Core Insights - The Federal Reserve faces unprecedented challenges in setting interest rates due to a lack of available economic data, exacerbated by a government shutdown that halted the release of key statistics [1] - The loss of ADP's internal data, which covered about one-fifth of the private sector workforce, has left the Fed without a crucial real-time measure of employment conditions [1][2] - The absence of reliable data increases the risk of significant policy missteps, as the Fed may either over-tighten or under-tighten monetary policy [1][3] Group 1 - ADP had been providing anonymous payroll and income data to the Fed since at least 2018, which helped economists construct weekly employment trend indicators [2] - Following a public mention of this data by Fed Governor Waller, ADP abruptly suspended access, prompting concerns about the implications for monetary policy [2] - The potential reasons for ADP's decision include methodological issues with their data or internal pressures regarding the perception of their relationship with the Fed [3] Group 2 - The timing of the data loss is particularly problematic as the Federal Open Market Committee (FOMC) prepares to decide on interest rate cuts amid a lack of official employment, unemployment, and wage data [4] - In the absence of real-time data, the Fed is relying on alternative sources such as state unemployment claims and regional bank surveys, which are deemed useful but incomplete [4] - There is a call for the Bureau of Labor Statistics to secure multi-year funding to maintain operations even during government shutdowns, highlighting the critical need for a robust statistical system [4]

Core Insights - The Federal Reserve is facing an unprecedented data shortage ahead of its policy meeting on October 28-29, primarily due to the ongoing government shutdown, which has hindered access to critical official economic statistics [1][3] - A significant third-party employment data source, ADP, has ceased supplying data to the Federal Reserve, further complicating the already unclear economic landscape in the U.S. [3] Group 1: Data Shortage Impact - The government shutdown has resulted in a lack of key economic statistics, making it difficult for policymakers to make informed decisions regarding monetary policy [1] - The interruption of ADP's data supply exacerbates the situation, as employment data is a core consideration for monetary policy [3] Group 2: ADP's Data Supply Suspension - ADP has stopped providing aggregated management data to the Federal Reserve, citing its commitment to public service and the need to protect client confidentiality [3] - Efforts by Federal Reserve Chairman Jerome Powell to persuade ADP to resume data sharing have not yet been successful [3] - Powell has previously indicated that while private data sources cannot fully replace official statistics, ADP serves as a reasonable alternative in the employment data sector [3]

Core Insights - The Federal Reserve has lost access to employment data provided by ADP, which has been a key source of information since 2018, covering 20% of the private sector workforce [1] - The cessation of data sharing occurred after a speech by Fed Governor Waller in August, which raised public attention regarding the Fed's reliance on ADP data [1] - The specific reasons for ADP's decision to stop providing data to the Fed remain unclear [1] Summary by Categories Employment Data Access - ADP has been supplying the Federal Reserve with a dataset containing anonymous employment and income information, allowing for timely assessments of the labor market [1] - The Fed typically received this data with about a one-week delay, making it a comprehensive measure of employment conditions [1] Impact of Waller's Speech - Waller's remarks included a footnote referencing ADP data, which highlighted concerns about a slowdown in the labor market [1] - The footnote indicated that preliminary estimates showed a continued deterioration in hiring conditions over the summer, beyond the latest government data coverage [1]

Core Insights - ADP reported strong fourth-quarter fiscal 2025 results with earnings per share of $2.26, exceeding consensus estimates by 1.8% and reflecting an 8.1% year-over-year increase. Total revenues reached $5.1 billion, surpassing estimates by 1.5% and growing 5.7% year-over-year [1][10]. Business Strategy - The company employs a three-tier business strategy that enhances its position as a human capital management (HCM) technology and services provider, offering a comprehensive suite of cloud-based HCM and HR Outsourcing (HRO) solutions [2]. - ADP is expanding its global HCM and HRO businesses through established local software solutions and cloud-based multi-country solutions [2]. Operational Initiatives - The company has increased DataCloud penetration and investment in inside sales, mid-market migrations, and service alignment initiatives, leveraging ongoing transformation efforts [3]. - Continuous innovation and operational improvements are aimed at expanding margins and enhancing forward-thinking capabilities [3]. Financial Performance - ADP has consistently paid dividends, with payouts of $2.4 billion in fiscal 2025, up from $2.2 billion in 2024, indicating a commitment to returning value to shareholders and confidence in business stability [4]. - The current ratio at the end of Q4 fiscal 2025 was 1.05, an improvement from 1.02 in the previous quarter and 1.01 a year ago, suggesting the company can easily cover short-term obligations [5]. Expenditure Trends - The company has seen a notable increase in expenditures due to acquisitions and transformation projects, with increases of 6.8% and 6.2% in fiscal 2025 and 2024, respectively [6]. - Historical expenditure increases of 8% and 10% in fiscal 2023 and 2022 indicate ongoing pressure on ADP's bottom-line performance [6]. Competitive Landscape - ADP faces significant competition across its product lines, particularly in Employer Services and PEO Services, which compete with independent business outsourcing companies [7]. - The company has experienced a decline in its retention rate, leading to increased competition and migration from its legacy business [7].

Core Viewpoint - Automatic Data Processing, Inc. (NASDAQ: ADP) is set to announce its Q1 '26 earnings on October 29, indicating a significant upcoming event for investors and analysts to monitor [1]. Group 1 - The company is expected to provide insights into its financial performance, which may influence investor sentiment and stock valuation [1]. - The author emphasizes a long-term investment strategy, focusing on a mix of growth, value, and dividend-paying stocks, with a particular inclination towards value investments [1].

