Morning Report – GDP flatlines in Q1 4/29/15

Markets are subject to some push-pull this morning with stronger data out of Europe and weaker data out of the US. Bonds and MBS are down.

Bonds are getting roughed up this morning after Germany reported inflation that was higher than expected. The German Bund is trading at 26.3 basis points, up 10 basis points this morning. This has pulled US Treasuries lower. Note the Fed rate decision is scheduled for 2:00 PM EST.

Stocks on the other hand are dealing with a huge miss on GDP. The advance estimate came in at +0.2% for the first quarter. The Street was already expecting weakness due to the weather, however the number still missed the +1.0% street estimate by a wide margin. Consumption growth fell to 1.9% from 4.4% in the fourth quarter. Investment fell from 3.7% to 2.0%. Government spending improved from -1.9% to -.7%, although that was driven by decreases in defense and increases in non-defense spending. Finally, the trade balance decreased a little.

This number is going to be subject to two more revisions, and I would expect this number to be revised upward. Most economic data do not suggest that growth ground to a halt in Q1, just that it slowed down from Q4’s +2.2%. I suspect this will seal the deal that the first rate hike will be in September, not June.

Mortgage Applications fell 2.3% last week, as purchases were flat and refis fell 3.7%.

Pending Home Sales rose 1.1% in March, more or less in line with estimates.

Financial professionals can expect more invective thrown their way. Bernie Sanders (I-VT) is throwing his hat in the ring. Sanders, a socialist, will run on the Democratic ticket and try and pull Hillary to the left.

13 Responses

  1. Just heard some sweet Q1 GDP numbers, 0.2%.

    Bouncing on the bottom.

    Like

  2. Drip Drip Drip.

    “1,100 donors to a Canadian charity tied to Clinton Foundation remain secret”By Rosalind S. Helderman and Tom Hamburger
    April 28 at 7:58 PM

    http://www.washingtonpost.com/politics/1100-donors-to-a-canadian-charity-tied-to-clinton-foundation-remain-secret/2015/04/28/c3c0f374-edbc-11e4-8666-a1d756d0218e_story.html

    Bernie Sanders campaign slogan should be “No more whining that you didn’t have a real choice”.

    Like

  3. I haven’t decided how Clinton should handle Sander. i’m leaning toward “barely acknowledge.”

    Like

  4. More David Simon.He lays the Baltimore policing problems directly on O’Malley.

    “The drug war began it, certainly, but the stake through the heart of police procedure in Baltimore was Martin O’Malley. He destroyed police work in some real respects. Whatever was left of it when he took over the police department, if there were two bricks together that were the suggestion of an edifice that you could have called meaningful police work, he found a way to pull them apart.”

    http://www.themarshallproject.org/2015/04/29/david-simon-on-baltimore-s-anguish

    Like

  5. What’s funny is that this hag’s gonna win.

    Like

  6. This is good news..,

    Like

  7. Scott, you mentioned a coffee vendor in midtown Manhattan that you favor. Would you recall that for me, please?

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    • The northeast corner of 48th and Park, right in front of the back track entrance to Grand Central. Nick’s breakfast food cart. $1.50 for a large cup of coffee. Not latte, not espresso, not cappuccino. Just a plain, old fashioned cuppa joe. My standard guy in the morning before I go into the office (which is right across the street).

      To be honest, there is a coffee cart on virtually every corner along Park in the morning. I suspect they are all pretty good.

      Like

  8. What’s funny is that this hag’s gonna win

    I’m going to make a request. Would you lose the word “hag”, please?

    Like

  9. I was always a sucker for the coffee carts in Manhattan. Why anyone would wait in line at Starbucks is beyond me.

    Like

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