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DEEPCASTER LLC
www.deepcaster.com
DEEPCASTER FORTRESS ASSETS LETTER
DEEPCASTER HIGH POTENTIAL SPECULATOR
Wealth Preservation Wealth Enhancement
“In one
of the most shamefully disingenuous reports we’ve seen in years, the US
Labor Department released the latest employment figures on Friday showing
that the headline US unemployment rate had fallen to 8.3%.
“Champagne
and sound bites were pre-positioned in Washington as the self-congratulatory
praise flowed like the bubbly. President Obama, beaming like he’d just
caught the winning touchdown pass, told the American people on Sunday that he
‘deserved’ a second term.
They call it
the headline unemployment rate for a reason… it’s the only number
that the papers tend to run. All weekend long, mainstream press ran headlines
like:
“Unemployment
rate falls to 8.3%; fifth straight monthly decline” (LA Times)
“Jobless
rate drops to lowest level in almost three years” (MSNBC.com)
“Unemployment
rate drops to 8.3 percent” (Christian Science Monitor)
“Hiring
surges in January; jobless rate at 8.3 pct.” (Atlanta Journal
Constitution)
“Jobless
Rate Falls to 8.3%, Altering Face of Campaign” (New York Times)
“Unemployment
report: January job gains have economists rethinking outlooks”
(Washington Post)
Needless to
say, few outlets with any meaningful reach covered the real story behind the
employment figures—the Labor Department simply took 1.2 million
Americans out of the labor force. In other words, the unemployment rate fell
because the Labor Department deliberately did not count 1.2 million
unemployed people….
It’s
the same Orwellian style logic (WAR IS PEACE. DEBT IS WEALTH.) that prevailed during the Soviet Union—outright lies
and deceitful reports painting a rosy picture of the economy and its glorious
leaders, masking a dismal reality. It’s nothing but propaganda in the
worst form.
This has
been going on for years in the United States, as evidenced by the chart below:
sovereignman.com, Simon Black, 02/06/12
Indeed, the U.S. Department of
Labor’s Employment Data is Bogus, as Deepcaster
and John Williams of shadowstats.com (see below) and others have been
pointing out for years. Real U.S. Unemployment is 22.5%.
And not just Employment Data, but also
Inflation Data are Bogus. Real U.S. Inflation is 10.57% per shadowstats.com.
Even the Chinese just acknowledged (via their tightly controlled and
politicized Official Data Source, the National Bureau of Statistics) that
inflation had risen significantly.
But the Key Take-Away for Investors and
Traders is that the recent Ostensibly improved Job and Inflation figures are
False Premises on which the Markets rallied. And this provides Superb
Opportunities to bet against the False Premises as we later indicate.
Indeed, Shrewd Trader and Political
Interventionist, George Soros, recommends
"Find
the premise which is false and bet against it." George Soros
First,
however, it is important to understand why and how the Unemployment Numbers
are Bogus.
“January
Jobs Reading Still at Levels of 11 Years Ago
January
Unemployment: 22.5% (SGS)
Money Supply
M3 Growth Is Picking Up
“Given
pending benchmark revisions, monthly reporting results are unusually
vulnerable to any reporting needs of the political establishment.”
“The
hard data (not-seasonally-adjusted) on payrolls always tank in January
(January 2012 was down by 2.68 million jobs month-to-month), while the
unemployment rate always rises (January’s unadjusted unemployment rate
rose to 8.8% from 8.3% in December). The only difference between those
numbers and the headline 243,000 January jobs gain and 8.3% unemployment
rate, is how the seasonal adjustments were applied. There are serious issues
with the current quality of those adjustments, and extremely small distortions
in those seasonals can make big differences in the
resulting headline data.
“Whenever
there is a major systemic change to an economic series, and the data overtly
are massaged so as to prevent distortions, unusually large changes in the
resulting near-term reporting automatically are suspect as to accuracy.
Today’s reporting included the annual benchmark and seasonal-factor
revisions to the payroll survey, as well as to the annual population controls
and revised population assumptions for the household survey. Where both of
those revision processes involve making assumptions (i.e., Is the economy
going to be growing, or not?), it is not surprising that assumptions yielding
stronger results might be selected over those that did otherwise.
