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Private payrolls add only 167,000 jobs versus 1 million expected—Four pros on what’s next

The U.S. added 167,000 workers to private payrolls in July, according to the latest ADP data. The release came in far below expectations of 1 million.

This comes ahead of the U.S. nonfarm payrolls report out Friday.

Four market strategists discuss what they’re watching now. 

Doug Cohen, managing director of Fiduciary Trust International, says more stimulus is needed. 

“I think almost everyone knows at a gut level that when you have the kind of stimulus that we’ve had — both monetary stimulus and fiscal stimulus — there are probably going to be unintended consequences down the road, and I’m quite confident that we’re going to have to face those. Unfortunately the damage that’s being done to the economy, and you don’t see it as much in the S&P 500, but when you look at small businesses throughout the country and you think about the construction that’s being done and how difficult it’s going to be to revive those businesses, essentially what’s going to happen is that we’re going to have to print even more money.”

Victoria Fernandez, chief market strategist at Crossmark Global Investments, sees falling participation in the market. 

“We have to wait and see what happens with this stimulus package. If we don’t get some more unemployment insurance to help support those that have been furloughed or unemployed, then that demand question is really going to be key to see how the economy can move forward. Obviously we have a handful of stocks that have really been driving this market. And that’s all well and good to an extent, but we’re missing that breadth that we started to see about a month ago. We’re looking at stocks that are surpassing their 20-day moving average. That percentage is really coming down.”

Jim Paulsen, Leuthold Group chief investment strategist, sees improvement on the horizon. 

“People think about a sugar high. But the sugar only really works for stocks if it ultimately is going to work for the economy as well. And I think the stock market is reflecting what’s going to happen to the economy. There’s just so much to improve, in part because it’s been so bad. We had a record-setting unemployment rate. We had a record-setting inventory drawdown. We had a record-setting rise in the personal savings rate. We had a really nasty earnings decline. Think about those going back to some sense of normal and what that’s going to do for the stock market down the road, so I think there are some good things that could keep this ball going.”

Glenn Hutchins, chairman at North Island, gives credit to the Fed for its liquidity injection. 

“Some parts of the economy are having a ‘good pandemic.’ And the technology industry … which has more capacity to do things virtually, is obviously taking a huge amount of market share all across the economy, everything from what we’re doing right now with remote communication all the way to retail. Very large parts of the economy are not doing as well. The stock market … it’s a day-to-day thing, so you can have good days and bad days … But remember one of the major things that has happened in this crisis, and it’s something the Fed, I think, did very well — not for this purpose but for purposes of addressing the underlying economy — was to put a huge amount of liquidity in the markets.”


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