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Quick Fix
Welcome to jobs day — As we’ve noted, this one could have something for everyone. ADP (which hit close to 1 million) suggests it could be big. But ADP is not always the best predictor of the official monthly payrolls number.
And if it is big, Republicans will say it means no more government help is needed while the White House will say it shows President Joe Biden’s plans are working and government assistance is not keeping people away from the workforce.
A weak number will offer the White House a chance to argue for more government intervention and Republicans to say the labor shortage is a result of too much stimulus. There will be SOME actual answers in the numbers.
But everything is so volatile and confused at the moment as the nation comes out of a massive shock buffered by massive fiscal and monetary support that it will be hard to draw many firm conclusions. It’s totally boring and cliche to say, but right now the trend — at least three or four months — truly is your friend.
Moody’s Mark Zandi emails: “I expect the BLS to report an increase of 750,000 jobs in May, and a 5.9% unemployment rate with an increase in labor force participation. Wage growth should also post a sturdy gain of 0.4%.
“Even if this strong expected job gain is on the mark, there will still be an enormous hole in the job market to fill as employment will be down 7.5 million jobs since before the pandemic, and this doesn’t factor in the jobs that would have been created if there wasn’t a pandemic …
“There is a long list of reasons why employers are having difficulty filling open job positions, and while the extra unemployment insurance benefits is on the list, it is towards the bottom of the list.
“At the top of the list is simply that the economy has re-opened very quickly as the pandemic winds down, and it is taking some time for workers that permanently lost their previous job to settle on a new one. Other workers are still home taking care of kids and elderly parents. And still other workers are still nervous about the pandemic and require a higher wage to compensate for their concerns.”
Pantheon’s Ian Shepherdson: “We still look for a 550K May headline payroll print today, with private payrolls up 500K, despite the 978K ADP reading yesterday. …
“Still, we see less scope for a big downside surprise than in April. Our payroll forecast is consistent with a two-tenths dip in the headline unemployment rate, to 5.9% … Today's report, … is unlikely to trigger any big changes in perceptions of the state of the labor market, either at the Fed or among investors”
GOOD FRIDAY MORNING — Happy weekend, all. Email me on [email protected] and follow me on Twitter @morningmoneyben. Email Aubree Eliza Weaver on [email protected] and follow her on Twitter @AubreeEWeaver.
Driving the Day
May jobs report at 8:30 a.m. expected to show a gain of 663K with unemployment falling to 5.9% from 6.1% and wages up 0.2% … Biden will deliver remarks on the jobs report at the Rehoboth Beach Convention Center in Rehoboth Beach, Dela. … Treasury Secretary Janet L. Yellen will attend the G-7 finance ministers meeting in London
LEFT LOSES PATIENCE WITH BIDEN ON INFRASTRUCTURE — Our Laura Barrón-López, Christopher Cadelago, and Sam Stein: “Progressive activists have mostly kept their cool as … Biden’s infrastructure negotiations with Republican senators stretch on longer than planned.
“But with talks ongoing and new concessions being offered, leaders of liberal organizations say they’re losing patience, fearful that the White House is wasting time in pursuit of Republican votes that are unlikely to materialize. The latest bout of anxiety came this week after Biden met with the lead Republican negotiator, Shelley Moore Capito of West Virginia, and backed off his insistence that a narrow infrastructure bill be paid for by a hike in the corporate tax rate.”
MEANWHILE, DEMS HAVE TAX HIKE ANXIETY — Our Bernie Becker and Aaron Lorenzo: “Democrats hung with former President Barack Obama when he campaigned for higher taxes on the rich. And they didn't blink when Republicans passed another round of tax cuts in 2017, without a single Democratic vote, after years of getting clubbed by the GOP for being the tax-and-spend party.
“But … Biden’s proposed tax increases are another breed, even if they are focused on people making over $400,000 a year. His proposals are far more ambitious than the concessions Obama ended up winning after the 2012 election, which allowed the top income tax rate to rise for high earners. … Biden’s proposed tax hikes would come as the economy is still rebounding from the coronavirus, and as Democrats are about to face likely difficult midterm elections while increasingly relying on higher-income suburban voters.”
FORMER TREASURY OFFICIAL SENTENCED — Our Josh Gerstein: “A former senior Treasury Department official was sentenced Thursday to six months in prison for leaking thousands of confidential reports on suspect financial transactions.
“The disclosures from Natalie Mayflower Sours Edwards, 42, fueled reports in BuzzFeed on issues related to special counsel Robert Mueller’s investigation of ties between the Trump campaign and Russia, as well as a series by news organizations across the globe last September examining why banks around the world continued to do business with clients who regularly engaged in suspicious activity.”
