This page has been archived and commenting is disabled.

Bank Of America Joins Goldman In Cutting Its Q1 GDP Forecast

Tyler Durden's picture




 

Yesterday, when we reported about Goldman not one, but two GDP Q1 forecast cuts in one day, we said to "watch for the Wall Street lemming brigade to quickly follow in Goldman's footsteps." Sure enough, here is Bank of America, rushing first into the bandwagon, trimming its Q1 forecast from 2.2% to 1.8%. This is perfectly expected: recall that from day 1 of 2012, most banks had been pushing for QE3, ignorant of the massive liquidity tsunami that was going on behind the scenes. Well, the impact of that has now come and gone, with no more easing from the ECB on the horizon for a long time. Which means that the focus can again shift to how "bad" the US economy is in preparation for the inevitable Bernanke gambit. Needless to say this will make the pre-election economy appear like a total farce in the months before the re-election: soaring employment and plunging everything else. Good luck explaining that away. Incidentally explains why the EURUSD has resumed its slide: the market is now pushing Bernanke to halt the appreciation of the USD against the EUR, and thus the implicit benefit of German's economy over that of the US, which can only happen with further promises of easing. That said, we can't wait for the statement as the vaudeville Trio of Bianco, Chadha and of course LaVorgna to follow suit and slash their now comically hyperbolic expectations.

From Bank of America

While we are quite concerned about second-half growth, we expect continued mixed news in the near term. Four fair winds are supporting growth: the fading shocks from the Arab Spring; the rebound in Japanese-related manufacturing after last year’s tsunami; reduced home foreclosures as banks wait for clarification on the rules; and mild winter weather. On the back of a very weak consumption report, we have lowered Q1 GDP growth from 2.2% to 1.8%. However, the early data for February has been healthy: although the national PMI weakened, jobless claims continue to drift lower, measures of consumer confidence continue to rebound and auto sales inched higher (Table 1). In the week ahead, we expect more of the same, with a solid 215,000 reading for February payrolls.

Unfortunately, the winds are starting to shift. In the spring the weather is much less important to economic activity than in the winter. Hence, the mild-weather induced bump up in the data should fade. Gasoline prices are up roughly 50 cents from their December lows and with the usual lags this could impact spending (Chart 1). The Attorney General Agreement in February paves the way for a ramp up in foreclosures over the next several months, dampening home prices and potentially construction. And the recovery in the auto sector now seems complete, suggesting a return to a slower pace of growth in sales and production. Based on these cross winds, we expect the data surprises to turn negative over the course of this spring.

 

When the facts change…

 

A popular indicator among clients is the Economic Cycle Research Institute (ECRI) leading index. Back in September ECRI argued that a recession was “inescapable,” pointing not just to their publicly released index, but to a series of other proprietary indexes. “Once the [negative] feedback loop starts,” they warned, “it’s more powerful than any policy response.” In the past week, they were back on the airwaves, saying “our call stands”: a recession is still likely in the first half of this year. Indeed, they argue, “when you look at the hard data that is used to officially date business cycle recessions, it has been getting worse, not better, despite…the consensus view of an improving economy

 

Risk of recession rises in the second half

 

The deterioration in leading indicators last summer was mainly because of waves of financial market stress coming from Europe and weak US data due to the oil and Japan shocks. Those shocks have now faded and the risk of a near-term recession has in our view fallen back to normal levels. Unfortunately, we believe the risk of a recession rises in the second half. The sudden stop in fiscal policy at the end of the year will likely cause a sharp slowing in growth. If it is handled badly, it could cause an outright recession. However, this has nothing to do with the now out-of-date signals from last fall.

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Fri, 03/02/2012 - 09:49 | 2216479 disabledvet
disabledvet's picture

"FLASH SALE AT SEARS! EVERYTHING FOR 5 DOLLARS!"

Fri, 03/02/2012 - 10:02 | 2216530 bigdumbnugly
bigdumbnugly's picture

take this seriously.

bank of america knows a thing or two about cutting forecasts...

Fri, 03/02/2012 - 09:51 | 2216485 Jayda1850
Jayda1850's picture

Wish this whole charade would just collapse already, so we can start over.

Fri, 03/02/2012 - 12:20 | 2216916 illyia
illyia's picture

I wish that TD & co would find or create a chart that shows all the attempts at QE (announcements and false leads), all the actual backdoor QE through any and all means and the current QE as we know it (and can "prove" it through a paper trail).

It has become very difficult to follow the QE with all the ins and outs, backs and forths. Does she or doesn't she? Did they or was it all just smoke and mirrors? Is there a "Wall of Liquidity" heading our way, with Israel leading a charge into USofA equities (along with every other Central Bank) that is so strong it will effect more than the stock market? Or is there "no more dry powder" and the "turkey shoot" is over?

Please Tyler, hear my plea. I need some clarity. At least a little...

