2nd Quarter GDP really disappoints!

This morning the Commerce Department released its numbers on the economy. Gross domestic product rose at a 1.3% annual rate in the second quarter following a 0.4% gain in the prior quarter that was less than previously estimated. What's even more striking to me than the 2nd quarter low number of 1.3% is the revision to 1st Quarter numbers. The 1st quarter numbers previously reported were 1.9% and now have been revised downward to 0.4%. That's a very large difference. In fact, for all practical purposes that's basically close to negative growth and if this quarter gets revised downward by Sept, it may have shown we are in a Recession right now.The official definition of a Recession is 2 consecutive quarters of negative growth.

If it smells like a recession, feels like a recession, and speaks like a recession, it most likely IS a recession!

In the mean time, the Futures markets are predicting today to be a significant stock market drop again. Hold on to your hats!

Consumer Sentiment data for July was also released and came in at a 63.7, which compares to a 63.8 reading for June. Again, not in the right direction for a recovery.

Watch the rise in those TZA Call Options today for October Expiration at a Strike price of $41. I said we could see $6.00 for those which you could have bought for $2.69 just last week.

UPDATE: 6:53am PST

The Chicago PMI came in at 58.8 this morning for July. The month of June came in previously at a 61.1 reading.

Initial Jobless Claims improved.

Expectations were that we would actually have 440K Initial Jobless Claims when the data was released this morning for the previous week, but instead, the data released showed only 398K were in fact what was recorded. That is the first time we have been below 400K in almost 2 months. However, it should be noted tha the week before this data's release was revised upwards from 418K to 422K. Still, today's release showed an improvement and at least is in the right direction.

Meantime, the debt ceiling standoff is approaching a critical moment for the Congress and the markets. Stay Tuned.

Tomorrow an important piece of data will be released, which may have a major impact on markets, a first look at 2nd quarter GDP, as well as the Chicago PMI and Michigan Sentiment.

Unemployment Rate rises to 9.1%!!

The Unemployment rate for May rose to 9.1%. Wednesday I made a prediction that the rate was going to rise to this level and that could be what others in the market expected, hence the selloff two days ago. This will have a very negative impact on the stock market today and continue the downtrend of lower lows, followed by lower highs.

Non-Farm Payrolls for May were 54K jobs added. Expectations were for 169K. In April it was reported we added 244K new Non-Farm jobs, but today, that number was revised down to 232K.

These data released today combined with previous data this week of a much lower Consumer Confidence (60.8 vs. 66 in April) and much lower Chicago PMI number (56.6 vs. 67.6 in April) have the Futures market for the Dow down -142. This is going to be a rough day for the Bulls and a rough week as well.

Next week this trend will continue!

Market commentary for May 31st

Well the Dow is up to +123 points on the Dow this morning within the first 15 minutes. You might be saying to yourself, "Wow, I wonder what great news came out this morning?" Well I don't know about good news, but the Case Shiller Housing 20 city Index number came in at -3.61, which was down from April's number of -3.41 for example. And the Chicago PMI came in at an incredibly low number of 56.6 for May. Expectations were for 63.0 and last month it came in at 67.6, so you can see how bad that is.

We are awaiting the Consumer Confidence number in a few minutes which I will update here, but the news this morning is anything but good and yet the market soars, as usual completely ignoring the facts with the remaining QE2 funds being applied to the continued manipulation of market data. This is so much worse than any odds favoring the house in Vegas. Will we ever learn this will have a bad ending? I doubt it until it actually happens! Shame on us.

Update: 7:00am PST

Consumer Confidence was down remarkably to 60.8, while last month the number came in at 65.4 and expectations for 67.5, so this too is just awful for the economy outlook as well as the above data.

Market comments for Nov. 30th

Well QE2 saved the market from much heavier losses yesterday, I'm quite confident. The market turned around about an hour before the close from the Dow being down about 160 points to closing down less than 40 points. You can see the chart for the moment it started but it did. After all, we don't want those shoppers to be depressed as the Shopping season is upon us. However, over in the Euro zone things are much different. Their markets are correcting without the kind of intervention we are having here. Expect the same to happen today.

The pre market indicators show the Dow down about 85 points in pre-market and the S&P 500 down about 10 points. That keeps putting pressure on the Dow to stay below 11,000 and below the 50 day Moving average. Nasdaq Futures are down about 20 points. German markets and France's CAC index are down about 0.5% while the English FTSE is down about 1.25% at this hour.

Housing prices were down about 2% in Q3 according to the Case Shiller report. I must be away at work today so look for the Consumer Confidence number to come out at 7:00am PST. The expectations are for an increase to 52.0% from the prior reading of 50.2%. Oh, and the Chicago PMI is expected to come in at 58.0, down from the 60.6 reading last month.

