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Private Job Sector Payroll Numbers In Focus

We take a break for a moment this morning from our normal Q2 earnings season checklist of prominent companies reporting results before the opening bell to bring you the ADP  private sector payroll numbers for July: they were good. The headline number of 178K was a smudge below the 180K the analysts had been forecasting, but June numbers were revised upward significantly, from 158K on the first read to 191K this morning. Goods production was a little weaker than expected at 4000 new jobs, but 174K in Services made up the slack.

Medium-sized businesses (between 50-499 employees) did the most hiring last month with 83K jobs. Small firms brought in 50K and large companies hired 45K new workers. Education and Healthcare led the way with 43K hires, followed by Trade/Transportation at 24K and Leisure/Hospitality with 15K. Construction, which had been seeing a slight resurgence in recent months, is now back down where it had been previously, at 6K. Manufacturing, also a recent beneficiary of “Make America Great Again” spirits, lost 4000 jobs in the month.

Friday’s non-farm payroll estimate currently sits at 180K, and today’s ADP read will not move this needle. We are essentially operating at what economists call “full employment,” although wage growth remains stagnant overall, and thus business owners are actually having difficulty filling positions higher up the economic food chain. Should we see wage growth gain traction in the coming months — as well as policies long-promised regarding infrastructure and corporate tax reform — there is an opportunity for the U.S. to see a stronger labor market than perhaps any time in our readers’ lifetimes.

To say Apple Inc. AAPL posted a “big surprise” in its fiscal Q3 earnings report after Tuesday’s closing bell would be a bit overstating the case. After all, this is the company that, in the final years of Steve Jobs’ tenure, would wallop expectations on the top and bottom line each quarter for years. Since Jobs’ passing, Apple has come back down to earth a bit, although the bull rally of the last 9 months or so has brought AAPL shares to new all-time highs — to nearly $160 per share as of pre-market trading today.

Consider this has happened even before the release of the iPhone 8, currently not scheduled for release until the beginning of fiscal Q1 2018. For sure, some of AAPL’s current price point has already priced in the future sales of this long-anticipated smartphone. But consider for a moment that Apple posted improved sales for its Macs and iPads in its most recent quarter, and the company has an astounding $261 BILLION in cash. This company could buy out entire INDUSTRIES with that kinda scratch.

Electric car leader Tesla Inc. TSLA releases its Q2 earnings results after today’s closing bell, with CEO wunderkind Elon Musk’s conference call to follow. The company is more than doubling its revenues year over year, but so are its capital expenditures. The best way to look at Tesla is not necessarily in its quarterly earnings but how the company is growing: look at the Gigafactory numbers, Model 3 orders, and the like. This could be one of the most important companies of the 21st century, but execution is entirely key.

Tesla shares are up nearly 50% year to date, but are exactly flat in today’s pre-market. The company sits at a Zacks Rank #3 (Hold), with a Zacks Style Score (Value-Growth-Momentum) of F. Earnings ESP is -18.5%, indicating a greater chance of missing the Zacks consensus estimate when the report comes out. Keep in mind, however, Elon Musk has his eye trained on the much bigger picture. So should anyone looking at this stock.


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