News: Beware a big (or small) ADP private payrolls report — New top cop at the SEC

Wednesday, June 30, 2021

Beware a big (or small) ADP private payrolls report — New top cop at the SEC — UK clears big bankers to fly

Jun 30, 2021

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Quick fix

Beware a big ADP number — ADP private payrolls today at 8:15 a.m. are expected to come in around 515K. But ADP has overshot the official number by a lot in each of the last two months. So it could come in huge again but NOT necessarily mean that Friday's official number will be a blockbuster.

So if you wake up to tweets and commentary about a blowout private payrolls report remember that it was a blowout number in both April and May and the actual jobs number the following Friday turned out to be disappointing . Similarly, if ADP comes in quite soft it won't necessarily mean Friday's number is going to be a bummer.

Anything based of a model rather than hard data right now is just tough to trust given the very difficult to track impact of Covid-19 and the vexing nature of the jobs market recovery. Still analysts remain pretty bullish on Friday's official jobs report. RSM's Joe Brusuelas: "We expect a total change in employment of 750,000 and a decline in the unemployment rate to 5.6% in the U.S. June employment report.

"The major economic narrative to emerge from the summer hiring reports will likely be that consumers are flush with cash and pivoting to demand services, which will bolster overall hiring during the summer months. Thus, the June employment report will likely reflect a surge in hiring to prepare for what will be a monumental release of pent-up demand for services over the next three months."

Goldman on inflation — Per new Goldman Sachs analysis of whether inflation is REALLY a thing to worry about: "Extreme base effects make inflation data difficult to interpret … A simple solution is to look at the average annualized inflation rate since the start of the pandemic, which captures both the initial decline and the rebound …

"[F]rom this perspective, the core PCE index has risen at a 2.4% average annualized rate since the start of the pandemic, versus 3.4% year-on-year in May. … This measure also provides perspective on how core PCE inflation has averaged over 2% so quickly after a recession, after failing to reach 2% sustainably during the last cycle"

GOOD WEDNESDAY MORNING — Email me on bwhite@politico.com and follow me on Twitter @ morningmoneyben. Email Aubree Eliza Weaver on aweaver@politico.com and follow her on Twitter @AubreeEWeaver.

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Driving the Day

President Biden convenes Cabinet officials, governors from Western states, and private sector partners "to discuss the devastating intersection of drought, heat and wildfires in the western United States" …

House Financial Services subcommittee at 2:00 p.m. holds a hearing on "Addressing Climate as a Systemic Risk: The Need to Build Resilience within Our Banking and Financial System" … ADP private payrolls at 8:15 a.m. expected to rise by 550K …

Also today: At 1:00 PM, "EIG in partnership with Upwork, will host a fireside chat and panel conversation with Senator Susan Collins (R-Maine) and others on the rise of the remote work revolution … Those who are interested can register for the event here.

At 9:00 a.m. the "inaugural Bloomberg New Economy Catalysts virtual event. The event will showcase the young innovators and entrepreneurs accelerating solutions to today's greatest problems."

SEC NAMES NJ AG AS ITS TOP WALL STREET COP — By our Kellie Mejdrich and Katherine Landergan: "The Securities and Exchange Commission … named New Jersey Attorney General Gurbir Grewal as the next leader of the agency's enforcement division, putting in place a well-known public sector figure to police Wall Street misdeeds.

"Grewal, 48, will take the helm of SEC enforcement on July 26, after serving as New Jersey's top law enforcement official since 2018. Grewal is one of the state's longest-serving attorneys general and made history as the first Sikh American to hold the position. …

GENSLER UNDER PRESSURE — "SEC Chair Gary Gensler, President Joe Biden's pick to lead the agency, has faced pressure to recruit an enforcement leader who would be tough on Wall Street after progressives blasted his decision to hire corporate defense lawyer Alex Oh to the post in April. Oh resigned less than a week on the job after a federal judge reprimanded her and others defending Exxon Mobil in a lawsuit brought by Indonesian villagers."

FSB MOVES TO BOLSTER MONEY FUNDS — Our Victoria Guida: "The Financial Stability Board … proposed a set of policies aimed at improving the resiliency of money market mutual funds during financial stress after severe market disruptions last year exposed weaknesses.

"The international standard-setting body is seeking feedback on its report, which lays out different options for ensuring that such funds are more able to absorb losses and less likely to suffer them. Each member country would be expected to implement some combination of the policies put forward in the FSB's final report, which will be published in October."

UK CLEARS BIG BANKERS TO FLY — Esther Webber and Matei Rosca: "The list of VIPs exempt from U.K. travel restrictions is growing, as the British government announced company bosses and senior bankers will be allowed to skip lengthy quarantine requirements.

"A special fast track has been reintroduced for executives from financial hubs New York, Frankfurt and Hong Kong as it is thought they will bring a 'significant economic benefit' to the U.K., defined as a reasonable chance of creating 500 jobs or more. The move drew instant criticism from across the political spectrum"

Markets

STOCKS DRIFT AROUND THEIR RECORD HIGHS ON WALL STREET — AP's Damian J. Troise and Stan Choe: "U.S. stocks are drifting around their record highs on Tuesday as Wall Street waits for the heavyweight economic data coming at the end of the week. The S&P 500 was 0.1 percent lower in afternoon trading after earlier adding to the all-time high it set a day earlier.

