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Chad Humphrey
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Military Operations in Financial Markets. In the summer of 2010 using military & mathematic strategies described, Chad created a algorithmic strategy for an investment advisory firm in Denver. In late September the algorithmic strategy was employed across the advisory firms portfolio in the fall... More
My company:
Strategic Options, LLC
My blog:
Strategic Options Insight
  • The Jobs Number Is Bogus And Bernanke Knows It.  0 comments
    Feb 9, 2012 1:03 AM | about stocks: SPY, SH, DIA
    jobs number liars BLS stock markets

    "If you tell a lie that's big enough, and you tell it often enough, people will believe you are telling the truth, even when what you are saying is total crap." ~ concept accredited to Joseph Goebbels

    Anyway you look at the jobs number, you have to realize it is easily the most manipulated number in all of government financial reporting. If you think the current party in political power is the first one to do so then I think you should cast your vote for the following candidate. The real question should be why are so many people contesting people and defending the number?

    1. Cramer on Jobs Data: That's Why Stocks Have Rallied

    2. Santelli: Here's What's Wrong With the Jobs Number

    3. The Gigantic Conspiracy To Inflate Jobs Numbers In America via Business Insider

    4. TrimTabs Explains Why Today's "Very, Very Suspicious" NFP Number Is Really Down 2.9 Million In Past 2 Months via Zerohedge

    Cramer is the CNBC cheerleader, Santelli is the antagonist, and Business Insider is usually lots of pictures & graphs and generally leans left. The Business Insider provides a good argument as well. However TrimTabs uses real time data based on tax income receipts. Simple numbers. The trimtabs piece is the one I believe is the most analytical. (aside from the brief mention of politics) You either have a job or you don't. I can understand the concept of a birth death model in the jobs report, but as he says in the video no one understands the seasonally adjusted model. You have a job in one season and not in the next?

    So if someone can explain the seasonally adjusted component of the BLS, please tell me or Trimtabs. Or you can keep it to yourself and make millions. The other key issue as stated in the video, most financial reporters don't actually read the report, they just report the number. And for someone who has written millions of lines of code, I can tell you it's not hard anymore to write a program that evaluates the number and starts buying or selling based on the number long before you have a chance to refresh your web browser. Code doesn't need details it just looks for the number and then the market are off to the races...

    So how do I know the number is manipulated? Well the Federal Reserve has dual mandate. The first is max employment and the second is price stability. (The unspoken third mandate, is to maintain confidence in the stock market.) So if the employment number continus to decrease and yet the Federal Reserves interest rate policy remains at zero, then the Fed is clearly indicating it doesn't believe the jobs number and continues to hold interest rates low to stimulate the economy.

    Only when we start to see an increase in the interest rate will we know that the Federal Reserve actually believes the economy is getting better and there is actual sustainable job growth. But seeing as how the Federal Reserve has projected a zero interest rate policy until 2014, I think we know the answer. If the jobs number continues to decrease, look for interest rates to increase soon rather than later and say goodbye to Quantitative easing part 3 or 4 or 5. If the jobs number continues to decrease and the interest rate stays at zero, then start buying guns and gold because inflation or a revolution is pending.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Stocks: SPY, SH, DIA
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