Unbelievable Jobs Report

First off, in discussing this week’s market movements, I have to confess that last week I gave you the statistics from the week ending May 22 rather than May 29. But now, in comparing June 5 with May 29, it is clear that this week was a very reckless “risk on” week with stocks and commodities rising dramatically while safe havens in the monetary metals and the T-Bond were shunned.

Gold got slammed hard especially on Friday by the usual massive bullion banks who are able to push markets down hard, buy them back when they pushed as far as they can and then ride them up, making profits through their manipulation of gold and silver in both directions. Sure, gold rises over time, but as long as they can keep a lid on gold, they can be counted on to do so. And of course, everyone in the establishment whether Democrat or Republican likes that action because it keeps gold from running away to the upside, which would shed light on a very obvious truth, namely, that all is not well in the world. And as in any burglary, shedding light on dastardly deeds is never by the perpetrators.

Much as I would like to believe Friday’s job report, it really does seem unbelievable. Speaking of shedding some light on dastardly deeds, former bond trader and now gold bug analyst David Kranzler shed some light on employment lies being told by the Bureau of Labor Statistics. As readers of John Williams’ works know, governments fudging figures is nothing new. All Presidents do it. But today’s positive numbers were by all admissions a real shocker. Here is what David Kranzler wrote today:

Today’s employment report is a complete fraud. But as long as the market and its army of mainstream storytellers focus just on the headline number, unicorns do exist. But the Devil is in the details:

As was the case in March and April, household survey interviewers were instructed to classify employed persons absent from work due to coronavirus-related business closures as unemployed on temporary layoff. However, it is apparent that not all such workers were so classified. BLS and the Census Bureau are investigating why this misclassification error continues to occur and are taking additional steps to address the issue. 

But as explained here on the U.S. Bureau of Labor Statistics, https://www.bls.gov/news.release/empsit.nr0.htm, at the bottom of the page, “If the workers who were recorded as employed but absent from work due to “other reasons” (over and above the number absent for other reasons in a typical May) had been classified as unemployed on temporary layoff, the overall unemployment rate would have been about 3 percentage points higher than reported (on a non seasonally adjusted basis). However, according to usual practice, the data from the household survey are accepted as recorded. To maintain data integrity, no ad hoc actions are taken to reclassify survey responses. 

David went on to say, “This is before looking at the actual line item date estimates (more like guesstimates) in the Household and Establishment data. Most of the numbers in the line items for each industry are simply not credible. As a colleague points out, “this is the same shit that happened before the November 2012 Presidential election when jobs growth was egregiously overstated and then revised lower over the next several months. 

Beyond that, there’s not much to say about this report. The numbers as presented are astonishingly implausible. It’s an insult to everyone’s intelligence for the Government and the main stream reporters and analysts to think that anyone with two brain cells to rub together would find this report believable. Ultimately, this attempt by Trump to stuff the ballot boxes early in the election cycle will backfire – badly.

Let me be honest about my political leanings. While I am not happy about President Trump’s brash language, I hope he wins because if he loses the election in 2020 and especially if the Democrats get both houses of the legislative body, the final nail will be driven into the American Republic’s coffin. So when I write critically about the Trump Administration fudging economic numbers, it’s not with joy that I seek to rain on his parade today when unbelievably good numbers were released that drove the Dow up close to 1,000 points and sent safe haven assets down hard.

But in the longer run you can’t defy natural law, whether in the social realm of economic behavior or in physics. So unfortunately, I think David Kranzler may indeed be right when he suggests that Trump’s effort to “stuff the ballot boxes early in the election cycle will backfire—badly. One reason I think that may be the case can be seen from the chart on your left published by Danielle DiMartino Booth in her Daily Feather report on June 5, 2020. It pictures the historical delays between job cut announcements and Chapter 11 Business Bankruptcies. Notice that we have not even begun to see a rise in bankruptcies yet while job cut numbers are rising dramatically.

Here are the key points made by Danielle:

  • As states reopen, surges in pent-up demand have been a catalyst for increasing home and auto sales; reflecting months of homebound online shopping, furniture sales have risen by an average 35% in the three most reopened states compared to a 21% increase nationwide.
  • Bankruptcies have been postponed for many businesses as forbearance measures and bloated court dockets delay the inevitable for small businesses; expect bankruptcies to accelerate exacerbated by a continued build in permanent layoffs as companies struggle to survive.
  • Even as the economy reopens, layoffs are rising as companies cut costs to offset falling demand; after a one-week reprieve, continuing jobless claims rose anew flagging millions of pent-up layoffs as service and factory firms downsize and consumer credit tightens

It’s always good to hear from Michael Oliver during times of unstable markets and so with this being the most unstable period of American history that this 73-year-old has lived through (yes including the tumultuous 1960s) I’m glad to pass along a couple of Michael’s comments:

Michal Oliver on gold and related markets: We regard this drop as a micro version of what happened over a span of three massive down days in late March.  Expect same outcome – back to upside.  And by the way, please note the obvious.  S&P500 action has been opposite that of gold and miners.  Hopefully the action over the past few weeks in both markets will now finally make reality clear to those who have long believed the opposite.

Stock market:  We do not trust this rally, though as have defined our intermediate trend factors have not broken down.  But with today’s and now also this week’s action MSA now has weekly non-confirmation (3-wk. avg. momentum) and an overbought weekly SD band reading–with ample structures just below to break this joyous fake event back into a sense of “where are we? The 360Weekend Report will fully chart these events and define numbers. www.OliverMSA.com

About Jay Taylor

Jay Taylor is editor of J Taylor's Gold, Energy & Tech Stocks newsletter. His interest in the role gold has played in U.S. monetary history led him to research gold and into analyzing and investing in junior gold shares. Currently he also hosts his own one-hour weekly radio show Turning Hard Times Into Good Times,” which features high profile guests who discuss leading economic issues of our day. The show also discusses investment opportunities primarily in the precious metals mining sector. He has been a guest on CNBC, Fox, Bloomberg and BNN and many mining conferences.