Trending Thursday is a roundup of the stories shaping the week and what’s yet to come through the weekend — also taking into account social media reaction. Think of it as a midweek Monday Morning Cup of Coffee, but with extra caffeine.
Friday's employment report will be a flop, based on ADP's estimate for private payrolls, which it sees rising only 185,000, and a lot of people are wondering how that bodes for a stalling housing market and a weak economic recovery.
The 185K print by ADP is below the lowest analyst estimate for Friday’s report, which is a meager 190,000. ADP’s number is also 20% lower than the 232,000 number ADP posited a year ago, and the weakest July since 2013.
It’s not pretty. Payrolls for businesses with 49 or fewer employees increased by 59,000 jobs in July, half of the June number. Employment among companies with 50-499 employees increased by 62,000 jobs, down from 78,000 the previous month.
The rest of today’s job-related numbers also look weak at best, and troubling in reality. The U.S. Payroll to Population employment rate, as measured by Gallup, was 45.5% in July, unchanged from the previous month, and the highest rate Gallup has measured for any July since tracking began in 2010.
The percentage of U.S. adults participating in the workforce in July was 66.9%. This is at least 0.6 points lower than the rate measured in any other July since Gallup began tracking it in January 2010.
Gallup's unadjusted U.S. unemployment rate was 6.1% in July, up nominally from June's 6.0%, but still near the 5.8% low point from December 2014 in Gallup's five-year trend. However, after years of gradual decline, Gallup's unemployment measurement has not substantially changed from the 6.3% measured in July 2014.
Companies may not be hiring, but jobless claims are very low, at 270,000 for initial claims in the Aug. 1 week. The 4-week average is down for a third week in a row, 6,500 lower to a 268,250 level that is more than 10,000 below the month-ago trend.
Also of concern, the Challenger report on job cuts shows an outsized 105,696 layoff count in July.
The Wall Street Journal says that "an interest-rate increase helped drive a 27% rise in [Fannie's] second-quarter profits" Or, as Brena Swanson wrote it, Freddie saw an "astounding 702% increase in just one quarter."
The GSEs will turn over a combined $8.3 billion to the Treasury in September as part of the ongoing Third Amendment Sweep. That payment will bring the total amount Treasury has siphoned from the enterprises to a whopping $239 billion, which more than repays the $187.5 billion they received in bailout funds a few years ago.
As Investors Unite notes, after the September payment, Fannie will have paid Treasury $142.5 billion (she received $116.1 billion) and Freddie will have paid $96.5 billion (he took $71 billion in bailout funds).
Clearly there's something going on that's letting the GSEs post profitable quarters. “Could it be that the companies have recovered and have regained their footing in the housing sector to the extent that now their strength is coming through? Of course, all the more reason for Treasury officials like (Michael) Stegman to continue draining them of their profits by refusing to let them build up their capital buffers,” the activist investors say.
The monkeying with economic measures apparently continues, and ZeroHedge as always is there to dive deep into the morass and shine a little light. Definitely worth a look.
The first Republican debate is tonight in Ohio, where everyone wants to watch Trump and the seven dwarves. (He may be a clown, but what does it say when your best and brightest can’t beat a clown?) But you know what else is in Ohio?
Also on the Twitters…