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5 Things To Ponder: GDP - Love It Or List It
Submitted by Lance Roberts via STA Wealth Management,
My wife is a huge reality television show junkie, and despite male macho commentary to the contrary, every "happily" married man knows that it is "she" who controls the remote. Therefore, as a consequence of remaining "happily" married, I wind up watching more reality television than I would like. I reserve the hope that at some point we, as American's, will learn to STOP making stupid people famous.
There is a particular show that my wife likes to watch called "Love It or List It" where an interior designer and a realtor go head-to-head over a particular couple's housing related issue. That got me to thinking about the latest GDP report.
As discussed yesterday, the data trends on many fronts suggest that the current weakness is more than just weather related:
"The problem with the "weather excuse" is that temperatures were only "much below normal" in a relatively few states. The map below shows average temps across the U.S. for the 2014 winter period. Importantly, three of the most populous states - Texas, Florida, and California had normal to above normal temperatures for the winter period. But then again, maybe it was just "too hot" for shoppers as well."

"However, and importantly, this is why the Bureau of Economic Analysis "seasonally adjusts" the data to account for winter weather that tends to, surprisingly enough, happen during the winter.
Lastly, let's not forget that while economists are blaming the weather for weak first quarter GDP growth, they were also the ones that said GDP should get a boost from lower gas prices. So, assuming they right, then the savings from lower gas prices on a national basis should have offset any drag from weather related issues. Right? (Read this for why that didn't happen.)"
As I reviewed much of the commentary relating to the latest GDP report and economic outlook, the question that we must answer as investors is: Should we "love it or list it?"
1) Ignore The "Whiff Of Panic" As Economy Stall by Ambrose Evans-Pritchard via The Telegraph
"The US economy has suddenly stalled. A blizzard of shockingly weak figures raise the awful possibility that America's six-year growth cycle since the Great Recession has already rolled over, with unsettling implications for the world.
We should not ignore his warnings lightly, yet for once I am an optimist, clinging to the belief that the US will recover from the strange "air pocket" of early 2015. A siege of snow and ice across the North East over the late winter - for the second year in a row, and some say evidence of a drastically slowing Gulf Stream - has obscured the picture. The first flash of data is often wrong, in any case."
Read Also: The Economy's Biggest Weakness Is...Winter? by Matt O'Brien via The Washington Post
2) Another Winter Of Discontent by Matthew C. Klein via FTAlphaVille
"First off, investment spending, excluding inventory accumulation, knocked off about 0.4 per cent from total GDP growth last quarter — the worst performance since the recession ended (all rates are annualised). Had investment spending increased at its average rate since the start of 2011, excluding the first quarter of this year, then GDP growth would have been about 1.5 per cent in the past quarter, rather than 0.2 per cent. (And if my grandmother had wheels she’d be a wagon, but still…)."
Read Also: Another Lousy GDP Number To Forget by Richard Moody via Regions Bank
3) The Step Down In Long-Term Growth Rates Breaks Lower by GaveKal via Gavekal Capital Blog
"From 1974 to 2007, the long-term US growth rate in real GDP generally fell between 3-3.5% on annualized basis (excluding the v-shaped bounce from 1982-1984). We define long-term here by looking at the 10-year annualized percentage change. With the 1Q now in the books, this series just dropped to an all-time low of 1.46%."
Read Also: What's Driving The Economic Slowdown by Dr. Ed Yardeni via Dr. Ed's Blog
4) Be Skeptical Of The Weather Excuse by Chico Harlan via The Washington Post
"To be sure, the weather in some parts of the country between January and March was really bad. Boston got crushed by snow. So did Chicago. In the Northeast, this was the coldest winter in 30 years.
But the tie between weather and economic performance is often overstated, according to the small number of experts who’ve searched for a correlation. In fact, the data shows that only a few slices of the economy — manufacturing and construction, namely — can be hurt by a brutal winter. Retail sales, to a much lesser extent, can also feel a pinch. But weather alone won’t bring a humming economy to a halt."
Read Also: America's Risky Recovery by Martin Feldstein via Project Syndicate
5) The Harsh Winter Actually Boosted US Economy by Tyler Durden via ZeroHedge
"Which is why a quick look at what said Joe spent in the harsh winter reveals something stunning: no, not that the most consumed "service" was again healthcare - mandatory spending on Obamacare will be with us for a long, long time, "boosting" the US economy by this mandatory spending item.
No, what surprised even us is that far from subtracting from GDP growth, the harsh winter actually boosted consumption, in the form of Utility (i.e., heating) spending, which made up the second largest increase in personal consumption in the first quarter. Because, to every economist's cries of horror, freezing weather while perhaps reducing discretionary spending actually boosts spending on such mundane, if very expensive, tasks as utilities which, to the same economists, also translates into growth."
