Market With Small Gains Waiting For Fed Decision

       There was some good data today, especially the ADP report which showed the economy added more jobs than expected in March. There was a drop in manufacturing jobs but a gain in construction spending.

      "In economic news, Automatic Data Processing said July private sector employment increased by 163,000. The government's July jobs report is due out on Friday."

      http://www.cnbc.com/id/48437499

      "The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, rose 0.2 percent in the week ended July 27."

      "The Institute for Supply Management’s manufacturing index came in at 49.8 percent for July, versus expectations for a reading of 50.4 and a June reading of 49.7. A reading below 50 indicates a contraction. Construction spending, meanwhile, rose 0.4 percent after a May increase of 0.9 percent."

       So pending the Fed this adds up to a mild move up. It seems the Fed is not expected to do to much today other than promise if needed they will do more-certainly novel for them! There seems to be a sense that maybe we aren't going to fall totally off the cliff. By that I didn't mean literally the famous "fiscal cliff" but even that we saw a little movement on yesterday with a very rare tentative deal between the House and Senate to stave off another government shutdown by a six month funding bill that would go into effect September. There's also a belief that China may have bottomed:

     “We think a moderate growth environment is going to be sustained in the U.S.," Bob Browne, Northern Trust chief investment officer, told CNBC. "The Fed is really focusing on avoiding recession. Whether they do something today, in August or in September, I think the markets really have to focus on that bias toward using monetary policy to keep the state of repair going.” Browne is overweight U.S. equities, underweight Europe and neutral on emerging markets."

      What a shock-Browne is "underweight" Europe. Europe, of course, remains the weak link. However, there is some reason to think maybe our "moderate growth environment" can continue. 

      It will be interesting as well to see what the jobs report is like on Friday. Note though that what we've seen a lot lately is "bifurcation" where the ADP report comes in much better:

     "The ADP survey offered some hope that hiring is picking up. But it has often deviated sharply from the government report. In June, the Labor Department said employers added just 80,000 jobs, less than half the figure reported by ADP."

     "The government's report is expected to show employers added 100,000 jobs in July, according to survey of economists by FactSet. The unemployment rate is expected to stay at 8.2 percent."

     http://www.cnbc.com/id/48436214

     The reason for this is because while Obama was eviscerated back in June for saying that "the private sector is fine" the fact is that we've seen it grow consistently since June, 2009. The weak link has been government jobs, particularly state and local.