Following the report, the GDPNow Forecast dropped 0.5 percentage points to 1.8%.
Latest forecast: 1.8 percent — July 28, 2016
The final GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2016 is 1.8 percent on July 28, down from 2.3 percent on July 27. After the U.S. Census Bureau’s inaugural release of its advance economic indicators report, which covers retail and wholesale inventories and foreign trade in goods, the nowcast of the contribution of net exports to second-quarter real GDP growth declined from 0.17 percentage points to –0.10 percentage points and the nowcast of the contribution of inventory investment to growth declined from –0.63 percentage points to –0.79 percentage points.
That is the final DGPNow forecast for the second quarter.
The “Advance” BEA Gross Domestic Product, for 2nd quarter 2016 comes out tomorrow. The next GDPNow forecast will be for third quarter.
Note how lagging these BEA GDP reports are. The third quarter is nearly a third over and we will just now get data for the second quarter (and it will be revised again and again).
Slate writer Franklin Foer says “Vladimir Putin has a plan for destroying the West—and that plan looks a lot like Donald Trump. If the Russian president could design a candidate to undermine American interests—and advance his own—he’d look a lot like Donald Trump.”
The International Trade in Goods report shows a widening trade gap. Both exports and imports rose for the month but the gap widened more than any Bloomberg Econoday economist’s estimate.
Trade Gap Widens to -$63.3 Billion
Exports of goods improved in June though imports rose even more, making for a $63.3 billion goods deficit in the month. The mix will pull down tomorrow’s second-quarter GDP report, where exports are a subtraction, but nevertheless is a welcome sign of strength in cross-border demand.
Exports rose 0.9 percent led by gains for foods and for consumer goods. Exports of capital goods, which have been weak, posted a solid monthly gain, also at 0.9 percent. The import side shows a big gain for industrial supplies where price inflation for oil is at play but also a 1.2 percent gain for capital goods imports and a second very strong gain for the leading component, consumer goods which rose 3.3 percent following May’s 2.7 percent. Gains in imports of consumer goods point to business confidence in consumer demand.
The international trade deficit was $63.3 billion in June, up $2.2 billion from $61.1 billion in May. Exports of goods for June were $120.2 billion, $1.1 billion more than May exports. Imports of goods for June were $183.5 billion, $3.3 billion more than May imports.
Advance Wholesale Inventories
Wholesale inventories for June, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $589.3 billion, virtually unchanged (±0.4 percent) from May 2016, and virtually unchanged (±1.6 percent) from June 2015. The April 2016 to May 2016 percent change was unrevised at up 0.1 percent (±0.2 percent).
Advance Retail Inventories
Retail inventories for June, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $604.2 billion, an increase of 0.5 percent (±0.2 percent) from May 2016, and were up 5.6 percent (±0.7 percent) from June 2015. The April 2016 to May 2016 percent change was unrevised at up 0.5 percent (±0.2 percent).
Anything can happen. At least, more things than you can imagine can happen.
Facebook, after trouncing yet another quarter’s earnings report, has now climbed to a market value greater than that of Berkshire Hathaway. It may be temporary, it may be forever. Regardless, at the current moment, a ten year old company with few physical assets and a small amount of employees is now worth more than an empire built by Warren Buffett over the course of 50 years.
How many people had the imagination to picture something like this as being within the realm of possibilities, let alone a likelihood?
Masha Gessen writes about our lack of imagination regarding graver things at the New York Review of Books:
Lack of imagination is one of our greatest handicaps as humans and as citizens. Mikhail Khodorkovsky, one of the richest men in the world, could not imagine that Putin would put him in jail, and this was one of the reasons he ignored repeated warnings and stayed in Russia. Then he spent ten years in a Russian prison. David Cameron could not imagine that his fellow citizens would vote to secede from the European Union, so he called for a referendum. Soon after the vote last month, pundits in both the UK and the US regrouped and started reassuring themselves and their audiences that the UK will not really leave the EU—because they can’t imagine it. I have spent much of this year arguing with my American friends about Donald Trump. Even after Trump had won enough delegates to lock up the Republican nomination, reasonable, well-informed people insisted that some Republican savior would swoop in and reclaim that party. There was little, if any, evidence in favor of that kind of outcome, but for a brief moment many Americans seemed to believe in the unlikely rather than the obvious. Why?
