Whack-A-Mole: Gold & Silver Pop, Drop, Pop, Drop, Pop, And Drop Again After Sep 2018 Jobs Report

Looks like a game of whack-a-mole so far. Here’s an update on the BLS Jobs Report, gold, silver, the dollar, and something crazy with the VIX…

Before the release of the September, 2018 jobs report, here were the consensus estimates:

The entirety of the Econoday consensus range was below 200,000 jobs.

The actual number of jobs created as we’re told by the government comes in at 134,000. Additionally, unemployment came in at 3.7%, labor force participation rate came in unchanged at 62.7%, and hourly earnings came in at .3% gain month over month and a 2.8% gain year over year.

Overall, this report is considered a big miss, but not to worry – there is a a scapegoat and her name is Flo.

Regardless, the actual number of jobs created in this report basically has no bearing on the next Fed interest rate “hike”. President Trump constantly reminds us that we have the greatest economy, ever, and he was quick to boast about the ADP payroll print from Wednesday:

Furthermore, Jerome Powell is also uber-bullish on the US economy.

So with a scapegoat totally acceptable in most people’s eyes, this will end up being no big deal for the US economy.

I mean, President Trump is totally stoked about such a tight labor market anyway after this report.

But don’t take Ol’ Half Dollar’s word for it, see for yourself:

It will be interesting to see who wins the blame game (Fed or President trump) when the economy enters (the long overdue) recession at best, or total economic collapse at worst, but that is beside the point.

The point is the Fed is still hiking interest rates in December.

Gold & silver started coming under some pressure from about 8:15 a.m. EST.

As soon as the release “hit the tape” as traders say, here are gold & silver’s initial, knee jerk reactions:

It is easy to see why gold and silver were pressured pre-report. Had gold not been pressured, for example, the yellow metal would have clearly been above $1215 and solidly above the 50-day moving average, an average which the cartel has fiercely defended all week long.

That is just the first minute or two after the report. Remember that the knee-jerk in many cases is not the actual direction of the move. It takes about 30 minutes to an hour to see the actual direction of the move, and with data that comes out a full hour before the markets even officially open, it can take more than one hour for something like this report.

Back to the September job creation, from Bloomberg (bold added for emphasis):

U.S. hiring cooled in September by more than forecast, wage gains eased slightly and the jobless rate fell to a 48-year low, illustrating a tight labor market as well as the impact of Hurricane Florence.

Nonfarm payrolls rose 134,000 after a 270,000 gain the prior month that reflected a large upward revision, a Labor Department report showed Friday. The median estimate in a Bloomberg survey called for an increase of 185,000 jobs. Average hourly earnings climbed 2.8 percent from a year earlier, matching projections, while the jobless rate fell more than projected to 3.7 percent, the lowest since 1969.

While Florence probably affected the figures during the month, hiring may settle into a more sustainable pace after a strong run that has pushed the economy closer to full employment and reinforced expectations for a fourth interest-rate hike by the Federal Reserve this year. President Donald Trump’s tax cuts are boosting employment, yet growth in worker pay remains relatively tepid at a time inflation is rising and the trade war with China poses risks.

 “You really can’t put any stock at all in a weak payroll number that comes after a major storm in the survey week,” Thomas Simons, an economist at Jefferies LLC, said before the report. “There will be displacements, and distortions. I’d expect a solid rebound in the next month,” as other data indicate “it’s a very strong labor market.”

Hurricane Florence affected parts of the East Coast during the September reference periods for the surveys for payrolls and the national unemployment rate, the Labor Department said in a special note Friday. Data-collection rates were within normal ranges for both surveys.

First bold: Wage gains eased in the face of a “tight labor market”? That doesn’t make sense so that’s what we call some good old MSM propaganda. Let’s see what else we can find.

Second bold: Yeah, work that upward revision BLS! Way to go! Can’t have the best economy ever and only add 134,000 jobs, so let’s crank up the prior month by 60,000 in an upward revision and they smooth out to “everything is awesome”!

Third Bold: Blame it on the rain! Who sang that song? Hmmm. Some artist who was known as somebody. Ah, at any rate, the hurricane blame game has come to the September jobs report, yet the unemployment rate falls. So low job creation? Too easy: It’s all because of the hurricane. Unemployment falls? Uh, just ignore the hurricane, ok?

Fourth bold: MSM propaganda strikes again. Tax Cuts boosting employment? Seems there is much more news about the trade wars hurting jobs than the tax cuts boosting them. Furthermore, as 2018 sets a record-setting year for company stock buybacks, seems pretty simple to see where all the tax cut benefits have gone.

Fifth bold: Bring in a spin artist to put the bullish spin on a bad report!

Sixth bold: That special note is not for you or me, it is for the black box HFT algos that parse the words out of news reports and data releases, as released on expensive and fancy proprietary trading “tools” such as Bloomberg Terminal. Let’s call it what it is – a money making couple of sentences for the big banks and major prop trading firms specializing in robo-trading.

Here’s a look at some of the data in graphical form.

First, the headline number of jobs created compared to previous reports:

Payrolls miss expectations due to a hurricane in North Carolina.

Next we have the unemployment rate:

You have to go back to 1969 according to President Trump to get an unemployment rate this low.

Here’s the year over year average hourly earnings:

That is .1% higher than the headline inflation the government told us we saw in August, but also .1% lower than the headline inflation from July. Regardless, taking margin of errors into account, wages are either barely keeping up with inflation, or not keeping up with inflation at all. We know the margin of error can’t favor wages that are outpacing inflation because at his press conference on September 26, Fed Head Powell said that CPI understates inflation. Of course, we don’t need some shill in his ivory tower pushing his funny money and telling us whether inflation is understated or not.

But I digress.

Thirty minutes in we see the direction of the moves coming into focus:

Gold & silver are looking like they want to rally here, and the dollar is not lovin’ it.

Check out this flash crash in The Farce:

Whoops. Markets about to open, and it looks like the cartel has taken to their desks:

Let’s see if gold & silver can manage a close above the all-important 50-day moving average today. And since it is the end of the week, and China comes back next week, that would be very bullish.

Regardless, things could get very interesting today.

And the “market” still isn’t even officially open.

Stack accordingly…

– Half Dollar


 

About the Author

U.S. Army Iraq War Combat Veteran Paul “Half Dollar” Eberhart has an AS in Information Systems and Security from Western Technical College and a BA in Spanish from The University of North Carolina at Chapel Hill. Paul dived into gold & silver in 2009 as a natural progression from the prepper community. He is self-studied in the field of economics, an active amateur trader, and a Silver Bug at heart.

Paul’s free book Gold & Silver 2.0: Tales from the Crypto can be found in the usual places like Amazon, Apple iBooks & Google Play, or online at PaulEberhart.com. Paul’s Twitter is @Paul_Eberhart.

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