Did Stocks Buy a Conflicted Jobs Report?
Last Friday, we got the latest phony jobs report from the Bureau of Labor Statistics of the U.S. Department of Labor. The BLS reported without blushing that the U.S. economy created 175,000 new jobs in May. This occurred while the unemployment rate did not change, remaining at 7.6 percent, and the number of unemployed did not change.
How is this possible? This BLS report comes on the heels of the April report, where the BLS reported that the U.S. economy created 149,000 jobs. The truth? According to the BLS’s own CESBD report, where they guess how many new jobs were created by new businesses they think may have started that month, and then they add this estimated make believe figure to the count that gets reported to us as the new jobs number, huge fudge numbers were added to their count.
In April, 2013, the BLS reported that 149,000 net new U.S. jobs were created. But, they also reported that 193,000 of these were a guess on their part of new jobs created they hope by new business that probably started up in April. Which means the actual count showed the U.S. lost 44,000 net jobs in April (149,000 minus 193,000 fudged figure). For May, the actual count showed that the U.S. lost 30,000 net jobs (175,000 reported less 205,000 fudged figure). This helps explain why unemployment is not going down.
The true new jobs created figures are vastly overstated by the BLS. The numbers they reported the past two months are pure hogwash. However, the U.S. stock market happily bought the lie (it is a sophisticated lie, being that the CESBD figure is the product of a convoluted computer model of guesses and meaningless statistics). Even if there was an inkling of validity to the CESBD adjustment to the new jobs count, anyone who has started a new business can attest to the fact that the wages paid are often far below market, or non-existent.
Most new businesspersons have no revenue, so cannot take a salary when they open up for business, and further, most new businesses fail. For the BLS to even introduce such a guess is completely misleading to markets. The fact is, the U.S. economy lost a net 74,000 jobs over the past two months. This economy is not improving, and as we see the Jaws of Death pattern approach its conclusion, be aware, be forewarned, a terrifying economic collapse is coming. Nero is fiddling while the embers simmer.
The Fed is printing $85 billion per month that we know of, that money is being handed to Wall Street in exchange for paper IOUs, and the money is fueling the stock market. The Jaws of Death pattern is telling us this artificial stock market rally will come to conclusion sometime over the next year or two, that stocks are going to climb much higher, and then a terrible lengthy Bear Market is going to occur. I have written a book, The Coming Economic Ice Age, Five Critical Steps to Survive and Prosper, which will be available later in 2013. The purpose of this book is to warn everyone about what is coming, and to give a host of coping ideas and tools to deal with this coming period of tribulation. It is a book you can hand out to those you care about, and they can examine the evidence for themselves and prepare for the dark period ahead.
The lies we see in the Jobs numbers are part of a concerted effort to lull the innocent to sleep, to protect self serving political ambitions, and my fear is that many good hard working people will be caught unprepared. On that happy note, on to the markets. We got a four observation Hindenburg Omen observation the past week and a half, which became official on May 31. This suggests there is a one in four chance for a stock market crash sometime over the next four months, and a 70 percent chance for at least an 8 percent decline in stocks over that same period.
It is not at all unusual for stocks to stage a spirited rally immediately after a Hindenburg Omen is generated. One theory on this is the Fed takes this negative indicator seriously, and does some extra goosing to change market psychology from the developing negativity to positivity. The other theory is that markets tend to become oversold as part of the dynamics of generating a Hindenburg Omen, so a subsequent short-term bounce is normal.
Volume was light on Friday’s strong rally in stocks on the fictitious jobs report, with advancing issues mediocre at best, meaning there was not a lot of participation in the rally. This either means the rally is corrective, or that the longer term rally trend from November 2012 is not over, but that it is in its waning stage, a final fifth wave rally leg, where volume and breadth weaken as prices rise to their conclusion.
Originally written for www.technicalindicatorindex.com by Robert McHugh, Ph.D. McHugh is President and CEO of Main Line Investors, a registered investment advisor in Pennsylvania. The statements, opinions, buy and sell signals, and analyses presented here are provided as a general information and education service only. www.technicalindicatorindex.com is currently offering a FREE 30-Day Trial Subscription, which can be accessed here. Coming in October 2013: McHugh’s new book: The Coming Economic Ice Age, Five Steps to Survive and Prosper.
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