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DoubleLine Podcasts

MMM Episode 51: Delving into the ADP-BLS January Jobs Divergence

After their market and macro reviews for the Jan. 31-Feb. 4 week, Jeff Mayberry and Samuel Lau for their Topic of the Week (20:48) delve into the surprisingly wide divergence between the January jobs reports by the payroll processing giant ADP and the U.S. Bureau of Labor Statistics. On Friday, the BLS reported the U.S. added 467,000 jobs in January (including 444,000 in the private sector), a surprising departure from the 301,000 loss indicated on Wednesday by the ADP survey. Over the long term, the ADP report, which front runs the BLS report two days in advance, has closely correlated to the government report. As a result, the ADP numbers caused some analysts to revise slightly lower their expectations of the BLS number. However, Mr. Lau notes (34:00), “it seems like for the most part, the financial markets do shrug off the ADP numbers and wait that two days and show that patience to get the BLS report.”

In their recap of the market week ended Feb. 4, which saw a rise of 1.55% of the S&P 500 and a 2.27% gain by the Bloomberg Commodity Index, the podcast hosts (5:19) zeroed in on the ongoing losses in investment-grade corporate bonds. That sector of the fixed income universe posted a return of -1½% for the week, bringing its year-to-date return to -5%. Looking ahead to macro news for the following week (41:19), they have their radar fixed on the January Consumer Price Index report due Thursday and the Atlanta Fed’s wage growth tracker on Friday. The headline CPI, according to the consensus estimate, is expected to print 7.3% year-over-year versus 7.0% the previous month. Mr. Mayberry says the January or February CPI “is likely to be the peak of the cycle”; he’ll be watching the Atlanta Fed wage growth tracker to see “if we’re getting into a wage-price spiral.”

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