Howestreet.com - the source for market opinions

ALWAYS CONSULT YOUR INVESTMENT PROFESSIONAL BEFORE MAKING ANY INVESTMENT DECISION

October 25, 2019 | GDPNow Forecast Unchanged at 1.8% Despite Dismal Economic Data

Mike 'Mish' Shedlock

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.
GDPNow and Nowcast forecasts have converged at just under 2.0% despite dismal economic data, especially manufacturing.

Since the beginning of September, the GDPNow and Nowcast GDP model forecasts have been unusually steady. And they have converged at just under two percent.

This is despite a slew of bad reports as noted in Manufacturing Alarm Bells Ring on Unexpected Weakness.

  1. Boeing: This isn’t new news, but it is reflective of Boeing’s 737 MAX problems. The WSJ reports Airbus is Set to Overtake Boeing to become the world’s largest plane maker by deliveries.
  2. GM: On Day 38 of the strike, the WSJ reports UAW Workers Are Tilting in Favor of New Contract With GM 46,000 GM workers who have gone without a company paycheck for six weeks. GM promised sweeteners such as plant investments and escalated pay. But what if sales flounder?
  3. Ford: There was no strike at Ford. But yesterday, the Detroit Free Press reported Ford Earnings Dip 57%. The company blamed warranty costs, China, and incentives. CNBC reported Ford’s Shares Slide on Lower Year-End Guidance, Weak Demand in China.
  4. Caterpillar: CNBC reports Caterpillar Earnings Badly Miss the Street, Cuts Forecast Again
  5. China: Trump’s trade war with china is taking a toll. Every company above is impacted in some way. So is Apple and many other manufactures.
  6. EU: Trump is also feuding with the EU and threatens tariffs on German cars. Meanwhile, the EU and UK still have not sorted out Brexit.

GDP Model Forecasts

  • GDPNow Base: 1.8% (Oct 24)
  • GDPNow Real Final Sales: 1.7% (Oct 24)
  • Nowcast: 1.9% (Oct 18, New Report Oct 25)

Real Final Sales is the GDPNow bottom line estimate for the economy. The rest is inventory adjustment which nets to zero over time.

Mike “Mish” Shedlock

STAY INFORMED! Receive our Weekly Recap of thought provoking articles, podcasts, and radio delivered to your inbox for FREE! Sign up here for the HoweStreet.com Weekly Recap.

October 25th, 2019

Posted In: Mish Talk

Post a Comment:

Your email address will not be published. Required fields are marked *

All Comments are moderated before appearing on the site

*
*

This site uses Akismet to reduce spam. Learn how your comment data is processed.