Sunday, April 30, 2017

Fantasy Meet Reality aka. History's Largest Circle Jerk

Fake stock market euphoria masked the slowest consumer spending since 2009...

Fed Fred: Thursday, April 27th, 2017
A Tale of Diverging GDP Forecasts
"Leading up to the 2017:Q1 GDP release, the two GDP tracking indicators in FRED have told starkly different stories of expected growth."

"What is driving the difference? An analysis into the data underlying the GDP trackers identifies stark differences between “hard” data and “soft” data in the first months of 2017"

What is "soft data?"
Soft data consists of surveys of business and consumer confidence i.e. what people would like to happen. Hard data is what is actually happening. 

Fast forward to Friday and the actual release of Q1 GDP:
ZH: U.S. GDP Collapses to .7%, Lowest In Three Years. 

"The biggest culprit for the atrocious GDP print was the collapse in consumer spending, which rose at just 0.23% annualized, the lowest increase since 2009, and reflected an increase in services offset by a decrease in motor vehicles and parts."

"The Atlanta Fed GDPNow tracker was right. Again"

" In short: for whatever reason, spending in the first quarter imploded."

"It's just Amazon"

"For whatever reason, spending imploded"

The circle of jerks is driving this entire divergence...

Misallocation of capital deja vu:

"Then they learned there are no winners in the rat race to nowhere"

There are just self-interested morons who assume it can't happen to them