but Washington’s endlessly repeated false accusations, millions of peoples have been murdered, maimed, orphened, widowed, displaced, and sent as refugees overrunning Europe.

There is not a scrap of evidence anywhere that justifies Washington’s enormous crimes against humanity. Yet, these crimes that in a truth-conscious world would have resulted in several entire governments of the United States standing accused in the International Criminal Court, or the War Crimes Court, or whichever court, and perhaps in all of them, are ignored, because accusation alone against the destroyed countries and peoples sufficed to justify Washington’s war crimes against humanity.

What I have described is a truth-free world. There is no place for truth in the world that the West has created. The Western hostility to truth is overwhelming. As I write truth-tellers are being banned from Facebook, Twitter, and PayPal. Google makes their sites almost impossible to find. Throughout the Western World truth has been redefined as “Conspiracy Theory.”

Elites such as George Soros and innumerable tax-financed government agencies, such as the National Endowment for Democracy, spend taxpayers’ money discrediting those who tell the truth. Many in governments want truth-tellers locked up as enemies of the state, by which they mean “enemies of the self-interests of the ruling elites.”

You don’t need to believe me. Here are four books written by honorable persons, meticulously documented, full of evidence that make it clear that American elites have no respect whatsoever for truth. Truth is something that is in their way.

One of the books is Charlie Savage’s Takeover. Savage shows how Dick Cheney used the George W. Bush regime and 9/11 to destroy the separation of powers and the civil liberties in the US Constitution. When you read Savage’s book you will discover that the America that you think is here is not here. In its place is a dictatorship available to any president clever enough to use it. Savage’s book is one of the best pieces of investigative reporting that I have read.

The Roman system of government never recovered from Caesar crossing the Rubicon. I doubt that the US Constitution will ever recover from Dick Cheney.

Two of the books are by David Ray Griffin, one of the last and most determined of American protagonists for truth. In his book, Bush and Cheney: How They Ruined America and the World, Griffin makes, a decade after Savage, the same case against Dick Cheney. When two independently minded researchers reach the same conclusion, you can bet it is on the money. If the world survives Washington’s orchestrated conflict with Russia, Cheney will go down in history as the person who destroyed American constitutional government.

In this same book, Griffin also examines the official 9/11 story and exposes it as a total fabrication with no connection to any truth whatsoever. He takes up this case in his current, just released book with Elizabeth Woodworth, 9/11 Unmasked: An International Review Panel Investigation.

Anyone who is still brainwashed by the official 9/11 story can immediately free themselves from their deception by reading this book. There is no longer any doubt that 9/11 was an inside orchestrated event for the purpose of unleashing two decades, with more to come, of American aggression in the Middle East.

Griffin does not leave a single official statement about 9/11 standing as not a single official claim is based on any factual evidence whatsoever.

For seventeen years the world has been fed a pack of total lies based on nothing but accusations and in the face of massive evidence produced not by some collection of political hacks sitting as a 9/11 Commission, but by thousands of experts. Yet for seventeen years false accusations prevailed over heavily documented facts presented by disinterested experts called “conspiracy theorists” by those intent on covering up their crimes.

The fourth book is Mary Mapes’ Truth and Duty. Mary Mapes is the CBS producer whose team carefully prepared for Dan Rather the 60 Minutes report on George W. Bush’s failure to perform his Texas Air National Guard duty. Her story was absolutely correct, but she and Rather were destroyed by accusation alone. The Republicans set in attack mode the right-wing bloggers, and soon the official media joined in for the purpose of elevating their ratings at CBS’s expense.

CBS was vulnerable, because it was no longer independent but a part of Viacom’s empire. Mapes was already in trouble, because she had broken the Abu Ghraib torture story just at the moment that Bush and Cheney declared: “America doesn’t torture.” As the Cheney/Bush regime put pressure on Viacom, a corporate executive told Mapes: “You don’t have any idea how many millions of dollars Viacom is spending on lobbying in Wasington, and nothing you’ve done in the past year has helped.”