“In
any event, beyond the revisions, the headline numbers for January 2012
generated by the revamped systems simply were not believable. [In fact] New
online help-wanted advertising fell sharply in January, indications from the
January purchasing managers survey were mixed, and anecdotal evidence still
is running to the contrary of happier numbers. Accordingly, I would expect
reporting in the months ahead to revise and weaken with the payrolls, and
would expect deterioration in the headline unemployment rate ahead, assuming some catch up in seasonal factors, if that
is an issue.
“As an
aside, there is precedent for direct political manipulation (the first kind)
of headline economic data, from a number of administrations—both
Democrat and Republican—from the early 1960s and from the onset of
modern economic reporting, into the 2000s.
“January
2012’s headline 8.3% unemployment rate was in the context of the annual
population revisions. As such, it is not directly comparable with Decembers 8.5% unemployment rate, but it will be used as a
comparable number going forward. The new population data suggested a lower
labor force participation rate, with implications for a growing
discouraged-worker population. The U.6 unemployment rate was at 15.1%, the
SGS-Alternate was at 22.5%.”
John
Williams, “Payrolls, Unemployment and Revisions, M3, PCE
Deflator”, 2/3/12
Moreover,
Trader Dan Norcini’s Astute Commentary on the
Bogus Payroll numbers Reveals another Official Premise (recently expressed by
Chairman Bernanke himself) that should be “Bet Against”
Consider Norcini’s comment:
“Today's payrolls number, something which
I might add is more akin to an Alice in Wonderland creation, was the factor
responsible for the selling in both gold and in silver. The thinking was that
if the economy is gathering steam at such a fast clip as the numbers suggest,
then any notion of additional QE3 is a pipe dream. That means no Dollar
debasement and little to fear on the inflation front so out came the sellers in the gold market. It also did not help
the bullish cause that the market failed at a critical technical resistance
level.
”Between the two developments, longs who have had a nice run lately,
decided to go ahead and take the profits while they were still there and wait
for a better buy back in point. Short sellers looking for a top were also
emboldened and made their presence felt as they have been on their heels
lately due to the strong buying present in that pit.”
Dan Norcini, “Gold Bulls Unable to Break Through
Resistance”, 2/3/12
Savvy Trader Dan Norcini
makes a critically important point.
Because last
Friday’s Payroll Numbers were perceived to be improving, coupled with
Official Assurances that Inflation was contained, Safe Haven Gold sold off (with
help from The Cartel [Note 1 below]) the U.S.$ stopped sliding and even
strengthened a bit, and Equities shot up.
Only problem was that the Payroll
Numbers were “Alice in Wonderland” as Norcini
says. But the fact that Gold sold off and the U.S. Dollar stopped sliding
showed the markets believed the (False) Premise that Inflation was
controlled.
And John Williams of Shadowstats.com has
told us why and how, and what the Real Numbers are (Real U.S. C.P.I. at
10.57% is threshold Hyperinflationary).
In sum, there are clearly two False
Premises distributed by several Main Stream Media:
1) That the
Economy is Recovering, as the Payroll numbers ostensibly show, and
2) That
inflation is contained (See our Article last week – “Essential
Preparations for THE BIG ONE” in ‘Articles by Deepcaster’
Cache at www.deepcaster.com)
But, The Realities are that we are
moving into an ever more stagnant economy with increasing Monetary, and thus
already existing (U.S.CPI 10.57%) and increasing, Price Inflation, as we have
already seen in Food and Energy costs and even Officially controlled Chinese
Inflation figures. Deepcaster has recently made
several recommendations which have generated profit (Note 2 below) and which
are designed to Profit from (see our March Letter) the Impending Hyperstagflation.
But it is important to consider the
opportunity latent in a Third False Premise as exposed by Professor Simon
Johnson comments on Bloomberg Financial.
“Greece is (already – Ed.) in default. We are in a
downward spiral. They are papering over the cracks. When the ultimate
Collapse comes, it will be all the more painful.”
MIT Professor & Former IMF Economist, Simon Johnson, 02/09/12
Over the mid and long term that Euro
strength is unsustainable for the whole host of reasons including not only
the ultimate de facto default of Greece, Portugal, and Ireland, but also
probably eventually the default of Italy and Spain, and perhaps even France.
Third False Premise: that the
Eurozone as it presently exists, can and should be saved. Indeed, the
impending disintegration of the Eurozone, though most painful for the
citizenry in the short and medium term is, on balance, in their best interest
in the long run. Being beholden to Mega-Banks and Unelected Globalist Bureaucrats
results in a loss of political and economic freedom, as well as National
Sovereignty.
