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Inventory Adjustment Takes Out 0.7% Of Friday's GDP, Real Q2 Number Is 1.7% Per JPM
Friday's 2.4% GDP was enough of a stunner (and a plunger after the majorly upward revised Q1 GDP data), that it sent the market pretty much straight line higher ever since, now that QE is virtually guaranteed, as the Fed completes the circle and confirms that Einstein's definition of idiocy is nowhere more evident than in the Marriner Eccles building. So the fact that as JPM's Michael Feroli notes, the real Q2 GDP is actually 1.7% after revised data on non-durable goods, should have long sent stocks at least 1% higher for the day instead of the observed meandering in slightly red territory, has left the Zero Hedge staff scratching its head.
From JPMorgan:
The assumption that the Bureau of Economic Analysis had made regarding factory inventories in their initial estimate for Q2 GDP was a bit off the mark, and it now appears that growth last quarter was closer to 1.7%, rather than the 2.4% reported last Friday. (Of this downward revision, 0.1%-point came in yesterday's construction report).
Inventories at manufacturers of nondurable goods decreased around $4 billion in June, rather than increasing $1 billion as BEA had assumed. As a result, it now appears economy-wide nonfarm inventories increased at a $55 billion annual rate last quarter, and stcokbuilding contributed 0.5%-point to GDP growth, rather than the 1.1%-point initially reported.
With the implied revisions, second quarter growth is now looking especially soft. On the brighter side, the prospect of a big inventory overhang weighing on third quarter production -- which loomed large in the initial estimate -- now appears less threatening.
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3:30 ramp will be extra strong given this wonderful news.
The heart of the crack head races upon sight of the pipe!
The market knows with every piece of bad economic news, it is that much closer to QE2.
Happy Days are here again?
The beginning of the double-dip will be marked as starting in June.
Ph.D economists: What are they good for?
Let me see if i understand, JPM started with a Q2 GDP estimate of 4.0% revised to 3.2% at the beginning of July and it is now a mere 1.7%.
Excellent forecasting skills, i do believe.
I feel ya lizzy :D
For Good Economic Forecasts, Try Flipping a Coin: http://www.bloomberg.com/news/2010-08-02/for-good-economic-forecasts-try-a-coin-flip-commentary-by-caroline-baum.html
Hey, I'm profiting with Cramer, no time for the nattering neighbobs of negativity.
/s
Oh, that made me laugh, since Cramer was smiling at me when I read it.
Youre profiting with Cramer IF you use him as a contrarian indicator and do the exact opposite of all his calls!
In war truth be the first casualty, we are indeed at war. The fight for our minds and the battle to destroy cognitive thought is with us everyday. Control the population's expectations well enough and you maintain a tax paying, fat, dumb and happy enough populous to avoid revolution. I flatly refuse to accept the lies, no more lies and everyday I do my level best to open up just one more set of slammed shut eyes.
"there be no shelter here" Rocha
Colleague of mine just said she is going to fall flat on the floor the day I say something positive. Who can ebullient or happy when a shit sandwich is on the menu everyday and half of the people around you are happily devouring it? The whole thing is repulsive.
"The truth is like sunlight - people used to think it was good for you." - Mike Judge, "King of the Hill"
AD...exactly. I feel like i am constantly battling to find truth on a daily basis. they lie and lie and lie and lie by the minute to us
sometimes I wish the whole system collapsed so people will WAKE THE F UP. friggin SHEEP is what they think we are
how about this??? the lie about SP500 company balance sheets and cash levels. a new one every day
http://finance.yahoo.com/banking-budgeting/article/110218/the-biggest-li...
+300 points by EOD. That is fantastic news after all. I mean, factory orders are down, real estate is down, GDP sucks, unemployment is heading higher, ISM is rolling over... I mean what could be better news? What is the market waiting for nuclear attacks on North Korea? Don't forget the Eurobor is creeping ever higher as well, nothing to see there either. What a crock of crap this is. Where is Leo with our daily dose of Chinese solar stock nonsense?
You forgot the ECRI and about 100 other stats, but other than that, well done.
So, it is a positive report. The future is bright.
I think I just heard the thump of a body hit the floor. Be a gent Cursive and please help her to her feet.
