30 May FIRST QUARTER REVISED GDP RELEASED AT 8:30
A consistent theme is that slower growth abroad is a headwind for growth in the US, a slowness that is perhaps amplified by an impending trade war.
Growth has slowed in the EU and China but increased unexpectedly in the US during the first quarter to a 3.2% rate. Today is the first revision of economy’s first quarter performance and analysts are expecting a nominal downward adjustment to a 3.0% pace.
To remind all the economy grew at average rate of 2.1% from mid-2009 through early 2017. Growth over the last 15 months is over 3% with productivity rising by 2.4% versus a 1.1% annualized rate experienced form mid 2009 through early 2017.
How will today’s data be interpreted? In many regards the economic outlook today is similar to the outlook prevalent last February…expanding weakness because of the government shutdown. In February growth accelerated.
Will today’s GDP data and next unemployment statistics agian alter perceptions? At this juncture I believe growth will continue to surprise on the upside.
Equities were volatile again yesterday, the result of growth and trade fears. Everyone has now become a yield curve expert however a key point these newly minted experts are missing is the yield curve must be inverted for over 90 days to have any measure of significance.
What will happen today?
Last night the foreign markets were mixed. London was up 0.35%, Paris up 0.20% and Frankfurt up 0.24%. China was down 0.31%, Japan down 0.29% and Hang Sang down 0.44%.
The Dow should open nervously higher as trade and growth assumptions are still front and center. The 10-year is unchanged at 2.27%.