ADP Weekly Data, Market Leverage & Peak Trump -3

17:37 18-Nov-25

Today also saw the official loosening of bank oversight by the Fed.  That has some thinking that adoption of stablecoins has the makings of the next banking crisis.  It need not be that way, if banks would simply be allowed to fail, as per this public commentary in response to the SVB collapse.

ADP weekly data shows the drop in private sector employment moderating after the big drop in mid-October, with a -2.5K figure for the four weeks ending November 1st.  A look into the details indicates churn, with hiring picking up to replace workers mostly at lower paying jobs.  Underscoring this interpretation is market leverage for October, which rose above 6x for the first time ever.  It shows that money continued to trickle into margin accounts, but eroded in cash (usually retirement) accounts, which happens in less than a sixth of the months on record.  With the federal government reopened we also now have the natural gas versus electricity data that was missing last month, which shows both declining.  This service will start including that graph again when the data gets back to being less than one month behind.

This morning's economic data is combining with a warning from Google's CEO about irrational AI investment in a BBC interview where he says "no company is going to be immune, including us."  While I agree with the statement for index dominating megacaps, I think the humble tone is smart posturing ahead of closing arguments in its AdTech remedies trial, where closing arguments are scheduled for November 21st.  This service has already stated that "we may already be in the initial stages of the sustained downturn that I've long anticipated", but the reaction to Nvidia earnings tomorrow will be necessary to confirm that.

Underlying all this is continuing uncertainty about American economic policy.  Some of this still comes directly from Trump, as he waffles on tariffs following recent election results.  However, more of it is coming from other Republicans as evidenced by the President having to reverse course on the Epstein files, when it became apparent he was going to lose that battle.  

At 09:27 23-May-2025 Esekla at CrowdWisers wrote:

I expect Trump to begin transitioning toward being every bit as disregarded, at least on Capitol Hill, as Biden was.

Trump's own actions are making this happen more quickly than anticipated, and this service has already pointed out that he will be in a tight spot over Venezuela.  He probably recognizes that sending troops into Venezuela would be vastly different than an airstrike on Iran.  Maybe the usual tactic of holding talks and declaring victory over nothing will suffice, but it now seems quite possible that the associated issues documented in this link may become overriding for law makers and even some in the military.

It remains to be seen whether the AI bubble pops or deflates, but for individual stock investors the prospect of a ground war directly involving American troops remains an unlikely but potentially important factor that would affect the scope and slope of the current market downturn.

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