I don't have the answer but the question has been driving me crazy so I might as well get it out in the open. I simply no longer believe the economic numbers we have been receiving, especially those from the Bureau of Labor Statistics. In a nut shell, I think they're cooked.
Let's approach this with a little deductive reasoning.
Today was a stinker from the standpoint of confidence. Remember when the 10 year stood at 2.27% just a few short months ago. It fell to 1.72% today. Not surprisingly, the dollar fell to a two year low against the Yen which if one was just watching the yield on dollar one would expect. But the Yen fell deeper in negative yield territory as well. Huh? A flight to quality in Japan? On top of that the Bund was at 0.07. The best--a relative term--economy in Europe looking at negative interest rates? Why? On top of that Max tells me that everybody he knows has a net short position in the 10 year futures which is one hell of a reach it seems to me given the liquidity at the money which continues to be zilch. Don't believe that? Well, in March a primary dealer failed to deliver, which happens from time to time, but this time I am told it was in size. Like the biggest fail in years. The bond boys, who have admittedly become more paranoid that their usual paranoidal state over the past year don't like what they are seeing at all.
And then there are the numbers.
We know manufacturing is in the doldrums, but we have been told for some time now that manufacturing doesn't count any more; ours is a retail and service economy. But the fact is in the first three months consumer spending has slowed as have retail sales. Real income has risen but not by much and yet there appears to be a large labor force surge. Anticipatory? I would agree but investment has slowed and profits are nothing to write home about. On top of that corporate tax receipts were apparently down nearly 10% on a year-to-year basis (not sure of that number) all of which speak to why hiring practises should be more circumspect, but nope, on the employment front things seem to be quite rosy...at least in some areas according to the BLS.
Retail on the Diffusion Index (we're in the weeds, here) which is a measurement of the broad economy show the sector at 58.4 which means more companies were in a hiring mode while in manufacturing, the index crashed to 37.3 in March. But where and how and why? Sales were essentially flat, hours worked actually declined, and profitability was flat to sluggish. There were big box closures all over and apparently, nobody--or very-few--got laid off in the oil patch--which is not what I hear from my buds in the West Texas town of El Paso--where the pay from those jobs (high) can affect retail big time. Can it be that up against a considerable amount of negativity people are just taking on more staff like crazy? Sounds to me like Peter Drucker might be on the verge of a come-back. Maybe the place to invest...since there is very little of that going on either...is in a book store.
Everybody works on models these days and the BLS is no exception. The problem of course is the old one: garbage in, garbage out. And there is absolutely no one or no entity that has any interest in exploring just how the BLS models are constructed...yet. Not that the BLS would give it up without on hell of a fight which would take years. We should be in a position in which we can trust those who are employed on our behalf but I am afraid, especially in the past few years that trust has been eroded...and especially since this is an election year. So there, I've said it. I have come to believe that we are deliberately being provided with information that is incorrect and which could directly affect voting patterns in 6 months. Can't prove it but more and more signs are there and this funny thing called The Market is beginning to pick up on this as well. The game's afoot. If you are out there, Sherlock, I could use some help on this one.
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