Markets
STOCKS DROP AS TECH SHARES RETREAT — WSJ’s Anna Hirtenstein and Paul Vigna: “U.S. stocks fell Thursday as fresh weekly data showed a continued recovery in the labor market and traders kept a close eye on any potential policy shifts from the Federal Reserve. …
“The moves in major stock indexes have been muted in recent days as investors weigh signs that the economic rebound may slow or falter, with snarled supply chains bolstering input costs for an array of products. Concerns about high valuations for many stocks following the monthslong rally in U.S. markets are also giving some investors pause.”
AMC’S STOCK PLUNGES — AP’s Michelle Chapman and Stan Choe: “Got your popcorn? The wild ride for the summer’s blockbuster stock, AMC, got even crazier on Thursday. The movie-theater company’s stock plunged nearly 40 percent in the morning after it announced plans to sell 11.6 million shares to raise cash, while warning buyers they could lose all their money.
“But it erased the loss in just a few hours. After the stock sale was complete, it climbed above the record closing price it had set a day earlier, only to sink back to an 8 percent loss later in the afternoon.”
Fly Around
BIDEN BLOCKS 59 CHINESE COMPANIES IN AMENDED TRUMP ORDER — Bloomberg’s Jennifer Jacobs: “Biden signed an order Thursday amending a ban on U.S. investment in Chinese companies begun under his predecessor, naming 59 firms with ties to China’s military or in the surveillance industry, including Huawei Technologies Co. and the country’s three biggest telecommunications companies.
“The ban on new investments will take effect Aug. 2 at 12:01 a.m. in New York, according to administration officials who briefed reporters on condition of anonymity. Investors will have one year to fully divest.”
AS ‘TSUNAMI’ OF CASH DRIVES RATES LOWER, WHAT WILL THE FED DO? — Reuters’ Jonnelle Marte: “Banks have too much cash on their hands — and they’re running out of places to put it. Nowhere is this more evident than in the rising popularity of a Federal Reserve program that lets firms stash their cash overnight with the U.S. central bank in exchange for at best a small return.
"The payout these days: Zero percent. But usage is soaring to record highs as money market funds and other eligible firms cope with what some analysts are calling a ‘tsunami’ of cash.”
ECONOMY IS SENDING CONFUSING SIGNALS. WHAT’S GOING ON? — NYT’s Ben Casselman: “This is a strange moment for the U.S. economy. Unemployment is still high, but companies are complaining they can’t find enough workers. Prices are shooting up for some goods and services, but not for others.
"Supply-chain bottlenecks are making it hard for homebuilders, automakers and other manufacturers to get the materials they need to ramp up production. A variety of indicators that normally move more or less together are right now telling vastly different stories about the state of the economy.”
JOBLESS CLAIMS DROP TO ANOTHER PANDEMIC LOW — AP’s Paul Wiseman: “The number of Americans seeking unemployment benefits fell last week for a fifth straight week to a new pandemic low, the latest evidence that the U.S. job market is regaining its health as the economy further reopens.
“The Labor Department reported Thursday that jobless claims dropped to 385,000, down 20,000 from the week before. The number of weekly applications for unemployment aid, which generally reflects the pace of layoffs, has fallen steadily all year, though it remains high by historical standards.”
SEC NAMES NEW ACTING DIRECTOR OF TRADING AND MARKETS UNIT — Reuters: “The U.S. Securities and Exchange Commission (SEC) on Thursday named David Saltiel as acting director of the agency’s trading and markets division, which regulates major market players including broker-dealers and stock exchanges. Saltiel, head of the unit’s analytics and research office, replaces Christian R. Sabella. Sabella left the SEC on June 2, the SEC said in a statement.”
JPMORGAN NAMES THREE HEADS OF INVESTMENT BANKING GROUP — Bloomberg’s Jan-Henrik Foerster: “JPMorgan & Chase Co named three global co-heads of its investment banking group that advises financial institutions on mergers, acquisitions and capital raisings, according to an internal memo seen by Bloomberg News. Jared Kaye, Laurent Nevi and John Purcell will become global co-heads of the FIG industry group, the memo shows.”
TRANSITIONS — Kate V. Silina is now North America communications director and public affairs lead at Visa. She most recently led the West Coast crisis communications practice at Sunshine Sachs and served in the Obama administration at DHS. …
Maeve Healy is now COS for Rep. Grace Meng (D-N.Y.). She most recently was political affairs manager at Finseca and had earlier served as Meng’s political director. …
Saumitra Thakur is now a managing partner at MMV, a healthcare venture fund. He is also a full hospitalist physician in San Francisco and is the former president of College-100.
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