Core Insights - Automatic Data Processing, Inc. (ADP) is a leading provider of cloud-based human capital management solutions with a market capitalization of $117.8 billion [1] - The company is expected to report an adjusted profit of $2.44 per share for Q1, reflecting a 4.7% increase from the previous year [2] - ADP has a strong earnings surprise history, having exceeded analysts' bottom-line estimates in the last four quarters [2] Financial Performance - For the full fiscal year 2026, ADP's adjusted EPS is projected to be $10.92, a 9.1% increase from $10.01 in 2025 [3] - In fiscal 2027, earnings are anticipated to rise further by 9.5% year-over-year to $11.96 per share [3] - In Q4 of fiscal 2025, ADP reported net revenues of $5.1 billion, marking a 7.5% year-over-year increase and exceeding expectations by 1.5% [5] Stock Performance - Over the past 52 weeks, ADP's stock has decreased by 65 basis points, underperforming the Technology Select Sector SPDR Fund's 25.9% increase and the S&P 500 Index's 16.3% returns [4] - Following the release of strong Q4 results, ADP's stock experienced a slight uptick [5] Analyst Sentiment - The overall consensus rating for ADP is "Hold," with 17 analysts providing coverage: three "Strong Buys," 13 "Holds," and one "Strong Sell" [6] - The mean price target for ADP is $318.54, indicating an 11.4% upside potential from current price levels [6]

Group 1 - The primary goal of the "High Income DIY Portfolios" Marketplace service is to provide high income with low risk and capital preservation for DIY investors [1] - The service offers seven portfolios designed for income investors, including retirees or near-retirees, featuring three buy-and-hold portfolios, three rotational portfolios, and a conservative NPP strategy portfolio [1] - The portfolios include two high-income portfolios, two dividend growth investing (DGI) portfolios, and a conservative NPP strategy portfolio aimed at low drawdowns and high growth [1] Group 2 - The article is part of a monthly series on dividend stocks, analyzing approximately 7,500 stocks listed on U.S. exchanges [2] - The author has disclosed beneficial long positions in a variety of companies, indicating a vested interest in the stocks mentioned [2]

Core Insights - The government shutdown has delayed the release of the crucial monthly jobs report for September, marking the first such delay since 2013 [2] - The current economic environment is characterized by a halt in hiring, which poses risks to the broader economy, despite continued consumer spending among higher-income earners and some business investments in AI [3][4] Labor Market Conditions - Alternative measures from nonprofits and private-sector companies indicate a job market with minimal hiring and few layoffs, suggesting job security for current employees but challenges for job seekers [4] - ADP reported a loss of 32,000 private-sector jobs in September, with job cuts primarily in construction, manufacturing, and financial services, while sectors like healthcare and IT added jobs [5][6] Unemployment Claims - Goldman Sachs estimated that weekly unemployment claims rose to 224,000, up from 218,000 the previous week, indicating that companies are retaining most of their workforce despite the hiring slowdown [7]

Labor Market Insights - Initial Jobless Claims have significantly decreased from a multi-year high of +264K to +218K, indicating a resilient labor market [2][3] - Continuing Claims have remained below 1.94 million for three weeks, after being above this threshold for 13 consecutive weeks, suggesting stabilization in the labor force [3] - The BLS reported an average of +71K new jobs filled per month in 2025, a stark decline from the previous eight-month average of +159K, raising concerns about future job growth [5] Tesla Performance - Tesla set a new record by delivering +497K vehicles in Q3, despite facing brand erosion due to CEO Elon Musk's public behavior [6] - The expiration of the $7500 tax credit for EV purchases is expected to negatively impact Tesla's deliveries in Q4, alongside increased competition from companies like BYD and MG in the European market [7] - Tesla shares have seen a market gain of +88% over the past year, with an additional +3% increase in early trading [7] Manufacturing Sector - Factory Orders for August were anticipated to rise by +1.4% after a decline of -1.3% in July, indicating a potential recovery in manufacturing [8] - Recent manufacturing data from S&P PMI showed steady performance at 52.0, while ISM numbers improved but remained in slight contraction at 49.0 [8] Stock Market Outlook - Pre-market futures are mixed, with the Dow down 14 points, the S&P 500 up 20 points, and the Nasdaq up 150 points, reflecting ongoing interest in AI investments and deal-making [9] - AI-based technology firms are currently driving market momentum, highlighting the competitive landscape in this sector [9]

Market Performance - Market indexes remained stable despite the federal government shutdown and a negative private-sector payroll report from ADP [1][7] - The Dow gained +43 points (+0.09%), the S&P 500 crossed 6700 for the first time (+22 points or +0.34%), and the Nasdaq rose +95 points (+0.42%) to a new high of 22,755 [3] - The small-cap Russell 2000 gained +5 points (+0.24%) but is still below its all-time highs from September 18 [3] AI and Tech Sector - NVIDIA became the first company to reach a $4.5 trillion market cap, with its stock continuing to rise [1] - The momentum from the AI trade is currently a significant market catalyst, overshadowing economic concerns [7] Gold Market - Gold prices reached record highs at $3895 per troy ounce, reflecting a +45% gain year to date, with intraday highs of $3915 [2] Manufacturing and Economic Data - ADP reported a loss of -32,000 private-sector jobs last month, while ISM Manufacturing and S&P Manufacturing PMI numbers for September were in line with expectations [4] - ISM Manufacturing came in at +49.1%, up 40 basis points from August, while S&P remained steady at +52.0 [4] - Construction spending data for August was delayed due to the federal shutdown, with analysts forecasting a drop to -0.2% [5] Future Expectations - The stock market is expected to have limited movement due to the federal shutdown affecting the release of Weekly Jobless Claims and Factory Orders data [6]