@American Dreams
Lulz. I admit at first I was perplexed and then it hit me. Thanks for the laugh. :)
It's always nice to know that there's a silver lining.
This guy's been bullish for a long time now. V-shaped recovery type stuff.
Heard the DB economist Lavourna (?) on CNBS. He said we are tracking a 1970 recovery (can't remember which one) so we are just fine. He thinks we will get a +250k jobs print any day now - after being wrong for months now.
Yeah, I forgot how to spell Joe's last name, too, since I haven't watched CNBC much in the last 2 years. That guy is Krudlow's little bitch...
Well, I have to say (and not being sarcastic), my hourly charts have been showing oversold on the indices today so it's possible we will get a move up into the close.
This is not trading advice, and I have been losing money as I am VERY bearish on this market.
DavidC
Me too DavidC, me too.
What happens when by Friday its revealed actual GDP revisions bring it to -.5%? 500 point DOW ramp I guess?
Well, you see, the stock market is forward looking. So -0.5% is such an easy beat next month/quarter...so stocks up. I am not a financial advisor and this is not meant to be understood as financial advice.
Better than revised expectations. Market soars!
I don't disagree but you can also so that imports would or should be adjusted somewhat because there is a portion of the inventory increase that came from imports (which were a drag but would add the same amount if reversed).
I'm torn between laughing and crying. Well, sighing. I'm not much a of a crier. I think I'll just go with a bemused chuckle.
is it einstein's definition of idiocy or insanity? eh, tomatoes, tomahhhtoes...
Or Timmytoes, Timmaytoes...
DavidC
"Only two things are infinite, the universe and human stupidity, and I'm not sure about the former."
Albert Einstein
Funny, I'd predicted this in an earlier article on the GDP number. That they'll revise it down.
The game is so damn predictable.
When the game is out in the open like this, we are being dared.
What are we doing about it? Slogans and T-shirts? The great Bumper Sticker campaign?
Yup, that'll bump us into our senses.
ORI
http://aadivaahan.wordpress.com
All of the other GDP reports have been revised downward - by then no one cares. And then they manipulate the series to show a deeper recession in the Bush years and a stronger recovery during Obama. A manipulated crock, that they can't even get to be a reasonable number.
"A manipulated crock, that they can't even get to be a reasonable number. "
That really is how bad it is. And how farcial. Well said traderjoe. Here is some real crock http://to.ly/5OJp
ORI
http://aadivaahan.wordpress.com
We have been assimulated.
We are all ADHD HFT Borg now.
Albeit carbon based and a bit slow on the uptake.
in a dynamic of total farce, reality matters not
real gdp will be negative so long as debt continues to outpace growth in income
all data from official sources is simply doggie poop
(ever examine the hedonic adjustments to IT spending that goes into the GDP calc? - really, it's all one needs to see to understand the depth of the farce that is gov't economic statistics)
The heart of a crack head races upon sight of the pipe!
can we call this a 'plunge' now , Leo?
QE2 will happen. But how can they implement it while telling everyone that everything is ok, and as stocks melt up everyday?
Hmmmm, I expect some "unexpected event" in the near future. The bots will be switched to sell, and the economy will be depressed. Once the S&P reaches ~800-900, Ben will implement QE2 and the masses will be so relieved the system was saved again.
So fucking predictable.
I was thinking the same thing.
I've been trying to play the "event" as a bear, but I'm getting poorer by the day doing that. Perhaps it's better to be a bull in the "post-event" world.
Repost from another thread:
David Tice on Bloomberg continuing the bearish theme. Tice points out that the GDP is a completely propped up farce:
http://www.bloomberg.com/video/61891496/
Do the Feds put out numbers that make algos say things look good, but not too good that they go gangbusters? Revisions have been quite large on order.
Real GDP is -1% per John Williams.
ShadowStats.com (July 30, 2010):
• Worst Economic Downturn Since World War II Just Got Worse
• Bulk of First-Half GDP Growth Due to Inventories, Setting Up Likely Third-Quarter Contraction
• Lingering Market Hopes for Recovery Should Fade Quickly
There are certainly a lot of details like that to take into consideration.I read and understand the entire article and I really enjoyed it to be honest.
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