We know from the real time US Federal tax withholding data that the December jobs gain was NOT just 199k jobs. Withholding had a 3.2% higher annual growth rate in December than in November. That would equate with not 199,000 new jobs. More like 1.99 million.
Now before you get too excited, not all of that increase in withholding was an increase in the number of jobs. The average weekly earnings rose by 0.8% M/M so that the real rate of change was 2.4%.
We also know that withholding taxes include distributions other than regular income, particularly employee 401K and IRA distributions, which are subject to withholding. We can assume that these were higher this year than last year, but we don't know how much. It's unlikely that this would account for all of the difference between November and December.
The 2.4% month to month real increase in withholding is the biggest since the initial post pandemic y/y surge in May. That surge settled down in June. December's is the strongest monthly performance since then. It is a full 1 % better than the previous peak in the year to year growth rate, in October.
The BLS said that October jobs increased by 648,000. We have a 1% stronger annual increase in withholding taxes in December and yet the BLS reports only 199,000 gain in jobs? I mean WTF are they doing? Where are the other 447,000 jobs? Plus 1%. How did they miss that? Forget the tax data.
Their own data says they missed a huge chunk of the jobs that were added last month.
Let's use the BLS's own data. Let's look at December, not seasonally manipulated data, in other words, the actual number that they derived from their survey's before seasonal adjustment, for the previous 10 years. This is the month to month change that they themselves derived from their own surveys.
What do you notice about this data?
That's right. Every single December there were fewer jobs versus November.
Except for one. This year.
December 2021 has the only gain in jobs in the last 11 years. It was the best performer, by far, of all of the last 11 Decembers. Yet the BLS managed to see only a tepid gain of 199k in its headline number.
Now let's see how the BLS ranks this December with the past 10 Decembers on the basis of their seasonally adjusted headline number. The M/M column shows the change from November each year. Rank is how that December ranked among the 11 years. December 2021 ranked 7th, that is, fourth worst of the last 11 years.
How is is that they only managed to see an increase of 199k, ranking the 4th worst in the last 11 years, when last month was actually the best of the 11 years.
How is that reasonably possible. It's ridiculous. It's absurd. It's criminal. And yet Wall Street takes this garbage seriously.
Here's another way to look at it. Based on the BLS headline number, the December 2021 M/M change increased over December 2020's performance by 505K. That makes sense because December 2020 was terrible.
But the actual data, NSA, says that it really increased by 591K. The BLS's own data shows that it missed at least 85,000 jobs. It also shows that the NSA data for December was +74,000 over December 2015 which BLS says was the best December of the previous decade. If last month was 74K better, then the headline number should have been 273k+74k= 347k.
So even the BLS own data shows that they undercounted by anywhere from 85k to 306k.
The only miss here was by the BLS. It missed the creation of a couple hundred thousand jobs. Based on the withholding tax data, they actually missed far more than that.
Bond traders are not fooled by the BLS's statistical garbage.
The 10 year yield has broken out and is headed for the projections I reported yesterday.
They're so full of crap. He knows that any reduction in QE, let alone a balance sheet runoff, will be disruptive. Yellen already tried it and look how far that got. The answer is 3.2%. That's how high the 10 year got in October 2018 when the Fed started to choke on its vomit.
A little later today, I'll be off on my travels to Slovenia, Slovakia, Poland, Czechia, and Germany. I'm saying farewell to Zadar, just as yesterday it seemed to say farewell to me!
I will pack my trusty laptop snugly in its favorite backpack, so that I grab it from time to time and work along the way, publishing Liquidity Trader, the Wall Street Examiner, and keeping our little group of friends here up to date on my thoughts about the daily market squiggles from time to time.
I don't know how much posting I will be doing today. I'll be on a bus for 6 hours, heading from Zadar to Ljubljana, Slovenia. For now, at 3:15 AM in New York here's how the hourly ES chart looks.
As in the same trend channel the market has been in since June 21. As in slight new highs. As in still with reverse head and shoulders breakout measured move targets of 4315 and 4350. The first is all but a done deal. The second looks likely too, just not this week.
There's not enough fluctuation for a 5 day cycle projection. On a 2-3 day basis we're looking at 4308. They've broken through the top of the megaphone pattern at 4295. That and 4290 look like s-port. Breakouts of rising trendlines often signal acceleration, if they're not immediately reversed into a false breakout.
A band of trendlines from 4301-05 should present resistance. If not, the next would be currently around 4315. They're all rising. Here comes the judge.
Ciao! I'll check in whenever possible!
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End Stage Rally
Now The Balance Begins To Shift
Gold Needs A Bounce
I don't believe in "pricing in." I also don't think about whether I'm a bull or a bear. I just do the math and report what it shows. The longer term projections are what they are because the liquidity balance is what it is.
Yes, to your point, there's more and more supply. I factor that into the analysis. In fact, I warned more than a year ago that stock buybacks were a two way street, that eventually the tide would turn and companies would issue more stock than they buy back.
As far as people's market sentiment, I learned a long, long time ago, that it means nothing. The consensus can be correct for a very long time. Bubbles can last indefinitely, especially when all of the world's central banks are promoting them.
I learned two rules when I was very young. Don't fight the Fed, and Don't fight the tape, aka, The trend is your friend. When supply exceeds demand, I would expect the technical indicators to turn bearish. Until then the liquidity balance and the long term trend indicators rule.
In addition to being a serious anal cyst, I like to entertain, and I need to sell. Attracting a new person to read my bombast sometimes entices them to subscribe to the service. Without subscribers, I starve and write a travel blog, and Capitalstool gets laid to rest.
It is not my intention to irritate or argue with paying customers, that's for sure. I want everybody to be happy here. I will simply continue to calls them as I sees them, and hope that people are entertained, enlightened, and that they get it. Everybody knows that I'm not always right, and please know that I know it as well.
More power to anyone who can profit on the short side of the market. They are better traders than I. I love bears. I'm a bear at heart. But I'm a technician at heart, and one of my jobs is to do my best to keep my bear friends from harm. I'm no John Hussman, or other permabears whose names I won't mention, constantly explaining why the market is wrong, day after day, week after week, month after month, year after year. It's a disservice to the people who are paying you.
The market isn't wrong. It just is. My job is to describe it, inform, enlighten, entertain, and be a friend.
I want to add a few more personal thoughts about the Ukraine situation, since it is in the news, and since we've seen some Russian anti-Biden propaganda on it.
As you know, I am not a geopolitical anal cyst. I have a personal interest in this subject. I do research, collect and review facts to the extent that they're available, and form my personal opinion. I do so in the context of having paid attention to world affairs, to some extent, since the Cuban Missile Crisis in 1962.
I also have a smattering of knowledge of 20th century history pre-dating my personal experience. Some of that history is personal. For example, my grandparents lived under Russian rule. My grandfather was a conscript in the Russian Army during the period when Russia ruled not just the Ukraine, but also Poland, until 1920. In 1900 he and other members of my family fled the Russian instigated pogroms in Poland to come to the US. They left after the death of my great grandfather, and many other Jews, in the town of Makow Mazowiecky, that same year.
What happened there that year that so many died, and my grandfather and brothers and sisters left? I don't know. There's no record.
Russia has a history of being expansionist, imperialist, racist, and homicidal, regardless of who led the government. The historical record is unclear as to the exact number, but Stalin killed between 9 million and 25 million of his countrymen. By most accounts, he murdered more people than Hitler did.
Today, Putin is promoting a rebirth of Stalinism.
Meanwhile, Putin has rebuilt the Russian military into the second most powerful in the world. Ukraine is 25th.
