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6.5.2016 - Financial Intelligence Report Bookmark

38K

 

So, Friday was “jobs” day. The first Friday of every month brings us the “non farm payroll report”.  This piece of data is watched by every market participant, because the labor data is correlated to monetary policy such as interest rates.

 

The Fed’s have been sitting on their pedestal telling us how wonderful the recovery is and that the labor markets are so hot that they’re worried about overheating. For months now they’ve had a smug attitude about how many jobs there are, and that their monetary policy has indeed saved the world.

38K

 

So, Friday was “jobs” day. The first Friday of every month brings us the “non farm payroll report”.  This piece of data is watched by every market participant, because the labor data is correlated to monetary policy such as interest rates.

 

The Fed’s have been sitting on their pedestal telling us how wonderful the recovery is and that the labor markets are so hot that they’re worried about overheating. For months now they’ve had a smug attitude about how many jobs there are, and that their monetary policy has indeed saved the world.

 

The estimates were for a gain of about 160 – 190,000 jobs. All the brainiacs from Wall Street had estimates of 140 – 175K jobs. The biggest “most respected” names, you know the ones… were confident that the jobs market was and is improving monthly.

 

So the number hits and guess what? It wasn’t 190K or 160K. It wasn’t even 120K  It wasn’t 100K. It was a measly 38K.  The so called “smart people” that you see on CNBC day in and day out, missed the estimates by over 100K jobs.

 

If that was the extent of the problem it would be bad enough, but noooooo….. it was much worse than just a lousy headline number. Inside the report was a treasure trove of ugliness.  Consider the following….

 

Americans Not In The Labor Force Soar To Record 94.7 Million, Surge By 664,000 In One Month.

 

The last two months jobs reports were revised DOWN by 59K. The labor force participation level FELL to 62.6%.  The number of workers part-time for economic reasons was up by almost 500,000 versus April and is now higher than a year ago.  The "household survey" reported just 24K jobs.

 

Now check this....the Fed's "Birth/Death" model ADDED 224,000 jobs to this reading. Jobs that don't exist. So take out that distortion and we didn't add 38K jobs...we lost 180K jobs. Wow.   ( For those that don’t know what the B/D model is,  the short of it is this; for each company that lays off workers, they figure some of those workers go out and open businesses and hire people. They don’t have any proof of these jobs, no tax returns, etc, they simply MAKE THEM UP. THEY’RE A WILD ASSED GUESS.  This month  they guessed that laid off employees went out, opened businesses and hired 224,000 people. Right. You bet.)

 

You really need to go back and read those data points again so that the severity of them really sinks in. 468,000 people took part time jobs for “economic reasons”. That usually means 1) there were NO full time jobs, but they needed anything they could get and 2) they make so little money they need TWO jobs to get by.

 

600K people fell out of the labor force. In a MONTH!  Why? They couldn’t find work. They gave up. They got on Welfare, food stamps and said “to hell with it, I’ll sit on the couch”. 

 

My job is personal investing. It is what I do. Because of that I have to watch the market every single day. I have to dig under the Wall Street crap and find the facts. Well the facts are that the economy is circling the toilet, BUT YET…the market has been flirting with all time highs. How can that be? Easy…the market isn’t the market any more. It is a centrally controlled, completely manipulated machine, designed to 1) give the illusion of economic strength, and 2) reward the folks that make money off of the market.

 

I mentioned something the other day that I want to revisit. If I’m right and the market is being held up artificially so that it looks to the Average Joe that all is well in the world, why not just go with it? Why not get 100% invested on margin and take the ride?  If what I’m saying is correct, and Job one at the Fed and other central banks is to keep the markets up, why not go with it? 

 

First off let me say this…I am right. I’ve shown you all how the Swiss national bank has bought 14 billion worth of US stocks in the first quarter alone. How they own millions of shares of AAPL, IBM, etc,  I’ve shown you how the Bank of Japan is buying US Stocks by the billions. I’ve shown you how the ECB is printing 85 billion a month and is now beginning to buy Corporate Debt.  I’ve shown you how any time the market begins to dip, “someone” rushes in and buys up a few billion worth of futures, and saving the market.  So get past the idea that I could be wrong on the control and manipulation and let’s get back to the big question…if it’s true, why not just go “all in?”

 

Well, let’s consider that. The market hit its all time high in May of 2015. Since then the economic reports have continued to deteriorate. From retail sales, to big brands going bankrupt, to the oil patch experiencing 121 bankruptcies, to weak durable goods, to lousy PMI’s, ISM’s  to 4 quarter of falling earnings, to horrid Fed regional reports to you name it. Yet here we are just 2% from that all time high. Why hasn’t the market put in a massive correction if the economy is so lousy? Because they are determined to keep it up.

 

As I’ve mentioned in the past they need the market up for two reasons. One is to give the illusion that the economy is strong, as it is a fact that “most” people still think the DOW is a reflection of the economy. The second reason is that there are so many derivatives now that used equities as collateral, that the Fed’s themselves have said “a falling stock market could be a systemic risk”.  Meaning if stocks fall, the whole damn thing might blow up.

