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Q4 GDP Comes At 3.2% On Expectations Of 3.5%, 2.6% Previously
Q4 GDP comes below consensus at 3.2%, on expectations of 3.5%. Goldman once again hits in on the nail with their below consensus estimate of 3.0%. Inventories take out 3.7% from Q4 economy (annualized) which is strange considering all diffusion indices in Q4 saw inventory accumulation. Furthermore we are supposed to believe that the government actually subtracted 0.11% from economic "growth." Exports and Imports combined to add another 3.44% gross of the total annualized growth. This is the first time Imports "grew" the economy since Q2 2009. Overall, more or less in line with expectations, with a weaker tone.
Some highlights:
Real personal consumption expenditures increased 4.4 percent in the fourth quarter, compared with an increase of 2.4 percent in the third. Durable goods increased 21.6 percent, compared with an increase of 7.6 percent. Nondurable goods increased 5.0 percent, compared with an increase of 2.5 percent. Services increased 1.7 percent, compared with an increase of 1.6 percent.
Real nonresidential fixed investment increased 4.4 percent in the fourth quarter, compared with an increase of 10.0 percent in the third. Nonresidential structures increased 0.8 percent, in contrast to a decrease of 3.5 percent. Equipment and software increased 5.8 percent, compared with an increase of 15.4 percent. Real residential fixed investment increased 3.4 percent, in contrast to a decrease of 27.3 percent.
Real exports of goods and services increased 8.5 percent in the fourth quarter, compared with an increase of 6.8 percent in the third. Real imports of goods and services decreased 13.6 percent, in contrast to an increase of 16.8 percent.
Real federal government consumption expenditures and gross investment decreased 0.2 percent in the fourth quarter, in contrast to an increase of 8.8 percent in the third. National defense decreased 2.0 percent, in contrast to an increase of 8.5 percent. Nondefense increased 3.7 percent, compared with an increase of 9.5 percent. Real state and local government consumption expenditures and gross investment decreased 0.9 percent, in contrast to an increase of 0.7 percent.
The change in real private inventories subtracted 3.70 percentage points from the fourth-quarter change in real GDP after adding 1.61 percentage points to the third-quarter change. Private businesses increased inventories $7.2 billion in the fourth quarter, following increases of $121.4 billion in the third quarter and $68.8 billion in the second.
Real final sales of domestic product -- GDP less change in private inventories -- increased 7.1 percent in the fourth quarter, compared with an increase of 0.9 percent in the third.
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long DX
praise the Bernank
Recovery Winter!
Kondratiev style
4Q not 3Q
market goes up...no matter the news...
http://online.wsj.com/article/SB10001424052748703399204576108463818702014.html
So why are the futures up? Is that there is zero fear of any meaningfull sell off that would not immediatly be bought?
PCE and Real Finals were very strong. I'm afraid revisions will be higher too.
The Federal Reserve magic works............until it no longer does. For every action there is an equal and opposite reaction. Still waiting for the full opposite reaction.
No where does it say the opposing reaction is instantaneous, just that it's inevitable.
It is inevitable if your macro construct is corrrect. Faith in the wrong construct has messed up many a portfolio.
There is nothing the market has not seen before. Faith in a "this time is different" strategy has messed up many a portfolio.
Take economic opinion out of the equation. Bullish sentiment is at extreme levels.
And if you look at the S&P P/E10, we're currently 45% above the market's historical P/E. S&P is trading at nearly 24x. There has NEVER not been a correction when the market's P/E10 was above 20. Never. Going all the way back to the 1870s. And each correction brought the market below its historical average of 16.3, and in many cases, the market was brought back to a single-digit multiple.
Simple facts. No opinion.
A very intelligent post with FACTS! Thanks Johnny!
Yes. Excellent post.
Thanks. P/E10 is definitely not a market timing device, because it doesn't predict when the correction will occur, but a severe correction has always happened from these levels, without fail. More of an asset allocation device.
7-9 large POMO today.
Futures tried to sell off but were shoved higher each time they hit unchanged.