There you have it. The Viacom executives had no interest whatsoever in the truth, only in what advanced their lobbying interests in Washington. Mapes, a truth-teller had to go, and she did. And so did Dan Rather.

Ask yourselves where you can read articles like this. If you do not support the remaining portals of truth, you will find yourselves bound, like the Elven-kings, Dwarf-lords and Mortal Men in J.R.R. Tolkien’s Lord of the Rings, “in the darkness” by the elites ability to control the explanations that comprise your reality.

Elon Musk Turns U.S. Capital Markets Into A Complete Farce

“Nobody, when they’re looking at a privatization, dangles this way and does this sort of teasing dance of choreography. Somebody only does this when they are trying to distract us with a shiny new thing…There’s a lot of problems here. He can’t afford to build the new factory that he says he wants to build. This is a distracting strategy like attacking the press” – Jeffery Sonnenfeld, Yale School of Management on CNBC

Elon Musk has turned the U.S. capital markets into a complete farce. He’s made of mockery of the fact that the regulators no longer enforce rule of law. The idea that any financial institution on earth would fund the largest leveraged buyout in history at a level that values Tesla on par with Volkswagen – the world’s larges car manufacturer – is beyond absurd.

We should hope and pray that some truth-seeking entity will hold Musk accountable for what is likely a highly fraudulent claim. Or, then again, perhaps Musk took one of his flying automobiles and went to Mars on Monday to “secure funding” from his Martian financiers.

A careful dissection of Tesla’s latest 10-Q reveals a Company with negative working capital and an unmanageable level of debt and other fixed commitments headed for eventual insolvency.

Beyond ranting about the obvious here, I’m posting an insightful, if not poignant, comment from a friend and colleague:

I am pretty amazed/disgusted that we haven’t come to terms (as a society) with social media. It is in this grey area where leaders of Government and corporations can walk a tight rope of truth/fiction without any consequence or regard for the affect of the immorality and illegality.  Narcissistic psychopaths like Musk utilize cult of personality to harness the power of the hopelessly ignorant looking for a guru; looking for a reason to justify their worst impulses and implausible fantasies. From a social science standpoint: it is interesting. From a person of the society: it is mindblowingly frightening.

Was Gold Actually “Dumped” Friday?

Sifting through Twitter, I came across a curious assertion posited as a reply to a post on “unemployment” on Steph Pomboy’s twitter feed (@spomboy).  The tweeter asked, “have you noticed that gold is being dumped?”  But was gold “dumped?”  Perhaps the tweeter should have qualified the question with the adjective, “paper,” in front of the word “gold.”

I replied rhetorically with, “is actual physical gold being dumped or is it Comex is it paper gold?” Let’s have a look. (click image to enlarge)

The Comex is a futures contract trading venue. While the Comex vault operators issue daily vault reports which allege the presence of 100 oz gold bars in custody, we have no idea if all of the bars are sitting physically in the vaults or whether or not there are any sort of encumbrances attached to any of them. Very few holders of gold contracts ever take delivery and very little actual physical gold moves in or out of the Comex vaults on a weekly/monthly/quarterly basis.  In short, the Comex is a paper gold trading exchange.

On Friday, after the primary physical bar trading markets – India and China – were closed for the weekend, large quantities of paper gold futures were suddenly being dumped into the CME’s Globex computer trading system, about 5 minutes before the Comex gold pit opened for the day (8:20 a.m. EST).  You can see the action narrated in the chart above.  It’s not uncommon for the price of gold to be smashed using paper gold on the Friday after an FOMC meeting, especially in the summer months when trading operations are likely only at half-staff and the rest of the world is gone for the weekend.

Over a 60 minute period from 8 a.m. – 9 a.m. EST, approximately 90,300 contracts were sold, largely indiscriminately hitting every bid in sight.   This is the equivalent of 9.03 million ozs of gold.  There’s only one problem with this:   as of Friday’s warehouse report, Comex vaults were reporting total gold stock of 9.01 million ozs – only 507,453 of which were listed as “available to be delivered.”  In other words, in just one hour, the total amount of gold allegedly held in Comex vaults was “dumped” in the form a paper derivatives.  Worse, the amount “dumped” was 17.7x the number of gold ozs currently available to deliver.

