Wednesday, June 30, 2021

Morning Note: "As Expected", if you're not in the Roaring 20s camp...

Payroll company ADP's monthly private sector jobs report released this morning shows 692k net new jobs taken for June. That was 92k ahead of expectations, although, ironically, May's number was revised down by precisely 92k. As you might expect all but 48k occurred in the services sector, with more than half in the leisure/hospitality space.

Bottom line, ~20 million private sector workers lost their jobs during last year's plunge, 12.8 million of those are now back to work. Which means there remains a gapping mismatch between current job openings, a record 9+ million, and available workers. I.e., there are oodles of job opportunities when the remaining folks are ready. Which of course will coincide with the expiration of historically-generous unemployment benefits.

As expected, the world's seeing a notable deceleration in many cyclical indicators. Well... "as expected" if you're not in the roaring 20's redux camp (we're not). I.e., of course there's a letdown to be had after the initial reopening thrust. Although, that said, there's also the delta covid variant that is beginning to play havoc in a number of economies across the globe.

Overnight data showed manufacturing dropping in Japan and South Korea, China's PMI (business survey) weakening, Switzerland's leading indicators dropping notably and the U.S. Chicago PMI coming in nearly 4 points below consensus expectation.

Consumer data, on the other hand, continues to shine: With Japan housing starts (and "housing confidence"), French consumer confidence and spending, and U.S. consumer sentiment (Conference Board survey) all besting expectations.

Asian equities were mixed overnight, with 7 of the 16 markets we track closing lower.

Europe's a mess this morning, with all but 2 of the 19 bourses we follow in the red, as I type.

U.S. major averages (save for the Dow) are essentially (on balance) flat to start the day: Dow up 146 points (0.43%), SP500 up 0.13%, SP500 Equal Weight up 0.23%, Nasdaq 100 down 0.07%, Nasdaq Comp down 0.12%, Russell 2000 down 0.05%.

The VIX (SP500 implied volatility) is up 0.50%, VXN (Nasdaq 100 i.v.) is up 1.44%.

Oil futures are up 1.12%, gold's up 0.11%, silver's up 0.80%, copper futures are 0.64% and the ag complex is down 0.68%.

The 10-year treasury is up (yield down) and the dollar is up 0.24%.

Led by MP (rare earth miner), energy stocks, uranium miners, base metals miners and KRBN (carbon credits) -- but dragged by solar stocks, wind stocks, Latin American equities, Viacom and Asia-Pac stocks -- our core mix is off 0.05% to start the session.

Will and Ariel Durant in their 1968 must-read treasure The Lessons of History remind readers of the cyclical nature of things, including things some believe are unique to present times:

"We conclude that the concentration of wealth is natural and inevitable, and is periodically alleviated by violent or peaceable partial redistribution. In this view all economic history is the slow heartbeat of the social organism, a vast systole and diastole of concentrating wealth and compulsive recirculation."

Have a great day!

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