Next week is a dream week for those that look for new information to be digested by the markets. When I say new information being digested I’m really saying increased volatility based on major economic announcements. We have the two biggies – FOMC and Non-Farm Payrolls – coming out. Since the title is Three Gray Swans I’m going to add the ADP Employment Change report as a third event to watch next week. I’m adding this one due to the close association with the big employment number that comes out on Friday.
ADP Employment Change – Wednesday at 7:15 Chicago Time
The ADP National Employment Report (ADP Report) is considered a preview to the official number that is released on Friday before the stock market opens. Last month the ADP report indicated that 281,000 nonfarm private sector jobs were added in June which was much higher than expectations. Two days later the Labor Department reported that 288,000 nonfarm jobs were added in June that was also an upside surprise. Before I get emails about clarifying the differences between the Labor Department and ADP job counts, I am aware they are slightly different – the important aspect is that they both were higher than expected last month. This topping of the Labor Department count resulted even after estimates were raised between the ADP release and the official Labor Department number. The point is that the ADP number did a great job forecasting a higher government jobs number last month so it will probably get some extra attention next week.
If you are more interested in the ADP report you can visit – www.adpemploymentreport.com
FOMC Announcement – Wednesday at 1:00 Chicago Time
It has been a long time since there has been any question about what the rate decision will be and there are no questions about the target level remaining unchanged at 0.25%. These days the FOMC announcement is more about what is contained in the statement which is supposed to be a clear update on monetary policy. I’ll leave that debate to the guys that like to talk over each other on CNBC. The element of the statement that I always scan down to comes toward the end where any potential risks to the economy are discussed and how the members voted. The potential risks will summarize what the members of the Federal Open Markets Committee are concerned about. I think it is safe to say that what they are focused on should also be a focus for investors and traders. The voting section will note any members that did not agree with the rate decision and potentially the reason this member did not agree with the majority of voters. That too can give some insight into the mindset of the committee and some concerns about the economy going forward.
Nonfarm Payrolls – Friday at 7:30 Chicago Time
If it were not for the FOMC meeting this week the slew of monthly data that comes from the Labor Department would be the primary focus next week. However, because of FOMC it may take on more importance. There have been grumblings that an acceleration of employment and wage growth could be an early sign of inflation. If that message is included in the FOMC statement Friday’s employment report may have a heightened level of importance.