The Deception Continues: October Payrolls Rise 161,000, Unemployment Rate Dips To 4.9%

This morning, we got more happy news from the Bureau of Labor Statistics. The talking heads announced the results of the Establishment Survey: 161,000 jobs added in October. Did that sound good? You have to look under the hood, dear reader. Consider these facts from the same report.

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Deutsche Bank’s Slow Motion Bank Run

Last month, I wrote about the problems at Deutsche Bank (DB) as the stock slumped and markets worried that this could be a European Lehman event given DB’s huge derivatives position and its critical role as counter-party in the EU banking system. See my post of September 28, 2016. But the world did not end immediately and the market went back to sleep. DB’s stock rose and that was the end of it, right? NOT.

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Is the Stock Market Really Overpriced?

Sell side analysts argue it is not. They use measures like future operating earnings per share, a measure that has two major flaws. First, it is based on next analyst estimates of future earnings which are always way too optimistic. The estimates are then slashed as they come closer, but never mind, it’s on to the next estimate of a brighter, better future. Second, operating earnings are not like GAAP earnings which look at actual performance and include the bad stuff…write-downs, discontinued operations…all those so-called ‘one-time’ events that seem to come around every year.

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At Last, the Gold Correction

As readers know, I have been waiting for a correction in gold since May. Finally, here it is. You should be thinking of buying, dear reader, not selling. For those who missed the chance to load up in February at lower levels, as I recommended at the time, this is your chance to get aboard. Maybe not quite yet but it’s close. The 200 day moving average tends to mark the bottom in gold bull market corrections and that number is just under $1260.

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