FRIDAY'S REVISED JOB REPORT
Yields Another Major Sell Signal for the Stock Market
by Bob Bronson, Bronson Capital Markets Research. April 2, 2004
Whenever the lagging economic indicators rise simultaneously with leading economic indicators declining -- like now -- history shows the stock market is at major top.
Everybody knows jobs were lost during the first 17 months of the past 24 months of economy recovery since the end of the first of several recessions that we expect during this K-cycle winter, or what we fundamentally and technically quantify as a deflationary economic BAAC Supercycle Bear Market Period.
But during the last four months of last year, job growth slowly emerged and averaged ~50K per month. With today's BLS revisions, the establishment payroll survey shows that for the first three months of this year, job growth averaged ~170K, or just a little over the rate necessary to cover the estimated new entrants into the labor force. In fact, the unemployment rate ticked up from 5.6% to 5.7% in March because of the difficulty of new job growth exceeding that threshold.
Job growth should continue in the months ahead, even if it doesn't accelerate its growth rate, as employment joins many other lagging indicators reflecting the economic rebound, which is already failing.
That the economic rebound is not a self-sustaining expansion is reflected in the fact that important leading economic indicators are now declining: stock market, bond yields, money supply growth, refi mortgages and various other housing sector stats, etc.
Now that employment stats have been predictably revised upwards, the past three months juxtaposition of expanding lagging economic indicators, along with simultaneously declining leading economic indicators, yields a classic major sell signal for the stock market, which we have been reporting with other "last gasp" peak growth rate indicators.
© 2004 Bob Bronson
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