The Bureau of Labor Statistics guessed that 236,000 jobs were added in February and everybody applauded. Yay, or should we say, “boo.”
What most everyone missed is that even the BLS admits in a footnote to its February jobs press release that historically its initial number can be revised as much as 90 percent. A 90 percent revision to me means that the February 230,000 job number is meaningless.
On the other hand, TrimTabs has been estimating about 100,000 new February jobs. Our estimate historically has varied less than 10 percent from the final, revised BLS jobs number. The real numbers for this February will not be reported until March 2014. In other words, like most of what the U.S. government does, the monthly jobs number is a joke.
As I have been saying all year, the reality is that stocks have neared all time highs for just two reasons. The first, and most important, is that the Federal Reserve has been consistently debasing the currency by creating $4 billion of new money via computer keystrokes each and every day and some of that money has been increasing the demand for equities.
The second reason why stocks are so high is that companies have accumulated a huge cash hoard earning nothing sitting on balance sheets. That’s why companies are using some of that cash to shrink the number of shares outstanding.
So we have more money chasing fewer shares. The end result is that stock prices go up. So what if the U.S. economy isn’t growing? Remember, Las Vegas magicians do not use magic. They use misdirection to deceive the audience.
Misdirection is the name of the game at the Fed these days. In the past a rising stock market had some relationship to an improving economy. But not this time. This time it is all a charade.
Read more: Why The U.S. Economy Isn't Growing While Stocks Soar - Forbes
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