The whole notion that Ukraine could drive the Russian military out of Crimea and Donbass is laughably absurd. Ukraine knows it and Biden certainly knows it. So whoever is attempting to circulate that lie about Biden encouraging Ukraine to attack Russia won't get far. Ukraine would be inviting its own annihilation.
Here are a few facts. Russia's military is 5 times the size of Ukraine's in manpower. It has 10 x the number of tanks, 20 x the number of jet fighters, 5 x the artillery, and 6x the number of rockets. Putin invaded the Crimea and took it over by force. Putin is amassing more Russian troops on the border with Ukraine right now.
You don't think that Ukraine didn't resist the Russian attack and hasn't resisted its ongoing attacks for years? There's been a low grade war there ever since Putin invaded and took control of Crimea.
Ukraine has no chance of winning. They know it. Putin especially knows it, and Biden, of all people, knows it.
Ukraine is merely trying to hold the line. Donetsk has been perpetually under siege by Putin and his supporters there. I know someone who was forced to flee her home there to move in with a relative in Kiev in a one room apartment. I also know a woman whose husband, a Ukrainian military officer, was killed in the conflict. Ask these Ukrainians about how they feel about the Russians invading their homeland. Or how they felt living under Russian rule for most of their lives.
Regardless of its government, Russia's modern history has been one of repression, corruption, manipulation, and aggression against its neighbors. Putin is just one of a long line of that type of ruler.
Sadly, there are millions of outright fascists and quasi fascists all over the world willing to spew his lies and propaganda. Saddest of all is that so many "freedom loving" Americans are among their number.
The Ukrainian government knows better than anyone that it has no hope of driving out Russian forces. In addition to Russian military might, the Russian government has indigenous support in the areas of Ukraine it currently controls.
Just as the Confederacy does in the US. That doesn't make it right.
Putin invaded a sovereign nation. He has devastated Ukraine. I know the sadness and devastation that Putin has caused in Ukraine. Not just there, but anywhere in the world where he reaches his dirty fingers.
Putin took the Crimea because he wanted control of the military base on the Black Sea in Sevastapol, not because of ethnic ties. He did it for strategic purposes. Did it matter that he had lots of ethnic support in Crimea? Sure. He knew he could use this as an excuse and get away with it, because strategically no one could force him out once he moved in.
Military aggression is military aggression. Ukraine has the right to defend its sovereign territory. But it knows that if it tries to eject the Russians it will lose, and Kiev will again fall under Russian control.
That is Putin's goal, and I don't know that NATO, led by the US, has the ability or the will to stop him. I don't doubt that Putin might take this gamble. However, his calculation now must be far different than it would have been when he controlled the White House.
An attack will further destabilize the world order. The growing worldwide slide toward authoritarianism will march on.
All around the world, including the US, democracy is losing. Political freedom and the Rule of Law and Reason are in retreat. Lies, disinformation, and repression are gaining.
We saw an example of it here yesterday.
That makes me sad.
It has no impact on the stock market.
The size of the Fed's balance sheet needs to be viewed in relation to supply of and demand for financial assets. That's the issue for us. The price of financial assets.
The US Treasury creates so much supply of securities, that the market could NEVER absorb it on its own. The Fed must provide the demand. This started with the first TARP, which ironically the market was able to absorb on its own because there was so much panic that the world massively panicked INTO Treasuries. At that time, Primary Dealers were net short Treasuries.
Fast forward a dozen years and everybody is filled to the gills with long Treasuries, and leveraged to the nth degree to carry them. Therefore the Fed must print enough money to buy enough or fund enough of the Treasury supply to keep prices high and yields low. Ever since QE1, the magic number has been 85-90%.
The relentless drop in prices tells us that at that rate today, the Fed isn't creating sufficient demand to absorb enough supply to keep prices stable. Dealers and institutions are so stuffed with inventory and overleveraged that they can't take another dime of new supply. The market has been choking on this shit since last August. The Fed reduced emergency QE in July. Direct cause and effect.