Market comments for Sept. 30th.

The economic data released today were the Initial Jobless Claims, Continuing Claims, the third estimate of Q2 GDP and the GDP deflator. First Initial Jobless Claims came in at 453K. Expectations were for 450K. The prior week was revised upwards from 465K to 469K. Continuing Claims came in at 4.457 Million. Expectations were for 4.450 Million. The prior week was revised upwards from 4.489 Million to 4.540 Million.

Third estimate for Q2 GDP came in at 1.7%. The prior estimate was 1.6% while the GDP Deflator came in at 1.9%. Expectations were for 1.9% and the prior estimate was 1.9%.

We are awaiting the Chicago PMI number at 6:45am PST which is only 5 minutes away now and I will post it here in a moment but first, the market reaction to the other released numbers were to be expected, always up. The Dow is up about 100 points right now. It doesn't matter if news is good or bad, the market goes up, while your dollar becomes less valuable and able to purchase goods. This play by the Fed will eventually have to be corrected and it will be painful indeed.

Tomorrow, Personal Income and Spending data is released as well as Univ. of Michigan Sentiment Index for Sept.. Also tomorrow, Construction spending, the ISM Index and Auto and Truck Sales.


OK, now here's the Chicago PMI. It came in at 60.4 for Sept. Expectations were for 55.0 and the previous month it came in at 56.7 for August. This is a better than expected number and while the stock market was already up almost 100 points before the news, CNBC is reporting the market is now up because of the PMI number. Can you believe that reporting?! The Dow is now up 95 points.

Market comments for Aug. 31st. (Update)

I'll let the numbers say it all this morning on the release of PMI and comments from Forex. Here's the data:

Chicago PMI comes in at 56.7 Weaker than expectations
Written August 31, 2010 at 9:45 AM EST by Greg Michalowski

Chicago PMI 56.7
Business barometer 56.7 vs 62.3
Prices paid 57.2 vs 58.1 last month
Production 57.6 vs 65.0 last month
New orders 55.0 vs 64.6 last month
Order backlogs 56.2 vs 57.6 last month
Inventories 46.5 vs 50.8 last month
Employment 55.5 vs 56.6 last month
Supplier deliveries 61.2 vs 59.4 last month

So all the numbers are weaker than expected. What's amazing still is that the market rallied on the data as it was down about 44 on the Dow before the release of the numbers and after they are now in positive territory. I don't expect this to last and do expect a deterioration in markets. Much will hinge on the Consumer Confidence number which will also be worse than expected in my view. Come back shortly and see it as an Update.

UPDATE: 7"00am PST

Consumer Confidence up to 53.5 from an expected drop. It was expected to come in at 49.5 and in the prior period it came in at 50.4, so this is better than expected. It is amazing how they are spinning this on CNBC as a big positive.

Summary of Projections versus actuals for economic data released this week

This is a summary of the economic data released this week along with what the expectations were for this data.


Monday, July 26th
10:00am EST. New Home Sales for June. Forecast is 295K and the prior month reading was 300K.
Actuals: 330K

Tuesday, July 27th
10:00am EST. Consumer Confidence for July. Forecast is 51.0 and the prior month was 52.9.
Actuals: 50.4

Wednesday, July 28th
8:30am EST. Durable Goods Orders for June. Forecast is +1.0% and the prior month was -0.6%
8:30am EST. Durable Goods orders ex Transportation. Forecast is +0.5% and prior month was +1.6%
2:00pm EST Fed's Beige Book.
Actuals: Durable Goods -1.0%
Actuals: Durable Goods ex Transports -0.6%

Thursday, July 29th
8:30am EST. Initial Jobless Claims. Forecast is for 450K and the prior week was 464K.
8:30am EST. Continuing Claims. Forecast is for 4.550 Million and prior week was 4.487 Million
2:00pm EST. Fed's Beige Book.
Actuals: Initial Claims 475K
Actuals: Continuing Claims 4.565 Million

Friday, July 30th
8:30am EST. GDP for Q2. Forecast is for 3.0% and Prior was 2.7%. Market is expecting 2.5%.
8:30am EST. Chain Deflator for Q2. Forecast is 0.7% and prior period was 1.1%
8:30am EST. Employment Cost Index for Q2. Forecast is 0.5% and prior period was 0.6%
9:45am EST. Chicago PMI for July. Forecast is for 58.5 and prior month was 59.1
9:55am EST. Univ. of Michigan Sentiment for July. Forecast is 67.5 and prior month was 66.5
Actuals: GDP 2.4%
Actuals: Chain Deflator 1.8%

The remaining data will be added as it becomes available today on Univ. of Michigan Consumer Confidence.

UPDATE:
Actuals: Chicago PMI 62.3
Actuals: Univ. of Michigan Sentiment 67.8