What Today's Job Report Shows About The Future Of The US Economy Is Shockingly Scary.

Here is what we got.

288K new jobs added in April, far higher than 218K expected.
The unemployment rate tumbled down to 6.3% from 6.7%.
Labor participation rate collapsed from 63.2% to 62.8%

That’s great…..right? Not so fast there sparky. If there was ever a fundamental setup for a massive bear market to start, we got it today. Think about it the following way.

As Janet Yellen has suggested on a number of occasions, jobs or job creation is her primary concern. Today’s job report validates her view that the US Economy is recovering at a good clip and that full employment is just around the corner. As such, further monetary tightening is now a certainty. Yet, the reality is quite different……

Incredibly overpriced financial markets and most other asset classes.
Extreme levels of speculation driven by cheap money and FED printing.
An economy and a financial market environment that is entirely dependent on cheap credit and/or stimulus.
Technically negative GDP growth and slowing economy.

Job creation is a lagging indicator. As I suggested a number of times before, the worst thing the FED can do right now is tighten further. I hate going back to 2007, but the “fundamental” setup we face today is identical to the one we have faced at 2007 top. Jobs were plentiful, markets were in extreme overvaluation and the FED was tightening. It was not until the mid 2008 (or well after the stock market peaked in October of 2007) that the unemployment rate started surging higher. Expect the same thing to happen now.

Our mathematical and timing work confirms this notion. It shows a severe bear market between 2014-2017. When it starts it will very quickly retrace most of the gains accrued over the last few years. If you would be interested in learning exactly when the bear market will start (to the day) and its subsequent internal composition, please CLICK HERE