In other words, the Fed is too tight at the given level of supply. And supply will double soon. We're about to see the MMT crowd face their come to Jaysus moment.
Then what will the Fed do, and when will it do it? Those are the two great questions. We answer them based on the Fed's historical behavior. The Fed is people. People behave in similar ways in similar situations.
he doesn't deserve to be addressed as Jerome...his name is "Jerry"....just like the mouse...cause that is all he is, a mouse...we have the makings of a pathetic national cartoon in this country...it is not funny, instead it is a tragedy..called..THE Joey and Jerry show...in the last episode everyone dies
Gold is going to drop.
The answer to why gold has not risen in USD in 2021..... Gold gets more expensive when real yields fall (period 2019 - to mid-2020). it was stable in 2021. if real yield would go up (QT), then gold will flop. same as crypto.
this will end in tears...they just have to figure out who or what to pin it on...if anyone doesn't believe that Janet, Jerry and Joe don't have a plan...you should think again... it may not work but they will try something...my bet is an extraneous event, false flag?, China, who knows...but the event will crash the Market, they will say, and money will pour into bonds as safe haven.....unlike my Namesake I am almost always wrong and over simplified.
stopped trading miners years ago. That is a pure timing game. The fund I manage is 99% physical held outside the financial system. The whole thing is a confidence game. No one knows when the music stops. One can only prepare. At some point the metals go not sure about the miners. Some lost their shirt in the last run 10 years ago due to hedging.
Today is my last day in Zadar. I have such mixed emotions. I have just fallen in love with this place in the two stints I've lived here, totaling 12 of the past 18 months. I will miss it.
But at the same time, I'm excited to see Ljubljana, Lake Bled, Bratislava, Vienna, Krakow, and Auschwitz--with a degree of dread, of course--on my way to Warsaw for a month. That will be my base for my ancestral research. I will visit the hometowns and birthplaces of my maternal grandparents, and look for evidence of earlier ancestors and possibly cousins who stayed behind and perished at the hands of the Nazis.
Towards the end of summer into mid September, I'm planning a swing through southern Poland, Czechia, Germany, and the northern Polish seacoast. The trip as planned so far will include Zakopane a resort town in the southern mountains, where my friend has a condo, then Prague, Nuremburg, Leipzig, Dresden, Wroclaw (pronounced Vroetzwaf!), then north to the Baltic coast to the Tri-cities of Gdansk (pronounced Gdoinsk sort of😁), Gdynia, and Sopot.
It's an ambitious itinerary, but I love the nomadic lifestyle of exploration and discovery.
I'll take a little break from regular publishing over the this Fourth of July weekend, but expect to maintain a fairly regular schedule other than that. The great thing about living in Europe, while serving an American market, is the 30 hour days. So I have time for both work and play. Just not for sleep. 😄
If you're interested, you can follow my photos at https://www.instagram.com/200daysineurope/
Partly fun. Partly serious. But meaningful. I'll be looking for ancestral records, and records of cousins who stayed behind and perished, or hopefully, survived. I have a few leads that I'll try to track down.
As soon as I heard that Friday's nonfarm payrolls report was the biggest "miss" in history, I knew that something was "amiss."
And it wasn't the eConomissts estimates. As much as I can't stand Wall Street and most academic eConomissts, their jobs estimates are usually pretty good, rarely missing the BLS number by more than a few tenths or hundredths of a percent. This time, the difference was orders of magnitude.
I knew from this that the eConomissts had it right and the BLS had it wrong. Very, very wrong.
Could it be-ee-ee-ee, that the BLS, aka the Bureau of Liar Statistics wanted it that way? After all, a week jobs number would be a good reason for a bond market rally, and god knows the US Treasury and the Fed desperately want that, so as to keep their Primary Dealer pals the appearance of being among the living.
