BLS Manipulates Employment Numbers To Fit Narratives Of Biden Administration And The Fed
The US dollar is falling signalling rate cuts are coming soon, while gold is making higher highs and highers lows with each new high a new all-time high.
From the not surprised department here at Rocks And Stocks news, the BLS announced that they miscalculated the employment numbers by 818,000 jobs. Which means they overstated the numbers by 30%, in an election year, coincidence…right?
Another coincidence is it fits perfectly into the Biden administration's narrative that they are doing a great job at creating jobs. And into the Fed’s narrative that they are doing an equally great job in their dual mandate on price stability and on the employment front. Of course it was just an honest mistake…
The Fed and economic muckety-mucks are meeting in Jackson Hole, Wyoming. I’m sure no reporter will ask Powell how it’s possible folks at the BLS were manipulating the data to fit nicely into the Fed’s narrative.
An equally tough question would be how does this affect their plotting of the dots when the dots were skewed to fit the bill of goods they have been selling.
Instead of being outraged about such a big mistake happening at a crucial time in economics, he will put some kind of spin on it. Something about how their models are so good they can correct for garbage data going in and their interest rate policy is tickety-boo.
Their models are not fine, it is clear that the jobs market is in trouble as it is shedding full-time jobs while increasing part-time jobs. Beyond the headline numbers in the revision, almost half those overstated jobs created were in professional and business services.
The jobs market is ill and that without a doubt means the economy is as well. Trends in the jobs market are the most accurate indicator of the health of the economy.
So, the Fed is willing to throw the economy and workers under the bus because the manipulated dots are not plotting correctly for them as inflation hasn’t reached their desired level. They never really have explained how they came up with their stated goal of 2% inflation. It is just another made up number, why not 2.5% or 3%, tell us the magic that is 2%.
Arbitrary numbers are not needed, because when they finally do see the number they made up, it will be too late. Like always the Fed is consistently behind the curve because they believe they can be precise and get it just right like Goldilocks.
Instead of a bunch of “economists” getting together to schmooze with each other, they should invite some workers to their party in Jackson Hole. Ask them how they feel about losing full-time jobs to take on a couple part-time jobs to make less money. They will say, “it sucks, plug that into your economic models.”
I have no doubts that the Fed will stay behind the curve until it is too late, that is like predicting the sun will rise and set each day. Then they will cut rates and head back toward the Free Money Era, while also driving up their balance sheet.
Take a wild guess when the last time was that the BLS manipulated the numbers this significantly. If you guessed in 2009, just after the 2008 GFC you won the prize.
Back then they were also trying to calm people from panicking. I guess they ran the numbers and thought the real numbers showing the jobs patient is ill wasn’t a good look for an election year. And that they would go against the Fed’s party line. So they decided that smoke and mirrors numbers would be the way to go.
My initial reaction is that they aren’t coming completely clean on how much they cooked the books. Now I’m starting to think Old Smoken Joe Biden didn’t like that we can do this the easy way or hard way message to stop running.
Maybe he thought you wanted me out, then dropped a dime and called up his friends at the BLS and said, “you can put the real numbers out now.” Someone remind me I need to adjust for inflation, the cost of a dime to make a phone call would now be a buck if we still had payphones.
The Fed and politicians can manipulate the stats all they like and pawn off whatever they so wish. They aren’t fooling the workers and the health of the economy is predicated on the jobs numbers and they ain’t bueno.
The currency traders know it, that is why the US dollar (USD) index has been in free fall since the beginning of July. They know the Fed is behind the curve and that they will be starting a rate cutting cycle.
The USD index is not trading like it will be a one and done rate cut or a short series of small ones either. It is trading like there will be several that gets the Fed back on the path to the Free Money Era. They know if they have to do that, it is because the Fed drove the economy into the ditch.
It is already veering off the road as can be seen in the growth in debt. Spending as much as the politicians do to get a weak jobs market is not good. Especially in an election year.
This is not a short-term issue, President Biden and the two presidents before him have nearly doubled the debt that now sits at $35 trillion with over a trillion in debt servicing costs. The next one will take on the challenge to out spend the others.
The dirty little secret that very few politicians on the left and the right want to talk about is the Death Spiral of Debt. Even worse, two candidates certainly don’t want to do anything about it other than to make it grow.
If they did want to work on fixing it, they would first have to admit they helped make it happen. Them and all their cronies took the spending drugs from their dealer the Fed.
The Fed is always behind the curve because they look at where the puck is, not where it is going. They have certainly kicked the workers under the bus and that means the economy is heading for rocky roads.
Which means rate cuts are coming. How much and how long will be governed by how far behind the curve the Fed really is. My guess is they are far enough behind the curve that they will have to go back toward the Free Money Era. For no other reason that the debt situation is so dire.
