Here's why the jobs number tomorrow may be terrible

Checking out the Daily Treasury Statement for May 29, last business day of May we see government took in $169.2 billion in employment tax deposits. Employment tax deposits are withholding and FICA, which flow to the Treasury when a) more people are working on a payroll and/or; b) their incomes go up. Both are indications of an improving job market.

That $169.2 billion of payroll tax collected was $8.9 billion below the level collected in April, so right there is not a good sign, however, in the past six years 2010-2015, May employment taxes were below those collected in April so there could be something seasonal with that. (Who knows? More accountants working in April??)

That's the "good" news. The bad news is that the current May decline was the largest April-May drop in employment tax collections since 2010. By the way, the only April-May increase in employment tax deposits in the last six years was in 2011 and that was only, $1.7 billion.

There's more bad news, unfortunately. The overall rate of Federal Government spending has suddenly dropped off sharply. On May 27 total Federal Gov't spending for the FY 2015 was $117 billion above the same time last year and it's been $90 billion or above since late March. Now, all of a sudden it has suddenly dropped to $72 billion over 2014, a marked deceleration.

This is not good.

So if you want to trade the jobs number tomorrow in Forex, I would short the dollar going into this data release. (8:30am ET.)

Stocks will also be hurt by a weak number, at least initially. They could recover if the bond market rallies, which I believe it will, however, signs of a weakening economy would not sit well with stocks.