Birth-Death-ing Your Way To Prosperity

Fri, Jun 5, 2015 - 10:54am

As expected, the statistical guesswork of the BLS magically added 200M+ "jobs" in May. This has spiked interest rates and crushed the yen, which is now trading at levels not seen since 2002. What does this mean for the short-term future of the metals?

First of all, that nonsensical "birth-death" thingy. Again, based upon the statistical guesswork of past Mays, the BLS presumes that "X" number of businesses were started in May (birthed) and "Y" number of businesses were closed in May (death). They also presume the number of "jobs" gained or lost by these opening and closing business. The net number...the amount of guesstimated new jobs minus the amount of guesstimated job losses equals the "Birth-Death Adjustment".

For the month of May 2015, the BLS decided that the Birth-Death Adjustment was a whopping 213,000 "jobs". When combined with other new "jobs" discovered through their extensive <sarc> phone survey work, Hampton Pearson was allowed to breathlessly report "UP 280,000 jobs for May". And there you have it.

Because all of this "robust job growth" clearly signals a roaring US economy, everyone now is 100% confident that Mother Fellen is going to jack the Fed Funds rate 25 bps, perhaps as soon as this month.Up go US interest rates and The Pig. Down go all other currencies, particularly the yen.

And the yen, as noted above, is now trading at 13 year lows! WOW! Take a look at these two charts. The one on the left is just the last six months. The one on the right is the last 25 years.

In case you're wondering whether the all-dominating HFT algos still have gold and the yen tethered in a swirling ball of death, please observe the chart below:

However, in yesterday's podcast, we pointed out a couple of things:

  • the metals were getting quite oversold
  • the metals were approaching solid support areas just below $16 in silver and near $1170 in gold
  • the Specs rapid rotation back out of longs and into shorts, thereby "cleaning up" the CoT structure

Because of all this and the expected flush after the B/D-adjusted BLSBS, we thought there might be a tradable bottom made this far, so good.

After reaching all the way down to $1162, the August gold now has a last of $1169. Not a full FUBM but impressive nonetheless. Again, I'd just like to see us hold here and eek out a close back above $1170. July silver saw a low of $15.94 and it's back to $16.10. I'll take it! Why? Check these updated daily charts. If gold can hold here and close back above $1170, it stands an excellent chance of a "false breakdown" and reversal with a move next week right back into the $1180-1220 range that has contained it for nearly 90 days. Silver bounced from very near the trendline from the March lows and, if t can just come back a little farther and close today back near the $16.20 area, I think we can feel pretty good...all things considered.

Lastly, just a few words about the HUI. Every since the index hot that overbought peak a few weeks ago and proceeded to break down through its 100-day MA, we've been waiting for an oversold dip toward the 155 area that has been solid support. Well, with today's low of 158, I think we're pretty close. And look at how deeply oversold the RSI and MACD have become. The miners may not immediately spring higher from here but I don't think we have to worry about them falling dramatically lower, either. Nibble away, if so inclined.

Just two items to read this morning. First, Koos does his usual excellent job of clearing up the confusion raised yesterday by this article from Sputnik: The translation from Cyrillic to English must have added a few too many zeroes. Koos points out that, in the end, Russia is announcing that they plan to add about 400 mts of gold to their reserves. That's still A LOT and it certainly adds further pressure to the global physical market.

And last week's A2A guest, Alasdair Macleod, is out today with an update on his thinking regarding China and gold. You might find this interesting, too.

As I close, I have $1169 and $16.09. Watch those levels listed above and let's see how the week finishes out.


About the Author

turd [at] tfmetalsreport [dot] com ()


Chiron · Jun 5, 2015 - 10:56am

Yes, Sir


tyberious · Jun 5, 2015 - 10:57am


Im mean first!

infometron · Jun 5, 2015 - 10:57am

alpha and omega

birth death

Edit: drat!! thought I was being so clever...

infometron tyberious · Jun 5, 2015 - 10:58am


now that was clever!!

