ADP jobs report -79k/Home equity loan delinquency rates rise to highest levels since 1987

Just a few blurbs before I head out the door. Many are calling for a bounce over the next few days because we are way oversold. I am sorry folks but I just don't see it. Lets take a look at some of the news that came out this morning.

ADP: Payrolls Decreased by 79,000

Here is the Link

July 2 (Bloomberg) -- Companies in the U.S. cut an estimated 79,000 jobs in June, a private survey based on payroll data showed.
The decrease was larger than forecast and followed a revised gain of 25,000 for the prior month that was less than previously estimated, the report from ADP Employer Services showed. Last month's drop was ADP's largest since November 2002."

Quick Take:

This number the last several months has been way too bullish versus the actual jobs number thats reported tomorrow. I expect that jobs number to be horrific.

ADP also revised their numbers down to plus 25,000 in May. So lets revert back to May. ADP shows a rise in May when the unemployment rate rose from 5% up to 5.5% which was one of the biggest rises in decades.

Now ADP shows a 79,000 drop in payrolls in Jube which was the biggest drop since 2002. Can you imagine what tomorrows jobs report is going to look like? Its going to be ugly folks.


Overdue Home-Equity Credit Lines Rise Most Since 1987, ABA Says

Here is the story from Bloomberg:

"July 2 (Bloomberg) -- Consumers fell behind on loans secured by their homes at the fastest pace in two decades in the first quarter, signaling deeper distress in the U.S. economy, the American Bankers Association reported.

Home-equity lines of credit at least 30 days past due rose 14 basis points to 1.1 percent of accounts for the quarter, the Washington-based group said today in a statement. Delinquent credit-card accounts increased 13 basis points to 4.51 percent, the highest level since 2006.

``People are looking for any source of funds to pay their daily expenses,'' Carol Kaplan, spokeswoman for the bankers' group, said yesterday in an interview. ``It's a sign of the overall condition of the economy that people are having trouble making their payments.''

Consumers squeezed by higher food and fuel prices are tapping revolving credit lines to stay afloat as the economy slows.

The rise in delinquent home-equity accounts was the biggest since the ABA began collecting data in 1987, Kaplan said. It was also the highest in 11 years. Delinquencies often don't peak until late in an economic slowdown"


Quick Take:

Ok so here we are with delinquencies hitting all time highs since they began collecting data. This is supposed to happen late into an economic slowdown according to Kaplan.

So basically we are seeing all time highs in delinquencies at a time when we haven't even fallen into an official recession yet!

Bottom Line:

I continue to be flabbergasted at the speed of which this is all happening. Consumers are folding like tents on their loans at a time when unemployment, inflation, and interest rates are rising.

This is nothing but a recipe for disaster. I will be on later with a recap. Oil inventories are out later this morning. If there are some suprises there we could see a selloff.