Hey, REITs are up pre-market. I didn't see that coming.
Same situation with the dollar . Up against most currencies until it mysteriously started tanking during a typically uneventful period in FX markets .
You know, I'm starting to share your concern, Boiler. I think that IYR creation units machine is stuck...in the ON position. Someone might want to do a share count there to see what percentage of infinity has been sold already.
Same applies to the RMZ and, of course, the major REITS (SPG, VNO, BXP, GGP, etc). It's such a pile of stank now that it's not even worth touching. They are going to ramrod the snot out of it daily to punish put holders and, god forbid, short interest.
SPG at $101.35...of course. Why not? Even with a shit-bomb unemployment number, an awful durables number and, now, a GDP miss. Ah fuck it...what does that stuff have to do with shopping malls?
Wow-The economy is great!
So all of my friends (in the private sector)who lost their life savings, their jobs and homes are just imagining a bad economy? I guess that is past tense and doesn't really matter any more.
But the stock market is up and refuses to go down even though no one has any money to invest anymore. Hurray - all is well again.
No offense, but your friends (and mine, and me and you) don't count. It's about creating a super-class and, quite frankly, their winning in a rout.
dont matter to me. I is bankrupt.
Imports up by 3.04%? Who's buying? Or is it because the US has no manufacturing base?
DavidC
The market is up because traders know QE2 - POMO is here until June. The commodities speculation will not end in spite of the riots in the middle east. After all, they are replacing one dictator with another. Bankers know that as lons as they can control the western governments; their existence is guaranteed. Central banks are resolved to keep the current system in placed until they cannot. Look for economies in Europe and US to stay in life support until is crystal clear that it is a lost case.
Markets going up in the face of bad news is a bullish sign. However this cyclical bull is getting long in the tooth and due for a correction soon. I have been thinking soon is before may, but my magic 8 ball keeps giving vague answers.
Looks like new highs are in store for the REITS today.
No doubt, due to the booming economy and out of control, mad shoppers.
Off topic but funny. China's state run news channel is trying to pass of clips from Top Gun as one of their air force exercises.
http://blogs.wsj.com/chinarealtime/2011/01/28/video-cctv-tries-to-pass-off-%E2%80%98top-gun%E2%80%99-clip-as-military-drill/?mod=WSJ_latestheadlines
If you read various reports, including the one by Bloomberg there's a line there "excluding inventories, the economy grew at a 7.1 percent - the most since 1984". This is key here. Numbers are made up as it goes. Japan's rating cut, Moody's publishes a warning for US - what? we're doing gangbusters, what downgrade you're talking about?
How does the picture on housing and jobs fit into reports like this? Answer: when it's on like 1984, EVERYTHING FITS as long as the markets go up.
This is what Wikepedia says about the GDP Price Index or Deflator: "In practice, the difference between the deflator and a price index like the Consumer price index (CPI) is often relatively small." Looking at the CPI index we saw a rise from 218.879 in October 2010 to 220.25 in December 2010. This equated to a 2.5% annualised Q/Q rise which looks completely out of line with the 0.3% GDP Price Index.
To me this GDP number is a lot weaker than it looks as I think the Price Index does not reflec the rise in CPI. If the number had been in line (1.6%) real GDP growth for Q4 would have been 1.9% and not 3.2%.
This would be laughable recovery in the old
days but we now CELEBRATE being feeble.
Yay!!!!...lol
Here one on Yahoo "Robert Aliber is suddenly Mr. Sunshine"
http://finance.yahoo.com/banking-budgeting/article/111966/gloomy-economic-guru-says-america-is-back?mod=bb-budgeting&sec=topStories&pos=7&asset=&ccode=
Feeble= better than expected.
That's all you need to know.
Actually, feeble = boom (as
evidenced by stock prices). We
are resilient, self-deluded fuckers
like no other culture in the world.
