Terrible Jobs Report, but Market Still Hasn’t Woken Up (Video)

A terrible jobs report was released on Friday, triggering a dramatic day on Wall Street. Peter Schiff reviews the numbers and analyzes the market’s reaction. He also shared some insight into why financial reporters are no longer reporting on the poor manufacturing numbers.

Highlights from the video:

“The [jobs] report we got today was one of the weakest reports relative to expectations than we’ve had in years. I think this may be the final missing piece to the economic puzzle that really shows the mainstream that the economy is nowhere near as strong as everybody, including the Fed, is pretending. And that the rate hikes that everybody believes are right around the corner, are a distant blur on the horizon. I think soon people will be joining me in recognizing more quantitative easing is what’s coming. Of course, I know it’s not going to work, but everyone is going to administer more of what they think is medicine, but what I know is actually toxic…

“Everybody believed that the August number… which was originally reported at 173,000. Everybody expected that to be revised up. I think the consensus was 215,000, with a lot of people thinking it was going to be higher… Not only was that number not revised up, it was revised down to a paltry 136,000 jobs. That’s it. In fact, not only did they revise down last month, they revised down the month before that. That one is still above 200,000, but not as much above as it was originally reported…

“[The September] number was supposed to be 203,000. It was 142,000. That’s it. Again, way below expectations. In fact, if you average now the last three months, you just get 167,000 jobs on average for the last three months. 6 of the last 8 jobs numbers have now been revised downward. What does that mean about this 142,000 that was reported today for September? It’s probably going to be revised down too…

“It gets worse. Look at the labor force participation rate. It was at 62.6 last month. That was the lowest it has been of this whole recovery, recession, whatever you want to call it. It dropped another two-tenths to 62.4. So now this is the lowest since back in 1977. Another 579,000 people marched out of the labor force in September. Now there’s 94.6 million Americans not working. Also, average hourly earnings. They were expecting an increase of 0.2. They got a goose egg – zero. No gain at all in average hourly earnings. In fact, the average work week actually ticked down from 34.6 to 34.5. So Americans worked fewer hours, they didn’t earn anymore money, and lots of them left the labor force…

“What has Janet Yellen always said is a requirement to raise rates? That is an improvement in the labor market. In fact, when Janet Yellen did not raise rates in September – the way I forecast she would not – she said we would need more improvement in the labor market. Everybody was saying, ‘Well, Yellen didn’t move in September, so she’s going to hike in October or December.’ I said, ‘no.’ Because the labor market is not going to improve by then. If anything, it is going to get worse. That is exactly what happened. Janet Yellen is talking about not the unemployment rate… That number means nothing. What Yellen is referring to is labor force participation. And that went down to a new low. This is the worst it’s been since she began saying it needs to improve before she can raise rates…

“This is the tenth month in a row that factory orders have been down year-over-year. That only happens in a recession. In fact, this is a record… This is the most months in a row where factory orders have been down year-over-year when the US economy was not in a recession… Maybe we are in a recession. We don’t have the Q3 GDP numbers yet, but the Atlanta GDPNow estimate for Q3 GDP yesterday was reduced to just 0.9…

“I think they’re going to blame this weakness on a spillover from overseas. Whether it’s China or any other country, they’re going to say, ‘Our economy was doing great, and then all this stuff happened in other countries, and now it’s starting to spillover over here. So we need to be cautious now, during this period, so we can assess how much damage these other countries are going to inflict on our otherwise healthy economy. We were just about to raise interest rates! You know what, now we can’t, because this stuff happened beyond our control…’ I think that’s what’s going to happen. The first ease is going to be a change in tone, a change in rhetoric…

“The Dow Jones initially sold off: ‘Hey, bad news is bad news. If the economy was really weak, maybe all the earnings that we all think are going to be there – maybe they’re not going to be there.’ And so the Dow was down as much as 250 points or so early in the morning. But then the buyers came in, because they realized, ‘Hey wait a minute. If the Fed isn’t going to raise rates, then this party can continue for a while longer.’ And the Dow finished up 200 points. That’s a 450 point move. We were almost down at the Black Monday lows. I think this was a pretty significant reversal. My guess is that the Dow is going to rally from here…

“Gold was up about $25. Still not much. It still hasn’t broken out of its range. It’s not even above $1140. It really needs to move above $1150. I think that can happen. The fact that it hasn’t happened yet shows me again that people still haven’t woken up… It hasn’t really sunk in yet…

“This time, if the dollar rises based on an anticipation of rate hikes, and the hikes don’t even come – can you imagine how much selling there is going to be on that fact? When you don’t even get the event that everybody has been waiting for? That’s going to work in reverse for gold. People have been selling gold for the same reason… Imagine how good it’s going to be for gold when everyone expects a rate hike, and instead we get QE4. I think this is the biggest upleg of the gold bull market, which means the gold stocks are going to take off if I am right. Because gold stocks today are cheaper today than they were when the last bull market began…”

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