For the entire day, Globex + floor volume, 495,364 contracts were “dumped.”  This is 49,536,640 ozs of Comex paper gold.  Again, I ask the tweeter who posited that comment on twitter, was gold really “dumped” on Friday?

For those who monitor the daily gold flow into India and China, I will bet any amount of money that both of those markets will be aggressively buying more than their usual daily amount of physical gold in order to take advantage of the lower price.   Funny that Trump would enable the Chinese to buy cheap physical gold when he’s engaged in a rapidly escalating trade war with China…

Retail Sales: Inflation Plus Extrapolation

The footnotes are the most interesting section of every financial and economic reports.  They also happens to be least studied section of these reports.  Those who prepare these reports rely on this fact.

The monthly headline retail sales is based to a large extent on estimates, guesswork, invalid assumptions and statistical magic.  Examine the line-item details in this retail sales report link. Note the numerous lines for the May “estimate” that contain “(*).” Then scroll down to the footnotes.

“(*)” indicates, per the footnotes, that “advance estimates are not available for this kind of business.” Footnote 3 further explains that “Advance estimates are based on early reports obtained from a small number of firms…”.   In other words, a significant percentage of the retail sales are based on guesswork and inference.

Scroll further down the retail sales report and Table 2 shows the summary table (Table 2) which presents the month to month percentage change comparison for the latest month’s report.  The data in first four lines in this table is the data used for the headline reports.

Everyone uses these numbers, most without any knowledge whatsoever about the degree to which the data “behind” the numbers is comprised of highly questionable guesswork and unsubstantiated, if not entirely problematic, statistical inference and  adjustment calculus.

Additionally,  there’s a section in the report that explains methodology for the guesswork.  “Advance estimates are computed using a link relative estimator.”  A “link relative estimator” is a polite descriptor that basically means, “we assume that the historical growth rates implied by our historical reports can be applied to growth rate we assume in  this month from the previous month.”  On top of all of that, the Census Bureau then applies its nefarious “seasonal adjustment” factors to the data.  Keep in mind that a significant portion of the data is pulled out their ass.

All of this methodology is explained in further detail in the tabs on the main Monthly Retail Trade page of the Census Bureau. The information spread out in this section substantiates every assertion I have put forth above. It requires sifting through the “how data are collected,” “definitions” and “FAQs.”  I’m probably one of the few analysts curious enough to subject myself to this brain damage.

By the Census Bureau’s own trumped up numbers, most of the “gain” in retail sales from April to May, if indeed a bona fide gain occurred, was from gasoline and clothing inflation.   The numbers in the report are expressed in nominal terms.  They are not adjusted for the effects of price inflation.  Removing the effect of price inflation would yield the change in “unit” volume of retail sales.  This would be the number of true interest.

Finally, the estimated change in retail sales is not consistent with the patterns in consumer credit.  Based on the Fed’s consumer credit report, the use of revolving credit (credit cards, checking overdraft accounts, etc) has been contracting.  With the savings rate at an all-time low, the only way that retail sales unit volume could possibly increase is through the use of credit.  Thus, while guesswork and inflation is driving today’s headline report, in all likelihood unit volume of sales declined.  This latter assertion is indeed supported by recent manufacturing, factor order, durable goods and wage growth data.

U.S. Labor Market Reports: Someone Is Lying

The propaganda laced with bold lies is enveloping the media. The JOLTS report (Job Openings and Labor Turnover)  released today alleges that the number of job openings in April hit a record.   Of course, the April number was based on large revisions to previous data.  The number reported is also “seasonally adjusted” and predicated on statistical inferences.   In fact, 6.7 million allegedly vacant jobs is not only an all-time high but it also exceeds the number of “unemployed” in the Government’s monthly employment “report.”

How do we know both the reported job vacancies and unemployed are an outright fabrication?  Because wages would be soaring.  It’s simple supply/demand economics.  According to the Government, the demand for employees far exceeds the supply of workers.  But if this were case, the price of workers would be rising quickly.  It’s not.

