Good Monday A.M.,

There is not much data this week until Wednesday when CPI comes out, as does the news from the Fed meeting. CPI Is expected to be at zero dot zero. The Fed may reinforce its commitment to keep rates low for an extended period of time to fuel the V-shaped recovery, anyone and everyone in the equity markets must be betting the farm on. I still do not get it or see it, but you cannot fight the tape (unbelievable the equity markets are up yet again today).

Interesting that as I was still scratching my head from Friday’s blockbuster payroll report, the BLS, who created the report, shared a mostly ignored update that the report had a misclassification error. What? How this type of manipulation happens in today’s world is unbelievable. We are all lemmings… the BLS shared that:

“As was the case in March and April, household survey interviewers were instructed to classify employed persons absent from work due to coronavirus-related business closures as unemployed on temporary layoff,” BLS said. “However, it is apparent that not all such workers were so classified. BLS and the Census Bureau are investigating why this misclassification error continues to occur and are taking additional steps to address the issue.”

What does this mean? Had the “misclassification error” not occurred, BLS said the overall May unemployment report would have been nearly 3 percentage points higher than reported—in other words, the May unemployment rate was 16.3 percent for May, not 13.3 percent; higher than April’s rate. BLS noted the problem was persistent through March data and said the March unemployment rate likely should have been 5.4 percent, instead of the official 4.4 percent rate. In April, BLS said the real unemployment rate likely jumped to 19.7 percent, not 14.7 percent.

What the hell? The real unemployment rate is 17% now? They share this by an asterisk? The ten year, which had jumped 10bps, has dropped in yield by 5 bps and Mortgage Bonds are +26bps, but this is a hollow victory after the damage that was caused and more importantly, how a trillion dollar industry, that quite literally has fortunes made and lost on trades, is using inaccurate data. It is mind blowing. OK off my soap box; I do expect a sell off coming soon in equities, but I have been expecting that for some time. Bonds should benefit from the dip in stocks.

Please stay safe and healthy, make today great!