Front End Of The Economy Diverges From The Clogged Back Office

While everyone is focused on the employment report it's the situation in the sewers that really matters. Your house can be immaculate until your pipes back up and you've got sewage all over the floor.

• New data shows a job market boom, but the real action is in the repo market with volumes spiking and reserves depleting rapidly.

• For 6 of the last 8 business days, repo volume has been above $2.3 trillion.

• Expect monetary plumbing issues within weeks

• September saw a shift from T-Bills to Notes issuance, while mining stocks face 10Y resistance but are poised for a breakthrough.

The kitchen is about to get flooded.

New data came in yesterday showing we're back in a "boom" of sorts, with more jobs created than consensus estimates and the unemployment rate falling to 4.1%, and rumors that we are actually in a "no landing scenario" as opposed to a hard or soft landing on the front end of what we can see.

Some on our side of economics may say that the statistics are fake or manipulated to the point of being meaningless. I'm not in that camp fully, but I hear that side. My point, at this point from what I can see, is something different. That is, the front end doesn't really matter. It's irrelevant, because the back end – the plumbing – is where the action is going to be in the short term. Meaning, in the time frame of weeks, though I can't pin down the number of weeks exactly, a new estimate follows: