Good News Is Bad News — Again

Why the Market Tanked Today [The Daily Reckoning] October 07, 2022 [WEBSITE]( | [UNSUBSCRIBE]( Good News Is Bad News — Again - September’s unemployment numbers surprise to the upside… - Good news for Main Street is bad news for Wall Street… - The evils of government statistics… [New Message From Jim Rickards]( [This Simple Chart]( [Please take a moment and go here now to see my new clip.]( It’s short. Only about 2 minutes or so. But it’s about a fast-moving situation that could hand investors the chance to double-their-money in a week – even during this market selloff. [The proof will SHOCK you]( But you need to see this new clip now, before it gets pulled down Wednesday at midnight [So please, go here now to watch this urgent 2-minute clip.]( [LEARN MORE]( Annapolis, Maryland October 7, 2022 [Brian Maher] BRIAN MAHER Dear Reader, Our old friend “good news is bad news” pays a fresh visit… The September unemployment data came issuing this morning. A Bloomberg survey of economists had divined 255,000 nonfarm payrolls. What was the actual figure? 263,000. Not bull’s-eye, yet close enough for government work… as the phrase runs. The unemployment rate — meantime — declined to 3.5%. The same Bloomberg survey of economists had forecast a 3.7% September rate. We set little store by official unemployment data or the government number-assassins who produce them. We would sooner accept the word of quick-change artists, bunco men, crystal gazers, salesmen of pre-owned automobiles and congressmen of the United States. Statistical Noise The unemployment rate is but a statistic. And statistics are the damndest of all damnable lies. They are approximations — at best. As our former colleague David Stockman styles it: The reports are so massaged, estimated, deemed, revised, re-bench marked and seasonally adjusted that any month-to-month change has a decent chance of being noise. The noise deafens. Our own Charles Hugh Smith likewise covers his ears against the mighty din: As always in the wonderful world of statistics, especially politically potent ones, it depends on what you measure… Everyone who digs beneath the headline numbers of employment/unemployment soon discovers a number of jarring anomalies in what the media present as “factual statistics.” Jarring Anomalies To what “jarring anomalies” does Charles refer? The first is that the Bureau of Labor Statistics (BLS) doesn’t actually count the number of people who are employed/unemployed; they rely on a sampling survey of employers, which is more like an election poll than an actual measurement. Secondly, they estimate the number of new businesses which are “born” and existing businesses that “die,” and then guesstimate the number of additional employees this real-time churn generates. This birth/death model is notoriously inaccurate, as it ignores little things like pandemics and is often magically revised to create or eliminate hundreds of thousands of presumed jobs. [Urgent Note From Jim Rickards: “You’re Running Out Of Time!”]( [Your exclusive “Pro level” upgrade to Strategic Intelligence is ready to be claimed.]( This is your chance to claim 3 exciting new benefits along with a whole new level of service. Hurry… you only have until the timer hits 0 to act. [Click here to learn more]( After the timer runs out, you’ll forfeit your chance to upgrade… and you may miss out. Please don’t waste any time. Just click below to see how to confirm your upgrade: [>> YES, I’d like to claim my upgrade.]( [LEARN MORE]( Yet let us assume the Bureau of Labor Statistics’ data-manglers have… against all evidence and by some miracle of God… turned up accurate figures. New payrolls have in fact exceeded consensus estimates. Should not Wall Street take heart from the news? After all, a happy unemployment report indicates a fizzing economy, easier waters ahead, confident businessmen eager to hire. Stocks should – in consequence – go jumping on the news. Yet they did not go jumping on the news. They instead went tumbling on the news. No Joy on Wall Street The Dow Jones hemorrhaged 630 points today to close at 29,296. The S&P 500 shed 104 points of its own while the Nasdaq Composite absorbed a true whaling — down 420 points, or 3.8%. In the bond market 10-year Treasury yields leaped to 3.883%. In a healthful and functioning order, the stock market is a plausible approximation of prevailing economic conditions. But ours is not a healthful and functioning order. It is rather an Alice in Wonderland order. Up is down. Down is up. Bad news is good news. And good news is bad news… Good news for Main Street is bad news for Wall Street, that is. No “Pivot” Anytime Soon In this environment Wall Street takes to Main Street’s good fortune as the devil takes to holy water. It is the anti-elixir. Thus this morning's jobs report sent Wall Street fleeing in fearful gallops. It merely formed additional evidence the Federal Reserve will remain on the warpath, elevating rates and working down its balance sheet. Wall Street will have to wait for its prized “pivot.” Ms. Liz Ann Sonders, chief investment strategist with Charles Schwab: Anyone looking for a reprieve that might give the Fed the green light to start to telegraph a pivot didn’t get it from this report. Affirms Ms. Seema Shah, Principal Global Investors’ chief global strategist: Payrolls were broadly in line with expectations but importantly in this good news is bad news: Markets were