April Fools

Another month begins, with an employment report to boot. The first day of the month is generally up, because Wall Street knows that most employer savings plans – 401Ks and so forth – credit people’s accounts at the beginning of the month which funds then get invested in mutual funds at the close. To Wall Street this only means one thing – put the prices up so the foolish saver who is not paying attention pays as high a price as possible.

The employment report is so far out of joint with reality that it has become a joke. The strong report is led by hiring by retailers. Despite a lackluster holiday sales season and massive big box store closures, despite major companies like Home Depot reporting flat hiring plans, the BLS model reports 181K payrolls added in 1Q 2016. This is the best first quarter ever, better than the entire annual retail employment growth for 2014; over 2/3s the growth for all of 2015. Weak sales and fewer stores, but best hiring ever? Really? One would think that they would choose something more plausible. Or just maybe, this is a message in a fortune cookie – we’re stuck in a BLS office, these numbers are fixed but we’ve been directed to do it and we need our jobs, so we’re sending out something ludicrous in the hope that the reader will figure it out. The administration does think we are fools.

Interesting to note that despite the excitement in stocks energy can’t catch a bid. Looks to me that the march down to the sub-20s is well underway and likely to accelerate at some point. Treasuries are strong and resilient, despite repeated attempts to push them down. I think there are very large Treasury short positions out there, and a defense is to be expected, but the ultimate capitulation will be fun to watch.

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