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Treasury yields higher after fast Q2 GDP print; rising inflation

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Comments (56)
  • bbro
    , contributor
    Comments (10255) | Send Message
     
    You have a 2.5% 10 year with Year over year nominal GDP growth at 4%....
    30 Jul 2014, 08:48 AM Reply Like
  • Digitking
    , contributor
    Comments (9) | Send Message
     
    It's 4% REAL GDP growth, not nominal, you'll need to add the inflation to get nominal... which would be around 6-6.3% for the quarter.
    30 Jul 2014, 09:32 AM Reply Like
  • bbro
    , contributor
    Comments (10255) | Send Message
     
    year over year...year over year...nominal GDP growth
    30 Jul 2014, 09:38 AM Reply Like
  • David at Imperial Beach
    , contributor
    Comments (4364) | Send Message
     
    When you use a nominal deflator, you can't ever get to real GDP. CPI is no more real than the dollars in your pocket are real gold coins.
    30 Jul 2014, 12:25 PM Reply Like
  • JasonC
    , contributor
    Comments (4040) | Send Message
     
    Nominal to Real GDP is not done with CPI but with the GDP price deflator.

     

    bbro is correct that year on year nominal GDP is up 4%, from $16.619 trillion in 2Q2013 to $17.295 trillion in 2Q 2014. The *annualized* rate of growth of *real* GDP in just 2Q2104 was indeed 4%, and nominal GDP *in that quarter* was faster, over 6%. But that is for only one quarter. For the whole trailing year, including the weak 1Q2014, *nominal* GDP is up 4%. With 1.6% of that price and 2.4% of it real GDP increase. The GDP price deflator stands at 108.188 now and it was 106.488 in 2Q2014.
    30 Jul 2014, 02:16 PM Reply Like
  • leopardtrader
    , contributor
    Comments (1599) | Send Message
     
    Bond traders are proven wrong again. Retail equity traders are right once more. Time to re-price rates going forward. Idea that rates remain at zero for so long is pretty idiotic
    30 Jul 2014, 08:50 AM Reply Like
  • Macro Investor
    , contributor
    Comments (9050) | Send Message
     
    Clear sign of a recession.
    30 Jul 2014, 08:59 AM Reply Like
  • Bouchart
    , contributor
    Comments (801) | Send Message
     
    Wait for the second or third revision and it'll be negative.
    30 Jul 2014, 09:01 AM Reply Like
  • Macro Investor
    , contributor
    Comments (9050) | Send Message
     
    No doubt. Hope springs eternal.
    30 Jul 2014, 09:05 AM Reply Like
  • Petrarch
    , contributor
    Comments (901) | Send Message
     
    you should put your money on that
    your heirs will certainly thank you
    P
    30 Jul 2014, 09:13 AM Reply Like
  • ArtC
    , contributor
    Comments (17) | Send Message
     
    Yeah. But the whole point is, it won't be a headline then.
    30 Jul 2014, 10:09 AM Reply Like
  • James Bjorkman
    , contributor
    Comments (1274) | Send Message
     
    So the economy is growing at a 1% rate so far this year WOOHOO break open the champagne.
    30 Jul 2014, 09:10 AM Reply Like
  • bbro
    , contributor
    Comments (10255) | Send Message
     
    Durable goods plus Residential Investment to GDP is 10.7%....No recession has started over the last 60 years until this number gets at least to 13%.....a lot more room to run....
    30 Jul 2014, 09:10 AM Reply Like
  • DeepValueLover
    , contributor
    Comments (9573) | Send Message
     
    Inflation is ramping up just as the Fed begins considering raising key rates.

     

    Got gold?
    30 Jul 2014, 09:17 AM Reply Like
  • bbro
    , contributor
    Comments (10255) | Send Message
     
    Year over year PCE Price Index is still a pretty benign 1.6%
    30 Jul 2014, 09:22 AM Reply Like
  • DeepValueLover
    , contributor
    Comments (9573) | Send Message
     
    CPI playing catch-up...its going to get ugly.