Currency traders are signalling that the Fed is going into rate slashing mode. Which will drive the USD much lower and as the US is an importer nation that manufacturers little compared to the size of the economy, will get inflation kicking in again. It is a reasonable question to ask how low can they go? If the USD gets smoked, the inflation will jump. I imagine they are going to test that limit.
Every time that the jobs market gets like it is now, a recession follows. How severe it will be remains to be seen. The Fed learned some new tricks after the 2008 GFC, one they could slash rates to give out free money. And lean on their balance sheet when debt buyers start wondering why they should risk their capital and get paid a yield in a plummeting currency.
To some it all up, get gold. Even better, get gold miners because they are making money hand over fist. When the rates get cut, it will drive the USD much lower and gold much higher.
Select gold miners, such as the ones featured in our reports as top picks (Agnico Eagle and Alamos Gold) are setting records in their free cash flow. They are producing gold for less than their peers and increasing production, while also bringing down costs. This makes the best in breed on all the key metrics that matter for gold miners.
The developers are more risky, but some of them are so cheap that they have eliminated a lot of the risk as they haven’t even really joined the gold bull market. Our top three developers are McEwen Mining, i-80 Gold and Alta Copper.
Speaking of who hasn’t joined the gold bull market, silver hasn’t, which tells us that the gold bull market is still only in its earliest days. Silver always lags and then plays catch up with higher percentage gains. The catch up phase hasn’t started yet, which tells us gold has a long way to go to the upside.
The big gold miners have joined the party, but until the middle of February they were still in a long-term bear market. So that is more like the early days of a turnaround stock.
Copper tried to join the gold bull market party by reaching an all-time high earlier this year, but has since given back a lot of the gains. It looks oversold and ready to rally. It probably got spooked thinking that if there is an economic slowdown that copper demand will drop.
This doesn’t take into account that the copper supply chain is very weak and if there is a slowdown the Fed will go into massive stimulation mode and drive the demand much higher. I’m not smart enough to time that perfectly, I will leave that for others.
In the meantime I see a copper mining sector that is relying on old mines, with not enough projects in development and discoveries being in free fall for the past couple decades.
As the copper supply chain is weak and getting weaker, demand is getting stronger and when the Fed stimulates that money will go into companies that need a lot of copper. So much copper that demand will overwhelm supply and drive the price much higher, for a very long time.
Another group of gold stocks that haven’t joined the party are the explorers. Just when more success is needed in a big way to help replace the old mines. The same problem exists for exploration for copper and silver.
Some of the explorers are showing significant relative strength such as my two highest conviction gold explorer picks are Goliath Resources and Borealis Mining.
The bottom line is everything is moving in the right direction for gold to go much higher. I have reported that I see gold reaching $20k within 10 years, with the next milestone being $3k which I expect to see this year or in the first quarter of 2025.
The powerful move in gold will make the free cash flow of gold miners grow rapidly which will catch the attention of generalist investors. When they look down the food chain of gold stocks, they will find a small menu of high-quality developers and explorers.
All the best,
Allan Barry Laboucan
Disclosure
i-80 Gold is a sponsor of Rocks And Stocks News, content creation about them is for the benefit of the company. Sponsors also benefit readers of the reports as it makes content creation possible for no charge to readers. Allan Barry Laboucan is a shareholder of i-80 Gold shares and its tradable warrants. Allan Barry Laboucan is a shareholder of Goliath Resource and owns warrants that are well in the money that give him the ability to increase his position. Borealis Mining is a sponsor of Rocks And Stocks News, content creation about them is for the benefit of the company. Sponsors also benefit readers of the reports as it makes content creation possible for no charge to readers. Allan Barry Laboucan is a shareholder of Borealis Mining shares and a consultant to the company.
Rocks And Stocks News does not make buying or selling recommendations. The reports are for information purposes only. Sponsors pay a fee to Rocks And Stocks News for content creation. The business model of Rocks And Stocks News is to fund research and reporting on the sector, picks and sponsors through corporate sponsorship. We are thankful to sponsors for enabling commentary free of charge to readers and viewers of the reports. When reporting on sponsors it is on behalf of the sponsors discussed in the portion of the report mentioning the sponsor. Before making any investment decision it is important for you to speak with your financial advisors to consider your risk profile. It is also important to do your homework. To help in that process, Rocks And Stocks News means to be a gateway by doing reports and interviews of management of sponsors and picks. The reports and interviews should not be considered investment advice. Allan Barry Laboucan is the founder and owner of Rocks And Stocks News, he has worked in the mining sector since 1993 and has been reporting on the sector since 2005. He has worked with and been mentored by very talented geoscientists in geology, geochemistry and geophysics. He uses the skills he has picked up during his career to assess sponsors and picks in the reports. Whether a company is a pick or a sponsor they go through the same filter and are reported on when important news is made that Allan Barry Laboucan wants to discuss on the Rocks And Stocks News platform. He may own shares in sponsors and picks for investment purposes which he discloses when discussing them in the reports.
