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Frontrunning: July 31
- Advance GDP: -1.0%, and here is why - Federal Spending up 11%, Q1 number revised significantly lower to -6.4% (BEA, and Bloomberg)
- Europe: widespread deflation and spiking unemployment (Bloomberg)
- Japan: widespread deflation and spiking unemployment (Bloomberg)
- Pearlstein: Wall Street is at it again (WaPo)
- Cash for clunkers done? AutoNation will be pissed by the lack of this subsidy (WSJ)
- Goldman's electronic trading head: more regulation needed (WSJ, h/t Nicholas)
- Deutsche Bank CEO: "Bad loans next wave of the crisis" (Bloomberg)
- Primus credit mitigations, or, if you are not a systemic risk (College Analysts)
- A surtax on the op 1% is a bad way to pay for healthcare reform (Forbes)
- Support for Obama's healthcare plan slips (WSJ)
- First they take over the markets, next the phones: Google's Androids set for battle (Bloomberg)
- Pink slips and poor health: the toxicity of job insecurity (Miller-McCune)
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How much of the so called "(real) economic activity" in the GDP came from the churn and burn from the likes of GS, JPM, etc?
So, if what is said below is correct, is downward revised Q1 number EVEN WORSE than now reported?
http://www.optionmonster.com/news/article.jsp?page=commentary/premarket_commentary/gdp_revisions_may_produce_surprise_36411.html
"GDP revisions may produce surprise"
As Robert Carnell of ING has pointed out, today's GDP number is likely to be a surprise. Why? The Bureau of Economic Analysis is revising its benchmark for calculation of GDP, a process that takes place once every five years. And today is the day.
As Carnell pointed out in a Bloomberg interview, the benchmark revisions are going to make prior data look better. Yes, you read that right--the...
check out the deflator +0.2% vs. +1.9% in Q1. That will help you
Federal spending up 11 %...if that was not the case, we would have seen GDP of -12%. Long live Obama!!!!
Barry is going to save us all! There will be so much fucking Change we might be able to handle it.
pan-handle it.
The Q1 revision will just make Q1 2010 look better... and no one cares that they are pawning off some bad data on Q109. Neat trick.
You got it. They'll also revise 2nd quarter figures higher later long after the rally monkeys have had their say.
Won't matter...
All that matters is the headline: "better than expected". I'm going long for the day - bet we punch right through 1000 and keep going.
That was my guess yesterday - told ya!
FROM WSJ:
Tension on Wall Street trading desks began building late last week when the Treasury surprised the market with plans for a record week of sales. A Monday sale of $90 billion in Treasury bills with maturities of as much as a year went well. But China appeared absent from the following two sales, which totaled $81 billion of debt, traders say.
_________________________________________
China has apperently stopped buying our debt and we still have $900 billion to auction off in the next three months. Let that sink in for a bit.
To everyone who thinks that China can't stop buying US debt or else their holdings decrease in value.... China has $800B in US treasuries. The US is trying to sell $900B this year, another 2 trillion next year. Don't you think China can liquidate without their volume being detected?
The US dollar dropping in value will have a muted effect on China. China is still the low cost producer, so even if the US imports less, a higher percent will come from China.
It's actually OPEC that has to step up buying treasuries. Oil at $50 will be painful if US demand ever failters, and China is still too small to make up the difference.
So Treasury yields WILL have to be cranked right up right? Otherwise they will never sell.
And this will push all interest rates up, else we could just make good money by buying Treasuries?
So if short-term interest rates go up, doesn't this put a giant Obama-shaped spanner right into the financial system?
'cause we all know that Fed, state and local government spending is sustainable. In fact, it is infinite.
Almost as infinite as state pension plans.
Town Halls gone wild
http://news.yahoo.com/s/politico/20090731/pl_politico/25646
Yeh that's right, Recession has ended.
what was the initial GDP estimate in the Q1?
Revision prior to this one was 5.5%. I do not know when that revision was made - probably mid/late April.
Not sure about initial Q1 GDP - 5.1% sticks in my mind.
Pete
I think it's about time we give bubble number three a name. In honor of ZH's work exposing HFT's and the fact that GS is one of the few mafia families left, I vote for the WOPR Bubble.
can we piss on a 'sparc' plug to do any good?
It looks more and more like a "W" bottom. You cannot have any growth if revenues of corp. and households' incomes are falling. End of story. Add enormous debt burdens and, well....connect the dots.
All this will be revised, like last 1/4, GDP down 6.4%. Big ouch!
Are we not getting what we pay these bureaucrats for, accurate accounting, or simple accurate COUNTING? Or are they making up numbers? Why don't we just outsource it to the Chinese? "A Swiss blanking watch..."
Damn that captcha problem is hard w/out calc.
(-25) x XXX = -475
In other news prepare for the massive mutual fund buying on monday from all the people switching from conservative investments back into equities. Because GDP headline is getting better and will most likely be positive by the end of the year.
??? Call it -500, so xxx is 20. Now just subtract off the extra -25. So xxx is 19 right.
That bloomberg article was overly optimistic if you ask me. There was no mention of the prior revisions and no mention of govt. spending influence on gdp.
Company I work for has been in the red since middle of last year, only question now is when the pink slips arrive. I voted for fourth quarter pink slip delivery, we'll see.
Interesting to see Pearlstein cover high frequency trading. For a columnist in a paper like the Post that really has no financial acumen (and nor does its readership), he's often spot on. Let's hope more of Schumer's colleague catch that column.
Yes just like Japan zombie banks and all government spending is the eCONomy now, how long before the Treasury market has and accident is the only question.
I am probably oversimplifying, but the release said that the Q2-09 GDP growth was -1.0% based upon the revised Q1-09 decline of 6.4% or ~ -7.4% total for H1-09 meaning that the real decline in Q2-09 is closer 1.9% even with the 11% increase in gubment spending.
I suck in math but what would the GDP be without the increase in Gov't spending?
Anyone?
Government spending added +1.12% (annualized) to 2Q GDP so it would have been -2.12% without it. You can see it on table 2 of the BEA's press release "Contributions to Percent Change in Real Gross Domestic Product."
http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm