D&D Note (4-27-2012)
First Quarter United States GDP came in at 2.2%, the estimate was for 2.5% (GDP was 3% in Q4 of 2011). What that reading means is that we will not be headed for a double dip recession, but QE3 is now definitely still on the table for late June when the FOMC meets. Interestingly half of that GDP number came from autos.
Perhaps that Obama Auto bailout doesn’t look so bad now?
Biggest drag came from government spending cuts (as in making government smaller), which marked the sixth consecutive quarter that government cuts weighed down on GDP. Which has not happened since 1953 while the US was pulling out of the Korean War.
A quick Econ class review: GDP = Consumption + Investment + Government + Net Exports
First Quarter numbers:
Consumption = 2.0%
Investment = 0.8%
Government = -0.6%
Net Exports = UNCH
GDP = 2.2%
All 3 indexes ended the week with gains. DOW adding 1.5%, Nasdaq up 2.3%, and the S&P 500 up 1.8%.
So far 300 of the 500 S&P 500 companies have reported earnings and 70% have beat estimates.
Economists expect to see earnings growth of 6.6% in the first quarter, however if you pull out the largest company in the world that is Apple (AAPL), then you only have 4.5% growth.
Bank of Japan took steps to further their easy monetary policy by announcing 5 trillion Yen of additional asset purchases by the central bank.
Euro markets gained while Asian markets declined.
Oil rose again 38 cents to $104,93 a barrel. Gold also rose $4.30 to close at $1,664.80 a troy ounce.
The 10-year US note continued to see yields fall (meaning more people bought bonds) pushing the yield down to 1.95% which is still under the FED inflation estimate of 2%.
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