We will have an important piece of economic data in an hour when Gross Domestic Product (GDP) is released. Right now earnings have been driving equities lower — and this morning equities are looking pretty darned weak, based on earnings from big tech.
We are looking at a forecast GDP of +4.7% compared to 2.1% last quarter. For the sake of interest rates we badly need to see a number at or below forecast. The FOMC meets next week and I think the ‘no hike’ is baked it–but if we see a few more hot economic number we will see a hike at the next meeting–forget thoughts that the Fed is finished–these economic numbers are not saying ‘finished’.
We also have jobless claims in an hour–we badly need this number to soften (grow larger). Last week it was below 200,000 at 198,000–this needs to change. I believe that the Fed is bound and determined to drive unemployment higher to wring inflation out of the system.
Equity futures are off 2/3% percent right now and the 10 year treasury is at 4.97% after a very hot new home sales number yesterday. If we get hot economic numbers in an hour over 5% we go.
Buckle up as the day could be a wild one.
Informative 8 minute video on the state of things. Dont have to agree with everyting they say, but definitely some food for thought.
https://www.businesscycle.com/interviews?id=economic-cycle-research-ecri-lakshman-achuthan-business-cycle-fox-business-money-making-ecri-insight-nailing-the-sticky-inflation-call
Market is saying :” This is the last 4% GDP handle probably for the next 2 years or longer “
So what is the over / under on those two years?
I have the over.
How do you explain the market reaction to the data? I’m a bit baffled
I never understand market reaction to news blurbs about what happened last month. The smart money already knows and is forward looking.
A lot of the report was consumer spending on services, travel, restaurants, netflix and the basic stuff that people need that just are paying more for. So inflation makes for higher GDP numbers.
I think if consumption was for goods and services in short supply it would cause larger concerns about inflation. Inflation that is the same or over the GDP is a stagnation indicator.
I think earlier this week there was an article on Marketwatch that housing starts crushed expectations, so there was a lot of additional spending in that sector. May eventually lead to higher consumption of durable goods, TV ‘s, washer dryer and other appliances, furniture, etc… all bought on credit cards.
I would say only thing that consumers were buying that was in short supply this past quarter was Taylor Swift tickets.