Tax collections for March, and the month ended April 4, were so weak that they indicate that the US economy is now in recession. Non-subscribers, click here for access.
If the BLS were tied to reality, that would mean a very bad Nonfarm Payrolls report coming up Friday. Yes, the report is scheduled for the first Friday as usual, even though the markets are closed. Non-subscribers, click here for access.
The bottom line is that the report should be a shocker, which I explain below. And that will be xxxxxxxx for bonds, and xxxxxxx for stocks. Non-subscribers, click here for access.
However, the usual seasonal tax bulge in April funds Treasury paydowns which stuff cash back into the pockets of dealers and investors. That could temporarily xxxxxx xxxxxxxx xxxxxxxx xxx effects of a weak jobs report on stocks. Non-subscribers, click here for access.
The consensus median forecast of the priesthood of Economism is for a gain of 238,000 jobs in March. If reality mattered, which it does not in the initial release, then the number would be negative. That won’t happen, but if the weakness in tax collections persists this month, then the BLS will be forced to catch up in the months ahead. Non-subscribers, click here for access.
We’ve seen that they can do that in one of two ways. They can revise previous months, or they can use their screwed up X13 Arima moving average to adjust the current month. X-13 ARIMA is like a paint brush that uses 5 years of imaginary future data to paint a picture of current reality. The BLS uses that to apply often absurd assumptions to adjust the current month to refit what happened in the past. It’s why the BLS Nonfarm Payrolls report is something more akin to impressionistic art than actual economic data. Non-subscribers, click here for access.
Eventually, they do fit the curve to what actually happened, but the process includes two monthly revisions and a once a year benchmark to real data. So it usually takes a year to adjust the current month to reality. Then there are additional annual benchmark tweaks for 4 years after that to account for the imaginary X13 ARIMA smoothing data that was initially applied. So the chart lines you see for nonfarm payrolls from traditional sources are actually fit to reality AFTER THE FACT. Non-subscribers, click here for access.
Withholding tax data has no such shortcomings. It’s real. It’s real time. And it is raw, unadjusted fact. We just smooth it so that we can make meaningful comparisons year to year and month to month. The easiest way to interpret it is to simply put it on a chart and look at it with our own two eyes. We don’t need no damn fool Wall Street egonomists to tell us what it means. We can see it for ourselves. And the chart is ugly (subscriber report). Non-subscribers, click here for access.
Again about the jobs report, I’ve observed that the new BLS reports tend to correlate more with the withholding data from two months before, not the previous month. That stands to reason because the BLS surveys employers on the 12th of the month. So the report for March is based on an employer survey as of March 12. That would mostly tend to represent February payrolls, not March. And therefore it would correlate more with February’s tax data. Non-subscribers, click here for access.
February’s withholding tax collections were way below January’s collections on a year to year change basis. And March was even worse, in fact, negative. So there should be a couple of shockingly bad jobs reports ahead. xxxxxxx for the bond market, and therefore for the idea of a potentially xxxxxxxxxxxxxxxx banking crisis. The scarier it gets, the more the market turns toward buying bonds, pushing yields down and prices up. xxxx xxxxxxxxx xxxxxx xxxxxxxxxx xxxxxxxxx xxxxxxxx problem of massive hidden losses on bank balance sheets. Non-subscribers, click here for access.
In that regard, weak jobs numbers would be just what the doctor ordered in the current environment. For bulls or bears? Find out in this report. Non-subscribers, click here for access.
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