September 30, 2020
US Data: The US ADP jobs report for September was solid at +749,000 vs consensus for 649,000 and up from 481,000 in August. This report always precedes the official monthly Jobs Report by two days. The two reports have a weak positive correlation, but the beat today probably reduces the likelihood of breaking the fiscal stimulus logjam. Friday’s Jobs Report is the last one before the 11/3 election. US Chicago PMI for September was very strong at 62.4 vs. consensus for 52 and up from 51.2 last month.
Banks: Fed stress test results for banks were supposed to be delivered ‘by the end of September’, so could come at any minute. The key is whether the Fed allows increases to dividends and/or buybacks. Reserve builds are largely complete, top line expectations are realistic and capital return in either form would be bullish for the industry, lead to more value sector outperformance and probably a test of the 9/2 record high in the SPX.