Curious why after inexplicably turning red earlier today (because as everyone knows in the New Normal selling is largely forbidden and the Caracas stock market is the model to imitation), the DJIA is about to turn green again and press on new all time record highs? Simple. Following the earlier disastrous construction spending report which feeds directly into the GDP calculation, banks promptly revised their Q1 GDP estimates. To negative.
To wit from Goldman:
Construction spending rose 0.2% in March (vs. consensus +0.5%). Private residential construction increased 0.8%, led by a gain in the more volatile multifamily category (+4.4%). Private nonresidential construction rose a soft 0.2%. Commercial construction continued to be a drag (-1.7%), offset by a decent gain in the smaller transportation structures category (+5.3%). Public construction continued to trend down, declining 0.6%. In addition to the modest disappointment in March, total construction spending was revised down by three-tenths in February (to -0.2%) and two-tenths in January (to -0.4%).
This morning's construction spending numbers were weaker than those assumed by the Commerce Department in yesterday's initial estimate of Q1 GDP growth. We reduced our past-quarter tracking estimate by two-tenths to -0.1%.
And of course, the always wrong, if always entertaining, Joa Lavorgna:
March construction spending was much weaker than what BEA had assumed which means Q1 #GDP now looks to be -0.4% vs. 0.1% previously— Joseph A. LaVorgna (@Lavorgnanomics) May 1, 2014
That this is happening as TSYs are soaring, should only make one smile even more at the constant, overt manipulation that the stock market is endlessly laboring under.
Looks like not even Obamacare managed to push the US economy out of its first "harsh weather"-driven (say that with a straight face) contraction in years.