ADP Payroll Huge Miss: Economy Is Plunging – Dave Kranzler

TND Guest Contributor:  Dave Kranzler |

Ever since the Fed took its “we need to raise rates soon” stance, I have been predicting that we would see QE4 before we see a Fed-driven interest hike.  Note:  the market itself might take yields higher, as we’ve seen happen in the last month at the long end of the curve.

To reinforce my view, ADP reported a huge miss of the consensus Wall Street Einstein Club estimates, coming in at 169k “new” payroll jobs in April vs 205k expected.  The number from March took a huge downward revision from the 189k originally reported to revised 175k.   So much for the integrity of the data – it says a lot about the nature of our financial markets when the stock market reacts to a number that is highly unreliable and inaccurate.

Let’s take a closer look:  February was also revised lower;  manufacturing lost 10,000 jobs;  services supposedly added the bulk of the new jobs.   Even if the report is somewhat accurate in terms of the areas where jobs were lost vs. added, the economy lost high-wage, big pension, big benefits jobs and added low-wage, no benefits jobs.

You may have noticed I referenced the jobs added as “new.”  That’s because ADP’s methodology itself is highly questionable.  In fact, right on its website (LINK), ADP states that the ADP payroll calculation methodology is designed “to more closely match the final print of the BLS numbers.” Furthermore, you’ll see that the ADP “seasonal adjustments” abuse imposed on the data is the same exact statistical meat grinding program used by the Bureau of Labor Statistics – see this LINK.

In other words, the ADP report is just as rigged and highly unreliable as is the Government’s non-farm payroll report.

I would love to be wrong about this, but I stand by my view that the Government is going to rig a huge “beat” of the Wall Street brain trust consensus estimate.  It’s all part of the Orwellian-like kabuki theatre being implemented to manipulate the stock market higher by manipulating the hedge fund HFT algo black boxes.

While I believe the stock market has been set up to “melt up” on Friday, I also believe that after the customary pre/post-8:30 a.m. gold smash as the non-farm payroll report released, gold will stage a huge move higher along with the stock market.

While the Government/Fed still has the ability to manipulate the market, a lot of smart money is catching on and seems to be using all dips to buy gold and silver.  This is why the PPT can’t get gold lower than $1150 or silver lower than $15.50.

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About Dave Kranzler:

 I spent many years working in various analytic jobs and trading on Wall Street. For nine of those years, I traded junk bonds for Bankers Trust. I have an MBA from the University of Chicago, with a concentration in accounting and finance. My goal is to help people understand and analyze what is really going on in our financial system and economy. You can follow my work and contact me via my website Investment Research Dynamics.  Occasionally, I publish on Seeking Alpha too. As a co-founder and principal of Golden Returns Capital, LLC Mr. Kranzler co-manages the Precious Metals Opportunity Fund, a metals and mining stock investment fund.

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