Morning Report – 4Q GDP upward revision 02/28/13

Vital Statistics:

  Last Change Percent
S&P Futures  1516.7 0.9 0.06%
Eurostoxx Index 2616.7 4.9 0.19%
Oil (WTI) 92.98 0.2 0.24%
LIBOR 0.287 0.000 0.00%
US Dollar Index (DXY) 81.58 -0.024 -0.03%
10 Year Govt Bond Yield 1.88% -0.02%  
RPX Composite Real Estate Index 194.2 0.2  

Markets are flattish after 4Q GDP was revised upward, but less than forecast.  4Q GDP has been revised upward to + .1% from -.1%.  Initial Jobless Claims came in at 344k. NAPM Milwaukee came in BTE at 56.5. Bonds and MBS are up on the news. 

The US GDP number was disappointing (the Street was at + .5%) and a drop in defense spending was a big factor.  Don’t forget 3Q GDP came in at + 3.1%, well in excess of the current 1.5% trend.  The government’s fiscal year ends in September, and there is a “use-it-or-lose-it” dynamic that goes on.  In other words, if an agency doesn’t spend their entire budget, it will be cut next year.  So even if they don’t actually need to spend the money, they will. The net effect is that government spending tends to accelerate in Q3 and then fall in Q1. You can see this in Table 1 of the official press release.  Punch line:  Take both 3Q and 4Q GDP numbers with a grain of salt. Of course, there is a battle royale going on between the right and the left about how to frame this whole issue as everyone deals with the sequester, which makes the signal to noise ratio miniscule.

Tidbits from the Bernank’s House Testimony yesterday:  A “significant majority” of the FOMC is supportive of current policy.  The Fed would prefer that US fiscal solutions be less front-loaded. They note some progress in the labor market and haven’t seen any significant problems in market functioning. He also gave some insight into the planned exit strategy:  to let the assets run off and then drain reserves.  He said it is a “reasonable guess” that unemployment will get to 6% by 2016.

It is getting easier to raise money in the housing market. There should be an uptick in IPOs for homebuilders this year as there is still a chasm between ease of financing in the private and public markets.  While yield pigs will jump on bond issues from the recently dead, non-public entities still struggle to get access to construction loans. The homebuilders are pretty rich at the moment, sporting P/Es around 30 or so.

Jack Lew was confirmed as Treasury Secretary.  His job will be the pit bull defending government spending and pushing for tax hikes. How this affects the dollar I have no idea. 

25 Responses

  1. “Jack Lew was confirmed as Treasury Secretary. His job will be the pit bull defending government spending and pushing for tax hikes. ”

    No, his job is to look out for Citigroup’s interests.

    Like

  2. That Obama! Dude makes some wise decisions. Biden, Geithner, Hagel, Lew. It’s like 11 dimension chess.

    I ain’t crappin’ you negative.

    Like

  3. How this affects the dollar I have no idea.

    Magic Eight Ball says. . . My Sources Say No.

    Well, that’s certainly helpful!

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  4. my ARM just reset down again. thanks artificially low interest rates.

    Like

  5. This piece is funny. My favorite part is at the end:

    “This can’t be what Obama wants. He must not know how thin-skinned and close-minded his staff can be to criticism. “I have the greatest respect and admiration for what you do,” Obama told reporters a year ago. “I know sometimes you like to give me a hard time, and I certainly like to return the favor, but I never forget that our country depends on you.”

    Why the deference to Obama? what evidence is there that he is not as, or even more thin skinned than his staff? Remember when he made a beeline to MoDo because he was all butthurt over a crack about his humongous ears? Or gave the bird to Hillary?

    http://mobile.nationaljournal.com/politics/why-bob-woodward-s-fight-with-the-white-house-matters-to-you-20130228

    http://hotair.com/archives/2006/12/14/audio-obama-scolds-maureen-dowd-about-making-fun-of-his-ears/

    http://www.reclusiveleftist.com/2008/04/18/obama-flips-hillary-the-bird/

    Like

  6. Anybody else having a hard time believing the Pope’s abdication and the upcoming Sequester apocalypse are not related?

    Are we not, perhaps, still in the Mayan year 2012?

