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Following Weak GDP Revision, Goldman Issues Latest Mea Culpa
We find few things quite as entertaining these days as watching Jan Hatzius, and the entire Goldman economic team, squirm, as he is forced to admit (repeatedly) that economic data does not support his suddenly ridiculous outlook on the economy. And following numerous mea culpas after the November NFP report, here is his latest admission that not all is quite as rosy as he hopes it should be. 'The Great God Offset strikes again as weaker growth in consumption of
services offsets most of the expected increase in inventory
accumulation. So we end up with a GDP picture for Q3 that undoes most of
last month's upward revision to domestic final sales.. Because the inventory accumulation rate now looks even more rapid
than before, this will likely be a bigger drag in this quarter or the
next."
From Goldman Sachs:
Actual: +2.6% qoq, +3.2% yoy
Previous: +2.5% qoq
Consensus: +2.8%
Released: 22 December 2010 at 08:30 (New York time)
Less Consumption; More Stockpiling
BOTTOM LINE: The Great God Offset strikes again as weaker growth in consumption of services offsets most of the expected increase in inventory accumulation. So we end up with a GDP picture for Q3 that undoes most of last month's upward revision to domestic final sales. Price indexes revised down, reflecting (as usual for this time of the quarter) Call Report data on the prices of bank services.
KEY NUMBERS:
Real GDP growth +2.6% in Q3 (qoq, annualized, +3.2% yoy) vs. GS +3.0%, median forecast +2.8%.
GDP price index +2.1% in Q3 (qoq, annualized, +1.2% yoy) vs. GS and median forecast +2.3%.
PCE core index +0.5% in Q3 (qoq, annualized, +1.2% yoy) vs. GS and median forecast +0.8%.
MAIN POINTS:
1. Although real GDP was somewhat firmer on revision than previously reported, the revision was less than most analysts-including us-had anticipated. In our case, the decision to call for an upward revision was based on inventory data for September that showed more accumulation than had previously been reported. This did show up in the GDP report, as the accumulation rate jumped from $111.5bn to $121.4bn, adding about 0.3 points to the growth rate. However, consumer spending on services-an area not well covered by the data we see-proved much weaker than previously estimated. Most other categories of GDP were fairly close to the levels currently on record.
2. As a result of these changes, the growth rate in real final sales drops back below 1%, to 0.9%, retracing half of last month's 0.6-point upward revision. If the trade balance is removed from that calculation, the growth rate in Q3 is 2.6%-the same as for real GDP-versus a preliminary report of 2.5% and 2.9% in last month's revision. Because the inventory accumulation rate now looks even more rapid than before, this will likely be a bigger drag in this quarter or the next. For the moment, we'll book that as a downside risk to offset the upsides that have been emerging elsewhere in the economy.
3. Price indexes were revised lower, by 0.2 points for the GDP price index and 0.3 points for the PCE core index. These indexes incorporated updated information on bank service charges from the FDIC's quarterly Call Report, the usual cause of changes at this time of the quarter. This, coupled with updated information on health care services, was the primary source of the reduced estimates for real consumer spending as well.
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Wind Speed shipping, that is what is fouling BDI sails.
And Demand Destruction Blowback.
Perhaps Mr Jan H. should be "in irons"..... ;-)
ORI
http://aadivaahan.wordpress.com
All to try and bluff their international clients that all is well in the USA.
You know, I'm starting to wonder if it is cool to be at The Goldman Sachs anymore.
I'm not sure Jan Hatzius really should espouse an opinion just now because clearly he is NOT in the running to be Dr. Frontrunner. I think Jan Hatzius should probably not be bullish or bearish, to tell you the truth, but maybe Jan Hatzius should get comfortable saying things like, "What do I know?"
If Jan Hatzius would just get comfortable saying things like that instead, then people would not be rushing in to buy stocks priced for stupid...only then to have to rush in to sell stocks priced for stupid, creating volatility, which, if you did not already know, is another thing that is NOT GOOD FOR AVERAGE JOE.
But hey, what do I know?
I expect the revision before you leave tonight, Jan.
goldman seldom right but never in doubt when they want to manipulate the markets
RIP- old Jon Corzine GS team in the day. You are missed.
Linear extrapolation is the only tool Wall street knows and can employ, anything that doesn't fit the upward sloping curve is anomalous
(d)
Wait till the New Year. This market is going to fall on Jan's head like a safe dropped from the 50th floor.