Or was it just another massive error in their seasonal fudge factor reporting. As I've watched this data closely every month, one thing I noticed that after 2 monthly revisions and 5 annual benchmark revisisions the final number for the month usually looks pretty much like the central tendency of eConomissts' estimates for the first report. The eCons get it write, the BLS gets it wrong more often than not.
This time they got it very very wrong. Let's dig into the numbers, just a bit. Does this look like a weak jobs report. We have 81 years of history on this. The first chart is the whole megillah. Then we zoom in to the last 5 years.
This is the actual data without the completely made up, seasonal fudge factor derived from a statistical trick formula called X-13 ARIMA. That essentially compares the current number to a 10 year average for the month. Just one thing is a little weird about that. The 10 years includes the last 5 years, and the next 5 years. Huh? Wait. What?
That's right. It includes data that doesn't exist yet. They project that too, and then they revise it based on the actual unemployment tax and withholding tax data every year until they have the final figure for this month 5 years from now. Got that?
So what do we see in the actual data? Only the biggest year to year increase in history by orders of magnitude. Over 14 million jobs added since April 2020. And that is somehow a disappointment according to the BLS headline data. Just eyeballing the withholding taxes through month end April, and the actual, unfudged jobs survey, it seems patently obvious to me that the eConomissts' guesses were a lot closer to reality than the BLS BS.
Look at the actual BLS not seasonally manipulated data
Fact. April had the largest month to month increase since April 2016. That was on top of a record increase in March.
Fact. This was the largest 3 month increase of the past 5 years. Not only that. It was the largest 3 month increase in HISTORY. By far.
Fact. This was the largest year to year increase in history, by far.
Fact. The survey date was April 12. The withholding tax data through early May showed that the trend was not only maintained, it accelerated. The increase was slower early in the month than post April 12.
Conclusion: There is no basis whatsoever for concluding that the jobs rebound is slowing. There's no basis for concluding that the bond market "should" rally. There's no basis for concluding that the stock market rally should pull back.
This stuff is red hot. Is there a basis then to conclude that the Fed will taper? Absolutely not. It can't, and I tell you why, and the strategy and tactical ideas to take advantage of what's ahead, here. Click to get a 90 day risk free trial. .
Adding a sliding parallel to the 4M chart, and et voila. At least for now. My trading is even worse when there's this much volatility, so I'm going to head to the beach. Doc, sorry for the serial posting. Hasta mañana!
When I first opened my intraday chart today I saw this and thought, "Oh mygawd. It's over."
Knowing that I had left massive long positions in my trading account overnight, I immediately went into atrial fibrillation and started having chest pains. I chewed 6 aspirin, grabbed my English-Croatian reverse dictionary, and got ready to call 112, which is the European number to call in an emergency.
But I collected myself, saying ok, Lee, Breathe. It's 3 positions totaling less than $10,000. We can handle a loss on 10% account exposure, on a 0.63% move. Let's see, that's .000063 of my account right? I don't know, I'm not good with decimals. When I started in the business they quoted prices in eighths.
Besides, this isn't even the whole chart. So click the key to refresh the chart and relax. And in my usual calm, self contained, stoicism I said to myself, "See, asshole! You panicked for nothing! You managed your risk so that it doesn't manage you. So calm down and take a nerve pill. Idiot. Jackass. "
And then, after all that, and bleeding from the rectum from eating so many aspirin, it finally dawned in me that that was an old chart that was stuck in my browser cache.
After my refresh, I saw this.
I must admit that the current rally bears a remarkable similarity to the rally off the March 4 low. Does that mean a pullback is guaranteed at this point? No, but it doesn't matter. I trade based on my extraordinarily low level of chicken shit risk tolerance. I'll set my automatic sell orders based on trigger mechanisms that give me the best odds of getting a good price, whether it's a small loss, small gain, or maybe keeps me in as long as these 3 plays trend higher, or at least one of them.
There have even been a few shorts come up in the screens to use as hedges. I'll post today's screen momentarily below.
