G-20 Left to Pick Up Pieces - Analyst Blog
November 02 2011 - 4:15AM
Zacks
The Greek referendum news has sucked the oxygen out of the
market. We were all getting ready to build on October's impressive
gains by aligning our portfolios for positive momentum in these
final months of the year. A key contributing factor in this
improving backdrop was last week's Euro-zone deal, which appeared
to provide for a viable framework to address the problem.
Today's G-20 summit in Cannes, France, was expected to give the
Euro-zone deal a global seal of approval. Instead, they are left
picking the pieces of that deal following the Greek
announcement.
Whatever the motivation of the Greek government to go this
route, they have succeeded mightily in keeping the issue not only
alive, but also front and center for global markets. One could
discuss the different scenarios and outcomes over the coming weeks,
but the fact remains that the continued existence of this issue is
a net negative for the market.
Had it not been for Greece, our primary focus the rest of this
week would have been the domestic labor market, starting with this
morning's better-than-expected ADP (ADP) jobs
report and culminating with the all-important government non-farm
payroll report on Friday.
We also have the FOMC statement coming out later today at the
end of the Fed's two-day meeting, to be followed by Ben Bernanke's
press conference. No surprises are expected out of the Fed meeting,
though the press conference may provide more color on Bernanke's
take on the evolving economic picture.
The ADP report came in better than expected, with 110K private
sector jobs created in October. The prior-month's tally was revised
upwards to 116K from the originally reported 91K level.
The ADP report is supposed to provide the market with a preview
of the official non-farm payroll monthly numbers from the Bureau of
Labor Statistics (BLS). Today's ADP report is broadly in-line with
the expectations for private-sector jobs in Friday's BLS report,
which is a net positive in these uncertain times.
The ADP report's track record in foretelling the BLS number on a
month-to-month basis has been less than solid. We will have to wait
till Friday morning to find out how good of a job today's ADP
report did. Overall, today's ADP report provides a relatively
favorable view of the labor market.
On the earnings front, we got better-than-expected earnings and
revenue numbers from Time Warner (TWX), while
Comcast (CMCSK) came modestly short of earnings
expectations. JDS Uniphase (JDSU)
came out with an earnings and revenue beat, but provided a subdued
outlook for the current quarter due to the floods in Thailand.
It is doubtful that the better-than-expected ADP report will
make the market forget about its Euro-zone fears. May be some
calming and reassuring words from Bernanke later this afternoon
will do the trick. In any case, Greece and Europe will not be far
from investors' minds today and for many more days to come.
AUTOMATIC DATA (ADP): Free Stock Analysis Report
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JDS UNIPHASE CP (JDSU): Free Stock Analysis Report
TIME WARNER INC (TWX): Free Stock Analysis Report
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