In my former seat ADP report was much ado about nothing. Analyst after analyst would fall over themselves to highlight just how inconsequential the data point was other than it’s spot on the calendar which always appeared to be simply an effort to steal the NFP thunder.
To whit, TK on BBG TV a moment ago asked the question … IF ADP leaked given how rates were grinding a touch higher (flatter) all morning long (see early update HERE) and turned lower about 15min prior TO ADP?
An hourly visual without a Terminal truthfully does not say enough to jump TO conclusions BUT again, TK with a Terminal asked and so am just wondering // thinkin’ outloud…Meanwhile, CNBC,
Private payrolls rose by 145,000 in March, well below expectations, ADP says
Private sector hiring rose by just 145,000 in March, down from 261,000 in February and below the estimate for 210,000.
Financial activities lost 51,000 jobs and professional and business services fell by 46,000.
Leisure and hospitality added another 98,000 workers, trade transportation and utilities grew by 56,000 and construction rose by 53,000.
And from THE REPORT,
Our March payroll data is one of several signals that the economy is slowing. Employers are pulling back from a year of strong hiring and pay growth, after a three-month plateau, is inching down. -Nela Richardson, Chief Economist
For somewhat more (or less, depending on yer view and P&L), ZH
ADP Employment Report Confirms Labor Market Weakness In March
… The miss-beat-miss sequence continues as ADP goal-seeks...
…Finally, as a reminder, it has been the labor market data that has materially supported the 'strong' macro argument among market participants, dominating the weakness in 'soft' survey and industrial data in recent weeks. But the last week has seen reality starting to set in on that 'lagging' labor market data...
It would once again seem to ME that narrative follow PRICE …
Am asking for a friend — who knew what and WHEN? Nela? Inquiring minds wanna know? Ok, setting aside my tinfoil hat for now!!
Loretta NON VOTING Mester on BTV now…
As a committed TinFoil hat wearer, Keep It On Bro!
"It would once again seem to ME that narrative follow PRICE …", yeah? The pattern, real or imagined, must exist before the mind cooks/conjures up a soothing bromide, usually something striving to establish a cause-and-effect (although probably as much -affect more often than not?), in an effort to maintain the illusion (although probably as much delusion more often than not? ;), in hopes of establishing or restoring some semblance of CONTROL over KAOS. Speaking of which, does anyone else remember, before SIVB spawned BTFP, yet another "window" (of opportunity?), in a bygone time when inflation raged and crises and enemies where simpler to identify and rectify, the "CONTROL Savings & Loan Bank" story? It's final Crisis of Undoing is a bit murkier than SVB's as it supposedly got tangled up in the CONTRA scandals. After the FED and Treasury were finished with it the only remaining vestige today is https://www.smartbank.com/ ... Anyway, for background you can get smart about it at, https://getsmart.fandom.com/wiki/CONTROL_Savings_%26_Loan_Bank
Discovering "narratives", that are actually profitable in money terms, before events occur is exceedingly rare and almost always one-off happenings. Consider the track record of the GFC great Shorters? What happens to the vast majority of their ilk, outside of Rule by Hereditary, after they run out money after a few more dice rolls or their heirs have a go at the hoard? If it were otherwise the narratives would soon be known as 'Laws' or 'Constants' once their secret escaped it's guarded chamber (or patent, or copyright, or whatever), no? In quasi-meritocracies it seems to usually render down to controlling and using 'insider' information just within or slightly past lines established by law, and before Trumpian figures appear, as they always do in time, by norms. In our current system's seemingly futile perennial (perineal works here too) attempts to tamp down blatant insider manipulation, a very popular scheme (perennial or perineal?) is swapping of information between C-suites among industry 'competitors' for purposes of trading each other's equities. None of that requires a tinfoil hat though. So how about this. Suppose it is 2019 and you own or are tapped in at both ends of a trunk-line connecting two exchanges and assume you have the hardware and software to statistically analyze, by the standards of the day, the stream before anyone else. How does that differ in any substantive way from possessing insider information once 75% or more of trades are executed at algorithmic speeds? Why do we/SEC persist in pretending otherwise? For sure, it is a matter of theoretical degrees of where the line(s) may be, so we could argue back and forth about it endlessly, except the system in practical terms, as it currently works, will grind most of us into dust soon enough. Meaning, we can use our dwindling hours more productively. Now let's add another layer of tinfoil. Suppose you are in the coveted position today, as described above, except now you add something like this: https://arxiv.org/abs/2303.17564
Giving you the power/right(?) to generate at near realtime thousands of plausible 'narratives' every minute, every second(?), in perpetuity if you have the juice and freshly squeezed data. Clearly, the order is obvious in this scenario. Narrative follows data (i.e., price or whatever data is a proxy for). When "plausible" becomes reliably-credible in a few months or years (makes little difference), what then? Probably nothing much since like us the machine narratives will be wrong as often as they are right, just like us. When electro-mechanical narrative's predictive track records become indisputably, or maybe just slightly, better than the human, what then? Then it is going to get absolutely weird if there is any practical truth to the old blithely repeated assumption, namely, in many circumstances, it matters less what-is than what-you-think-it-is. Just look back at the past twenty years and/or go ahead and include the "Great Moderation" if you want and consider all the received Economic and Financial wisdom(s) we operated under. We assumed these 'principals' were at least 'plausible' as explained by the "narratives" we told/sold ourselves. If a machine can gin up a series of comforting narratives, how long might the next 'Great Moderation' last? As long as we believe? An eternal Alan Greenspan mumbling dulcet Economic Monotonies for us to believe in could probably work for 50 years at least? Where was the disinflationary death spiral zero and then negative interest rates were supposed to plunge our economy into? It had over ten years to happen and nada. Is it unreasonable to question the usefulness of humans rewriting Economic 'textbooks' every decade or so of late? Here is an example of updating the economic narrative to match the recent data (I'm not interested anymore in arguing the merits of monetary vs fiscal policy, but I will grant, Grumpy is probably right about it taking two to tango more often than not): https://www.hoover.org/research/dropping-money-helicopters-economist-john-cochrane-inflation#