Can’t debate, so they changed the job
numbers.”
Jack Welch, former General Electric CEO
Jack
Welch’s Intuition – that the Official Numbers from the Bureau of Labor
Statistics are Bogus -- is correct (as we demonstrate below). The Real U.S.
Unemployment Rate is 22.8% per shadowstats.com.
But
of equal importance is Welch’s focus on the importance of having
reliable numbers as the basis for making sound Business Decisions (and
Investment Decisions, we add) in order to protect Wealth and Profit.
So
we lay out here certain critically important Numbers, and indicate resultant
Profit Potential.
Consider,
for example, Key Numbers which will help determine the future Gold Price (and
notwithstanding the Idle comments of Fossils who consider Gold to be an
Archaic Relic).
In
the first two months of Last Year, Chinese Gold Imports from Hong Kong were
about 11,000 kilograms. This year, for the same period Imports were 72,000
kilograms for the same period, about a 650% Increase.
Yet
China is now the largest Gold producer on the Earth. Conclusion: China is
Hoarding Gold. And several Central Banks are increasing their Gold Holdings
as well.
Key
Profit Nuggets: Despite the foregoing, Gold Stocks are in the
aggregate are trading at levels similar to when Gold was under $1000/oz.
Conclusion: Gold Shares are going higher and the only question is
“when”, a question to which we respond in our Alerts.
Intensifying
our focus on Jobs Numbers, they are Critically Important to Investors because
they are a Reflection of Economic Health (and thus the Tenure of Politicians)
and thus the “Earnings Climate” for Corporations.
Consider:
“The August-to-September change in the headline
unemployment rate almost certainly was not a 0.3% decline. The Bureau of
Labor Statistics (BLS) knows the reported change in unemployment was
wrong—other than by extreme coincidence—and it knows what
consistent reporting actually showed. Only politics prevents the BLS from
releasing the correct number, whether the unemployment rate actually
declined, held even, or rose as predicted by consensus forecasters. The lack
of transparency here in the data preparation allows for direct political
manipulation.
“The problem is that the BLS knowingly has
been preparing the seasonally-adjusted headline unemployment numbers on an
inconsistent and non-comparable basis for some time. The September number was
prepared using a different set of seasonal factors than was used in coming up
with the August number.”
“No. 473: September Employment and
Unemployment, August Construction Spending, PCEDeflator”
John Williams, shadowstats.com, 10/5/12
Thus,
we reiterate, the US Jobs Numbers for September released in early October
were Bogus. Real Unemployment is 22.8%.
Moreover,
contrary to the False Claim of Secretary of Labor, Hilda Solis, that the
upward revisions of jobs were from the Private Sector, they were actually
from upward revisions to State and Federal Government Payroll. Private Sector
job Growth actually decreased by 5000, Joel B. Pollak - Breitbart.
The
broader official U6 rate, i.e., the part-time and discouraged workers
Unemployment Rate, actually stayed unchanged at 14.7%.
Significantly,
if the labor force participation rate were
the same as when President Obama took office, the Official Unemployment Rate
would be 10.7% and the Real Rate higher than 22.8%. Moreover, we are still on
pace to create fewer jobs than last year according to a report by
James Pethokoukis, American Enterprise Inst.
And
consider another critically Important number -- the Money Supply Growth and
consequent Hyperinflation Potential.
John
Williams:
“…the
preliminary estimate of annual growth for the September 2012 SGS Ongoing-M3 Estimate…
is on track to hit 3.3%, up from a revised 3.2% (previously 3.1%) in
August… the upturn in annual broad money growth that began in February
2011, had faltered, leveled out and now is notching higher again. Such a
pattern—in an environment of massive Federal Reserve
accommodation—still remains suggestive of an intensifying
systemic-solvency crisis.”
Id.
Yes,
indeed. And, following up on that same point, consider the Inflationary
Implications of the Fact that a chart of True Money Supply plus Excess Bank
Reserves parked at The Fed is Now going Hyperbolic, indeed, virtually
straight Up in recent months.
“On
October 6, GoldMoney posted my podcast with Robert Wenzel of
EconomicPolicyJournal.com. In that podcast, Wenzel expressed concern about
the future inflationary implications of the build-up of excess reserves on
the Federal Reserve’s balance sheet. Excess reserves represent balance
sheet cash parked at the Federal Reserve Board by commercial banks.
“Being
the banks’ own money, they can gear up their balance sheets on it
whenever they choose to do so. However, putting aside the gearing potential
of excess reserves, we should at least treat it as cash, despite it being
regarded as out of public circulation. There is therefore a strong case for
it to be included in the True, or Austrian Money Supply quantity.
