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Deutsche Bank's Lavorgna Follows Revision Suit , Takes Q2 GDP Estimate Down To 1.1%
Our expected economic groupthink revision by the sellside "strategists" is accelerating, as now even permabullish CNBC permaguest Joe LaVorgna "takes the knife" to his Q2 GDP estiamte. Yet despite presumably seeing the light, he only cuts Q3 and Q4 estiamtes to 3.0% and 3.3%, still hundreds of bps higher than Goldman, and even worse when compared to reality. David Bianco and his stratospheric GDP will stick out like a speedoless nudist in the middle of the liquidity ocean when the economic tide finally goes out. Luckily, Bianco has no credibility to begin with so the concept of discrediting surely does not apply.
Taking a Knife to H2 GDP; Fed on hold longer
We are lowering our growth forecast and pushing out the anticipated timing of Fed hikes. The June international trade figures were much weaker than what both we and the Commerce Department had assumed, and it was not due to petroleum, which can often be a major monthly swing factor. In the June data, exports were down 1.3%, due mostly to lower capital goods excluding autos, while imports were up a sizeable 3.0%, largely on consumer goods and autos. The net effect was to push the June trade deficit from a modestly lower revised May reading of -$42.0 billion (was -$42.3 billion) to -$49.9 billion, the largest monthly trade deficit since October 2008 (-$59.4 billion). What is strange about the June trade numbers is that the deficit is widening while the inventory build is getting revised lower. Oftentimes, a rise in imports on the back of stronger domestic demand leads to higher rather than lower inventories—it now appears inventories will barely be higher in Q2 than their $44 billion increase in the prior quarter. Nonetheless, the data have an impact on our 2010 second half GDP forecast.
The net effect of this morning’s trade data is for us to further trim our estimate of Q2 real GDP. Less construction, inventories and net exports point to a sharp downward revision to Q2 real GDP growth from +2.4% to just +1.1%. This in turn creates a high hurdle for a large gain in output this quarter, which had been our expectation. Absent meaningful private sector job growth, a quarterly delta of 350 bps on sequential quarterly real GDP from +1.1% to +4.6% is too aggressive. Therefore, we are marking down our second half growth forecast as follows: Q3 real GDP has been cut from +4.6% to +3.0% and Q4 real GDP has been cut from +3.8% to +3.3%. This lowers Q4 over Q4 2010 real GDP growth from +3.6% to +3.1%, which is still above trend. We are not trimming our 2011 real GDP forecast at this point—it remains at +3.3% as measured on a Q4 over Q4 basis. Less GDP growth and lower employment prospects implicitly mean a longer period of near zero interest rates, and yesterday’s very dovish FOMC statement only reinforces this. Consequently, we are pushing out the expected timing of rate normalization from Q1 2011 into the second half of next year. We see the fed funds rate at 1% by the end of next year compared to 2.0% previously.
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Slice and dice, bitchez!
Futures are collapsing right now...1076 on the futures..
Have no fear - they'll ramp 'em up overnight and we'll be green by 'morn...
.
Pansy asses... i cant wait for this vix to go back to 50+
Ah those were the days. So which ugly biotch dies first to trigger a 55 reading? STI, RF, FITB? hmmm.....
He's been looking for a 250k+ NFP for like 6 prints now. Oops.
Wasn't he part of the "we're not going into a recession Kudlow crew" of June-July 2008; 7 months after the recession started?
Hmmm...war would shave a few %s too.
http://www.debka.com/article/8961/
That would be a turd in the punchbowl for sure Mr Ferguson, but somehow I think if they are going to pull that it will be after the election, in fact, could well be more like during the run up to the 2012 election as people might be hard pressed to want to change Presidents during wartime. But I really think that greed overrides the political dreams of most despots these days. My guess is that there are a large number of suitcases being passed between friends to keep the sheep nervous and the arms dealers busy.
You are, most likely correct. However, only US military actions are pre-planned and pre-announced. The rest of the civilized world tends to consider the element of surprise a distinct tactical advantage.
So, it sounds like the memo titled "QE2 Please!" has been fairly well disseminated.
Next up, the "We saw this coming" memo (subtitled "QE3 for dummies").
Um, does it really worry no one that every commentator using these numbers has scratched his head over the mismatch between spiking imports and the inventory + sales numbers? Like, pretty much everyone seems to be saying that their common sense indicates at least one of these numbers has to be completely bogus?
LaVorgna regularly provides comedy. He'll probably be singing the 1300 by year end tune all these bank analysts are siging next time he's on TV.
Yeah, and I see Skittle farting unicorns but that doesn't make 'em real.
maybe we should introduce him to the 2yr which says we wont get to 1% in 2yrs..
Skittle farting unicorns will get you every time...
Next Fed meeting should change the wording to "hold interest low for a permanent period of time".
nah.
Waiting for when they change the language to "exceptionally low rates in perputity" (and leisman jizzes himself on air).
ZIRP4EVER
This guy has never been right. He just likes getting on CNBC. He reminds me of Geithner! EEEWWWWWW!
guys quit the euphemisms, lavorgna is plain idiot
this moron provides nothing more than stand up economics
Cram a half dozen econoClowns into a room and they'll lay checks on every straight number on the board. Somebody gets to win, enjoy the hookers and coke and play on. The losers look for teaching and government jobs.
So when does the government get around to faking the numbers and intimidating those who would report a less than stellar GDP?
Now now Tyler, no need to be so harsh. I'm sure his mother still loves him, right? Right? Unless she lost her IRA following her son's advice. In that case, no Christmas goose for you Bianco.
Lavorgna is one of Kudlow's kids always talking about eating yummy green shoots. He actually looks more like Larry from the 3 stooges and is about as funny.
The 10 year is crying out iceberg ahead, but it's too late. The hull has already been sliced from bow to stern. Bernanke is calling for The band to play louder. I'm on the lifeboat now paddling away as fast as I can...
This country needs a little 'Operation Mindcrime and Revolution'. It's about the only thing that will save us.
Lavorgna, Bianco = unicornomists
On cue LaVorgna appears on Kudlow to tell Bob Shiller that house prices have bottomed
LaVorgna is full of bologna.
Hey Joe, PSTFU.
Zero Hedge is declared by many very prominent guys to be the best. If you take all the chatboards in the world and put together an all-star collection of whacky posters, they couldn't keep up with you guys. This is like a Comedy Central roast every night.