Marchas45 · Jun 5, 2015 - 11:02am


Is Going To Be an Interesting Day as Turd Previously Said. Keep Stacking

wildstylechef · Jun 5, 2015 - 11:07am

Its all as corupt as FIFA


93 Million Americans Remain Out Of The Labor Force Despite Nearly 400K Work Pool Increase

Tyler Durden's picture

Submitted by Tyler Durden on 06/05/2015 09:30 -0400

The reason why despite the better than expected increase in jobs the US unemployment rate rose from 5.4% to 5.5% even as the number of Unemployed workers rose by 125K to 8,674MM was due to the 397K influx into the civilian labor force which rose to 157.459MM, a new record high in the series, which on the surface would suggest declining slack as more people who have been traditionally left out of the employment calculation go back into the labor pool.

Which aslo meant that since the total US civilian non-institutional population rose by half this number, the number of Americans not in the labor force declined by 208K to just about 93 million.

And, as a result, the biggest malady affecting the US economy today, is still in place: as the chart below shows, the labor force participation rate rose just barely from 62.8% to 62.9%, a range it has been for the past year. Indicatively, the last time the US labor force was here, was in mid-1978.

Swineflogger · Jun 5, 2015 - 11:10am

Short Bus Participation

Hey Turd could you nudge me to a prior post that explains WHY the yen and gold are tied at the hip? I clearly see the linkage but I am a little fuzzy as to the reason for it. Sorry if this is a waste of precious Turd Resource. Thanks in advance. 

matt_ · Jun 5, 2015 - 11:13am

Dr. J.: also what about their own paperwork?

New companies, and companies closing shop are required to submit all kinds of paperwork to the government(s). What about all the documentation of LLCs, C-Corps, business licensing, and business credit/banking information that is required to be filed with government(s)?

canary · Jun 5, 2015 - 11:14am

OPEC meeting (follow-up)

There was a smoke....but no fire. At least not this time. No news.

· Jun 5, 2015 - 11:23am

jobs and more jobs

So why doesn't the gov get their numbers from the IRS who knows exactly how many people have jobs and are paying in taxes?

The birth death method is absurd. telephone surveys are likely flawed--and you have to have a generalizable sample of the entire nation, otherwise you get a "Dewey defeats Truman" headline. Besides, why not have a Bureau of Labor Statistics that just invents their preferred numbers and spends the rest of their month having office parties and surfing the internet.

Beware of those revisions! See page A28, column 4 of your local paper next month.

· Jun 5, 2015 - 11:28am

Good point Matt_

Most people start an LLC these days. The states could easily file a report each month.. I guess bankruptcy filings are another indicator.

another problem with Birth-death is that when a business closes its doors, they lay off the whole crew, on a friday afternoon with a handfull of pink slips. When one begins a business, you might only hire a handful of employees for the first month and then gradually add on help.

Craig has aptly named it: BLS BS

Kismet · Jun 5, 2015 - 11:36am


are an abstract idea that answers the question "How many?". I think the government loves "abstract".

Swineflogger · Jun 5, 2015 - 11:38am

There really isn't a fundamental/economic reason

You can make the case that short bonds--short gold makes some economic sense. As bond prices fall, yields rise. As yields rise, gold...which pays no perceived as less valuable.

However, short yen--short gold is just an HFT algo creation. It began in 2007 and really locked up in 2012. Why? Maybe a creation of the BBs as a creative way to drive paper gold lower and away from $1800? It's the best explanation as to why gold fell during QE3 rather than rise, as it had done it QE1 and QE2. 

Again, though, if the HFT had directly linked long POSX--short gold, that would at least make some sense. However, this is primarily a short yen trade. Global paper gold trading in tandem with the localized Japanese yen. Some sort of weird carry trade? By why only gold? Again, perhaps its just a creation of BB hedge funds, which other hedge funds follow?

