The tax data told us that jobs grew strongly in October. Whether the BLS number shows that or not is a crapshoot. It often takes them a few months to catch up with reality as first they massage, then the revise and revise, and revise again. Eventually, they fit their numbers to the curve of what actually happened but in the first month, we never know.
The first month is just the BLS’s impression based on a tiny sample of businesses surveyed as of the 12th of the month. Then they adjust for seasonality using a method that is similar to a 13 year moving average, except that only the last 6 years are used. The future years are assumed, based on their future data, data to which only they have access, but nobody else knows. And then of course, there’s the birth/death adjustment based on a wild guess of how many new businesses were formed and how many expired.
It’s all nonsense. So the next two months the BLS adjusts the past data to fit known unemployment compensation and tax collection data. Then once a year they do what’s called benchmarking, which is just another huge revision for all months of the previous year, again, based on known real data, such as taxes and unemployment data.
The question is, why don’t they just report the withholding tax data? That’s real. It’s real time. And it covers everybody. I can do it, and I do do it, and I have only a 6th grade edumacation from Temple University, a subway school in North Philly that will admit anybody who doesn’t mind getting mugged or shot at, or having their 65 Chevy stolen when you leave your keys in it once in a while. And 54 years ago when I signed up for that gig, they were even less selective than they are now.
But I’ll say this, you learn reality from the streets, not the hallowed halls and ivory towers of Ivy League academia. Academic economism, on which all these government surveys are based, is crap.
As I wrote earlier this week in Liquidity Trader:
If the BLS data accurately shows that, and again, that’s a coin flip, then the markets are in for an ugly surprise, as the Fed would have no excuse to pivot, pause, stepdown, or do whatever buzzword that Wall Street wants to sell you today. Non-subscribers, click here for access.
Judging from the Pope Load Jaysus’s incantations under way at this moment, the Fedican doesn’t know what it wants to sell you. The encyclical said one thing, and Jaysus is now speaking in tongues about it. It’s all word salad, and meaningless. Because it’s the money that moves market trends, not the talk.
On the other hand, if the BLS number does not reflect this month’s reality and comes in weak, as expected, then the ensuing economic data will continue to come in stronger than expected and the market will face its Come to Jaysus moment in the days ahead.
On the bullish side, strong tax collections mean … Non-subscribers, click here for access.
Of course, hope springs eternal in the hearts of Wall Street bulls and their sheep herds, so this morning in the premarket we see the inception of a 5 day cycle up phase in the 24 hour ES, S&P fugutures. At 8 AM ET, 30 minutes before the BLS show, the futures are hitting trend resistance at 3758, a perfect setup for a nasty surprise if the jobs data come in higher than expected. Which they should, but possibly won’t. For now, traders want to push higher today. If they get through 3758, they will, and if they don’t they won’t. More later, so stay tuned.
If the BLS data accurately shows that, and again, that’s a coin flip, then the markets are in for an ugly surprise, as the Fed would have no excuse to pivot, pause, stepdown, or do whatever buzzword that Wall Street wants to sell you today. Non-subscribers, click here for access.
Judging from the Pope Load Jaysus’s incantations under way at this moment, the Fedican doesn’t know what it wants to sell you. The encyclical said one thing, and Jaysus is now speaking in tongues about it. It’s all word salad, and meaningless. Because it’s the money that moves market trends, not the talk.
On the other hand, if the BLS number does not reflect this month’s reality and comes in weak, as expected, then the ensuing economic data will continue to come in stronger than expected and the market will face its Come to Jaysus moment in the days ahead.
Big picture stuff below.
- Bad News for the Markets – Not Just Withholding Boomed in October November 3, 2022
- Surge in Withholding Tax Collections in October Indicates Faster Jobs Growth November 2, 2022
- Signs of an Intermediate Bottom in Gold Falter November 2, 2022
- Swing Trade Screens – Adding a Few Buys While Meat Grinder Chews Up Shorts November 1, 2022
- Bear Market Isn’t the Mirror of a Bull October 31, 2022
- Why You Should Stay Skeptical of Bullish Technical Signs October 30, 2022
- Swing Trade Screens – Operation Extrication October 24, 2022
- Signs of an Intermediate Bottom in Gold October 22, 2022
- Bears Beware, Treasury Buybacks Will Turn the Markets, Sooner Not Later October 21, 2022
- We Can Now Project When Fed Will Pause, But Not Reverse October 13, 2022
- Look Out For the Real Fallout of Declining Withholding Tax Collections – Part 2 October 6, 2022
- Look Out For the Real Fallout of Declining Withholding Tax Collections October 5, 2022
- Markets Face Catastrophe as Dealers Mitigate Too Little Too Late September 26, 2022
- Fed Speeds Into Dead Man’s Curve, More Black Tuesdays Ahead September 15, 2022
- There Will Be More Black Tuesdays September 14, 2022
If you’re serious about the underlying forces of supply and demand that drive the markets, join me!
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