     

    http://bpp.mit.edu/usa
    30 Jul 2014, 08:40 PM Reply Like
  • bbro
    , contributor
    Comments (10255) | Send Message
     
    Current GDP per employee is $118,280.....a year ago it was $115,350
    30 Jul 2014, 09:26 AM Reply Like
  • Petrarch
    , contributor
    Comments (901) | Send Message
     
    where is Lakshman Achuthan? where?

     

    why isn't ECRI talking? surely they have a point of view on these dire and disturbing numbers.

     

    P
    30 Jul 2014, 09:32 AM Reply Like
  • Mike Spelman
    , contributor
    Comments (71) | Send Message
     
    There are going to be a lot of pissed off zerohedgers today...
    30 Jul 2014, 10:01 AM Reply Like
  • David at Imperial Beach
    , contributor
    Comments (4364) | Send Message
     
    Actually, the BEA was totally discredited in Q1. They initially reported that the GDP grew in Q1, then had to revise down not once but twice into negative territory. Now they're saying it wasn't -2.9% after all, but only -2.1% decline.

     

    So after discounting Q2's 4% for inflation and revisions yet to come in, it's doubtful we grew at all in Q2.
    30 Jul 2014, 12:23 PM Reply Like
  • JasonC
    , contributor
    Comments (4040) | Send Message
     
    No, it really is not doubtful at all. We grew in 2Q2014, and by a lot. Auto sales were very strong, housing pretty strong, investment spending pretty strong.

     

    The US household sector has seen increases in the value of its owned assets of greater than $5 trillion in the last 12 months. From stocks up nearly 17% and houses up over 9%. That is a capital gain of 30% of GDP in one year. Anyone who thinks that is just spun statistics is high. It is real wealth, and bulls know it.

     

    You might try to make a case that the expansion is long in the tooth or asset price increases are overdone, but pretending we are still in recession in the face of tens of trillions in new wealth since the recession low, is flat-out nuts.
    30 Jul 2014, 02:19 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (9573) | Send Message
     
    Schiller PE is pointing towards a correction coming within the next few quarters...

     

    http://bit.ly/QqZ06c
    30 Jul 2014, 08:42 PM Reply Like
  • bbro
    , contributor
    Comments (10255) | Send Message
     
    I have full confidence the zerohedgers have called an emergency meeting of the Conspiracy Doom and Gloomers Stackers Society and will come up with something
    that will explain it away....
    30 Jul 2014, 10:11 AM Reply Like
  • quabbin
    , contributor
    Comments (127) | Send Message
     
    That was lame the first time you penned it,bbro.
    30 Jul 2014, 07:50 PM Reply Like
  • machiavelli
    , contributor
    Comments (584) | Send Message
     
    Lame? Go hang out at zerohedge if you lack a sense of humor.
    30 Jul 2014, 08:43 PM Reply Like
  • Macro Investor
    , contributor
    Comments (9050) | Send Message
     
    Isn't insanity required to hang out in ZH?
    30 Jul 2014, 10:18 PM Reply Like
  • machiavelli
    , contributor
    Comments (584) | Send Message
     
    I have visited that insane asylum a few times in the past. There isn't much humor there for sure.
    31 Jul 2014, 12:23 AM Reply Like
  • alcyon
    , contributor
    Comments (39) | Send Message
     
    Expect the 3rd quarter to be much weaker and the fourth quarter will bring a correction (absent FED action). Inflation peaked in May.
    31 Jul 2014, 09:38 AM Reply Like
  • Brian58
    , contributor
    Comments (187) | Send Message
     
    It's like a D student coming home with a C-. Great improvement
    30 Jul 2014, 10:23 AM Reply Like
  • Petrarch
    , contributor
    Comments (901) | Send Message
     
    hold that thought
    you are absolutely correct
    OMG you nailed it
    well done
    P
    30 Jul 2014, 10:29 AM Reply Like
  • mrdirt
    , contributor
    Comments (627) | Send Message
     
    While the economy seems generally to be bouncing back from the recession, overall growth remains lackluster. Wages have failed to rise significantly, an area of concern that Janet L. Yellen, chairwoman of the Federal Reserve, noted when she appeared before Congress this month

     

    Second-quarter earnings for many companies have been mixed. Home prices are rising at the slowest pace in more than a year. Many economists say the mediocre housing market and underwhelming labor conditions are the driving forces behind the Fed’s plan to keep interest rates low into next year.

