Today Third Quarter GDP is Revised.

Today third quarter GDP is revised. Consensus is now expecting third quarter growth to be 3.3% versus the previously reported 3.5% rate.  Is this of any significance?

I would argue no, as the vast majority of real time indicators are suggesting a further acceleration into the fourth quarter.  Yes there may be some second and third tier data points that may not fit this narrative but generally speaking the statistics are indicating greater strength.

Generally speaking the data in Europe is also stronger than forecasted albeit considerably more choppy than the US counterpart.

To some, such as me, the drop in oil has been unexpected and uncomfortable.  However to economy, the drop in price for a gallon of gas to under $3.00 from $3.80 less than five months ago may provide an unexpected global boost especially going into the pivotal holiday shopping season.

I think it is of great significance China imports about 60% of its oil.  Europe around 80% and Japan almost 100%.

OPEC is meeting at week’s end.  There is not a prevailing consensus as to its outcome but the weaker countries—those that are already experiencing geopolitical and socio economic pressure—a group that also includes Russia need a production cut.  Will it occur?

If a reduction is announced, will OPEC members cheat as such is the norm?

At this juncture, it is more about psychology.  Oil is essentially flat during the past 45 days but the narrative about the decline has gone nuclear.

Commenting about yesterday’s market activity, the Russell 2000 vastly outperformed other indices, perhaps under the realization that economic activity may accelerate.  The 10-year was flat.

Last night the foreign markets were up.  London was up 0.16%, Paris up 0.63% and Frankfurt up 1.04%.  Japan was up 0.29% and Hang Sang down 0.21%.

The Dow should open quietly higher as trading is expected to wane as day the progresses as many make this four day holiday into four and a half.  The 10-year is up 1/32 to yield 2.30%.


The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. The information contained herein has been compiled from sources believed to be reliable; however, there is no guarantee of its accuracy or completeness. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. The material provided in Daily Market Commentaries or on this website should be used for informational purposes only and in no way should be relied upon for financial advice. Please be sure to consult your own financial advisor when making decisions regarding your financial management. Members of FINRA and SIPC, Capitol Securities Management is a privately owned full-service retail brokerage and investment advisory firm headquartered in Richmond, Virginia. For nearly 30 years, we have been serving the needs of our investors. Today, more than 200 Capitol Securities Management investment professionals and support staff serve approximately 18,000 customer accounts from Southern Florida to the New England coast.