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Market Talk / July 2 - 8
- Thread starter Spaf
- Start date
The Association of Directory Publishers (ADP)? 
Yep... Google answered my own question.
Wait... Nope ADP; http://www.adp.com/
Yep... Google answered my own question.
Wait... Nope ADP; http://www.adp.com/
Mike said:I think this bears repeating.
Last edited:
Markets seem to have a split personality today. Stocks are down and commentators pointing to increased wage pressure, implying increased inflation, implying more rate hikes. But the bond market is brushing all this aside and holding higher price levels (lower yields), implying that bond investors don't believe higher rates are coming. When the two views converge, whose view will win??
The_Technician
Active member
Pilgrim said:
Here's a viewpoint Pilgrim....it may ease your hysteria....
http://money.cnn.com/2006/07/07/markets/markets_newyork/index.htm
Chin up my dear fellow....chin up
W
Wizard
Guest
As if we needed more contradictory data on the economy, this week many investors were introduced to something called the ADP National Employment Report.
In the up-is-down world of Wall Street, the report's optimistic assessment of job creation in June helped send the Dow Jones industrials down 76 points Wednesday.
The episode illustrates just how important today's definitive jobs report from the Labor Department is for the future of interest rates and the stock market.
Two days ago, most analysts were predicting a nice, Goldilocks-style gain of 170,000 jobs in June, enough to indicate economic health but not so much that the Federal Reserve would worry about inflation.
Shortly after 7 a.m. Wednesday, though, Automated Data Processing Inc.'s National Employment Report changed such cozy notions with news that, by its count, private-sector employment had increased by 368,000 in June.
Bond prices immediately sank, reflecting the increased inflationary expectations. If the economy can absorb that many workers, the thinking goes, chances are pretty good that wage pressures are building and the Fed will keep raising rates.
Payroll data
Unlike the Labor Department's survey of employers, the ADP data come from payroll data on 225,000 of its corporate customers, encompassing 14 million employees.
Still, economists apparently thought the ADP data reliable enough that the consensus estimate for June job creation has risen to 200,000.
Goldman Sachs went even further, raising its forecast for today's report to 250,000 from 150,000. Goldman said ADP better predicts the Labor Department's figures than any other data economists use to forecast payrolls.
Moody's Investors Service's John Lonski found that the ADP data had overestimated payroll growth by 49 percent in the last year. Still, that average predicts 247,000 in job gains.
Less swayed
Others were less swayed.
"It is hard to believe that in the face of what was a slowdown in demand in June that corporate America suddenly embarked on the greatest hiring spree in this 5-year-old economic expansion as the ADP seemed to suggest," Merrill Lynch chief economist David Rosenberg said.
He was referring to the first time in 13 months that the employment component of the Institute for Supply Management, a survey of manufacturers, reflected fewer employers expanding payrolls than those expected to shrink them. Add to this the first upturn in layoff announcements in June.
Whatever happens, this morning's report will tell us two things: whether investors think job creation is strong enough to make the Fed tougher on interest rates, and whether we'll be hearing much more about the ADP report from here on out.
http://www.dallasnews.com/sharedcontent/dws/bus/columnists/ddimartino/stories/070706dnbusDiMartino.1...
In the up-is-down world of Wall Street, the report's optimistic assessment of job creation in June helped send the Dow Jones industrials down 76 points Wednesday.
The episode illustrates just how important today's definitive jobs report from the Labor Department is for the future of interest rates and the stock market.
Two days ago, most analysts were predicting a nice, Goldilocks-style gain of 170,000 jobs in June, enough to indicate economic health but not so much that the Federal Reserve would worry about inflation.
Shortly after 7 a.m. Wednesday, though, Automated Data Processing Inc.'s National Employment Report changed such cozy notions with news that, by its count, private-sector employment had increased by 368,000 in June.
Bond prices immediately sank, reflecting the increased inflationary expectations. If the economy can absorb that many workers, the thinking goes, chances are pretty good that wage pressures are building and the Fed will keep raising rates.
Payroll data
Unlike the Labor Department's survey of employers, the ADP data come from payroll data on 225,000 of its corporate customers, encompassing 14 million employees.
Still, economists apparently thought the ADP data reliable enough that the consensus estimate for June job creation has risen to 200,000.
Goldman Sachs went even further, raising its forecast for today's report to 250,000 from 150,000. Goldman said ADP better predicts the Labor Department's figures than any other data economists use to forecast payrolls.
Moody's Investors Service's John Lonski found that the ADP data had overestimated payroll growth by 49 percent in the last year. Still, that average predicts 247,000 in job gains.
Less swayed
Others were less swayed.
"It is hard to believe that in the face of what was a slowdown in demand in June that corporate America suddenly embarked on the greatest hiring spree in this 5-year-old economic expansion as the ADP seemed to suggest," Merrill Lynch chief economist David Rosenberg said.
He was referring to the first time in 13 months that the employment component of the Institute for Supply Management, a survey of manufacturers, reflected fewer employers expanding payrolls than those expected to shrink them. Add to this the first upturn in layoff announcements in June.
Whatever happens, this morning's report will tell us two things: whether investors think job creation is strong enough to make the Fed tougher on interest rates, and whether we'll be hearing much more about the ADP report from here on out.
http://www.dallasnews.com/sharedcontent/dws/bus/columnists/ddimartino/stories/070706dnbusDiMartino.1...
I still think the data is more confusing than anything else and to use a cliche, Wall Street hates uncertainty. The emotional money spoke early. Let's see what the late money does, although going into the weekend may be reason to sell enough for some investors/traders. More uncertainty.