“TMS
is basically cash plus instantly encashable accounts. The chart below is of
TMS plus excess deposits at the Fed from 1960 to the present day.
“Worryingly
it conforms to a hyperbolic curve, which is already going vertical in the
fashion of a hockey-stick. Where this measure of money has deviated from the
hyperbola it has done so by increasing faster than the hyperbola
itself…
“We
can be sure the Fed doesn’t want to look at things this way; but now
that the increase in TMS plus excess reserves is beginning to lag behind the
curve, it indicates that monetary policy is failing…
“Confirmation
of this alarming discovery is to be found in the chart below, which is of
gold from 1900 onwards, and has its own hyperbola…
“…
together they represent confirmation of the ultimate collapse of paper
money.”
“Accelerating money supply and gold prices”
goldmoney.com, 10/8/12
True Money Supply compared to the Price of Gold.
Therefore,
it is not surprising that Real U.S. Inflation is 9.33% -- Threshold
Hyperinflationary.
From
all the foregoing, John Williams correctly concludes:
“…while
general circumstances have continued to advance towards the ultimate demise
of the dollar, the general outlook is unchanged. While QE3 is an enabling
action for the onset of massive inflation, the outside timing of 2014 for the
ShadowStats.com hyperinflation forecast remains in place…
The
official recovery simply is a statistical illusion created by the
government’s use of understated inflation in deflating the GDP, which
overstates deflated economic growth…
The
long-term fiscal solvency issues of the United States—where GAAP-based
accounting shows annual deficits running in the $5 trillion range—are
not being addressed…
Neither
economic nor systemic-solvency issues have been resolved by U.S. government
or Federal Reserve actions, and the most recent readings on income variance
suggest that the worst is yet to be seen…
With
the economy weak enough to provide political cover for further Federal
Reserve accommodation to the still-struggling banking system, QE3 was
introduced on September 13th. That action effectively provided for open-ended
monetization of U.S. Treasury debt at the Fed’s discretion. The
mechanism for eventual full debasement of the dollar now is in place, and it
likely will come into full play, as needed to support the banking system and
as needed to assure “successful” auctions of Treasury debt.
QE3
likely will lead to a massive dollar-selling crisis, and that will begin the
process of a rapid upturn in domestic consumer inflation. A near-term
dollar-selling crisis is now of a much greater risk, post-QE3. Separately,
though, a dollar-selling crisis could begin at any time…”
“No. 473: September Employment and
Unemployment, August Construction Spending, PCEDeflator”
John Williams, shadowstats.com, 10/5/12
Profit
Nugget: Only the Monetary Metals, Gold and Silver, and certain essential
Tangible Assets such as Energy and Food will serve as Profit Centers and
Stores of value as the Inflation Acceleration proceeds. Deepcaster has made
specific Recommendations aimed at Protection and Profit from these in recent
Letters and Alerts referenced in the Notes below.
And
since Real Jobs Growth or lack thereof is a reflection of Economic Health,
consider Williams’ conclusion:
“The
BLS reported today (October 5th) a statistically-insignificant, seasonally-adjusted
September 2012 month-to-month payroll employment gain of 114,000…
http://www.shadowstats.com/imgs/2012/792/image016.gif?vcode=a80094806113945b
“Despite
the ongoing and regular overstatement of monthly payroll employment—as
evidenced usually by regular and massive, annual downward benchmark revisions
(2011 and the just-announced 2012, excepted)—the BLS generally adds in
upside monthly biases to the payroll employment numbers. The process was
created simply by adding in a monthly “bias factor,” so as to
prevent the otherwise potential political embarrassment of the BLS
understating monthly jobs growth… That process eventually was recast as
the now infamous Birth-Death Model (BDM), which purportedly models the
effects of new business creation versus existing business bankruptcies.
“…At
present that is a monthly average of roughly 47,000 jobs created out of thin
air… as part of the BDM…
“The
aggregated upside annual reporting bias in the BDM reflects an ongoing
assumption of a net positive jobs creation by new companies versus…
“The
broadest unemployment rate published by the BLS, U.6 includes accounting for
those marginally attached to the labor force (including short-term
discouraged workers) and those who are employed part-time for economic
reasons (they cannot find a full-time job). The September U.6 unemployment rate
held at a seasonally-adjusted 14.7%...
“In
1994, during the Clinton Administration, “discouraged
workers”—those who had given up looking for a job because there
were no jobs to be had—were redefined so as to be counted only if they
had been “discouraged” for less than a year. This time
qualification defined away the long-term discouraged workers. The remaining
short-term discouraged workers (less than one year) are included in U.6.
“Adding
the SGS estimate of excluded long-term discouraged workers back into the
total unemployed and labor force, unemployment—more in line with common
experience as estimated by the SGS-Alternate Unemployment Measure—held
at 22.8% in September, the same as in August…”
Id.