Hi TexDenim, True but remember the POMO will inflate the safe and thus it will rise!! LMAO
I fear you may be right. The new Repub congress may draw fire from the nutjobs orchestrating the economic farce. It won't likely happen immediately, but after 6-9 months of media smear, the marxist blame machine will finally let go of all the scaffolding holding up the facade and start pointing fingers. The Repubs are too effing clueless to realize that they are no longer playing the old game of cheaters poker like before. I think 2011 is going to be a pivot point for this country. Question is; pivot to what?
There are signs of bullishness everywhere.
signed
Bob Pisani
(d)
(d)
Jim O'Neill, Goldman Sack asset management, was on CNBC this am. He said 2011 would be rosey.
Joe Kernen called his forecast an outlier to many of the others which were predicting disaster for 2011.
O'Neill feigned surprise, backpedalled some. I think he was just surprised Kernen called him on it.
The IYR gapped up, again, and is marching higher.
They'll just keep putting the spurs to it through the holidays, I guess.
Why would it even slow down? Real Estate is just ON FIRE right now. REITs are so attractive that nobody can keep themselves from mouse-clicking their savings away.
My god...whatever.
We can't have a con-game without the confidence.
You people watch to much TV....... TURN OFF THE NEWS SHEEP!!!!!!
The PTB knew the 3Q GDP revision was going to be bad, so last week CNBC pimped for TBTF whores extolling the 4Q GDP. To wit, this dimwit:
http://www.cnbc.com/id/40697428
Published: Thursday, 16 Dec 2010 | 5:06 PM ET:"...The reports added to growing evidence of a substantial pick-up in economic growth during the fourth quarter, even though housing data pointed to continued stress in the sector.
"The recovery is gaining some momentum. Manufacturing output is strong, layoffs are slowing and we think GDP growth will be somewhere between 3 and 4 percent in the fourth quarter," said Mark Vitner, a senior economist at Wells Fargo Securities in Charlotte, North Carolina."
Whatever B.S. is takes to keep the Ponzi from collapsing...and the proletariat from revolting.
WTH am i supposed to do with my retirement fund i am only allowed to put it in Stocks or Bonds :( wow worse or worser.......
Check out CEF (central fund of canada). 100% precious metals and cash (no derivatives or hocus pocus). They've been around since 1962, and run by the same family since. Gold to Silver ratio varies but is something like 53/46 with the rest in cash. You have to watch the news about CEF because they periodically use the run-up in share price to buy more real metal. When that happens, the price mysteriously drops even on gold or silver up days. It is just a temporary jolt and the price more than makes up for the loss after the buy is complete. I've held various amounts since it was at 8 back in 2005... it is now around 20.
CAT overbought on RSI(14) reading of 78.09 as of yesterday close.
An overbought RSI(14), greater than 75, has occurred 12 times since 2007 in CAT. 11 of those times have immediately led to corrections from -2.2% to -8.4%.
Wasn't ZH calling (not too long ago) for <2% when all is said and done? We may not quite get there but it will be close!
Its amazing to me how they can be profitable 365 days a year...but give out this kind of advice...something is wrong here...
Amen!
their traders don't follow it. They are HFT with the best of them. And active in the fringes--who do you think is making money in feeder cattle? Not mom and pop. and not GS institutional clients.
Competing interests internally creates the right environment. Jan and his team are the cheerleaders. The guys behind the scenes trading have their own agenda, which is making money any way possible. This includes trading against clients and their own advice. GS has a carefully orchestrated plan and honesty/transparency is not part of it.
Does anybody but Tiny Tim and The Benjiman actually read these reports or give any credibility to them.
PS Merry Christmas everyone!
Everyday at work I recieve a market update, this is how GDP is reported.....
GDP Revision: The U.S. economy grew slightly more than previously thought in the third quarter as companies boosted inventories, showing the recovery regained steam after a brief slowdown. Gross domestic product, the value of all goods and services produced, rose at a seasonally and inflation-adjusted annual rate of 2.6% in July through September, the Commerce Department said Wednesday. In the government's previous report of how the economy performed, released a month ago, GDP was estimated to have increased by 2.5% in the third quarter, following a meager 1.7% in the second quarter.
You wouldn't happen to have full screen blowup of your avatar handy, would you?
on the home computer
GS is still calling for a 1450 s & p by year-end 2011.
GS = suicide banksters