cbwang888 (25.84)

Q4 2009 GDP growth of 5.7% are mostly due to inventory investment

February 01, 2010 – Comments (3) | RELATED TICKERS: GDX , GLD , SLV

With 20%+ workforces out of jobs, how did US grew its GDP at 5.7%?

I found one good paragraph from a blog through googling:

"Inventories were the big story, contributing 3.39 points to growth, up from just a 0.69 points in the 3Q. Inventory investment is the lowest “quality" form of growth, since a big increase in one quarter is generally followed by declines in subsequent quarters. "

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Overall, this is a much better than expected report. However, the numbers are very preliminary. In the 3Q, the first report came in very strong at 3.5%, and then was revised down twice to growth of just 2.2%. Before one gets too giddy about this report, remember that the numbers are subject to revision.

Most of the growth was low-quality inventory investment, which tends to be fleeting. Still, even if inventories are totally stripped out, this does represent an improvement to 2.31% growth from 1.51% growth in the 3Q and 0.72% growth in the 2Q.

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It is time to cut down risky assets and seek safe haven.

Low interest rate is also here to stay so USD can't be relatively strong to other currencies for too long. Many debt-loaded coporate bonds (junk bonds) are bubbles. It's still not clear to me if US T-bonds are backed by its nuclear weapon or its printing machine (Fed).

I would keep adding more gold now as it is hovering around 1080 support level.