ADP Employment 5-1-13

ADP Employment 5-1-13

TRADEX GLOBAL INTERNAL COMMENTARY

Hiring at private businesses remained sluggish!  According to ADP, private payrolls rose just 119k last month.  The estimate was 155k and March was revised down to 131k.  The TV pundits will spin this and talk about the volatility of jobs numbers and seasonality (blah, blah, blah…).  In the real economy (Main Street), the one thing the  Fed cannot manipulate is jobs.  They really matter and these numbers flat-out stink after 5 years of recovery.  Small businesses, the engine for growth in the US, are not hiring.  The economy needs 250k to 300k jobs in order to really recover.  So far we are far off that number.  That being said the S&P is at an all-time high and HY bonds trade at historic high prices (and low yields); probably a good time for our short high yield product launch.  The government can inflate financial assets, but cannot put people to work.  Maybe just starting to send blank checks to the unemployed is a better way to spend the trillions they have stolen from the future generation.  Keep nimble – Michael Beattie

EXTERNAL RESEARCH COMMENTARY

Hiring at private businesses remained sluggish last month, as job growth continues to slow in the beginning of the year.  Employers added just 119,000 workers last month, according to payroll giant ADP. The figure is considerably below economists’ forecasts. They’d expected closer to 155,000. March’s gains were revised lower (by 27,000) to 131,000.  Stock futures dropped further this morning after this morning’s news. Dow Jones industrial average futures declined 5 points to 14,839.8. S&P 500 and Nasdaq composite futures were flat.  There’s an important trend immediately apparent from the ADP data. Small businesses are hurting. Once the engine for employment growth, small business hiring is falling. Consider these figures: In January, small businesses added 115,000 jobs in January as large ones lost 2,000. In April, small businesses added 50,000 as large ones grew by 43,000. Observers chalk the decline in small-business strength to a number of factors, from increased Obamacare expenses to higher taxes this year.  Parsing these numbers leaves an uncomfortable conclusion. The U.S. economy continues to limp along at a truly plodding pace, and the one-time source of greatest growth (small businesses) is being sapped. Economists say the economy needs to be adding closer to 250,000 to 300,000 jobs a month for the country to recover at a normal rate. Surely economists will spend today slashing predictions for Friday’s government employment, probably down to just 100,000 jobs from an earlier prediction of 150,000.  One thing it certainly should do is prevent increased chatter of an end to the Federal Reserve’s easy money policies. The Fed says its massive bond buying will end eventually, but it’s hard to picture policymakers doing it at a time of continued substantial weakness in the economy.  In corporate news today, Merck shares lost 4.9% to $44.75 in pre-market trading. The Dow component cuts its 2013 profit forecast and offered disappointing quarterly sales.  Chesapeake Energy gained 5.3% to $20.58 as the natural gas giant swung to a quarterly profit. Time Warner retreated 2.2% to $58.49 after its profit beat Wall Street expectations from stronger results in its networks and studios.  Apple rose 0.5% to $442.78 following a blockbuster bond offering by the world’s most valuable company. The $17 billion offering was the largest corporate-bond deal in history.  Facebook gained 1.3% as investors eyed the social media company’s results which will come after today’s Closing Bell.