Q1 GDP Expectations Continue to Sink

Readers will be familiar with the GDPNow estimates published regularly by the Atlanta Federal Reserve. These estimates have been the most accurate out there, quarter after quarter. The latest forecast for Q1 GDP is just 0.4%, despite the most benign winter weather in decades.You may remember that the “polar vortex” phenomenon was said to have been the reason for lower GDP in Q1 of 2014 and even 2015. This year, you can expect that the unseasonal warmer weather will be the excuse for poor growth because it has suppressed parka sales and home heating and utility revenues. You heard it here first.

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Those Pesky Payroll Numbers

Well, I got that one wrong. I thought the U.S. March employment report released today (April 1) might show a spike down on the basis of a recent uptick in Q1 layoffs and initial jobless claims. It was not to be. The Bureau of Labor Statistics (BLS) reported 215,000 jobs added in the month, right around the consensus estimate. Good thing I didn’t place any bets on my theory.

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Earnings Set to Visit Empty Elevator Shaft

So here we are, heading into Q1 earnings season. This is going to be interesting, dear reader. The omens are not good. The market has been on a roll since the February low, it’s been one of the strongest rallies since 1933, volumes have dried up, the short covering is over and here we sit, waiting for the numbers. This market looks fragile to me.

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US Jobs Data Beginning to Buckle?

The one thing the Federal Reserve keeps pointing to as its justification for normalizing interest rates is the improvement in the jobs market and especially the declining unemployment rate. Readers will be familiar with the fact that I am sceptical of the data. But leaving that issue aside, it looks like the data may be heading down.Weekly initial jobless claims are starting to rise. The last three weekly reports show a 9.1% surge in jobless claims. Here is today’s:

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U.S. economy getting darker

One of the truly pathetic characteristics of the current environment is how the bulls try to find comfort in any news that isn’t terrible while ignoring all the really terrible news.On March 21, Atlanta Fed president Dennis Lockhart spoke to the Rotary Club of Savannah about his visions of rate hikes as soon as April. He cited “sufficient momentum evidenced by the economic data to justify a further step at one of the coming meetings, possibly as early as the meeting scheduled for end of April.”

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