Wednesday, June 25, 2014

No Merry Note, Nor Cause of Merriment

The revisions of US 2014 Q1 GDP so far. Comparing the contribution to real GDP

Contribution to real GDP in percentage points (from BEA)

Most of the revision is basically from PCE, and the rest from EXIM (both exports and imports worsened). This is just a point estimate, but will definitely cause some serious re-think on the recovery. The PCE has been the flagship of US recovery so far. And this prints definitely NOT good.

If US enters a recession, inspite of QE3, that will shake the confidence of the public in general, and will not be exciting for equities. Are we back to rates rally?

Most of the other data, including something that you can rely on, like Federal Reserve FoF data, still show encouraging trend. So I would say nothing to worry as of yet, but be watchful.

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