TrimTabs

The Fed's Manipulation Of The Market Is Driving TrimTabs' Charles Biderman "Even More Nuts Than He Already Is"

Back in 2009 and 2010, TrimTabs Charles Biderman made waves for being the first person on prime time financial TV to tell it how it is, namely that the Fed is indirectly and directly affecting asset prices. Then he was ostracized. Now, it is not only a given that the Fed does everything in its power to hike stock prices, but is in fact welcome. Indeed, none other than Bob Pisani made point of highlighting that between central bank intervention and kicking the can down the road, the status quo has managed to restore credibility in the system. Of course, nothing could be further from the truth, as we have demonstrated with the now terminal evacuation of faith by the retail investor in the gross manipulated stock "market" which is nothing but a nominal policy vehicle for politicians and bankers. Unfortunately, the endless lies and propaganda are starting to push rational people who refuse to take the blue pill, and who are fully aware there is no wizard, over the edge. In his latest videoblog, Biderman is back, taking his Lewis Black impersonation to the next level, with the following rant: "Individuals are net sellers of US equities and have been for years, probably because they need to pay bills and stuff. So how are they able to do that and get decent prices without the stock market cracking. Well simple the Federal Reserve has been printing huge amounts of money and that ultimately has been boosting the value of US equities, and therefore the sellers can sell. All of this is driving me even more nuts than I already am."

Bank Of America Throws Up All Over Friday's Jobs Number

There was a time when Bank of America's archoptimist David Bianco would take any economic data point, no matter how fecal mattery, and convert it into 24-carat gold. Then, in late 2011 Bianco was fired because the bank realized that its only chance to persevere was if the Fed proceeded with another round of QE, (and another, and another, ad inf) and as such economic reporting would have to lose its upward bias and be reporting in its natural ugly habitat. And while many other banks have in recent days become content with every other central bank in the world easing but not the Fed in an election year due to the risks of record gas prices, BAC's push for QE has not abated and in fact has gotten louder and louder. So exposes us to some oddities. Such as the firm's 29 year old senior economist Michelle Meyer literally demolishing any myth that yesterday's job number was "good." Needless to say, this will not come as a surprise to Zero Hedge readers. Nor to TrimTabs, whose opinion on the BLS BS we have attached as exhibit B as to the sheer economic data propaganda happening in an election year. Yet it is quite shocking that such former stalwarts of the bullish doctrine are now finally exposing the truth for what it is. Presenting Bank of America as we have never seen it before - throwing up all over the Bureau of Labor Statistics.

Shockingly Large BLS Adjustments Should Be Main Focus Into NFP

As we head into tomorrow's all-important NFP print, that will make or break the next month's market action and political posturing, we thought it worth highlighting just how statistically farcical the accuracy bias is in this data. As we pointed out in January, this time of year is prone to extreme seasonal adjustments and moreover, this year has seen these adjustments breaking records in their relative scale. As TrimTabs notes the seasonal adjustment for February is likely to exceed 1.5 million jobs, which is many times greater than the job growth the BLS is trying to measure. They expect a 149k add, down from their 180k add forecast for January, which is well below the 210k consensus estimate but we note that the difference between the highest analyst estimate (+275k and no its not Joe LaVorgna) and the lowest (+125k) is entirely covered by a mere 10% disturbance in the BLS-'force' of adjustment. Critically, this means that whatever they need the number to be, it will be though we hesitantly point out the sad reality that while we have added jobs for 17 consecutive months (apparently), the average 133k addition is still insufficient to absorb all the new entrants to the labor force, suggesting the unemployment rate is likely to remain above 8%.

