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June 6, 2013 / Toby Dayton

Better Than Expected Jobs Report Tomorrow Will Send Markets Tumbling Due To Fears Of Imminent Tapering

I’m not often one to try to predict what will happen in the markets on the first Friday of the month when the jobs numbers are released by the Bureau of Labor Statistics. It’s hard enough to try to forecast what the jobs numbers themselves will be, let alone attempting to prognosticate how the markets will react. But this month, it seems quite clear to me that a positive number tomorrow, which is highly likely given the solid growth in both new and total job listings we saw on LinkUp’s job search engine in March, will send the markets tumbling with the resulting increase in fear of imminent tapering from the Fed. The markets seem to be talking itself into the 10% correction that everyone is anxiously waiting for (perhaps even desiring so that it can move on and resume its terrific bull run) and the market declines this week appear to be placing the market on the brink of such a move. A surprise on the upside tomorrow might just be the catalyst for that correction.

How strange that would be.

ADVICE: IGNORE EVERYTHING I SAY ABOUT THE MARKETS (but we are, more often than not, correct about the jobs numbers themselves)

Based on strong gains in new and total job listings on LinkUp in March (a 10% blended average), we are forecasting that the U.S. economy added a net gain of 290,000 jobs in May. (A job opening posted on a company’s website is a very strong indicator that a job will be added to the economy 60 days later. And LinkUp’s index includes 1.5 million job openings indexed from over 25,000 company websites throughout the U.S.). The modest increase in new and total job we saw on LinkUp in April (1.2% blended average) point to a net gain of 315,000 jobs in June, and the declines we saw last month in new and total job openings on LinkUp (a -3.2% blended average) point to only 240,000 jobs gained in July. We will be adding more data to our forecast for June and July as we move through the next few months, and the numbers will likely be revised, but table below details our forecast for tomorrow and our preliminary look into the next few months.

LinkUp 60-Day Forecast (June 2013)

In May, new job listings on LinkUp fell by 6% while total jobs rose by 1%. (The raw numbers below are slightly different from the ones above which have been run through our forecasting model and are adjusted based on the particulars of the way the model is built).

Jobs By State May 2013

In terms of jobs by category, new job openings in May fell 2% and total job openings by category rose 1%.

Jobs by Category May 2013

So look for a strong jobs number tomorrow, far better than consensus forecast, but I’d recommending being short the market (at least for a day).