"Nearly as many stocks were rising within the index as falling, as weakness for several banks and utilities offset gains for tech companies. … Stocks have set their recent records on optimism that the economy is strengthening and that the Federal Reserve will keep interest rates low for a while longer."

SEC CHARGES JPMORGAN UNIT FOR OPERATING AS UNREIGSTERED BROKER-DEALER — WSJ's Dave Sebastian: "The Securities and Exchange Commission said it has charged Neovest Inc., a JPMorgan Chase & Co. unit that provides an electronic-trading platform, for operating as an unregistered broker-dealer.

"The commission on Tuesday said this is the first such charge against a provider of an order and execution management system. It said Neovest agreed to pay $2.75 million in penalty, though the company didn't admit or deny the SEC's findings."

Fly Around

CONSUMER CONFIDENCE SOARS ON UPBEAT VIEWS ABOUT ECONOMY — Bloomberg's Augusta Victoria Saraiva and Olivia Rockeman: "U.S. consumer confidence soared in June to a fresh pandemic high as Americans became more upbeat about the economy and job market.

"The Conference Board's index increased to 127.3 from an upwardly revised 120 reading in May, according to a report Tuesday. The June figure exceeded all forecasts in a Bloomberg survey of economists. Consumers also expected inflation to pick up in the coming year."

TUNE IN TO DISPATCH+ ON APPLE PODCASTS : POLITICO Dispatch, our daily podcast that cuts through the news clutter and keeps you up to speed on the most important developments of the moment, is expanding. In collaboration with the new Apple Podcasts Subscription platform, Dispatch+ launches this week! This new podcast gives premium Dispatch+ subscribers exclusive bonus weekly reporting and analysis from POLITICO's newsroom. Don't miss out, subscribe and listen to Dispatch+ on Apple Podcasts.

Federal Reserve Chair Janet Yellen, now the Treasury secretary, appears before the Senate Budget Committee on May 8, 2014.

Federal Reserve Chair Janet Yellen, now the Treasury secretary, appears before the Senate Budget Committee on May 8, 2014. | (J. Scott Applewhite/AP Photo)

YELLEN, INDIAN COUNTERPART DISCUSS SHARED INTEREST IN 'ROBUST' MINIMUM TAX — Reuters: "U.S. Treasury Secretary Janet Yellen on Tuesday discussed a shared interest between the United States and India to implement a 'robust' global minimum tax, the Treasury said after Yellen's call with Indian Finance Minister Nirmala Sitharaman.

"'The Secretary stressed the importance of partnership with India in the G20 and OECD to seize a once-in-a-generation opportunity to remake the international tax system to help the global economy thrive,' the Treasury said in a statement."

FED'S BARKIN SEES 'LONG WAY TO GO' IN LABOR-MARKET PROGRESS — Bloomberg's Steve Matthews and Matthew Boesler: "Federal Reserve Bank of Richmond President Thomas Barkin said the U.S. labor market isn't close to its pre-pandemic levels and he wants to see much more progress before slowing central bank asset purchases.

"'I still think we've got a long way to go on the job front,' Barkin said Tuesday in a broadcast interview with MNI Market News, pointing out that employment was 7.6 million below the pre-Covid-19 level."

RENTAL ASSISTANCE FELL VICTIM TO POLITICS, BUREAUCRACY — Center for Public Integrity's Sarah Kleiner and Taylor Jonhston and AP's Sarah Kleiner: "Nationwide, state leaders set aside at least $2.6 billion from the CARES Act's Coronavirus Relief Fund to prop up struggling renters, but a year later more than $425 million of that — or 16 percent — hadn't made it into the pockets of tenants or their landlords, according to an investigation by the Center for Public Integrity and The Associated Press.

"'It's mind-boggling,' said Anne Kat Alexander, a project manager with Princeton University's Eviction Lab. 'I knew there were problems but that's a huge amount of money not to be disbursed in a timely manner.'"

BANKS' NEXT ACT GETS TOUGHER — WSJ's Telis Demos: "Investors should savor the dividends and buybacks coming from big U.S. banks right now. They might not get the same kind of boost next year. Following last week's Federal Reserve stress-test results, which banks passed with room to spare, banks on Monday evening unveiled a host of increased dividends and expanded share-repurchase plans.

"This is very good news for shareholders who stuck with bank stocks last year, betting on these capital returns, when they were beaten up and restricted from big payouts. But to bet even more after this might require increasing faith in the underlying economics of lending."

BITCOIN EXTENDS REBOUND WITH CHARTISTS EYEING BULLISH TECHNICALS — Bloomberg's Vildana Hajric: "Bitcoin is hanging tough amid a slew of negative headlines, extending its rally for the third day and lifting the spirit of battered bulls.

"The largest cryptocurrency has rallied above its average price over the past 20 days, a positive indication for advocates who were looking for the digital token to reclaim its upward momentum. Bitcoin gained as much as 5 percent to $36,422 Tuesday in New York trading."

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