I am constantly amazed that ANY ZH readers would believe any of these reports...EVER!! Project this: the government agencies who spearhead GDP reporting provide their "report" to the market-makers before the public finds out. The market-makers create short term markets (as it were ) via front-running ANY reported data...thus benefiting from contracting OR expanding GDP. It matters not. That is the beauty of the system. The market-makers get richer regardless. GDP is a sham. The BLS is a sham. The ratings agencies are a sham. And if you believe ANY of these reports...you're a sheep.
I believe em. But 3% stinks. It's
going nowhere. Only an idiot would
celebrate it.
Miramanee,
Agreed. I still don't understand why EVERYONE at the BLS hasn't already been fired. Nice, simple government cutting move there...and no one would miss any of them.
What is more important...is that raving Stud Man [USD] on that other side of that door from us right now. He is pissed and banging on it now...and it is starting to scare me. You want a black swan for the day? There you go...but he ain't a bird...he's a totally depraved, naked, sexually frustrated, oiled up father raper. And that will make this entire thread about GDP mean nothing in milliseconds if he gets out.
Inventories is key....As Dylan says "...inventories take out 3.7% from Q4 economy (annualized) which is strange considering all diffusion indices in Q4 saw inventory accumulation...."
-3,7% is far worse than 4th Q 2008 when inventories posted -2.31%.
is it the small companies (not captured in PMI) that are hesitating or R the big guys lying?
Just curious, will this number get the 3 downward revisions that the initial Q3 number received?
There is going to be no connection
between reality and the markets until
Ben's sugar runs out.
GDP up 7% guys! Cheer up!
Recession is way over!
More american retired EARLY in their 30s and 40s due to wealth effects in all markets. And they could push GDP higher if they choose to come back to workforce
More american are in graduate school including MBA programs than ever---add more to GDP when they graduate in a year or two!!
So BTFD!!
Government data = pure fiction.
This is good news for anyone - like me - who has recently examined the situation and concluded that the best approach at this time is to lie, steal and pillage as much as possible from my fellow countrymen and women who believe the economy is "good" and the government robots who tout such knowledge.
I said a few months back that it's time for middle Americans to start doing what the rich and poor have been doing to us for so very long - cheat, lie, steal, TAKE IT BACK, while there's still a fictional economy in place and prepare for doomsday.
An anecdotal note: I have a couple living in a house I own. The currently owe me over $800 in back rent and I have a court order to get it by Feb. 4. These lowlife scumbags convinced the court that they would be getting a fat income tax refund on Feb. 4 and would pay up. I went along, but hardly believe them. One works for Wal-Mart and the other (fat woman) doesn't work at all, spending her time trying to scam the government - Obama phone, food stamps and desperately trying to get on disability. She claims she filed for EIC and will be getting a huge check, which she claims is in excess of $5K.
Not being a tax expert, I still doubt how no income and no job can somehow result in $5000 from the Feds. Will see next Friday, but I believe it to be, like the government, pure fiction. Will update as events conspire.
It's fine to buy stocks in a 3% GDP economy.
But they shouldn't have more than an
8 p/e on them or you've been screwed.
So defecit spending and QE2 flooded $700B into the economy to get $150B in growth...yepper....sounds like a good trade-off to me.
(plus inflation was ONLY 0.3% to get the 3.2%...yepper)
you are misleading a large group of bearish bias, fearful and unamerican investors on this board.. Sigh..
The 700 freaking billion is NOT done yet and won't be used until June. Only small amount is used in the 4th quarter..
Here. the government is effective.. The only right thing to do is: trust the commitment from Berneke and BDFD!!
So I get an email alert from the Washington Post that economic growth had "strengthened." Naturally, I have to come to ZH for the breakdown. I also checked out Denninger and he calls it "subdued":
http://tinyurl.com/6ysvbu5
Like the unemployment rate, that 3.2% number is for the sheeple. You have to look deeper in order to find out how much of that number is government and how much is surging commodities prices. The "real" economy is still shitty.
If I'm not mistaken, didn't we get monster GDP numbers during certain years of the Depression? I'm talking even a 10% number somewhere in there. Don't have the numbers in front of me.
this and all previous gdp numbers are the equivalent of boob implants....