Into Jobs Report, Investors Fed up With Washington

NEW YORK (BankingMyWay) -- Staring down the barrel of Friday's national unemployment number, investor patience with public policymakers when it comes to the economy is at a breaking point.

In the release of the Federal Reserve's Open Market Committee meeting on Tuesday, quantitative easing optimists seized on the Fedspeak use of the word "closely" -- as in closely monitoring the slowdown in the economy, as a signal that QE3 is all but assured.

Given the economic slowdown, the government's own reduction in its growth projections, and the situation over in Europe, the Fed could simply be telling the market that it is "closely" watching the economy because Big Ben wants to make sure that as far as the Fed's public face goes, it doesn't look like it has its head in the sand. That neutral view would still leave investors with plenty of reason to be frustrated about the economic situation leading up to Friday's nonfarm payroll data.

For the record, one forecast of economists expects the Labor Department release to show that the unemployment rate remained flat at 8.2% in July.

Gallup has a similar outlook, with unemployment at 8.2% for July (Gallup seasonally adjusts its unemployment number, resulting in the expectation of the July rate at 8.2% actually being higher than the 8% seasonally adjusted June number. However, the market is attuned to the government's nonfarm payroll data change month over month, which was 8.2% in June, implying the jobs report outlook is flat.)

The wildcard is the ADP monthly jobs report, released earlier this week, which was more bullish, estimating that the U.S. economy produced 163,000 jobs in July 2012. The problem is that the ADP report has a very weak track record of serving as an indicator for the nonfarm payroll report.

Against this backdrop, U.S. investors are looking at a glass half-empty," especially with the U.S. headed for the so-called "fiscal cliff" if Washington doesn't deal with the debt ceiling issues in the fall. That's the conclusion drawn from a joint survey conducted by Wells Fargo(WFC) and Gallup, and released on August 1.

The survey finds that U.S. investors are increasingly sour on "politically divided federal government," and a vast majority say it is the "top factor" affecting investors.