Wednesday, June 30, 2010
Right Up Sporkfed's Alley
First, ADP employment: A June increase of 13,000, even with the modest upward revision of May by 2,000, does not foreshadow much joy on Friday. Since Census jobs are going to be diminishing, the expectation is that the June employment report will show a net loss of jobs. If ADP is in the ballpark, June's negative number will be higher than expected. I am thinking -250K or thereabouts.
The MBA weekly mortgage application report showed a continued drop in purchase apps, which are related to home sales, and the drop in home sales is related to construction employment and materials transactions. I believe the Philly Fed's bad performance was related to home sales in part. T-bill yields are extremely favorable for refis, and refi apps continue to climb.
Today we get crude inventories and Chicago PMI. Tomorrow we get unemployment claims, ISM mfrg, NACM, Monster Employment, pending home sales and construction spending. Then on Friday it's the employment report, which I expect to be a kick in the teeth. Factory orders will be somewhat positive (I hope).
Then everyone gets a long weekend to think it all over.
I still see the economy growing the balance of the year, albeit weakly. And I do now have something in the way of evidence aside from freight to offer - so far in June we have pegged out a nice increase in Treasury tax receipts. Personal and corporate income taxes are showing healthy YoY increases, and even FUT has turned and moved to an increase. FUT has a very strong predictive value in the near term, and better yet FUT is not going to be distorted by those Census jobs. FUT is paid quarter by quarter, so the current increase is related to improvement in the private job sector over the last few months. But at least it's there!
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