Fri, 03/02/2012 - 09:51 | 2216486 Jlmadyson
Jlmadyson's picture

The revisions keep rolling in. Latter part of the year should be fun. Especially so since the last treasury statement from yesterday had a jump of nearly 50 billion in a DAY on the debt ceiling.

Roll on 16.4 Trillion

Fri, 03/02/2012 - 10:29 | 2216617 stocktivity
stocktivity's picture

"The revisions keep rolling in. Latter part of the year should be fun."

Keep in mind it is an election year so the hopium and "Fixed" economic numbers could extend until after the Santa rally.

Fri, 03/02/2012 - 09:51 | 2216487 Marge N. Callz
Marge N. Callz's picture

But...but...Dow 13000.  Everything is getting better right?

Fri, 03/02/2012 - 09:58 | 2216512 Moneyswirth
Moneyswirth's picture

Markets will roar back on this news.  Everything's bullish.

Fri, 03/02/2012 - 09:53 | 2216494 Sutton
Sutton's picture

Dear Leader take over Sears' 5000 stores and run O-Mart, filled with union reject crap and scuzzy meat.

Third world president=third world country.

Fri, 03/02/2012 - 09:53 | 2216496 battle axe
battle axe's picture

Bank of America: "so net net is we think the Economy is going to slow down so we are going to raise our fees on our customers" And they wonder why they are considered the retards of the banking world. 

Fri, 03/02/2012 - 09:56 | 2216503 adr
adr's picture

How can GDP go down?? I thought we had record auto sales, a housing bottom, better personal consumption, massive beats in every regional fed survey, the ability to weather high gas prices, a soaring stock market, increasing jobs, the new resurgence of American manufacturing, and rainbow surfing unicorns shitting skittles!!!

OHHH I GET IT.

If they lower estimates to 1.8% from the prior 2.2% forecast and GDP comes in at 2.0% IT WILL BE A MASSIVE BEAT!!!! Instead of a miss.

RALLY ON!!!! Nasdaq 10,000 DOW 100,000 S&P 5,000

Fri, 03/02/2012 - 09:58 | 2216510 LongSoupLine
LongSoupLine's picture

or it's a self-fullfilling QE3 book talking fest.

Fri, 03/02/2012 - 10:05 | 2216539 Shizzmoney
Shizzmoney's picture

How can GDP go down?? I thought we had record auto sales, a housing bottom, better personal consumption, massive beats in every regional fed survey, the ability to weather high gas prices, a soaring stock market, increasing jobs, the new resurgence of American manufacturing, and rainbow surfing unicorns shitting skittles!!!

If they lower estimates to 1.8% from the prior 2.2% forecast and GDP comes in at 2.0% IT WILL BE A MASSIVE BEAT!!!! Instead of a miss.

+infinity.  Especially the unicorns on rainbows shitting skittles.  Hilarious.

Welcome to the jobless, wageless, inflation driven stagnant "recovery".  Just an insult to the intelligence to anyone actually working in the "real" economy today.  Not people like Ben, who lie in Congress that he shops for his own groceries, when in fact its probably some flaming homosexual who is his personal assistant buying his food on the Fed Reserve Corporate Black Card. 

In poker, we call this "a peanut" when you win (or lose) a very small amount, b/c despite the gains, after the rake/vig, all a player is left with is "peanuts".

 

Fri, 03/02/2012 - 10:05 | 2216541 crawl
crawl's picture

Lowering GDP expectation so the less than stellar actual number, when reported, will easily beat and cause outbreak song and dance for the dumb masses.

Fri, 03/02/2012 - 09:57 | 2216506 Offtheradar
Offtheradar's picture

"Unfortunately, the winds are starting to shift" ---  wtf?  Who reads this bullshit, anyway? 

Fri, 03/02/2012 - 10:00 | 2216520 LongSoupLine
LongSoupLine's picture

Answer:  Cramerica.

Fri, 03/02/2012 - 10:10 | 2216564 Offtheradar
Offtheradar's picture

I wouldn't wipe my ass with paper sent out from any of these fuckos

Fri, 03/02/2012 - 09:58 | 2216509 firstdivision
firstdivision's picture

QE on, QE off, QE on, QE off.  I'm starting to feel like Danial-son.  I cannot wait til my monetary tournament starts and I can kick those Cobank Kais with my Praying-Hawkish face kick.

Fri, 03/02/2012 - 10:00 | 2216516 chinaguy
chinaguy's picture

Total US employed in 2009 140 million.... unemployment rate 10%

Total US employed in 2012 140 million.... unemployment rate 8.3%

That's some progress

 

Fri, 03/02/2012 - 10:01 | 2216525 Jlmadyson
Jlmadyson's picture

No fuzzy math here bro. It's the warm weather of course.

Fri, 03/02/2012 - 10:02 | 2216531 Moneyswirth
Moneyswirth's picture

That's Obamao efficiency right there....

Fri, 03/02/2012 - 10:05 | 2216537 Moneyswirth
Moneyswirth's picture

Back in September ECRI argued that a recession was “inescapable,” pointing not just to their publicly released index, but to a series of other proprietary indexes.