This is a shitty chart because the vertical axes are so off but you can see the clear trend before and after late 2007:

And here's a much better chart showing the action since QE3 in October of 2012:

THE MOST IMPORTANT THING is that this paper price HFT nonsense has put incredible strain on the physical delivery system. So far, London has succeeded in keeping the system afloat off of any available flow. However, as we've often discussed, these algos nearly broke the physical market in November of last year and The Banks have been reluctant to let them take price lower than $1150 ever since.

lakedweller2 · Jun 5, 2015 - 11:49am

Umemployment as a Negative Number

Waiting to see how the Feds explain a negative unemployment # when there are over 100 million without jobs or hope. Seems like all these great #s will eventually take the # negative and the sheeple will celebrate by stealing their neighbors goats for a feast.

Swineflogger · Jun 5, 2015 - 11:53am


Duly noted. Thanks.

2c piece · Jun 5, 2015 - 11:54am

The number of jobs created is actually under reported

winkActually the BLSBS numbers as reported are much lower than the “real” blsbs.. Yes the numbers are underreported. The birth death number takes into account the number of people who lose their job and then become entrepreneurs making new jobs. The wonderful shape of the economy as we can observe in the real world demonstrates this. However how about all the people who lose their jobs and think about making a business. They are probably at least 5 times the birth death number and are probably adding just as many real jobs as the birth death number. I call this the pregnancy number as the jobs are still just a gleam in the government’s eye. I think that the government could be reporting a much better economy. FWIW

tyberious · Jun 5, 2015 - 12:09pm
Angry Chef · Jun 5, 2015 - 12:14pm

Job #'s

This nightmare is never going to end until it does. Either thru the market taking over and the CB's lose control or War. You can't take the productive side of an economy, ship it offshore, and get employment to improve... period. Our leaders are completely corrupted and out of control. If they lose control of the market and the real price discovery mechanism kicks in, they'll shut it down. Close the markets. But there is no way they are going to allow the Chines, Russians, Indians etc... ( BRICS ) to win this without a massive War. The metals and preparation is your only chance of making it to the other side. And that's assuming there is another side to go to after the dust settles. We've been on this fiat currency system for almost 44 years. We now have QE 1, 2, 3... BLICS, TARP, ZIRP NIRP extend and pretend. Employment can NEVER EVER recover in this environment. Just like our fiat currency can not survive forever. It's baked in the cake to fail. The World needs to come to it's senses and figure out a diplomatic solution to our problems. But that would require a rearrangement of the deck chairs and all this while being on the Titanic. Keep stacking, prepare, make sure your the best spouse, parent, neighbour, coach every moment of every day. And get right with your maker. Whatever you perceive that to be.

GoldenWizard · Jun 5, 2015 - 12:14pm

Throw in the towel

Is it time to throw in the towel and join the masses?

usk · Jun 5, 2015 - 12:15pm

Well. The good thing is that it has passed

This bullshit number has passed. What's the next pretext to kill these markets? I presume they have still plenty of shorts to cover. What are the next BS numbers? How many contracts do you guys expect they have already cover? I am a bit disappointed by this move: Look at the action in Euros, I am very surprised Gold is actually up after their attack. When is the next attack, Turd ? smiley

I am 100% confident you can time the next move, as the 15 or 20 precedent ones! Congrats! ... but I would say that this last one was an easy one: it's easier and easier to predict these bastards, have you seen how they simply don't try anymore to hide? Their level of greed + the level of corruption in the justice system don't force hiding their fraud anymore. I remember last year you were alone on this board to predict the right moves, this was a good time when trolls came up here from trader Dick board. This was a challenging time for you. (where have the trolls gone? who is still pretending manipulation does not exist in this market?) Now pretty much everyone can see this manipulation and read the next round of rinse and repeat cycle. This is a full HFT driven Open-bar-for-JPM corrupted system.

Mickey · Jun 5, 2015 - 12:19pm

independent contractors/self emplyed

have their own classification. However, how many mattress shops do we need?

remember the establishment and household numbers are based on surveys. A whole lot of leeway there

and Birth Death started in 1998 with 2000 jobs created in the first month.

