Wednesday, July 3, 2019

Idle Rambling, Independence Day Eve -- The ADP Employment Report Today; The Record S&P -- July 3, 2019

Recession talk. 

A reader pointed me to Advisor Perspectives.

This is a nice analysis of the ADP employment report today.

This is the graph with minimal markings. Spend some time looking at this graph while reading the linked article.

Two comments regarding that linked article.

First, for the past five years, analysts have been talking about a "recession right around the corner." Some analysts suggest we are already in a recession. My interpretation of the graphic above suggests we are a) not in a recession; and, b) a recession is not "right around the corner."

This is based solely on the ADP employment report today and the comparison of this data with the data prior to and during the last recession.

The second observation, "why the market went up today," with the S&P 500 hitting a third consecutive record high:
  • the ADP employment report, as good as it was, fell short of expectations
  • if the economy is struggling that puts pressure on "the Fed" to cut rates
  • investors are looking for any data to suggest that the economy is not doing as well as one might hope
  • with the ADP coming in under expectations (quite a bit, in fact) that puts pressure on the Fed to cut rates 
  • cutting rates is "bullish" for the stock market -- and that's why the market went up today, the third consecutive day with record highs
Finally, the graphic with some additional markings:

And I would comment on the additional markings, but it's late, and I'm heading to bed.

No comments:

Post a Comment