Profit
Nugget: When considering the Prospects for any Investment or Trade, it is
essential to consider The Real Numbers which reflect the Actual and
Prospective Economic and Financial Context in which the Investment or Trade
is Made.
Conclusion:
regarding the effect of the foregoing Real Numbers, Marc Faber recently
agreed with Deepcaster’s earlier forecast that there would be a
“Great Equities Crash in 2013.”
“‘Basically,
I think QE3, which I think is unlimited, and bond purchases by the ECB bailout
of countries have been largely discounted by the market, and the markets have
been weakening technically, so I believe that we hamy have here quite a
serious setback,’ he said….
“’I
justwant to have a lot of cash because I think that within the next six to
nine months, we can buy just about anything 20 percent lower than it is
now.’…
“’…if
I look at the presidential candidates today, if Obama is elected, I think the
Dow Jones should be negative -13,473, and if Romney gets elected, it should
be minus ‘6,000.’”
“Marc Faber: Market Setting Up for ‘Serious
Setback”,
Bruno J Navarrro, CNBC, finance.yahoo.com, 10/10/12
Profit
Nugget: Be Prepared to short Most Equities at the right time in the next few
months.
Best
regards,
Deepcaster
October
11, 2012
Note 1: The
$US dropped nearly 200 basis points at one point in the last two weeks. No
surprise since the Fed’s U.S. Dollar-Destructive Q.E. to Infinity
Action, coupled with the ECB’s Similar Action the week before, boosted
the Euro vis-à-vis the Dollar, as we earlier Forecast. The very recent
$US bounce does not change its weakening Trend.
This
Debauchery of the $US weakens its Purchasing Power and thus increases Burdens
on the agonized disappearing Middle Class.
The Bernanke
claim that buying $40 billion per month in Mortgage Backed Securities would
Stimulate the Economy and help the Housing Market is just a Fictitious Cover
Story. In fact, it is just another Gift to the Mega-Banks who hold Underwater
Paper, and to Wall Street which proceeded to rally on The Fed-sugared High.
Both the
Continuous Commodities Index which show Average Annual Price Inflation of 15%
and the Real Inflation Number (9.3% per year from shadowstats.com) reveal
Serious Inflation is with us and it Intensifying.
And
Especially Food Price Inflation.
To increase
Yields, Farmers increasingly employ Fertilizer.
And last
week’s Buy Reco – a Fertilizer Producer – was trading near
its 52 week low at under 40¢ per share when we first recommended it. It
has moved up nicely since we recommended you buy in. But it has such great
potential that we raise our original “buy under” price to
45¢ per share.
To see our
recent Buy Reco aimed at Profiting from the Fed’s Inflation Rocket,
read Deepcaster’s recent Alert, “Buy Reco (under 40¢/share)
to Ride Inflation Rocket; Forecasts: U.S. Dollar/Euro, U.S. T-Notes, T-
Bonds, & Interest Rates, Gold, Silver, Crude Oil, & Equities,”
recently posted in ‘Alerts Cache’, on deepcaster.com.
Note 2:
“Debauch – to dissipate; to corrupt morally; to lead away from
excellence or virtue; to reduce the value, quality, or excellence
of…”
The
Fed’s U.S. Dollar-Destructive Q.E. to Infinity Action, coupled with the
ECB’s Similar Action the week before, boosted the Euro vis-à-vis
the Dollar, as we earlier Forecast.
But both
Actions Guaranteed Accelerating Price Inflation and thus Deepcaster
recommends a Buy Reco (trading around a mere $2.50 per share) to ride that
Inflation Rocket.
This
Debauchery of the $US weakens its Purchasing Power and thus increases Burdens
on the agonized disappearing Middle Class.
The Bernanke
claim that buying $40 billion per month in Mortgage Backed Securities would
Stimulate the Economy and help the Housing Market is just a Fictitious Cover
Story. In fact, it is just another Gift to the Mega-Banks who hold Underwater
Paper, and to Wall Street which proceeded to rally on a Fed-sugared High.
And, of course, it is a pre-election Gift to President Obama.
Important
Consequences will ensue.
To see the
Great Profit Potential flowing from this QE and our recent Buy Reco aimed at
Profiting from it, read Deepcaster’s recent Alert, “Surmounting
Debauchery with Profit; Buy Reco to ride Inflation Rocket; Forecasts: U.S.
Dollar/Euro, U.S. T-Notes, T- Bonds, & Interest Rates; Gold, Silver,
Crude Oil; Equities,” recently in ‘Alerts Cache’ at www.deepcaster.com.
DEEPCASTER LLC
www.deepcaster.com
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