Beware: They Can Manipulate The BLS Data

If there was ever a time to manipulate data, the BLS employment figures scheduled for release on Friday are ripe for manipulation. Before you continue to read this realize that I am not suggesting a drastic change in trend, I am not suggesting that hiring is going to collapse, in fact I think the trend will remain the same, at least for now (that may change a few months from now).

My suggestion here is that the BLS data can be manipulated by large corporations, and they seem to have every reason to do that in this coming report. Whether they do or not is left to be seen, but here's the conspiracy theory.

It starts with an understanding that the BLS data is a survey, and sometimes data comes in late. We saw the impact of this during the Government Shutdown, where the headline number blew away estimates because the delay gave companies two extra weeks to respond to the survey.

Therefore, companies know that they can impact the headline number, even though eventually adjustments will be made. The situation we are facing today though is one where a December FOMC taper is absolutely on the table, and will become much more probable if the BLS data comes in hot.

The Street is generally nervous about this, and investors worry that a December taper could start a sell-off in the Stock Market. These same large companies also have handsome share price appreciation (for the most part), and none of them want to see that erode as the year comes to an end either, and this is where it gets interesting.

If the executives know they can be a little late in responding to the survey (no harm no foul), and by doing so influence the BLS headline number down so that the FOMC will have less reason to taper immediately, some executives just may be influenced to drag their heels.

I am not saying this will happen, I do not know who would do it if it did happen, and I am just pointing out the opportunity to manipulate this data that exists today. Those same companies with huge vested interest in the stability or possibly even further appreciation of their share prices are in control of this BLS data, and if they decide to drag their heels the BLS figure can come in light.

Economists are calling for 180K jobs to be created, the recent trend has been over 200K, but I am ready for a miss. The ADP report is real time, ADP calculates this data as hiring happens, but BLS does not work that way. The Street expects the BLS data to beat, just like the ADP data, but beware of this opportunity to manipulate.

Furthermore, do not take your eyes off the ball. Regardless of this headline data, because the trend will remain intact, the FOMC still will be enticed to taper in December and the probability of tapering rests solely on the level of interest rates. Pay close attention to the levels of (TBT) and (TLT) as a result.

Source: Beware: They Can Manipulate The BLS Data

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More...)

Business relationship disclosure: By Thomas H. Kee Jr. for Stock Traders Daily and neither receives compensation from the publicly traded companies listed herein for writing this article.

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