     

    “We made up some of the ground lost in the first three months of this year, but there’s nothing in today’s data to indicate that the economy is growing more strongly than it has for the past couple of years,” the Economic Policy Institute, a left-leaning nonprofit group focused on low- and middle-income workers. http://nyti.ms/1AyPd1W
    30 Jul 2014, 11:30 AM Reply Like
  • RS055
    , contributor
    Comments (3164) | Send Message
     
    lets remember that GDP numbers are Quarter on Quarter ( annualized)
    Lets say GDP was 100 on Jan 1, 2014.
    Q1 growth was -2.1%. That is actually a 0.5% decline for the quarter.
    So on march 31, 2014 the GDP was 99.5
    Q2 growth was 4% . That is actually a 1% growth over the first quarter.
    So on June 30, 2014 GDP was: 99.5*1.01=100.5
    Therefore the GDP is up 0.5% between Jan 1 and Jun 30 of this year.
    Just to keep things in perspective.
    30 Jul 2014, 11:41 AM Reply Like
  • Macro Investor
    , contributor
    Comments (9050) | Send Message
     
    How can GDP be up if we are in a recession? Can you please check your numbers again?
    30 Jul 2014, 11:44 AM Reply Like
  • RS055
    , contributor
    Comments (3164) | Send Message
     
    huh? is that an attempt at sophisticated sarcasm? Or just another one of those one line snarky 'comments" that add absolutely nothing to the discussion? Cant tell.
    30 Jul 2014, 11:55 AM Reply Like
  • Macro Investor
    , contributor
    Comments (9050) | Send Message
     
    It's the truth. We all know we can't, must not, will not be out of a recession. Ever. Otherwise the terrorists have already won and the S&P500 has gone up.

     

    OK, bad analogy, the S&P500 did go up and by a lot, but you get the point.
    30 Jul 2014, 10:20 PM Reply Like
  • RS055
    , contributor
    Comments (3164) | Send Message
     
    thats an analogy? you had a point? Sorry I must have missed it.
    30 Jul 2014, 11:20 PM Reply Like
  • Macro Investor
    , contributor
    Comments (9050) | Send Message
     
    My point is that there is a raging recession ongoing and Obama and the Fed are hiding it. But shadow stats knows. So we should all buy gold.
    31 Jul 2014, 12:29 AM Reply Like
  • RS055
    , contributor
    Comments (3164) | Send Message
     
    I have a suggestion. I am sure your sarcasm goes over very well over beers with your pals. But in these internet forums - the subtlety of your biting sarcasm is entirely lost. Its the wrong medium for your talents.
    31 Jul 2014, 12:31 AM Reply Like
  • machiavelli
    , contributor
    Comments (584) | Send Message
     
    "subtlety of your biting sarcasm" Huh? Which is it? Subtle or biting?
    31 Jul 2014, 12:34 AM Reply Like
  • RS055
    , contributor
    Comments (3164) | Send Message
     
    heaven forbid that I get into a battle of wits against the unarmed combination of "macro..." and 'machiavelli' - you'll have to find satisfaction in your local bar.
    31 Jul 2014, 01:09 AM Reply Like
  • machiavelli
    , contributor
    Comments (584) | Send Message
     
    Heaven knows I tried. Are you afraid of an unarmed man?
    31 Jul 2014, 01:20 AM Reply Like
  • RS055
    , contributor
    Comments (3164) | Send Message
     
    No - but I have learnt that it is a waste of time time playing chess against an opponent who , when he is down 2 pawns or a rook, will start saying he's bored, lets his big fluffy dog in that knocks over the chess pieces and then says its time for his physiotherapy.
    You cannot win.
    31 Jul 2014, 01:29 AM Reply Like
  • machiavelli
    , contributor
    Comments (584) | Send Message
     
    Oh, but my portfolio gains for 2014 say I do.
    31 Jul 2014, 01:41 AM Reply Like
  • HAPPYCAPITALIST
    , contributor
    Comments (332) | Send Message
     
