Archive - Jul 30, 2014

Following last month's exuberant explosion of job gains according to ADP (the most since Nov 2012), the ADP employment report shows jobs missing expectations at 218k (vs 230k) and tumbling from the 281k print in June. Curious, there were still two days in the month when ADP estimated the full month print, which is curious considering ADP staunchly refuses to provide its unadjusted numbers. This is the 3rd ADP miss in 4 months. Zandi helpful addition, "there's job growth everywhere" except as we noted - not as much as expected. Today's print appears the anti-goldilocks, not low enough to prompt the Fed to get more dovish and not high enough to suggest growth is anything like markets expect.

After Eric Cantor's shocking defeat at the hands of an unknown Tea Party member several months ago, US immigration reform was said to be all but dead, a condition which has been substantially exacerbated by recent tensions over the influx of Central American children crossing the southern US border. However, contrary to initial appeals that Obama is limited in what he can do without a cooperative Congress, the president now appears set to take his latest unilateral decision, one that is set to set republicans fuming and the ranks of future potential democrat voters soaring, when as the WSJ reports, Obama may take "broad action to scale back deportations that could include work permits for millions of people, according to lawmakers and immigration advocates who have consulted with the White House."

• Fed Decision-Day Guide: QE Tapering to Inflation Debate (BBG)
• Obama says strains over Ukraine not leading to new Cold War with Russia (Reuters)
• Siemens to BP Prepare for Downward Russia Business Spiral (BBG)
• Paying Ransoms, Europe Bankrolls Qaeda Terror (NYT)
• Argentina Banks Preparing Bid to Help Argentina Avoid Default (WSJ)
• Obama Weighs Fewer Deportations of Illegal Immigrants Living in U.S. (WSJ)
• India Warships Off Japan Show Rising Lure as China Counterweight (BBG)
• Hong Kong Popping Housing Bubbles London Can’t Handle (BBG)
• Carnage at U.N. school as Israel pounds Gaza refugee camp (Reuters)

This week's US data onslaught begins today, with the ADP private payroll report first on deck (Exp. 230K, down from 281K), followed by the number of the day, Q2 GDP, which after Q1's abysmal -2.9%, is expected to increase 3%. Anything less and in the first half the US economy will have contracted, something the purists could claim is equivalent to a recession. The whisper numbers are to the downside since consumption and trade never caught up and the only variable is inventory as well as Obamacare, whose impact was $40 billion "contribution" in Q1 was entirely eliminated and instead led to a deduction, something we expect will be reversed into Q2. Following the backward looking GDP (which will be ignored by the sellside penguins if it is bad and praised if good) at 2:00 pm Yellen Capital LLC comes out with a correction on her call to short social networking stocks, as well as admit once again that the "data-driven" Fed really has no idea what it is doing and how it will tighten, but that tightening is imminent and another $10 billion taper to QE will take place ahead of a full phase out in October. Joking aside, the Fed is expected not to do much if anything, which may be just the right time for Yellen to inject an aggressively hawkish note considering her inflation "noise" refuses to go away.