Last Friday the Government reported Friday morning that the economy added 223,000 jobs, exceeding the Wall St. estimate of 190k. I go from general indifference to outright disgust with the payroll report. But Friday’s report was jaw-dropping horrification. Early Monday before the report hit the tape, Trump – who was briefed on the numbers Thursday evening – tweeted that he was “looking forward to seeing the employment numbers at 8:30 a.m.” I assumed the day before that the report would be rigged, but that confirmed it.

Here’s the problem with the 3.8% narrative: a “tight” labor market at theoretic “full employment is not confirmed by the “price of labor” – i.e. wages.

A 4% unemployment rate is considered “full employment.” The alleged unemployment rate has been running at 4% or lower for several months. But this story-line is not confirmed by wage growth. If the economy were at full employment accompanied by a “tight labor market,” wages should be soaring. Not only is wage growth dropping toward zero, it’s lower than the average wage growth shown in the chart going back to 1998.

The numbers and narrative as presented by the Government are simply not credible. The BLS statisticians removed another 170k from the labor force. The number of working age people not counted as part of the labor rose to 95.92 million – an all-time high. The labor force participation rate is 62.7%. Outside of Sept 2015-November 2015, this is the lowest level for the labor force participation rate since February 1978. Back then most families had one wage-earner per household.

Additionally, there are 102 total working age people who are either unemployed (6.1 million) or “not in labor force” (95.9 million). That’s 31.3% of the total U.S. population (Census Bureau: 2017 U.S. population 325.7 million). Of the 155 million people reported to be employed, 27 million are part-time. This means 39.2% of the total U.S. population works full-time, assuming that number is remotely accurate. Good luck to the Government keeping the Social Security Trust funded…

As for the most glaringly fraudulent aspect of the report, the BLS reports that “retail trade” was the 2nd largest producer of jobs in May. How is that heavenly possible? Retail sales are sagging and serial bankruptcies in brick/mortar retailing are dumping retail labor onto the market. There are other glaring inconsistencies with economic reality on Main Street. One number, however, that might be realistic: Health care/social assistance is credited with providing 31.7k new jobs. That is possible because the category is primarily Government jobs.

One last point. The birth/death model – which is reported before seasonal adjustments – is credited with throwing in 215,000 jobs into the total pool, which is then statistically “adjusted.” The BLS statistical sausage grinder spit out 223k jobs, of which the Birth/Death model contributed the majority on a non-adjusted basis. It’s just not a credible statistic. As we know, the Govt uses the birth/death “model” as a “plug” to create jobs that exist only on paper.

The chart above is the employment-population ratio. It shows the number of people “employed” as a ratio of the total working-age population. Prior to the 2008 financial crisis, the current employment-population ratio is the lowest going back to 1985. The ratio appears currently to be peaking. As it turns out, the four previous peaks in this ratio were followed by an economic/financial crisis and a severe stock market sell-off. My guess is that you will not see this graphic presented on CNBC, Fox Business, Bloomberg or any of the other mainstream financial media outlets.

Is War By Proxy With Russia Inevitable?

The U.K. refuses to release for independent examination any of the evidence that would link the Skirpal poisoning to Russia.  As such, we can only assume that Russia was meant to be the scapegoat.  Same deal with the chemical attack in Syria.   There’s a complete lack of evidence that would connect the incident to any specific perpetrator.  But the U.S. seems satisfied that a case built on no-evidence hear-say and western media headlines proves the allegations.

Amazingly, some of neo-cons at Fox News are now questioning the legitimacy and motives for U.S. belligerence toward Russia using Syria as the “host.” Tucker Carlson went nuts on the idea, which is surprising because Fox typically is pro-war against anyone and anything without bona fide cause and for any reason:

Perhaps of more concern is the analysis presented by Paul Craig Roberts, who has a little more experience in DC politics and Government policy advisement than anyone in the cable media:

No sign this morning of Washington coming to its senses. Zero Hedge reports that Trump is canceling his trip to Peru’s Summit of the Americas in order to oversee the US attack on Syria. If the attack is real and not merely a hit at an unimportant target for PR effect, war could be upon us…”War With Russia Approaching” and “On The Threshold Of War.”

