Good Friday morning. Markets were again in rally mode yesterday as major indices tacked on 0.50-1.0% on top of the big Apple induced rally of Wednesday.
This morning’s economic data point the 1st go round of Gross Domestic Product for Q1 2012 (advance estimate). It came in light at annualized rate of 2.2% vs expectations of 2.7% growth rate. This is down from 3.0% annualized gains in Q4 2011. That is before we get the revisions, which can go either way.
This is pretty much what we should expect from a post-credit crisis recovery.
The S&P is about as close to 1400 as you can be — 1399.98 — and the Nasdaq is comfortably over 3k at 3050.
The key takeaway has been the resiliency shaking off a tide of worrisome elements from slowing global growth to the crack up of the EU to mixed US economic data. The Bulls call this resiliency while the bears describe it as complacency. So far, profits have remained robust enough to support the bull case.
Despite the econ miss, markets are set to open flat. The silver lining for the bulls is that rates remain subdued, and the Fed is in no hurry to remove that accommodation.
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WHAT I AM WATCHING: If you have been paying attention, you know it is not the news but markets reactions to them that are so telling. Hence, I will be watching the market internals, technicals, and fund flows. My bias here remains to the upside, so the hunt is for data/risk factors that challenge that premise and present risk to capital.
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Source:
National Income and Product Accounts
Gross Domestic Product, 1st quarter 2012 (advance estimate)
BEA, April 27, 2012
http://www.bea.gov/newsreleases/national/gdp/2012/pdf/gdp1q12_adv.pdf
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.
“That is before we get the revisions, which can go either way.”
Really? MY (admittedly subjective) recollection is that revisions tend to have a HUGE downward bias, with the first and second revisions falling on the minus side of the line a lot more than 50% of the time …
A nice scatter plot of this would be appreciated, to either confirm my suspicions or falsify them …
I’d do it myself, but am lacking in a data source (other than my always-suspect memory) …
“Soft GDP, Hard Markets”
Makes sense.
OK, looks like I’m the one at fault here, not the reporting …
http://www.economicpopulist.org/content/gdp-revisions
http://www.clucerf.org/blog/2011/08/04/the-gdp-revision-chart/
Not exactly the overwhelming downside bias that I recall.
SO my always-suspect memory is, once again, hewing to my fears instead of to the facts …
I figure I’d better skewer myself before others leaped to the task …
I’m becoming more and more interested in Shiller’s animal spirits theories. Given the whole confusing mix we face — employment trends not so good, but pretty good earnings, and some pretty notable exceptions to the good earnings, the shakiness in Europe…it seems like something should fall off the shelf, but nothing has, and when something does, it doesn’t seem to have much dramatic effect. We see skittishness — up a hundred, down a hundred — but nothing that feels like a trend. But someplace in here, I suspect, we cuold see things turn really sour, or (a lesser chance, I think) really ebullient, and the market will really tank, or really take off for another thousand points or so. Which will it be? I’m not sure that looking at either fundamentals or technicals will tell the tale…it’ll be more like, is Kim Kardashian having a good time? How are bra sales at Victoria’s Secret? Is Vegas up? What’s happening at Disneyland? We need an animal spirits index (not the same as consumer confidence index — that’s too old and busted.)
Buy value once again – if you make the mistake of buying price – you will get hammered when there are no more suckers entering the market. YOU will not know when that is but “they” will know and will sell in such a way that you will not see it coming.
DIA pays 2.2% which is atrocious. Divvies would need to *double* to make it a good deal and account for risk. Those already holding from lower levels are naturally going to try and sell everyone on overpriced stocks but that is to their advantage not yours.
Buy value. Buy on sale. Buy smartly. Sell quietly.
Why is europe economic collapse not possible given the political realities(non-austerity)?
Unless ala USA-2008/09, govts everywhere are going to step in and backstop, anyone thinks this is not possible in europe?
My gut is telling me that maybe this is the time to buy some out of the money puts to limit my long side risks?
With GDI running at a 4% pace, it is quite probable Q1 will be upgraded in the July series of annual revisions. But even 2.2% is impressive considering the 1.1% headwind of cumulative high petroleum costs. TRI gauges Q2 activity has a 3.5% pace.