Now, there is a moral to this story. You may be wondering, "What is that, Lee?" OK, you probably aren't wondering, but I will tell you anyway.
If you think you are having a heart attack, and you chew 6 aspirin, always make sure that they are low dose aspirin, and not the full 325 mg. That's the lesson.
Oh, and always carry them in your purse or wallet. The time may come when you need them to save your life. It happened to me 5 years ago (almost- April 29, 2016), and I would not be here today, if not for those little aspirin tablets I chewed that day. Do it for you. Do it for your kids. Do it for me, ok? I need your business.
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Stock Market Says, Here Comes the Judge, All Rise
LEE ADLER 2 - TECHNICAL TRADER APRIL 4, 2021
Gold – Finally Some Good News
LEE ADLER 3 - GOLD TRADER APRIL 6, 2021
Stimmy Gonna Leave Its Mark… In Bond Trader’s Underwear
LEE ADLER 1 - LIQUIDITY TRADER- MONEY TRENDS APRIL 5, 2021
THE GAME RIGHT NOW
The game right now seems to be trying to short squeeze the shorts out of their positions
How many other hedge funds are playing the Archegos game.
Using total return swaps to disguise their positions.
Using 10 to 1 leverage provided by the banks to provide the power for the "pump engine".
Coasting on the inflationary gift of negative real rates provided by the FED.
A gift that the FED is in the process of ramping up.
This is what I call a "Frame congruent game".
i.e, the game is favoured by the frame forces.
A week ago a friend's ex husband died of Covid. Today her father died.
That's 6 people I know of who have died. My friend had it for a several weeks and was deathly ill at one point. She's recovering.
They find ways to skew the studies so that they show some benefits. I watched over my mom, saw dozens of Alzheimers patients and caregivers and families through the years, and none saw any benefit from those drugs. But doctors kept prescribing them? Why? Because they were getting paid.
Yah, at 156 bucks between 1/8 lines, it might be more of an options thing . . .
Was Forus the one that used to trade a huge chunk of full S&P contracts at a time, not the e-minis for people of meager means like me?
Added a second sliding parallel (top aqua colored line) to action-reaction lines on 15M chart this morning and it almost makes things look a little orderly. But I have absolutely zero confidence in anything I'm doing lately, so I'm over-posting random crap to avoid trading.
Anybody here trade Amazon and have insights about it? I probably should pay more attention to it than I do. Looks it is down around 600 bucks a share from the September high, and almost a perfect 3/8 from the Feb high to boot. It's actually one of those stocks that seems to follow MM lines fairly well and seems to like to move 3/8 or 4/8 in a direction before pausing and reversing a bit. So, my far-from-brilliant and penetrating analysis is that it could bounce from here, or continue to go down another 1/8 or so before finding a footing. 🤔
Got youses attention, did I?
Does seem like we are IN THE BEGINNING of the unfolding of the catastrophic scenario that I have been forecasting to begin once the 10 year vaulted past 1%.
But for today, the 5 day cycle projection is only 3912, hardly a catastrophe. Even if that breaks there's trend support at 3908 and every 5-10 points or so down into the 3860s. If we're going down today, it should be bouncy. However, below 3867, the bottom starts to drop out.
If support holds, look for resistance around 3930-34. 3934 would be the neckline of a reverse head and shoulders pattern. If they managed to clear that, that would start another mini short squeeze, probably good enough to get the ES back to 3950 for starters.
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Bulletin! Treasury Paying Down $55 BILLION RIGHT NOW to AVERT CATASTROPHE!
Bear With Me, Here’s Why I Gotta Stay Long
Primary Dealers are Already Dead
1 - LIQUIDITY TRADER FEBRUARY 11, 2021
Primary Dealers are Dead – Part 2 – Springtime Coming for Hibernating Bears
1 - LIQUIDITY TRADER FEBRUARY 13, 2021
FREE REPORT – Proof of How QE Works – Fed to Primary Dealers, to Markets, To Money