davejh23 (< 20)

Q1 GDP Estimates Being Cut Daily...

March 30, 2011 – Comments (0) | RELATED TICKERS: DE , CLI , NE

Q1 2011 is practically over and people are just now getting around to lowering their GDP growth estimates for the quarter?  Just in the last 3 days, I've read of at least 5 groups that have slashed their estimates...one estimate was slashed by nearly 50%.  Just a couple months ago, it seemed like every bank, economic research group, etc... was doubling their full year growth estimates.  What happened?  All of these updated estimates are below the reported rate of inflation.  I'm sure you're aware that the GDP formula doesn't adjust for inflation...so, real GDP for Q1 is expected to be negative!...nevermind the fact that it's taking deficit spending of 10% of GDP to produce this modest contraction. 

We continue to get earnings reports that are full of caution and signs of magin compression.  Consumer sentiment is tanking even as the MSM tries to squeeze positive news out of the mountain of negatives we've seen lately.  Today's employment report, if confirmed by Friday's report, is probably the only decent news I've seen for quite a while.  Investor sentiment is still high and margin useage is reaching historic highs.  Looking at long term charts, the market has been overbought for months and hasn't reached oversold conditions in 9 months.  I have a feeling that earnings expectations are going to be slashed over this quarter's earnings season...something that typically signals major turning points in the market.  This, combined with anticipation for the end of QE2, and likely a strengthening dollar, is going to lead to a decline in the markets that will be greater than the Spring/Summer decline in 2010.