    Lots of snarky comments here today. Perhaps some people are getting tired of defending a lousy economy that refuses to support the high prices they've paid for their Fed-fueled equities ?
    30 Jul 2014, 01:12 PM Reply Like
  • machiavelli
    , contributor
    Comments (584) | Send Message
     
    "HAPPY" Capitalist? More like sad panda.
    30 Jul 2014, 01:44 PM Reply Like
  • TraderzOracle
    , contributor
    Comments (21) | Send Message
     
    Party continues. Keep buying and don't sell.
    30 Jul 2014, 02:20 PM Reply Like
  • HAPPYCAPITALIST
    , contributor
    Comments (332) | Send Message
     
    Now now, Machiavelli ! No need to get personal....or snarky
    30 Jul 2014, 03:17 PM Reply Like
  • machiavelli
    , contributor
    Comments (584) | Send Message
     
    If anyone lost money this year they likely deserve ridicule. Maybe you are not a loser? I wouldn't know but most people that whine about the Fed have lost money because of their ideology.
    30 Jul 2014, 03:26 PM Reply Like
  • Macro Investor
    , contributor
    Comments (9050) | Send Message
     
    No, they have lost money because the Fed refused to listen to them like it should have and crushed the economy. It is not the fault of the people who went to fight the Fed. It is the fauly of the Fed.
    30 Jul 2014, 10:21 PM Reply Like
  • HAPPYCAPITALIST
    , contributor
    Comments (332) | Send Message
     
    So, taking a balanced view of the market vs. the economy is now considered whining ? That's funny, it used to be called analysis.
    30 Jul 2014, 04:20 PM Reply Like
  • James Bjorkman
    , contributor
    Comments (1274) | Send Message
     
    It's all political these days with some of these guys. Take a contrary view of anything to them and you're one of "those" guys. Don't sweat it, the market treats everyone the same.
    30 Jul 2014, 04:23 PM Reply Like
  • JasonC
    , contributor
    Comments (4040) | Send Message
     
    Thinking that the market is up so strongly it might be getting ahead of itself might be a balanced view. Thinking that the economy is very weak and still in recession and doing nothing to support higher stock prices is not a balanced view - it is delusional. Corporate profts are at records, and that is not spin, it is money in the bank. You can worry about PEs, you can worry about rates moving up, you can worry about unrest abroad I suppose. But anyone who doesn't see the economy is growing and profits are strong and that that plus low rates are the reason the market is up 3 fold since its recession lows, isn't seeing "balanced" anything. They are ignoring reality and refusing to admit they got a call wrong.
    30 Jul 2014, 04:29 PM Reply Like
  • Macro Investor
    , contributor
    Comments (9050) | Send Message
     
    But isn't all that growth fueled by 200% inflation?
    30 Jul 2014, 10:21 PM Reply Like
  • HAPPYCAPITALIST
    , contributor
    Comments (332) | Send Message
     
    Actually, I don't recall saying anything about being in recession. I'm only pointing out that the market being up 3 fold in five years is NOT a return you can typically expect, and the fact that the economy has been "growing" at roughly 2% a year for the past few years, even after all of The Fed's kindness, is not really the type of performance one would expect given where the market finds itself. I'd say that makes me a student of history, and a realist (now, go ahead and call me more names ! That will change everything....)
    30 Jul 2014, 04:37 PM Reply Like
  • JasonC
    , contributor
    Comments (4040) | Send Message
     
    You aren't the only poster in this thread, and 3 others alleged we are actually in recession. Which is crazy.

     

    As for what the economy supports, corporate profits after tax are running at $1.735 trillion annual rate. That is 2.6 times the recession low, and about 20% higher than the peak of the previous boom. Not signs of recession.

     

    As for "kind one would expect given where...", what are you talking about? What kind of numeric standard is that?

     

    If you want to say something like trailing Shiller CAPE is 25 times and looks high, feel free, you'd have a case. So far you don't.
    30 Jul 2014, 05:58 PM Reply Like
  • Matthew Davis
    , contributor
    Comments (4347) | Send Message
     
    No way it was 4%, waiting for the new revisions downward.
    31 Jul 2014, 12:14 AM Reply Like
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