Q1 GDP Whiffs…Again
Equities start the day lower as Q1 GDP whiffs…again. Honestly, and I’ve spoken about this before, what is the deal with Q1? For the past few years it has been awful with a capital AW (5 of the last 10 yrs saw low GDP print in 1st Q). Dear economists who project GDP: winter is a thing. I mean I’m no professional meteorologist or anything but it usually gets cold between Dec and March right? I wonder though…has Winter in the US been especially bad lately? Boston did get more snow than the Castle Black and here in the Midwest the past two winters have felt like our own personal Hell. That is…umm…cold instead of hot…you know where I’m going here. I mean winter has come for decades and decades yet Q1 GDP has never been this consistently awful? By the way, if you are looking for a sharp forecast on GDP check out the Atlanta GDPNow website . They absolutely nailed it. So GDP was weak, yes, and it pushed futures down about 15 pts pre-open. Let’s shift gears really quick and talk TWTR. I sat thru one of the most meta experiences of my life yesterday when TWTRs earnings dropped early…on TWTR itself. Some user (@selerity) found their numbers on TWTRs OWN IR PAGE, put them on TWTRs OWN SERVICE, and the company promptly lost about $8B in value. Two things stand out to me 1) you gotta be on TWTR if you work in this industry (especially if you are making investment decisions) and 2) how insane is that? I love seeing earnings reports early, because I’m a fan of watching markets deal with uncertainty, but how often do you see a company’s own product be the venue for it? Anyway, let’s see how bad the market felt about no growth.
After the open, there were more cross currents than a trip down the Colorado River. You had to have some kind of penchant for Macro analysis because things were flying around. Europe stocks down, Dax killed for 3%. Dollar crushed to late Feb levels (remember when Strong Dollar was a thing?). Bonds smacked all over the place, especially in Europe (see this story). German 10yr yields ripped 12 bps (to a whopping 0.28%) and yields on 10yr UST rose 3bps to 2.05%. Oil up another 3% because, like I’ve said for weeks, the Energy trade appears to be back. Back here stocks were hit for half a percent because apparently bad news is bad news now. I thought weak data meant lower for longer? Come on man. I mean if you wanted action in your little corner of the world you got it today plus more! On the earnings front big losses from WYNN and BWLD. WYNN because apparently Macau turned into a ghost town (revs dropped 38% there) and BWLD because wing prices went banoodles (up 41% from last year!! Thank God I like boneless). Other losers were HUM, WM, IRM, AAL, and CI. Winners were mostly energy, stuff like DO, RIG, NE, and CNX but HOT and GNW got on the scoreboard too. By lunch we sat on 2105 waiting for the FED to drop some funky fresh beats on us.
Which they didn’t, so it might be time for a new producer. Basically they said: “winter causes transitory effects, like people bunkering in their homes so they don’t freeze to death, so hopefully things pick up in the near term”. Honestly, this is the Fed Chairman right now trying to make their move. It’s just so hard to know when they are gonna pick up that idol (let’s hope the market reaction is different too). One last thing worth mentioning: CRM (+12%). News hit late that they hired bankers to “field takeover inquries”. Wow, that would be the largest software deal EVER if it happened. Maybe Hooli is mad about that Pied Piper thing and wants to go in a different direction? (does anyone watch this show?). We closed at 2,106, down 0.3%, and ex a few ups and downs that’s exactly where we were a week ago. Top of the range churn my friends, the story is still the same. Now we look to the jobs report on Friday and honestly I have no idea what to root for. The last time it beat big the market got crushed so who knows right? Anyway, small down day my friends, head home and see those you love.
Final Score: Dow -41bps, S&P500 -37bps, Nasdaq -63bps, Rus2k -98bps.
- Succinct Summation of the Day’s Events: Started off ugly, all kinds of stuff winging around. Fed in the aftn blamed snow, called it transitory, so now we wait for more data…like always.
- After hrs movers: YELP -13%, GLUU +16%
- 24/7 Wall St took a look at some of the upcoming Russell Rebal buy orders. Names in the story: NRZ CDE NVAX CY JBLU
- Wonkblog took a lot at this whole “weather” issue: But the tie between weather and economic performance is often overstated, according to the small number of experts who’ve searched for a correlation. In fact, the data shows that only a few slices of the economy — manufacturing and construction, namely — can be hurt by a brutal winter. Retail sales, to a much lesser extent, can also feel a pinch. But weather alone won’t bring a humming economy to a halt.
- Dshort always has the BEST chart of GDP components. The best Jerry!
- I agree with Barry here, this is definitely an “indicator that predicts nothing” “One day, this bull market will end. Whether it will be triggered by the Federal Reserve raising rates, accelerating inflation, valuation concerns or some geopolitical event is unknown today. But there will be an end, perhaps even a crash. History suggests that NYSE margin debt will be at all-time highs when that happens. But I strongly doubt its absolute level will give you much of a warning”. Another of my favorites rolled out by Bears is “insider sales”. Love that one.
- Things overheard in a Bull Market. It’s all so good, I don’t even have a favorite. I hear them all everyday.
- World’s biggest bonfire you say? Imagine the insurance pitch for this “So yea, we’re gonna burn a 20 story pile of wood. Should be fine though, we are near water”
- You know what time it is right? RIGHT? Time for “Sell in May” stories to flood your inbox! Yes!! This one rightly argues to ignore them.
- That is one tough part of town
- I could live here, but only if the internet coverage was good.
- Here is the movie theater in America’s most expensive home. How uncomfortable do those ottomans look? Ugh.
- I love Biotech! Yes! The FDA just approved a treatment for double chins
We’ll end tonight with people jumping off the World’s Tallest Building. It might be a GoPro viral video but I loved it. These people are insane.
Have a good night.