I'm staying put watching ~1260 as support for the S&P.
I'm staying put watching ~1260 as support for the S&P.
As you know, he has been on fire lately with his short term calls.SystemTrader
Member
As a rule, bond traders are considered to be smarter and more sophisticated than stock traders. However, bonds/bond traders didn't react with nearly the same euphoria last week after the Fedspeak. Maybe the two groups are just getting a little closer to equilibrium...
Pilgrim said:
It is interesting that the ADP report called for 368,000 new jobs. The DOL gave us only 121,000 but reported that a separate survey of 60,000 households estimated that 387,000 new jobs were created. For years now I have been seeing opinions from some economists that the household survey is the better number, since the "official" DOL estimate heavily weights large corporations while the household survey gives more importance to small businesses.
Since ADP and the household survey seem to agree, I tend to believe the larger number.
Since ADP and the household survey seem to agree, I tend to believe the larger number.
Mike
Active member
http://www.sba.gov/advo/stats/sbfaq.pdf
Small businesses are responsible for half of all private sector employment and have contributed 60-80% of net job gains recently according to that site.
Seems to me that the Dept of Labor should not skew its weighting in favor of large corporations as that would inaccurately depict the labor situation given the small businesses' share of net job growth.
Just another arbitrary government calculation...
Edit: Tom, that makes me feel better about what I did yesterday.
Small businesses are responsible for half of all private sector employment and have contributed 60-80% of net job gains recently according to that site.
Seems to me that the Dept of Labor should not skew its weighting in favor of large corporations as that would inaccurately depict the labor situation given the small businesses' share of net job growth.
Just another arbitrary government calculation...
Edit: Tom, that makes me feel better about what I did yesterday.
James48843
Well-known member
Wizard said:
Delphi workers do not earn $76 an hour- or $60 an hour.
The big issue here last fall was that Delphi workers were being asked to take a pay cut from $27 an hour, to $12 an hour.
See http://www.freep.com/apps/pbcs.dll/article?AID=/20051126/BUSINESS01/511260313/1002/BUSINESS
Extract:
Delphi has demanded that its 34,000 U.S. hourly workers accept an average base wage of $12.50, down 53% from an average base hourly wage of $27. Delphi's Nov. 15 proposal includes higher out-of-pocket health-care costs for workers, frozen pension benefits, fewer vacation days, restricted overtime and no vision or dental insurance.
The $76 dollar an hour figure was being thrown around by company managment, and was said to reflect the legacy cost of paying the pensions of those who previously have retired. By going into bankruptcy, Delphi planned to unload all the retirement obligations, including pensions and medical insurance, onto the back of taxpayers through PGC, then cut worker wages in half, and tell them no more pension or medical benefits. AND at the same time, offered 500 managementment flunkies bonuses amounting to millions of dollars, and 10% of the company's stock, if they stuck with the company and pounded the pay cuts for common workers through. And THAT is what caused a lot of people to be unhappy.
By the way- I am a federal employee in Michigan- a state where we've not had any economic recovery after Sept 11th, where real take home pay continues to slump each year, and unemployment is now over 7%. I only drive American made cars made in Michigan. My next door neighbors depend on my purchasing power, and helping to keep decent jobs here.
Mike
Active member
I've read similar articles about the true legacy costs being due to pension plans for executives / senior management and that rank and file employee pension plans are actually flush with cash. Of course, companies won't wish to publish that sort of information due to the inevitable backlash from the public.
It's really just a modern day version of "he who has the gold makes the rules."
As for Michigan, it put too many eggs into one basket with the auto industry. Gotta diversify to stay afloat during the inevitable tough stretches for various sectors of the economy. If Northwest Airlines goes out of business, that'll be a stiff blow to the MN economy, but we'll manage because we have so many other things here (medical device companies, chemical companies, etc.).
It's really just a modern day version of "he who has the gold makes the rules."
As for Michigan, it put too many eggs into one basket with the auto industry. Gotta diversify to stay afloat during the inevitable tough stretches for various sectors of the economy. If Northwest Airlines goes out of business, that'll be a stiff blow to the MN economy, but we'll manage because we have so many other things here (medical device companies, chemical companies, etc.).
James48843
Well-known member
Mike said:
It's not just auto industry here. Manufacturing of all kinds is getting killed by foreign imports. Steel production has terminated. Furniture is getting killed. Hi tech instruments are getting schlackered. (is that a word?) Even NWA lost 5,000 jobs in Detroit area - outsourced to low bid jet maintenance in El Salvador.
Univeristy of Michigan said last fall: " Over the past five years, Michigan's economy has lost a total of 308,900 jobs and will lose another 9,600 jobs in 2006. The state's manufacturing workforce has declined by about 25 percent during this time and will lose another 28,600 jobs in the next two years. "
That was before GM and Ford annouced an additional 40,000 gone. NATFA is attributed to over 51,000 jobs lost in the last four years alone. The new jobs that are created pay 30% less than the ones leaving.
State unemployment rate now at 7.2% and climbing- and that only counts the ones still getting anything. Once benefits are exhausted, they end up moving to another state, taking up hunting for food (seriously) and living out of cars in the woods.
Michigan becoming the new Mississippi.
(Sorry- no offense meant to those of you from Mississippi). :nuts:
W
Wizard
Guest
James48843 said:
Delphi pay: $76 an hour
Firm says compensation doubles its rivals'
http://www.freep.com/apps/pbcs.dll/article?AID=/20051126/BUSINESS01/511260313/1002/BUSINESS