Steve Silver · Jun 5, 2015 - 12:22pm

Algo madness

The markets are full of trading algorithms. Some trade the headlines trying to scalp a few ticks. Some trade based on various trading systems like moving averages or breakouts etc. These algos are fine because they are trying to make money off better understanding the way the markets work and result in the market getting where its going anyway a little bit faster. 

But there is another kind of algo that pervades the markets that is evil. These algos make no attempt to profit. Their purpose is to push the market where the evil ones want it to go. You can't push the market where it doesn't want to go and make money unless you are big enough to align yourself properly based on manipulation fore knowledge. An example of fore knowledge is the way the gold market dropped 6 dollars 30 seconds before the labor report was released today. 

In any event the evil ones have created numerous algos to use in different situations. This helps them control the markets. For example the one percent rule in the gold market. There is an algo that starts selling gold contracts when gold has gone up one percent. It probably has some sort of stop loss because every once in a while gold jumps past the one percent stop light. But there is another algo waiting at two percent. This one has a larger loss tolerance because its rare to see gold move beyond the 2 percent cutoff. These algos can't possibly be designed to make money. It is simply market control by the evil ones. The gold yen linkage on its face makes no sense. But it helps the evil one control gold. Since the yen is by far the weakest currency hooking the gold to the yen screws the gold bugs big time.

Another screw the goldbugs algo is one that sells gold stocks when the market is down over a percent. Say there is news which is gold bullish and stock market bearish. At first the gold stock will go up but pretty soon the gold stocks start selling off and keep selling off even going negative. Then another algo kicks in which starts selling gold because the gold stocks are negative. This routine causes a weak stock market to be gold negative which is the opposite of the way gold has acted for hundreds of years. But not over the last five or six years. This is why gold stocks didn't share the upside when gold had its big 2011 rally. Of course when the market is up and gold is down the gold stocks trade with the metal. 

Should we give up. Can the evil ones continue to manipulate the markets where they don't want to go. I believe the markets are starting to shows signs of breaking the chains of the manipulators. The thing is when the chains break it will most likely be violent.

Keep stacking.

Newtons third law will soon punish the evil ones. 

P.S. I hadn't seen turds gold yen explanation before I wrote this. So of course I agree with turd

joeblack · Jun 5, 2015 - 12:27pm

End of June is the next scheduled smash..........

silver options and contract expiration, FED meeting, Greece payment due, and end of quarter. 

· Jun 5, 2015 - 12:43pm

Job trends

What really matters is the quality of jobs, as ZH consistently points out.

People who have good jobs are being pushed harder. Entrepreneurs have a tougher time now. And people at lower paying service jobs are simply abused.

In my case at the university, there are tenure line faculty and non-tenured faculty. The tenured positions are highly coveted (and tenure must be earned after being offered one of these jobs). A tenured professor earns 65K to 105K depending on years of service. Non-tenured "instructors" like me hire in at 44K and are lucky to receive raises. In the past 10 years, the administration has shifted the ratio of tenure-non-tenure from 4/1 to 1/1. They cannot lay off tenured positions, so they are letting them go extinct through retirement and by hiring mostly non tenured positions. Also, colleges are growing and all new growth is with non-tenured faculty. This appears to be a nation wide trend, no doubt inspired and encouraged at conferences attended by deans, provosts, chancellors, and presidents.

I left a tenured position in 2012 making about 72K per year. The working conditions had become so oppressive after 2007 that my blood pressure was high, causing me to have nosebleeds during stressful meetings. My weight had also ballooned from 160 to 210. Within three months of taking the new job, my weight was back down to normal and blood pressure was down 40 pts. But the new position only pays 52K per year. I beat out 80 applicants for this position--most well-qualified. With the cost of living in my new city much, much higher, we just get by (no complaints here--just the facts). I made the job change voluntarily for my health and to move close to family anticipating TEOTGKE. Yet all of my new colleagues have accepted these low paying instructor positions because it is all they can get. Nine years of college, being at the top of their classes, and all they can get is a meager 44K per year job. Heck, I made that much 30 years ago working as an electrician.

So the BLS says I am employed. But the quality of that employment has shifted dramatically for the worse. 