Let’s hope saner minds somehow prevail in DC, though I’m not sure where those brain cells might reside. With a debt-riddled and a larger “explosion” than the one that hit in 2008 percolating throughout the U.S. financial system, it seems that Washington’s policy alternative of choice is, “when all else fails, start a war.”

The insane intra-day and inter-day volatility in the stock market is the primary signal that the system is spinning out of control.  The “trade war” narrative is strictly cosmetic.  The market turmoil reflects the conflict between the extreme inert overvaluation of financial assets and the money sloshing around in the hands of perma-bullish traders who never experienced a market collapse.  The drum-beat of war – trade and military – is meant to deflect the public’s attention from the underlying economic reality.

I would suggest that this is why gold is moving higher despite the overt effort by the Fed/banks to suppress the price and  the overwhelming negative investor sentiment toward gold.

Paul Craig Roberts: Make Believe America

Americans live a never-never-land existance. The politicians and presstitutes make sure of that.

Consider something as simple as the unemployment rate. The US is said to have full employment with a January 2018 unemployment rate of 4.1 percent, down from 9.8 percent in January 2010 – BLS Statistics.

However, the low rate of unemployment is contradicted by the long-term decline in the labor force participation rate. After a long rise during the Reagan 1980s, the labor force participation rate peaked in January 1990 at 66.8 percent, more or less holding to that rate for another decade until 2001 when decline set in accelerating in September 2008.

Today the labor force participation rate is the lowest since February 1978, reversing all of the gains of the Reagan years.

Allegedly, the current unemployment rate of 4.1 percent is the result of the long recovery that allegedly began in June 2009. However, normally, employment opportunities created by economic recovery cause an increase in the labor force participation rate as people join the work force to take advantage of employment opportunities. A fall in the participation rate is associated with recession or stagnation, not with economic recovery.

How can this contradiction be reconciled? The answer lies in the measurement of unemployment. If you have not looked for a job in the last four weeks, you are not counted as being unemployed, because you are not counted as being part of the work force. When there are no jobs to be found, job seekers become discouraged and cease looking for jobs. In other words, the 4.1 percent unemployment rate does not count discouraged workers who cannot find jobs.

The US Bureau of Labor Statistics has a second measure of unemployment that includes workers who have been discouraged and out of the labor force for less than one year. This rate of unemployment is 8.2 percent, double the 4.1 percent reported rate.

The US government no longer tracks unemployment among discouraged workers who have been out of the work force for more than one year. However, John Williams of shadowstats.com continues to estimate this rate and places it at 22 or 23 percent, a far cry from 4.1 percent.

In other words, the 4.1 percent unemployment rate does not count the unemployed who do show up in the declining labor force participation rate.

If the US had a print and TV media instead of the propaganda ministry that it has, the financial press would not tolerate the deception of the public about employment in America.

Junk economists, of which the US has an over-supply, claim that the decline in the labor force participation rate merely reflects people who prefer to live on welfare than to work for a living and the current generation of young people who prefer life at home with parents paying the bills. This explanation from junk economists does not explain why suddenly Americans discovered welfare and became lazy in 2001 and turned their back on job opportunities. The junk economists also do not explain why, if the economy is at full employment, competition for workers is not driving up wages.

The reason Americans cannot find jobs and have left the labor force is that US corporations have offshored millions of American jobs in order to raise profits, share prices, and executive bonuses by lowering labor costs. Many American industrial and manufacturing cities have been devastated by the relocation abroad of production for the American consumer market, by the movement abroad of IT and software engineering jobs, and by importing lower paid foreign workers on H1-B and other work visas to take the jobs of Americans. In my book, The Failure of Laissez Faire Capitalism, I give examples and document the devastating impact jobs offshoring has had on communities, cities, pension funds, and consumer purchasing power.

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