Another Unintended Consequence: $80 Billion 'Gas Price' Tax On Consumption

Although U.S. demand for crude oil has fallen by 1.5 million barrels per day since 2007, anyone spending more than a few minutes on the road, watching TV, or surfing the internet will be more than unpleasantly aware of the rapid rise in gas prices recently. As we noted earlier, following January's record high average gas price, February just surpassed its own record and TrimTabs quantifies the impact of this implicit tax on consumption, noting three key factors that will remain supportive of high oil prices: Central Bank liquidity provision (ZIRP), political tensions, and implicit USD devaluation. Critically, around 70% of the benefits of the payroll tax extension has already been removed thanks to 60-80c rise in gas prices nationwide whose growth has far outstripped wage and salary growth in recent years. As Madeline Schnapp points out, while the latest round of oil speculation is likely to end with a pop, the erosion of purchasing power from high energy prices is here to stay. Bottom Line: Rapidly Rising Fuel Prices Put Sluggish Economic Growth at Risk.

Phantom Gold And Deconstructing PollyAnna

Many want to believe that a stock market that has doubled from the March 2009 low (or added $9tn in market cap) has to mean that the US economy is in a healthy long-term recovery. Unfortunately, as Charles Biderman of TrimTabs explains, the PollyAnnas are wrong. The sentiment, built on the three pillars of an improved labor market, higher corporate earnings, and the return of the housing market, are all based upon misleading data. Starting from the position of discovering where the new money is coming from, the Bay Area Beau dismantles each of the pillars one by one and ends by noting that it is not Gold, which has outpaced stock market gains, that is a phantom currency but the USD.

Guest Post: Why The U.S. Economy Could Go Haywire

Americans participating in a recent Gallup poll showed the highest level of confidence in an economic recovery in a year.  Sounds great, but you can’t ignore the nearly 13 million unemployed, the 46 million people on food stamps and the roughly 29% of the country’s homeowners whose mortgages are under water. They would find it hard to subscribe to the poll’s sunny conclusion. On the other hand, there’s no getting away from a bevy of seemingly increasingly favorable economic data, which, more recently, includes falling weekly jobless claims, four consecutive monthly gains in the leading economic indicators, somewhat perkier retail sales and a pickup in housing starts and business permits. Pounding home this cheerful view is the media’s growing drumbeat of increased economic vigor....Confused? How can you not be?

Biderman Beyond Baffled by B.O.'s Budget

In his best Lewis Black impression, TrimTabs CEO Charles Biderman succinctly destroys the 'growth' myth behind Obama's budget plan as nothing but a handout and money-printing exercise in futility and drain-circling. Based on the $3.8tn budget plan, the TrimTabs truth-seeker notes that current government tax revenues are about $2.4tn, and growing at no more than $100bn each year, making the math surprisingly simple - we spend around $300bn per month and receive only $200bn with the missing $100bn to pay for the US government's largesse (income shortfall) coming from - 'printing money'. The spin is, of course, that revenues will somehow magically start to grow faster than spending and shrink the budget deficit. With take home pay at $6.3tn for everyone who pays taxes, up $300-400bn from the 2009 low, but still well below the $7.1tn rate from early 2008; Biderman's consternation at the self-hypnosis that a $200bn tax increase in an economy where take-home pay has been growing by only $100bn per year will somehow create anything other than slow-growth at best (or more likely contraction) is palpable. This slow- or no-growth will mean less tax revenue and more spending on safety-nets and thus the Sausalito-savant factually points out that most people do not realize that government spending is simply giving people money whether they do anything useful with it or not and still the governments of the US, Japan, and Europe want us to believe that our economies will grow faster if we keep taking more money from the workers and give that money to the government.

TrimTabs Explains Why Today's "Very, Very Suspicious" NFP Number Is Really Down 2.9 Million In Past 2 Months

We have examined the nuance of the euphoric jobs data this morning from every angle and by now there should be plenty of 'information' for investors to make their own minds up on its credibility. However, the avuncular CEO of TrimTabs, who despite channeling Lewis Black lately, likely knows this data a little better than the average Jim on the street having collected tax witholdings data for the past 14 years, is modestly apoplectic at the adjustments. In one of his more colorful episodes, and rightfully so, Charles Biderman notes that "Either there is something massively changed in the income tax collection world, or there is something very, very suspicious about today’s BLS hugely positive number," adding, "Actual jobs, not seasonally adjusted, are down 2.9 million over the past two months. It is only after seasonal adjustments – made at the sole discretion of the Bureau of Labor Statistics economists – that 2.9 million fewer jobs gets translated into 446,000 new seasonally adjusted jobs." A 3.3 million "adjustment" solely at the discretion of the BLS? And this from the agency that just admitted it was underestimating the so very critical labor participation rate over the past year? Finally, Biderman wonders whether the BLS is being pressured during an election year to paint an overly optimistic picture by President Obama’s administration in light of these 'real unadjusted job change' facts. Frankly, in light of recent discoveries about the other "impartial" organization, the CBO, we don't think there is any need to wonder at all.

