most likely will move the markets. The consensus read is for a big up
number. Last I heard the Street estimate was for up 4.7%, more than
double the annual rate of growth for the 3rd Q.
My own read of the numbers is for a slightly smaller number. Something
a tad over 4% is my guess. But this number is not so easy to get right.
Even worse, it will be revised a few times before we really know what
happened. I look at this number and try to anticipate how the market
will react if we get a surprise versus the consensus.
This number has potential to cause a stir if it comes in south of 4% or
north of 5%. The numbers in the middle are ‘baked in the cake’.
If the number comes in at 3.5% (or less) I would expect:
-Stocks will fall.
-Bonds prices will rise.
-Gold will rise.
-The dollar will fall.
-A number of economists will be scratching their heads.
-There will be renewed talk of a ‘double dip, starting sometime in the 4th Q.
-Larry Kudlow will misread the number and will hail the day as a triumph of capitalism and the free market economy.
-The White House will make a statement that they are responsible for the turn-around.
If the number comes in at 5% (or higher) I think the following happens:
-Stocks will rise.
-Bonds will get crushed.
-Gold will be steady.
-The dollar will be steady.
-A number of economists will be scratching their heads.
-There will be talk of the economy over-heating; some will express concerns over inflation.
-Larry Kudlow will hail the day as a triumph of capitalism and the free market economy.
-The White House will make a statement that they are responsible for the turn-around.
I think a graph of the actual GDP numbers is helpful in trying to
understand these big numbers. Note: The 4th Q number is a forecast
based on the consensus estimate.
While I will be happy to see a big number tomorrow, you have to look at
where we have come and where we are. Looking at this you see that the
growth in the economy is about where we were two years ago. What did we
pay to get back to 07? About $2 trillion in additional debt, the
socialization of the financial system and the expectation for trillion
dollar deficits as far as the eye can see.
A hypothetical question to ask might be, “What would we look like today if we had not had a train wreck in 08”. Another graph:
Of course we did have a wreck in 08, so it is sort of useless to play
the game of “if coulda shoulda “. However there are hundreds of
programs, retirement plans and dreams that are off track as a result.
We will not catch up to where we might have been. We need to adjust to
where we are, I can’t imagine how that can happen.
Some on the Street are putting 4Q GDP north of 5%. If we see a number
with a five handle, take note of it. It will be the last time we see
one that big for a long time.
Reality check. So we got a 5.7% GDP blip (notice GS nailed it again vs. avg 4.6~4.7 street expectation). That, with significant positive earning surprises since Thursday close. Yet, after a bump in US futures, European trading, and JPY across the board, rolled back into recent sell-off mode.
Friday 29th finished down across the board, this time visibly breaching (on a close) the technical SPX ~1085 sandline everyone and their dog were eying on their screens
Like Bruce, expected a small relief rally on such a number, did NOT happen... Buy the (positive) rumor, sell the (positive) news... Curiously, VIX daily tops are slowly dropping since the spike to 28 last Friday 22nd, unusual disconnect pointing to a mild sell-off (is there EVER such a thing?), what could be the most painful trade? Be careful out there
http://finance.yahoo.com/q/bc?t=3m&s=^VIX&l=on&z=m&q=b&c=&c=^GSPC
GDP data prior to 2008 should not be trusted as too much came from the accounting tricks of the financial service sector...
Again this GDP fetish is a canard - the most important number is the ratio of production /consumption vs debt creation and since the monetarists have taken over the economic debate that ratio has skyrocketed to almost infinity.
Before we all cross this event horizon GDP will have to be destroyed by wiping out large sections of the debt/money system.
Would someone push the button and flush the turd that is the American economy down the bowl, the site of it is making me sick!
Snore....even if we get a print of 5%, it's all
gubbermint baloney. What's a 15 multiple on
real GAAP earning estimates for the S&P. 900 maybe?
And why pay even a 15 multiple for slow-mo
earnings with everyone and his brother forecasting
a GDP fall off to 1% by the end of the
year? The street ramped the cart way in front of the
horse, as usual.
Some fairly big swings in the Dow futures, at one stage down over 30 now up 19. Be interesting to see who is causing these moved.
Patience is my game. Is there really a trade tomorrow that I can't afford to miss?
And since I'm watching more than trading my need to be right is moot. I don't see a continuation of an uptrend. Maybe butter it but many are looking to sell into it. And when that is prevalent you think they are going to let the small guy out.
GDP is pure crap. CPI is pure crap. State of the Union was breathlessly hostile and combative. "Asset protection" are two words I don't hear a lot lately. I hear "don't be in cash" and "sectors that are hot" and "solar blah blah" and "gold blah blah" and...
Cash means dry powder. Good luck folks. This is one pissed off electorate. When they say we (USA) don't matter anymore the original meaning and the new meaning The Street doesn't quite get yet.
stop looking into it so much. market is down what 5-7% from peak
perhaps a low # is baked in as well as a high one
As I recall Rosie said the US stimulus accounted for something like 2.6% of 3rdqtr's 2.2% (the revised low) GDP print... but maybe I'm wrong there.
I wouldn't be stunned to see 4.5% - 5.0% (hell.. or more) - only to hear it get revised lower a few months from now. That seems to be the m.o. these days.
Eventually the recovery has to show its face.. or reality (and its corresponding financial gravity) will come a callin....
I can't wait to wear my "I told you $$#%^&@# so" shirt...
John Williams estimates GDP upward bias is 2%...
So in reality 2% GDP = Zero.
If GDP is plus 4%.... then 2% built in creep + 2.6% government spending...
How much real growth was that? I thought so...
Claim victory <here> President Bullshit Barry O-Hoover...Speech! Speech! Which is all that useless fuck can do...
Williams also asserts the first GDP numbers are a bull crap guess with BLS blindfolded, ear plugs in and one finger up their ass... GDP number based on at least SOME data comes later hence all the revisions.
I wish I was in a business where I could be wrong all the time and just revise it without getting fired...
Putting out numbers that get revised doesn't mean they are wrong. If you wanted to really wait until all the source data is tallied before releasing GDP, we would just now be getting the data for Q4 2008.
People need to take the best actions they can while knowing they have incomplete data; the waiting time for full data is not acceptable. I hope you can understand this.
i'll bet that if the GDP number comes in low the market will rally, on the prospects of QEII and low interest rates forever. the only thing that could help the market more is if we started a war with Iraq. Or if a hurricane annhilated the Gulf Coast. Or possibly a bioterrorist attack, did Barry mention that? Well call up Cheney and see what's happening?
signed Anxious to go long
Isn't there a relationship between increased Government debt and improved GDP? However, I've forgotten what the relationship is.
Thanks Bruce.
as you said, "it will be revised a few times..." therein lies an answer.
i'm not sure even the mo mos will jump on a "big" number, this pattern is getting very, very stale and the numbers out of Commerce and Labor dep'ts are simply not trustworthy. i thought today was a bull trap (blind squirrel and all..) and a big gdp number tomorrow is another bull trap.....
Yep, wonder how long it will be before the Dec Durable Goods Orders will be revised down just like Nov's and pretty much every figure that's released. Obama, Bernskanky and the other White House fools really believe these bs numbers.
If we get a 3.5% # or lower the equity markets will tank hard and the USD will skyrocket via safe haven bid. Gold and Silver will get crushed as well as pretty much all risk assets. Don't know what markets this guy has been watching the past year??
We get a 3.5% # USD will rally... Equity markets will tank hard and USD will catch a save haven bid, gold and silver will get the dick as well as pretty much all risk assets. Don't know what markets this guy has been watching the past year???
No way in hell GDP is anywhere near 4%. If it is over 1% I'll be shocked.
Get ready to be shocked!
I got 99 problems, but a big GDP ain't one.