Health of U.S. economy depends on viewing angle

Based on payrolls processing firm ADP’s jobs report and the U.S. Federal Reserve “Beige Book,” the United States economy appears to be slowing. The number of private sector jobs created in May rose by a mere 37,000, almost three times lower than the Dow Jones forecast. And the Fed report noted that “economic activity has declined slightly since the previous report” released April 23.

The ADP report, however, isn’t always aligned with the Labor Department’s jobs report, which will be released Friday. For example, the former stated that private companies added 107,000 jobs in January 2024, but the latter posted a 353,000 gain in nonfarm payrolls for the same period.

Meanwhile, the Fed’s “Beige Book” report is based on “reports from Bank and Branch directors” and “interviews and online questionnaires.” Hence, while it provides a useful snapshot of economic sentiment, it is a “qualitative” report, as the Fed acknowledges, that might not capture economic data.

According to Albert Einstein’s theory of relativity, the speed at which an object is traveling depends on the position of an observer. Wednesday’s reports can give an insight into the economy, but they could also be skewed by the vantage point of the observers.

Dow snaps consecutive gains
U.S. stocks were mixed Wednesday. The S&P 500 was flat and the Nasdaq Composite added 0.32%. However, the Dow Jones Industrial Average slipped 0.22%, ending a four-day winning streak. Asia-Pacific markets traded mixed Thursday. Hong Kong’s Hang Seng Index rose 0.47% at 1:30 p.m. in Singapore as Asian technology stocks such as Meituan, Alibaba and Kuaishou Technology extended gains for a second session.

Slackening labor market in the U.S.
Trump called on Federal Reserve Chair Jerome Powell to “LOWER THE RATE” after payrolls processing firm ADP reported the lowest level of private sector jobs creation in years. Payrolls increased just 37,000 for May, below the downwardly revised 60,000 in April and the Dow Jones forecast for 110,000. It was the lowest monthly job total from the ADP count since March 2023.

Fed’s ‘Beige Book’ reports slowing U.S. economy
The U.S. economy has contracted over the past six weeks as hiring has slowed and consumers and businesses worried about tariff-related price increases, according to a Federal Reserve report Wednesday. In its periodic “Beige Book” summary of conditions, the central bank noted that “economic activity has declined slightly since the previous report” released April 23.

Circle prices its IPO higher than expected
Circle Internet Group, the issuer of USD Coin, one of the world’s biggest stablecoins, priced its initial public offering at $31 per share late Wednesday stateside. That’s above the expected range of $27 to $28 and gives the company a total market value of $6.8 billion. New York-based Circle, its founder and some original shareholders will raise $1.05 billion in the offering of 34 million shares. 

White House imposes travel ban
The Trump administration signed a proclamation Wednesday suspending travel to the U.S. for citizens from 12 countries: Afghanistan, Myanmar, Chad, Congo, Equatorial Guinea, Eritrea, Haiti, Iran, Libya, Somalia, Sudan and Yemen. Citing national security interests, the proclamation states that the identified countries lack sufficient vetting and screening processes, which could increase the risk of terrorism threats to America.

[PRO] Financial sector stocks slowing
The financial sector, seen as a potential winner of the Trump administration, is starting to cool. While the group is still outperforming the S&P year to date, the gap has been closing in recent weeks, wrote Wolfe Research analyst Rob Ginsberg, who highlighted one aspect of the sector that is the “most concerning.”

Auto industry sounds the alarm as China’s rare earth curbs start to bite

Several European auto supplier plants and production lines have already been shut down because of China’s recent export controls, according to Europe’s auto supplier association CLEPA, which warned of more outages as inventories deplete.

CLEPA said Wednesday that while hundreds of export license applications have been submitted to the Chinese authorities since early April, only around 25% appear to have been approved.

China’s Ministry of Commerce in early April imposed export restrictions on several rare earth elements and magnets widely used in the automotive, defense and energy sectors. The curbs came as part of a response to Trump’s tariff increase on Beijing’s products.