Final GDP Estimates Revised Higher
The market is pretty flat so far today, which is a bit surprising given the euro is bouncing, the dollar is lower, commodities are rising, tech is strong, and GDP was revised higher.
Q4 GDP was revised higher to +5.9%, which is above the last estimate of 5.7%. I think this is probably the highest growth rate we are going to see for awhile, but I still expect the recovery to continue at a modest pace.
There was also a solid Chicago PMI release this morning, with that manufacturing index rising to 62.6 from 61.5 last month. But existing home sales fell -7.2%, which is disappointing, although I have continually said that this data will continue to be lumpy on a month-to-month basis.
The lower dollar is boosting commodities, with oil rising to $79.75 and gold higher to $1115 so far.
Asian markets were higher overnight; the 10-year yield is a bit lower to 3.60%; and the VIX is down another -1.0% falling below the 20 level to 19.89.
Last night I went to hear Greg Valliere speak. He is the political strategist that talks about how the stuff coming out of Washington might affect the markets. Here is a quick summary of some of his comments:
- The Fed believes inflation will stay low due to contained unit labor costs and excess slack in the economy. As such, they are likely on hold at least until later in the year and possibly 2011.
- The 'Volcker Rule' is DOA, and likely won't be part of any financial reform. Financial stocks could actually rally if we do get some reform, simply due to the removal of the uncertainty overhang.
- Our huge deficits will continue to be a problem, and will likely result in higher bond yields at some point.