Why Non-Farm Payrolls Will Be Weak

Following today's sizable miss and significant revision to the ADP data it is perhaps worth taking a step back and looking at some independent research on the adjustments and seasonality issues in forecasting jobs around this time of year and furthermore, why one of the pillars of this extended rally and US decoupling story (a substantially improving jobs market) could be made of salt. Bloomberg's consensus for Friday's NFP at +145k (from +200k prior) and a 30k standard deviation, there is plenty of uncertainty among the economic elite (with 125k to 150k the sweet spot for their guesses) and our favorite outlier Joe LaVorgna near the top at +210k. So while the trend is supposedly improving (though expectations are slightly off December's exuberance), Stone & McCarthy (SMRA) point out a disturbing trend of sizable forecasting errors for the January payroll print with 7 straight years of estimates overshooting by an average of 64k - strangely consistent post the BLS switch to a probability-based sample. But its not just forecasting error, TrimTabs takes a deep dive into the actual daily income tax deposits from all salaried employees (which are historically more accurate than BLS initial estimates) sees the US economy added only 45,000 jobs in January, nearly unchanged from the 38,000 in December. Noting similar forecasting errors as SMRA, TrimTabs points out that the decline in seasonal adjustment factors and the reality of the underlying tax data suggest "It appears that the economy has hit stall speed due to lackluster demand and a deleveraging consumer who would rather save than spend." as wage and salary growth (net of inflation) weakened further to -2.1% YoY in January from -0.5% YoY in December. "The weak job market has us concerned" seems like a truer reality than the establishment trying to keep the dream alive.

Print-Or-Panic, TrimTabs On The Market's Meltup

As retail investors continue to appear significantly pessimistic in their fund outflows ($7.1bn from US equity mutual funds in w/e January 4th - the largest since the meltdown in early August) or simply stuff their mattresses, David Santschi of TrimTabs asks the question, 'who is pumping up stock prices?' His answer is noteworthy as a large number of indicators suggest institutional investors are more optimistic than at any time since the 'waterfall' decline in the summer of 2011. Citing short interest declines, options-based gauges, hedge fund and global asset allocator sentiment surveys, and the huge variation between intraday 'cash' and overnight 'futures market' gains (the latter responsible for far more of the gains), the bespectacled Bay-Area believer strongly suggests the institutional bias is based on huge expectations that the Fed will announce another round of money printing (to stave off the panic possibilities in an election year). The ability to maintain the rampfest that risk assets in general have been on (and the cash-for-trash short squeeze that has been so evident) must be questioned given his concluding remarks.

Morgan Stanley To Cap Cash Bonus At $125,000 (With Footnotes)

That after last year's abysmal performance on Wall Street, best summarized by the following quarterly JPMorgan Investment Banking revenue and earnings chart, bonuses season would be painful should not surprise anyone. But hardly anyone expected it to be quite this bad. The WSJ reports that Morgan Stanley, likely first of many, will cap cash bonuses at $125,000 and "will defer the portion of any bonus past $125,000 until December 2012 and December 2013" with bigger 'sacrifices' to be suffered by the executive committee which, being held accountable for the collapse in its stock price, will defer their entire bonuses for 2011. Morgan Stanley is likely just the beginning: "As banks report fourth-quarter results this month and make bonus decisions for 2011, total compensation is likely to be the lowest since 2008." This means that once Goldmanites get their numbers later this week, we will likely see a mass exodus for hedge funds which remain the only oasis of cash payouts on Wall Street. Alas, unlike the Bank Holding Companies, a series of bad decisions will result in hedge fund closure, as the TBTF culture will never penetrate the stratified air of Greenwich, CT. And with bonuses capped at about $80K after taxes, or barely enough to cover the running tab at the local Genlteman's venue, the biggest loser will be the state and city of New York, both of which are about to see their tax revenues plummet. And since banker pay is responsible for a substantial portion of Federal tax revenue, look for Federal tax withholding data in the first few months of 2012 to get very ugly, making America even more responsible on debt issuance, and likely implying the yet to be re-expanded by $1.2 trillion debt ceiling will be breached just before the Obama election making it into the biggest talking point of the election cycle.