“I just can’t imagine Trump becoming the nominee,” many said at the time. But a lack of imagination is not an argument: it’s a limitation. It is essential to
Fed does nothing, says little. Gold pops, stocks Decline. Japan considers 50-year bonds. Companies report fake numbers. Money pours into corporate bonds as sovereign yields go negative. G-20 commits to more stimulus. Debt keeps soaring while yield curves flatten. Judge rules that bitcoin is not money. Clinton accepts nomination. Gold and silver miners start reporting.
The numbers for both candidates, based on interviewing conducted July 18-25, are 37% favorable and 58% unfavorable. In all previous Gallup updates stretching back to last July, Clinton’s net favorable has been higher than Trump’s.
When the data from Saturday, Sunday and Monday are isolated, the numbers are even slightly more in Trump’s favor — 37%/58% favorable/unfavorable, compared with Clinton’s 36%/59%. In other words, there is no evidence through Monday night that Trump is losing his image gains from his Cleveland convention.
At this point, we can say that although Americans’ views of the Cleveland convention were not at all positive after it ended, the underlying trend data show that over the last week or so, Trump has managed to reach a milestone in his campaign: His image among Americans is now identical to that of his opponent.
Trend Favors Trump
This trend favors Trump, perhaps strongly so.
Bernie supporters feel disenfranchised and many of them will sit this election out, totally disgusted with the mess.
Trump may lose some of the warmonger vote to Hillary but will more than make up for it by picking up disgruntled blue collar workers who blame Mexico and China for stealing their jobs.
AS HILLARY CLINTON puts together what she hopes will be a winning coalition in November, many progressives remain wary — but she has the war hawks firmly behind her.
“I would say all Republican foreign policy professionals are anti-Trump,” leading neoconservative Robert Kagan told a group gathered around him, groupie-style, at a “foreign policy professionals for Hillary” fundraiser I attended last week. “I would say that a majority of people in my circle will vote for Hillary.”
As the co-founder of the neoconservative think tank Project for the New American Century, Kagan played a leading role in pushing for America’s unilateral invasion of Iraq and insisted for years afterward that it had turned out great.
Despite the catastrophic effects of that war, Kagan insisted
FOMC Interest Rates and Their Impact on the US Economy: Part 2
To me, interest rates and their future direction seems to be obsessively discussed and debated by many investors. So much so, that I often get the impression that many investors believe that interest rates coupled with Federal Reserve policy are the primary drivers of our economy. From my perspective, interest rates and Federal Reserve monetary policy are contributing factors to economic growth and stability. However, I would stop short of considering them of primary importance.
The Most Important Factors of Economic Strength
The true strength of an economy is fundamentally related to its capacity to produce sufficient goods and services in order to meet the needs and wants of its people. Strong economies are highly productive, and production is the true source of wealth. In order for an economy to be productive it must possess the resources required to produce goods and services. In economic terms these are referred to as factors of production. Under modern economic theory there are four factors of production, they are land, labor, capital and entrepreneurship.
Importantly, the reader should notice that money is not included in that list. Money is simply a medium of exchange, and as such, it has no intrinsic value in its own right. Its only value comes from the product (goods and services) that buyers or sellers are willing to accept in exchange for the goods and services they want or are offering. There is an excellent series on the Federal Reserve Bank of St. Louis website titled “Economic Lowdown Podcast Series” that I highly recommend to readers interested in learning more about how the economy works. Here’s an excerpt from Episode 2-Factors of Production:
“You will notice that I did not include money as a factor of production. You might ask, isn’t money a type of capital? Money is not capital as economists define capital because it is not a productive resource. While money can be used to buy capital, it is the capital good (things such as machinery and tools) that is used to produce goods and services. When was the last time you saw a carpenter pounding a nail with a five dollar bill or a warehouse foreman lifting a pallet with a 20 dollar bill? Money merely facilitates trade, but it is
Apparently, both parties have platform planks calling for the reinstatement of the Glass-Steagall Act of 1933, the law that separated investment banking from commercial banking until it was finally repealed in 1999 (after being watered down by the Federal Reserve beginning in the late 1980s). Bringing back Glass-Steagall in some form would force megabanks like JPMorgan Chase, Citigroup, and Bank of America to split up; it would also force Goldman Sachs to get rid of the retail banking operations it started in a bid to get access to cheap deposits.
