Digging Into The Data: The Jobs Report & An Overheating Market

This week’s top stories... Congratulations! First up, we want to say congratulations to Dennis Slothower and his Stealth Stocks Daily Alert readers. They just closed a position in Fiat Chrysler (NYSE: FCAU), netting 103.9% over 15 months. With the market struggling in recent months, it's always great to see that our readers are still getting the kinds of recommendations and analyses that dri You are receiving this email because you subscribed to Outsider Club. [Click here]( to manage your e-mail preferences. [Outsider Club logo] Digging Into The Data: The Jobs Report & An Overheating Market By Outsider Club Written May. 08, 2018 This week’s top stories... Congratulations! First up, we want to say congratulations to Dennis Slothower and his Stealth Stocks Daily Alert readers. They just closed a position in Fiat Chrysler (NYSE: FCAU), netting 103.9% over 15 months. With the market struggling in recent months, it's always great to see that our readers are still getting the kinds of recommendations and analyses that drive strong profits. Volatility is always painful, but it also tends to shake loose the across-the-board correlation between stocks. It is hard to tell where the market goes from here, but one thing is for sure... This is a stock picker's market. A Jobs Report Milestone After months, if not years, of flirting with the 4% unemployment level, official statistics finally fell to 3.9%. 164,000 jobs were added and previous months were revised upward to add another 30,000 jobs to the total. The U.S. hasn’t seen unemployment at this level since 2000. Using a broader measure of unemployment that includes “marginally attached” workers and those employed part-time for economic reasons, the numbers aren’t quite as good, but still improving. This U-6 measure from the BLS is still at 7.8%, about 1% higher than it was at the 3.9% nadir in 2000 in the regularly quoted U-3 figures. The watch for wage growth to pick up will continue. Average earnings rose by $0.04 an hour for a total 2.6% increase over the past year. If it doesn’t feel like we’re back to 2000 levels, you are right. Too much else has changed. Take the labor participation rate and employment-population ratio for example. Both show that an extra 4+% of the U.S. population is not working. Regardless of why, that is pulling wages from workers and tax revenues from government coffers. Then there are factors like rapidly rising rents for urban areas, the cost of health care and senior care rising far faster than headline inflation numbers, and everything else that factors into personal budgets. So while we are at levels we haven’t seen since 2000 when you just look at headline unemployment figures, it is clear that today’s economy and workers face a reality that simply cannot be considered on par. It all depends on what headline numbers you want to cite, and the depth at which you’re willing to look into the data. Peak Earnings & Falling Markets Speaking of the depth at which you're willing to look into the data, here is a portion of a Stealth Stocks Daily Alert by Dennis Slothower from last week. Wall Street's Underground Profits readers will also be very familiar with his analysis... With such impressive growth rates, why is the stock market breaking down? Why does it show a bearish formation, pressing on the 200-day moving averages and failing to renew its bullish trend? I think it is about the future and not about this quarter’s earnings, which had already been factored into the market in the fourth quarter of 2017. Investors are looking ahead. The Fed is draining its reserves and this means liquidity is being taken from the investment banks, along with a lot of buying power. Higher interest rates will affect future earnings growth. Peak earnings occurred last quarter. We can’t expect higher and higher earnings going forward when the Fed is making capital harder and harder for businesses to come by. Markit recently reported: “Factories reporting the strongest rise in prices for nearly seven years. Suppliers are hiking prices in response to surging demand, while tariffs and higher oil prices are also exerting upward pressure on costs.” So think about that... What are higher costs going to do to profits? What do higher gasoline prices do to a consumer’s ability to spend? And so demand falls. The combination of higher costs due to inflation and higher interest rates combined with falling consumer demand means lower corporate profits for upcoming quarters. Personal interest payments are rapidly rising because people's debts are rapidly rising, while real disposable personal income is falling. This is an invitation for recession. Notice how family net worth is falling for all income groups except the top 10%. Hence, stocks are struggling. What bothers me is even though the market has corrected some, it really hasn’t corrected beyond what it did in the first few days of February. Prices are simply just back down near these levels. Yet this is the real problem. Prices remain in the “third standard deviation” above the 50-“month” moving average and still in extreme overbought conditions. Add in rising inflationary pressures and a tightening Fed monetary policy and I just don’t believe we are about to elevate to a historic first by moving to a “fourth standard deviation.” I just don’t see that as a plausible course. Long-term investors are at extreme risk here. To your wealth, –Outsider Club Research Staff Enjoy reading this article? [Click here]( to like it and receive similar articles to read! Browse Our Archives [Apple "Cooks The Books" As the Market Struggles]( [Wars Are Being Fought Over A Metal You Never Heard Of]( [Here Comes The Great Hangover]( [While Trump Negotiates, China Flexes]( [A Lopsided Rally & A Pivotal Moment Approaches]( --------------------------------------------------------------- This email was sent to {EMAIL}. It is not our intention to send email to anyone who doesn't want it. If you're not sure why you've received this e-letter, or no longer wish to receive it, you may [unsubscribe here](, and view our privacy policy and information on how to manage your subscription. To ensure that you receive future issues of Outsider Club, please add newsletter@outsiderclub.com to your address book or whitelist within your spam settings. For customer service questions or issues, please contact us for assistance. [Outsider Club](, Copyright © 2018, [Angel Publishing LLC]( & Outsider Club LLC, 111 Market Place #720, Baltimore, MD 21202. For Customer Service, please call (877) 303-4529. All rights reserved. [View our privacy policy here.]( No statement or expression of opinion, or any other matter herein, directly or indirectly, is an offer or the solicitation of an offer to buy or sell the securities or financial instruments mentioned. Angel Publishing and Outsider Club does not provide individual investment counseling, act as an investment advisor, or individually advocate the purchase or sale of any security or investment. Subscribers should not view this publication as offering personalized legal or investment counseling. Investments recommended in this publication should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company in question. This letter is not intended to meet your specific individual investment needs and it is not tailored to your personal financial situation. Nothing contained herein constitutes, is intended, or deemed to be – either implied or otherwise – investment advice. Neither the publisher nor the editors are registered investment advisors. This letter reflects the personal views and opinions of Nick Hodge and that is all it purports to be. While the information herein is believed to be accurate and reliable it is not guaranteed or implied to be so. Neither Nick Hodge, nor anyone else, accepts any responsibility, or assumes any liability, whatsoever, for any direct, indirect or consequential loss arising from the use of the information in this letter. The information contained herein is subject to change without notice, may become outdated and may not be updated. Nick Hodge, entities that he controls, family, friends, employees, associates, and others may have positions in securities mentioned, or discussed, in this letter. No part of this letter/article may be reproduced, copied, emailed, faxed, or distributed (in any form) without the express written permission of Nick Hodge or the Outsider Club. Unauthorized reproduction of this newsletter or its contents by Xerography, facsimile, or any other means is illegal and punishable by law.