Moreover, with all the juicing and
goosing and bailing out, The Fed and ECB has provided the Markets, and
promised to continue, the current Equities Rally could last for a while
more.
But such a Rally goosed nearly solely by
Excess money and credit provided by The Fed and Eurozone (as opposed
to Savings and Investment which creates Real lasting wealth), will only
exacerbate The Great Equities Crash when it surely arrives. And the
Developing Jaws of Death Technical Pattern emphasizes this Prospect.
Meanwhile, Food and Energy Costs will soar more, further financially disabling consumers, which
are 70% of the U.S. Economy and a similar % of other Major Economies.
According to the U.S. DOE U.S. gasoline
Demand is at a 10yr low, but Gas Prices are near record High (and Food
prices still skyrocketing with Corn up 10% and Wheat 12% in just the last
three weeks). Thanks Ben Bernanke!
This fact of continuing high (and increasing)
energy and food prices underscores the Extraordinary Reckless Policy Error of
both The Fed and ECB which create too much money and credit (in their attempt
to save their owners, The Mega-Bankers), and the Obama Administration which
continues to Increase the U.S. National Debt to over $15 Trillion
(from $10 Trillion when he was elected) plus downstream unfunded liabilities
of over $100 Trillion for Social Security, Medicare, etc..
All of these feckless policies will, of
course, generate Hyperstagflation down the road for
which we will all pay (and are already paying) a very high price in Destroyed
Savings and Wealth in General.
But Short-term, the just-announced
Cosmetic Disguise of the existing Greek Default will likely keep the Euro
pumped up for a while. And the focus on the Eurozone’s Debt Saturation
Crisis temporarily deflects attention from the U.S.A.’s larger
and unsolvable Debt Crisis. Thus, in the long run, those two Debt Crises will
doom both Fiat Currencies, the Euro and the US$, vis a vis Real Assets.
Thus, given the foregoing and in light
of the False Premises, now is an Excellent time to Acquire Real Assets
– Gold, Silver and Agricultural Products, on the cheap.
Best regards,
Deepcaster
February 9, 2012
Note 1: *We
encourage those who doubt the scope and power of Overt and Covert
Interventions by a Fed-led Cartel of Key Central Bankers and Favored
Financial Institutions to read Deepcaster’s
December, 2009, Special Alert containing a summary overview of Intervention
entitled “Forecasts and December, 2009 Special Alert: Profiting From
The Cartel’s Dark Interventions - III” and Deepcaster’s
July, 2010 Letter entitled "Profit from a Weakening Cartel; Buy Reco; Forecasts: Gold, Silver, Equities, Crude Oil, U.S.
Dollar & U.S. T-Notes & T-Bonds" in the ‘Alerts
Cache’ and ‘Latest Letter’ Cache at www.deepcaster.com.
Also consider the substantial evidence collected by the Gold AntiTrust Action Committee at www.gata.org, including
testimony before the CFTC, for information on precious metals price
manipulation. Virtually all of the evidence for Intervention has been gleaned
from publicly available records. Deepcaster’s
profitable recommendations displayed at www.deepcaster.com have been
facilitated by attention to these “Interventionals.”
Attention to The Interventionals facilitated Deepcaster’s recommending five short positions
prior to the Fall, 2008 Market Crash all of which were subsequently
liquidated profitably.
Note 2: There are
Magnificent Opportunities in the Ongoing Crises of Debt Saturation, Rising
Unemployment, negative Real GDP growth, nearly 11% Real U.S. Inflation (per Shadowstats.com) and
prospective Sovereign and other Defaults.
One Sector full of Opportunities is the High-Yield Sector. Several of our
High yield stocks have moved up when the Equities Market was tanking.
That Portfolio is aimed at generating Total Return (Gain + Yield) well in
excess of Real Consumer Price Inflation (10.57% per year per
Shadowstats.com).
To consider our High-Yield Stocks Portfolio with Recent Yields of 18.5%,
8.6%, 10.6%, 26%, 6.7%, 8%, 10.6%, 3.99%, 14.9%, 10% and 15.6% when added to
the portfolio; go to www.deepcaster.com and click on ‘High Yield
Portfolio’.
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