BONUS READS
It's Going To Take A Major Bear Market To Meet Investor Expectations? by Jesse Felder via The Felder Report
"What investors need to know today is that they are currently priced just as high as they were back then! The problem is they once again want their cake and to eat it, too. Despite paying an extremely high price for stocks today they also expect a high rate of return. A few recent polls show investors expecting to get 10% per year from their equity investments right now. Some are even expecting to generate twice that much and there’s just no chance it’s going to happen."
Things People Say During A Bull Market by Ben Carlson via Wealth Of Common Sense
"On Fair Value:
Bears: We think the market’s fair value is much lower than current levels. (Translation: We have to say it’s way lower than the level where we called for a crash four years ago.)
Bulls: We think the market is fairly valued at current levels. (Translation: I have no idea what the fair value of the market is and neither does anyone else.)
Investment Strategists: If earnings grow at a consistent rate forever into the future and you slap a P/E ratio of 16x on the market we think stocks will rise 8-10% this year. (Translation: Stocks are up 3 out of every 4 years so if I keep predicting this I’m bound to be right eventually.)
Value Investors: The market is overvalued but our stocks are trading at a 30-40% discount to fair value.
Growth Investors: The monthly active user numbers are off the charts for this 3 person company that’s worth $50 billion."
"They say that it was so hot in the city today, grown men were walking up to cops on street corners begging them to shoot them.” – Glengarry Glen Ross
Have a great weekend.
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Lance - open your mind to the possibilities...10% may be a real underachiever. Just acknowledge there is no "market" any longer and the CB's and .Gov's can assign any value to anything.
valuations...
http://econimica.blogspot.com/2015/02/fundamentally-flawed-chapter-34-us-real.html
One of the largest means and methods to manipulate...
http://econimica.blogspot.com/2015/03/brics-blink-or-more-correctly-wink-and.html
Of course this means horrific economic mismanagement but I don't think they care.
http://econimica.blogspot.com/2015/04/stocks-or-economydoes-either-represent.html
Michael T Snyder is a fundamentalist god botherer:
http://theeconomiccollapseblog.com/the-most-important-thing
"I feel like I would be doing a disservice if I didn’t explain to you the most important thing that you could take away from this website. If I had not given my life to the Lord Jesus Christ, I would probably be dead today. He has taken the broken pieces of my life and has made them into a beautiful thing, and He can do the same thing for you."
"Humanity has rejected God and is continually breaking His laws.
Most people like to think of themselves as “good” people, but the truth is that none of us are truly “good”. Each one of us has broken God’s laws over and over again. We are lawbreakers and criminals in the sight of God. The Scriptures call us sinners."
http://theeconomiccollapseblog.com/did-you-know
"Did you know that there is a huge mountain of evidence for the Christian faith?
Did you know that logic and reason actually lead people toward God and not away from Him?
I would like to share with you some of the things that I have discovered during my research into these things over the past 30 years…"
"The following is our statement of faith.....
We believe that the Bible is the inspired and infallible Word of God and declares His design and plan for mankind.
"We hold to the basic truths that Bible-believing Christians have believed for centuries, and it is our desire to share that faith with the world.
We believe that the Lord Jesus Christ will physically return to this earth one day.
We believe in the millennial reign of Christ during which Jesus will rule over earth for 1,000 years following His second coming."
And my personal favourite:
"We believe that a final judgment will take place for all those who have rejected Christ. They will be judged for their sin and cast into the lake of fire. "
^^ Zerohedge chooses this guy's analysis to publish, embarrassing.
Another Christophobe.
Yeah, let's ban anyone who believes different than you.
If we all did that, you atheists wouldn't have a leg to stand on.
77% Christian in US.
9% Atheist in US.
Good luck with that.
"...every "happily" married man knows that it is "she" who controls the remote."
You poor fucking p-whipped bastard - just get a second TV and take charge of that fucking 2nd remote because that TV is YOUR goddamn TV, and watch whatever the hell you want. Then maybe you can have your man card back. Maybe....
Men don't watch tv. Little boys do.
Heck, grown women don't watch TV any more. We got rid of ours a while ago.
....just asking to anyone who might know. So there's GDP., is that like when GM builds a bazillion fucking cars and channel stuffs them into old closed down Mall parking lots where they sit unsold month after month unsold? Is the production of those auto's part of GDP?
Anything the government does is counted towards GDP.
Disposable income graph may be polluted by the top 1%. Take that off and it will look much worse.
I came here to Buy it or Riot, and I'm all out of money.
"..every "happily" married man knows that it is "she" who controls the remote." BS not on my watch. You're a metrosexual weakling.
The expression is "Eat your cake and have it too." Not the opposite.