And that was before the ramp up in the price of gasoline

 

Fri, 03/02/2012 - 10:05 | 2216544 ivars
ivars's picture

Intresting, how a recession in the USA could happen together with DJIA reaching 15000 (latest prediction chart):

http://www.tfmetalsreport.com/comment/133744#comment-133744

Only because of USDx moving up at the same time and stopping exports (october prediction chart)

http://www.tfmetalsreport.com/comment/78039#comment-78039

 

Fri, 03/02/2012 - 10:17 | 2216585 SimpleandConfused
SimpleandConfused's picture

I was thinking the same thing.  It appears that with the fed's unending infusion of capital into the equity markets, the DOW could reach all time nominal highs with the economy in an outright, recognized and stated depression.

My "best lesson learned" in 2011 is that the US equity market is without correaltion to the US economy.  The DOW value means absolutely nothing in terms of quality of life for the majority of the US.

Come to think of it, there doesn't appear to be ANY metric that can relate the actual condition of our economy.  Central planning manipulation has rendered almost all data meaningless except for propaganda purposes.

Wonder if there are better places to live out my remaining years.  I am disgusted beyond belief with the culture that not only tolerates this behavior from its leaders, but actaully rewards it.

Fri, 03/02/2012 - 11:02 | 2216692 garcam123
garcam123's picture

Geeze, I'm exactly there too.  I'm 61, sittin in the desert in my old RV running out of money and hope and look at a map every day and wonder where I might go to find any kind of job so I can continue to scrape by, hopefully until I make 62 and my great reward of Social Security...I guess it might be 1000.00 a month.

I read this stuff on here and hope and pray that the revolution starts while I'm still alive so I can do my Patrick Henry duty to this great country and I'd like to give my life in the cause of liberty.  I pray every day that I can strike deep somewhere into the guts of this tyranny.

I urge all Freedom loving Americans to rise up and throw off this criminal cabal called the US Government.

We could start by witholding taxes, credit card payments and utility bills.  If hundreds of thousands of US, no MILLIONS, they would have to bring the troops home....to guard us!

Wouldn't that be a wonderful day when the troops turn around and arrest them!

 

God keep me safe until then!

Fri, 03/02/2012 - 11:36 | 2216781 Conrad Murray
Conrad Murray's picture

Not too put to fine a point on this, but:

It was your generation that let this shit get where it is. Will the unemployed youth eventually lose hope, say fuck it, and start rioting? Of course. What is needed from your generation is martyrs, those with a guilty conscience and a sense of honor. Don't sit around hoping to leech off the system. Write out a manifesto, pick a cause, and die for it.

Fri, 03/02/2012 - 12:02 | 2216847 Fedaykinx
Fedaykinx's picture

like joseph stack?

Fri, 03/02/2012 - 10:06 | 2216545 Offtheradar
Offtheradar's picture

Gas @ $4 to $5 a gallon this summer.  BULLISH!!!

Fri, 03/02/2012 - 10:08 | 2216551 ivars
ivars's picture

I start to believe that this October chart is correctly showing the February peak in EUR/USD, principal trend. That means, that after little correction along time axis to match the 1,35 peak exactly (I will do it later when I am more sure) , there should be an event ( or nothing special) that would trigger sharp  EUR downslide in the END OF APRIL-early MAY ending in November/Early December 2012.

http://www.tfmetalsreport.com/comment/78027#comment-78027

What could that event (or general increasing weakness in EURo area)  be?

Fri, 03/02/2012 - 10:13 | 2216574 Angel Face
Angel Face's picture

Next week Dow 15000+

Fri, 03/02/2012 - 12:45 | 2216983 Olympia
Olympia's picture

Loan sharks knew that if they took the dollars printing machines under their control they could suffocate the world ...they could initially suffocate USA and after taking the USA from the Americans, they could move and suffocate the whole world and take the countries from their people.

FED printed cheap money and loansharking multiplied this money in an unnatural way within the American economy boarders and they discarded them abroad so that they did not threaten USA. USA became the first state in the world with artificial “breathing”...

It cannot be possible but just in the USA for only the last year, more than one million houses were seized. It cannot be impossible but the New World has returned to tents and shelters ..has returned to the ages of Columbus. It cannot be possible that we allow to a few loan sharks looting the toils and the assets of people...

http://eamb-ydrohoos.blogspot.com/2012/01/global-debt-crisis.html

------------------------

Fri, 03/02/2012 - 14:22 | 2217296 malek
malek's picture

I thought it's more like

When the facts start staring you too obviously in the eye, you adjust your lies

Sat, 05/05/2012 - 03:38 | 2399022 wandybrad
wandybrad's picture

I was very pleased to find this site.I wanted to thank you for this great read!! I definitely enjoying every little bit of it and I have you bookmarked to check out new stuff you post.
professional cv writing service

Do NOT follow this link or you will be banned from the site!