 

So there is ample reason why it wouldn’t be a terrible idea to be totally long and rely on the Fed’s to keep you safe. But there’s two big reasons why it might be the worst thing you could do. Let’s consider them….

 

The central planners are desperate. All their tricks and gimmicks have failed. We’re 7 years into QE, zero rates, trillions of printed money and we’re printing 38K jobs reports. Well if all that has failed, what’s next? Two times MORE QE? Helicopter money? More of the same insanity that didn’t work? Maybe. Or maybe 1) they just lose control at some point and the wheels fly off, or 2) they hold it up just long enough to have a reconstruction plan in place to pick up the pieces and then just allow it to crash.

 

In November of 2007 the market was at an all time high for that time period. Cramer was on CNBC screaming “buy buy buy!” Every Wall Street hack was telling us that the economy was roaring. The Fed head Ben Bernanke said there was zero chance of any major economic events. Yet just a few months later we came into the worst stock market crash since the 30’s.

 

What if we’re in the same situation? What if despite their pushing buttons and pulling levels and printing money and lying to us…they lose control? Do you want to be fully invested if we rolled over and started falling in big chunks?  Or worse, what if we’re so close to them capitulating and giving up on this debt ridden system that can’t be saved that they pull the plug on it, and replace the entire system? What if the “reset” hits?

 

Basically if you’re going to play for the Fed’s to never let the market fall, what if despite their best BS…they lose it? What if market forces simply overwhelm them?  What if the worlds central banks get together, realizing that the debts are too big and the stimulus isn’t working, and they decide to do a global SDR launch and individual currency reset, with devaluations and debt charge off’s? 

 

All I’m saying is this… market’s generally rise for a long long time and then they “snap”. We saw it after the 90’s run up and then the “crash”. We saw it from the 2003 to 2007 run up and then the crash. Well we’re 8 years into this “run” and they’ve tossed the kitchen sink at it to keep it going. If you think that they can pull it off, go for it. I on the other hand think that reality always triumphs, no matter how long it takes, and we get another “snap”. I don’t wish to be long when it happens.

 

So I don’t have any money in things I can’t move with lightening speed. In our 401K we’re in “cash” and I’m constantly considering just taking the penalty and cashing it out and buying more gold and silver. Yes we do long side “trades” but they aren’t buy and hold situations. They’re short term, grab 3, 5, 10% and scoot. Yes it’s too much like work but I don’t want to be 100% long in 10 stocks and wake up one day to find out the market’s closed and there’s been a major bank failure, and everything’s locked down.

 

Obviously it’s up to you. If you think they can pull off a win and somehow ignore the trillions in debt, the trillions in derivatives, the moral decay, the lack of jobs, and everything else, well go for it. If however you think the world is quietly spiraling out of control, I simply don’t think I’d want to be locked up in accounts that I couldn’t cash out of in an instant. Oh and let me leave you with this…. IF something really untoward were to happen, like Deutsche bank going belly up and derivatives across the land started imploding, would your trading account even be safe?  Are you certain you could get your money from them in a systemic failure? I’m not.  Not one bit.  We live in perilous times. Try your best to remain safe.

The Market…

 

What would you expect the market to do on a day where months and months of cheerleading about our soaring jobs market, was dashed by the fact that we actually lost jobs in May? Well, you’d expect the market to roll over and  fall like a rock, right? Right. But no… we didn’t roll over and fall like a rock.

 

After the customary 100 point dip on the DOW and the 10 point dip on the S&P, they halted the slide and hour by hour inched us back toward the flat line. At one point the DOW was down just 8 points.  We ended the day down 31.

 

If you took the time to read the commentary above, and still wondered if the market is controlled, then please…explain Friday’s market any other way. Friday’s jobs report completely dismantled the entire meme that we’re growing and that job growth is robust, and unemployment is under 5%.  It is nothing of the sort.

 

I think the most amazing part of the whole ordeal was that they closed the market right at S&P 2100, a level they’ve been flirting with for a week. No mater how big the intraday dip, they seem to always find a way to get us to 2100.  Is that a free market? Is that millions of investors around the globe pinning the number like that? Of course not.

 

So the question is, what now? You can see they are still hell bent on pushing us higher and if they can’t manage that, then their okay with just keeping us flat. We can use some chart levels to determine their next move.  On the downside, if we put in a close under 2085, you might expect to see some more sliding. On the upside, a close over 2105 signals they’re determined to try and challenge the all time highs.

 

Just suggesting that, leaves a strange taste in my mouth. All time highs as we print 38K bogus jobs?? Really?  Really. That’s what “they” want.

 

I sold my short term holds Friday. I told my Insiders that I thought they’d try and get us flat for the weekend, but next week they might not be so generous. So I didn’t want to walk in Monday to really ugly futures and have to play “position management” with our longs. So, I sold them.  If we do see them continue to push us higher, there’s several names that I see that would attract me for a swing trade. If they fade us, I’ll simply sit tight.

 

Have a great day folks and we’ll see you all on Wednesday.  

 

 

 

 

 

 

 

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