In his article discussing this possibility, Andrew Ross Sorkin of the Times slips in this:
“Whether reinstating the law is good idea or not, the short-term implications are decidedly negative: It would most likely mean a loss of jobs as part of a slowdown in lending from the biggest banks.”
I looked down to the next paragraph for the explanation, but he had already moved on to another unsubstantiated claim (that the U.S. banking industry would be at a competitive disadvantage). So, I thought, maybe it’s so obvious that Glass-Steagall would reduce lending that Sorkin didn’t think it was worth explaining. I thought about that for a while. I couldn’t see it.
In fact, basic intuitions about finance indicate that Glass-Steagall should have no effect on lending whatsoever. Banks should loan money to borrowers who are good risks: that is, those who pay an interest rate that more than compensates for the risk of default. (I’m simplifying a bit, but the details aren’t relevant.) Common sense tells you that whether the bank doing the lending is affiliated with an investment bank shouldn’t make a difference.
To dig a little deeper, banks should be making loans whose expected returns exceed the appropriate cost of capital. So, maybe Sorkin thinks that grafting an investment bank onto a commercial bank will lower its cost of capital. I can’t think of any obvious reason why this should be the case. Even if it does, however, we do NOT want the commercial bank to now start making more loans than it did before it was affiliated with the investment bank. Capital markets are supposed to direct funds to households…
In today’s FOMC Statement the Fed says the labor market has strengthened, household spending is growing strongly, and economic activity is expanding at a moderate rate.
Supposedly, “near-term risks to the economic outlook have diminished”.
But “against this backdrop, the Committee decided to maintain the target range for the federal funds rate at 1/4 to 1/2 percent. The stance of monetary policy remains accommodative, thereby supporting further improvement in labor market conditions and a return to 2 percent inflation.”
Stop Talking and Do It
Esther L. George, president of the Federal Reserve Bank of Kansas City dissented. She preferred to raise the target range for the federal funds rate to 1/2 to 3/4 percent today.
We have discontinued our moving average series due to limited data resources. For continued coverage of the Ivy Portfolio and timing methods, please see Meb Faber's website here.
The S&P 500 closed June with a monthly gain of 0.09% which follows a gain of 1.53% last month. All three S&P 500 MAs are signaling "invested" and all five Ivy Portfolio ETF MAs are signaling "invested". In the table, monthly closes that are within 2% of a signal are highlighted in yellow.
The Ivy Portfolio
The above table shows the current 10-month simple moving average (SMA) signal for each o...
A 13-point lead for Hillary Clinton on July 14 has vanished in two weeks with Donald Trump now leading in the polls by 1 point. This is clearly unacceptable to the establishment and so Reuters/Ipsos is taking matters into its own hands... and 'tweaking' its polling methodology.
Trump has seena yuuge bounce since Comey and the convention as Clinton's bounce was marginal...
By Jacob Wolinsky. Originally published at ValueWalk.
NetSuite Inc (NYSE:N) is soaring this morning as Oracle Corporation (NASDAQ:ORCL) has made a bid to buy the company for $9.3 billion. This deal has been rumored for some time but obviously few expected such a large premium or did not think the bid was certaintly coming as the stock is up about 18 percent at the time of this writing which is a lot for a tech giant. Here is what the sell side is saying.
NetSuite – analysts react
Should the transaction take place, Oracle would pay about 9x NTM EV / revenue (based on consensus estimates for NetSuite), above the average multiple paid in our precedent SaaS Software acquisitions analysis of 6.8x . Additionally, Oracl...
The following are the M&A deals, rumors and chatter circulating on Wall Street for Wednesday July 27, 2016:
Sequenom Being Acquired by Lab Corp for $2.40/Share in Cash
Laboratory Corporation of America Holdings (NYSE: LH) and Sequenom, Inc. (NASDAQ: SQNM) announced Wednesday, that they have entered into a definitive agreement aunder which LabCorp would acquire all of the outstanding shares of Sequenom in a cash tender offer for $2.40 per share, for an equity value of $302 million.
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After a three-year bull run that more than quadrupled its value by its peak last July, IBD’s Medical-Biomed/Biotech Industry Group plunged 50% by early February, hurt by backlashes against high drug prices and mergers that seek to lower corporate taxes.
This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible. Feel free to contact me directly at firstname.lastname@example.org with any questions.
Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts. After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.) Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.
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