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    • McWing:

      Anybody else having a hard time believing the Pope’s abdication and the upcoming Sequester apocalypse are not related?

      I blame global warming.

      Like

  7. The National Journal piece was a good read, thanks.

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  8. J, I’ll say a prayer for you as DC disapears into the void at midnight.

    Godspeed my friend.

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  9. Brent–

    I don’t know if you saw it, but Greg ended up doing a post saying that Woodward never really said that he felt threatened (his splitting of hairs was almost [but only almost] worthy of Scott).

    I don’t know if that’s even on your continuum of Obama supporter or WaPo journalist. . . almost off on a tangent!

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  10. Michi,

    The thing that hurt’s Woodward is that, for example, in the email exchange he let’s the guy off the hook, saying that there is nothing to apologize for. Also, and perhaps more importantly, I got the impression that Sperling was saying you’ll regret taking a position that is provably false (though I disagree with that assessment.) In Woodward’s favor, in regards to feeling threatened, or regretting doing it, is the fact that the left wing commentariat has gone after Woodward, almost as if on que from the White House.

    Now, you can’t know what’s in Woodward’s mind, and William Casey is dead and presumably unavailable for comment (like that would stop a stellar reporter like Woodward, hell, he can get confessions out of people in coma’s) but what do you think a reporter, a junior reporter cover the White House is thinking right now? Is he/she thinking, I can’t wait to speak truth to power? I wonder.

    I find this hilarious though, like I said, hawt blue on blue.

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  11. McWing:

    I have to admit, I’m enjoying the way this whole thing has blown up in Woodward’s face. I don’t know what he was thinking, that the e-mail exchange wouldn’t come to light or that people would simply believe that he had been threatened and shake their heads over that mean ol’ White House, or if he simply spoke and wrote in a fit of pique.

    Whatever, it sure generated a lot of blog traffic all over the dial this morning.

    I want you to know, though, that I feel very threatened that you find it hilarious. I’m calling CNN!

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  12. “Is he/she thinking, I can’t wait to speak truth to power? I wonder.”

    One thing worth noting is that the original piece that started the contretemps was an op-ed. Trying to switch back and forth from being a reporter who reports the news to an op-ed writer who is making an argument is a bit dicey, especially when he is explicitly saying that the White House’s version of events is demonstrably false.

    Like

  13. Michi, yeah, I saw that. Still I think the whole exchange was evidence that Greg is an advocate for the Party first, and a journalist second.

    And yes, Jen Rubin is just as bad (and not as good at it) as Greg.

    Like

  14. Obama’s first momentous decision:

    http://www.usnews.com/news/articles/2013/02/28/biden-advises-shooting-shotgun-through-door?vwo=2cn3

    We sure dodged a bullet with that Palin chick. She’s a gaffe a minute.

    Like

    • McWing:

      We sure dodged a bullet with that Palin chick. She’s a gaffe a minute.

      The best protection against media mockery for any politician is to make sure your name is followed by (D).

      Like

  15. No shit, works for taxes too, ask Charlie Rangel.

    Or influence peddling (and underage hookers), right Senator Menendez?

    Or helping out a bank your husbands invested in and is in need of TARP money, right Congresswoman “173 million jobs lost” Waters?

    Or supplying Mexican drug lords with weapons AG Holder?

    Or hell, buying property with Tony Rezko. We’ll just let the President slide on this one.

    I guess it’s gonna cost Bob Woodward a cool half a million to get back into Obama’s good graces.

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  16. No love for Woodward here, but Insty makes a funny point:

    “AMERICAN SENIORS SLAM DAVID PLOUFFE FOR AGEISM. Hey, if Woodward’s too old to report, then Hillary will be too old to be President in 2016.

    Posted at 1:47 pm by Glenn Reynolds

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  17. jnc: I agree. My first thought when I saw “Woodward” and “op-ed” was that there had been a copy editing mistake of some sort.

    Nobody would fault him for becoming a columnist and calling on his years of inside info to analyze/critique/pontificate. . . but he’d have to make it clear that he’s not a reporter anymore.

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  18. Scott: that’s why I said “almost”. You are still the Moksha.

    Like

  19. The best protection against media mockery for any politician is to make sure your name is followed by (D).

    Yeah.

    Like

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