hoping for a downside surprise today. Instead, the number only confirms that the Fed needs to hike rates by a fourth consecutive 0.75% in November. The Federal Reserve itself confirms it. Today Federal Reserve Governor Christopher Waller emptied ice water on Wall Street’s hopeful head: In my view, we haven’t yet made meaningful progress on inflation and until that progress is both meaningful and persistent, I support continued rate increases, along with ongoing reductions in the Fed’s balance sheet, to help restrain aggregate demand. Markets now give 82% odds of a 0.75% November rate increase… incidentally. [Strange 2022 Prophecy Rapidly Coming True]( [This Simple Chart]( America’s #1 Futurist George Gilder is telling American’s to “brace yourself” for the coming $16.8 trillion revolution. This same revolution could redefine millions of jobs and radically transform the way just about every major corporation does business. It could even change the way you get paid, save and invest for retirement. [And, says George, it could make you exceedingly rich — click here to see why.]( [LEARN MORE]( The Evils of Government Statistics We offer a final word on government statistics. As we have argued before: Statistics are the bureaucrat’s sharpest weapon. As we have also argued before: It is the government statistician who collects, sorts, analyzes, worries, tortures and weaponizes economic data. The mangled data is then conscripted into the service of government policy X… or government policy Y. That is, the statistician is the government’s roughneck, its henchman — its goon. He does its bidding. Without his statistics the government is a plodding doofus. It is a lunatic canine forever after its tail. It is a blinded, fumbling cyclops speared through its one and only eye. Explains the late economist Murray Rothbard: Certainly, only by statistics can the federal government make even a fitful attempt to plan, regulate, control or reform various industries — or impose central planning… on the entire economic system. If the government received no railroad statistics, for example, how in the world could it even start to regulate railroad rates, finances and other affairs? How could the government impose price controls if it didn’t even know what goods have been sold on the market, and what prices were prevailing? The Eyes and Ears of Government Indeed… in the absence of labor statistics, how would the government know when to “stimulate” or “cool” the economy? And how would its central bank plot the famously false Phillips curve? That is… how could it bungle as badly as it does? What is more, statistics are the “eyes and ears” of government: Statistics… are the eyes and ears of the interventionists: of the intellectual reformer, the politician and the government bureaucrat. Cut off those eyes and ears, destroy those crucial guidelines to knowledge and the whole threat of government intervention is almost completely eliminated. Thus government employs statistics as a highwayman employs a pistol… and for precisely the same purpose. “The only good bureaucrat is one with a pistol at his head,” said the irreplaceable Mencken. Alas, it is the bureaucrat who holds the pistol at our heads… Regards, [Brian Maher] Brian Maher Managing Editor, The Daily Reckoning Editor’s note: Jim Rickards asked us to pass along this message to you today: “I just got off a Zoom call, where I broke down all of my predictions for the months ahead. But as I mentioned on the call, I’m introducing a big change to my research for all of my readers… [You see, I’ve created a unique opportunity that brings you behind the scenes and gives you a more in-depth look at everything that I cover each week…]( This is for my most serious readers who want to go even deeper into the research I provide, week after week, every single Friday morning. In short, every Friday morning, we’ll be hosting a live Zoom call just like this one I held today… where my team and I will break down everything we covered that week. [I’m calling this new opportunity Rickards Uncensored, and I’d like you to join me.]( The next call is one week from today, Friday, Oct. 14. Unfortunately, due to Zoom limitations, I’m only able to accommodate 3,000 people on a call at once. That means only a small percentage of my readership will be able to join me on these weekly live calls. Once the first 3,000 spots are claimed, that’s it. What’s more, there could already be thousands of people rushing to sign up for these weekly Zoom briefings as we speak. That means this invitation could be withdrawn in a matter of hours. That’s why I’m extending it to you now, before that happens. Just click below for all of the details: [>> Click Here to Secure Your Seat Now <<]( Thank you for reading The Daily Reckoning! We greatly value your questions and comments. Please send all feedback to [feedback@dailyreckoning.com.](mailto:dr@dailyreckoning.com) [Brian Maher] [Brian Maher]( is the Daily Reckoning's Managing Editor. Before signing on to Agora Financial, he was an independent researcher and writer who covered economics, politics and international affairs. His work has appeared in the Asia Times and other news outlets around the world. He holds a Master's degree in Defense & Strategic Studies. [Paradigm]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( The Daily Reckoning is committed to protecting and respecting your privacy. 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