(I thinking I am preaching to the choir again)

In the past three years at my new department, we have not hired even one tenure line professor. But we have added 5 instructors each year due to radically increasing enrollments (courtesy of student loans and Pell grants).

I don't even need to mention the quality of jobs my adult kids are able to get. Actually, they have a fairly easy time finding work, but it is part time, no benefits, and demanding conditions.

Tell me again, Mr. Obama, how strong this economy is!

2c piece tyberious · Jun 5, 2015 - 12:46pm


Yes, Sarc. But your question shows how difficult it is to come up with something ridiculous enough to be unbelievable that the government would try it.

SS121 · Jun 5, 2015 - 12:51pm

BLSBS reporting topology same as Silver Chart

There is no direct connection between jobs and the BLSBS.

There is no direct connection between trades and the silver chart.

All individual actions happen "in the blind" with no visibility of the process or other reports (trades) ...then when the official report comes out it can't be questioned. it's setup like this for a reason.

Compartmentalized blind reporting all channeled to a single report/chart. 

It doesn't take a grand conspiracy since everybody is interacting "in the blind".

Just a small group with exclusive access to some point toward the end of the process. 

Are all the employment offices across the land flooded by false claims to "manipulate" the resulting data?? of course not. Why bother with all that?

As long as they own the guy who hands Hampton Pearson the little yellow sticky note for his Friday BLSBS show, that's all they need.

silver chart, same thing. let people input trades and compile and queue data all they want, but if I own the XYZ server that sits between the CME data and the Kitco web-site? LOL, it's TOO easy.

The individual Bullion Bank traders... they're all just people going to a cubicle to click a mouse. CFTC people too, there's no grand conspiracy amongst them, there doesn't need to be. 

Keep thinking topology, layout, process of interaction, ownership, visibility, etc.. and now look at all the Bernie Madoff feeder funds that channeled clients to Bernie. And look at all of Bernie's clients who read their 100% fake statements every month. Yet only Bernie and his small inner circle knew it was all a hoax.

What a complex operation involving thousands of people yet only a few knew what was really going on.

A compartmentalized topology with blind inputs that all pass through one privately owned black box right before being reported in the clear.

[Most Recent Quotes from]

chart jobs report 060515

Steve Silver · Jun 5, 2015 - 12:56pm

BLS BS and weak productivity

All the cheerleaders on CNBS are scratching their head about the insanely weak productivity numbers. They are looking for the msitake in the government numbers. I guess they want to doubly seasonally adjust the productivity numbers. 

I'm sure the washington regulation factory has something to with weak productivity numbers. But there is a simpler explanation. Maybe the output per hour numbers are weak because they are lying about the number of hours work ie jobs.

Dr. P. Metals · Jun 5, 2015 - 1:04pm

I'll probably take flak for this, but

I'm not sure why everyone is so worked up about BLSBS, or anything else at this point. "They" have proven, over and over and over and over and over and over and over and over that they will lie, cheat, steal, deceive, fraud, distort, manipulate anything and everything, at all times now, to get what "they" want. Regardless of who it hurts. So...

I'm not sure why so much energy is being wasted on objecting to it, or getting upset about it. Spend energy to change it if you know how. This will not end, until it's over. There is nothing that I see on the horizon, except God Almighty Himself, who can change their plans at this point in the "game". Metals are going nowhere also until everything crashes, and even then who knows.

I'd suggest instead of wasting energy there, to spend it still trying to warn and inform others, who probably may not listen, and to also inform those who you do know participate in this fraud, directly, that you know it's fraud, and so do they. Perhaps they won't change, but they will know that they aren't as clever as they think they are.

waxybilldupp · Jun 5, 2015 - 1:14pm

Volatility ...

When the daily volatility of U.S. 10 & 30 year bonds is greater than the daily volatility of silver, I would suggest the fuse has been lit. Nothing remotely "normal" about today. The SHTF clock is ticking. Tick ... tick ...tick ...

See you at the grocery store. Bring cash! Tick ... tick ... tick ...

wax off 

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