The 'Experts' Still Don't Have a Clue!

by Andrew Zatlin February 07, 2023 11:40 am ET

Last week, the "experts" got it wrong. But WE didn't!

Data came out that sent the market tumbling, and most investors were blindsided.

Here's the thing: These experts still don't know what's going on. And rest assured...

If they missed the last opportunity, you can bet they're about to miss this one.

For a transcript of this video, see below. This transcript has been lightly edited for length and clarity.

The 'Experts' Still Don't Have a Clue!

Not to toot my own horn, but things are pretty much unfolding as I predicted.

Last week, I forecasted a strong payroll number, followed by a market pullback. And sure enough, that's what happened.

All weekend long, the "experts" who were caught off guard were playing catchup, trying to figure out what they missed.

And that's the scary fact: These guys still don't know what's happening. But we do. And if these experts missed the last opportunity, they're surely going to miss the one I see coming next. Let me explain...

A Look at the Data

Simply put, most experts don't understand the data they're looking at. Let me show you what I mean:

This chart shows January payroll data for each of the last 20 years. All year long, and especially in the last six months of the year, companies hire seasonal workers to handle the holiday rush.

Amazon (AMZN) and FedEx (FDX), for example, hire more drivers. And retail businesses hire more employees to deal with extra shoppers.

Then in January, after things have calmed down, around two million of these workers are laid off. And that's reflected in the chart above.

But look at this year (the gray bar). A noticeably smaller group of workers was let go. What's happening here?

A Simple Explanation

Specifically, we had 250,000 fewer seasonal layoffs last month than we typically have. But the reason is simple:

Companies hired fewer seasonal workers in the first place! You can see that in this chart here:

Retail payroll growth (jobs added) in the last six months of 2022 was the second lowest in 10 years. Similarly, transportation companies weren't hiring much, either:

The bottom line is that there were fewer people fired this year, simply because there were fewer people hired. And that's key...

Keep in mind that the model that analysts look at doesn't reveal the whole picture. It assumes a certain number of layoffs and measures only how many more or fewer people were let go. It doesn't factor in how many fewer were hired. And that's not the only misreading...

In a strong economy, layoffs are smaller. Companies are growing and want to retain as many workers as possible. But this reduced layoff figure was not because the economy is strong. Quite the opposite, in fact.

Companies weren't in a position to hire as many people as usual, which led to fewer people being fired come January.

The economy is weak right now, and it's getting weaker. We'll start to see the data reflect this hard truth in just a few weeks.

Hiring is Down

You see, payroll data is based on actual hiring, not how many more or fewer people were hired. And here's what the data is showing:

According to my S&P 500 Hiring Index, hiring has taken a nosedive. Companies still aren't ready to add to their payrolls.

Soon, the market is going to take notice of this activity (or lack thereof). And that's when people will clamor for the Fed to start cutting rates.

As an investor, here's what you need to know:

Prepare for choppy waters over the next two months. Invest carefully. The market rally to start the year has begun to fade and will continue to do so for the foreseeable future.

For the long term, though, get ready. I think we're nearing a time to go long and strong with a lot of conviction. Stick with me to find out when I think that'll happen. In the meantime, check out my "Pro" content for an investment play I believe could result in gains of 150%.

We're in it to win it. Zatlin out.