On The Fed's Failure To Inspire, TrimTabs Shows Where The Real Money Is Going

As volumes this year in stock markets remain significantly below last year's but high yield bond ETF inflows reach record highs, TrimTabs offers some context for the massive relative flows of real cash into checking and savings accounts versus stock and bond mutual fund and ETFs. Not-Charles-Biderman, otherwise known as David Santschi of the now-infamous Bay Area backdrop, explains the incredible statistic that in the first 11 months of last year investors poured more than eight times more money into checking and savings accounts than into Fed-inspired risk assets in general. Even with rates ultra-low, the Fed's efforts to drive speculative flows is dwarfed by investors' aggregate sense of the reality of our tenuous situation as a massive $889bn was poured carefully into mattresses while a measly $109bn went into risk-worthy assets (including bonds). As Santschi concludes, as long as most investors keep hiding most of their money away, the economy is unlikely to get off to the races anytime soon and while we agree from a consumptive demand perspective, any recovery will only be truly sustainable via savings which are being desperately drawn-down by a need to maintain standards of living that are perhaps too much to expect.

TrimTabs Explains Why A Weaker Non-Farm Payroll Number Is Coming On Friday

Today's weak ADP was the first indication of why Wall Street may need to promptly revise its NFP consensus for Friday following last month's blowout 283,000 number. And while that number is legendary in its total irrelevance and complete lack of correlation to what the BLS reports, a more credible analysis of why NFP will likely come in lower than consensus comes from TrimTabs, which says that "Fed-fueled inflation in April has put breaks on consumption." The key culprit, and the main reason why the dollar just plunged again, is the realization that the economy has once again failed to restart the virtuous loop of trillions in monetary stimulus becoming a virtuous loop. And, as before, the only outcome will be more QEasing, and another massive spike up in commodities once Wall Street once again well delayed, realizes this is inevitable (as we have been claiming since January).

Surprising Observations From TrimTabs: "Are Central Bankers Loading Up On Gold?"

When it comes to following the trail of money, capital flows specialist TrimTabs has traditionally focused on the stock market. In the past, TrimTabs' Charles Biderman has discussed how according to any reasonable calculations, there appears to be a key buyer missing among the usual market participant suspects, leading Biderman to conclude that the Fed may be buying stocks directly (or indirectly through Citadel as the case may be). To our surprise, in its most recent release, TrimTabs takes a look at the buyers in the gold market, and ends up with the same question: "Gold prices hit a record high in nominal terms for the second consecutive day.  We are not sure who is driving up prices." The speculative conclusion: "Are central bankers loading up on gold as they crank up the printing presses and keep interest rates ridiculously low?" Of course, at first glance this would be preposterous as it has long been accepted that for the Fed a jump in surge prices is a very adverse development. Well, is it? Traditionally rising gold prices have been merely indicative of abnormally high inflation, which for the Fed was a "bad" thing in the past. Not so much any more, or at least since the advent of the "wealth effect" experiment. Recall that it is now the Fed's "goal" to give the impression of inflation (and reality for those who eat and use energy). This is based on Bernanke's false assumption that inflation is much more easily controllable (15 minutes...) than deflation. So while on the surface this may appear to be a preposterous claim, in reality there is nothing that prohibits a gold price surge in the context of the Fed's third mandate.