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GDP 2nd Quarter Falls off a Cliff

U.S. gross domestic product fell at a seasonally and inflation-adjusted 32.9% annual rate in the second quarter, the steepest declines in more than 70 years. People receiving unemployment benefits increased by 867k ending a downward trend in May. Small gains made priorly weren’t enough to offset the steep drop in output. So, many were wrong about improved conditions, and I suspect many will be wrong about 3rd quarter growth as well. Will $1 trillion in stimulus convince markets?Screen Shot 2020-07-30 at 9.02.55 AM.png

 

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Re: GDP 2nd Quarter Falls off a Cliff

This is what has me baffled about the market recovery. 


@Mortmain wrote:

U.S. gross domestic product fell at a seasonally and inflation-adjusted 32.9% annual rate in the second quarter, the steepest declines in more than 70 years. People receiving unemployment benefits increased by 867k ending a downward trend in May. Small gains made priorly weren’t enough to offset the steep drop in output. So, many were wrong about improved conditions, and I suspect many will be wrong about 3rd quarter growth as well. Will $1 trillion in stimulus convince markets?Screen Shot 2020-07-30 at 9.02.55 AM.png

 




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Re: GDP 2nd Quarter Falls off a Cliff

I remember that when the 1st Iraq bombing war started, its GDP subsequently was down by -25%. And I thought that was devastation. So, the US 2020/Q2 was worse than that.

YBB
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Re: GDP 2nd Quarter Falls off a Cliff

Market attitude:   What does "GDP" stand for?  And does it even matter? 

Apparently not.

The Nasdaq will rally again tomorrow big-time as traders will bid up Apple and Amazon.  Robinhood heaven.   

Maybe the market is playing a game of "fake it until ya make it".   And playing it quite well.

 

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Re: GDP 2nd Quarter Falls off a Cliff

Gross Domestic Product, but I think you know that. NASDAQ will rally until it thinks the drop will extend this entire year.


@jadster33 wrote:

Market attitude:   What does "GDP" stand for?  And does it even matter? 

Apparently not.

The Nasdaq will rally again tomorrow big-time as traders will bid up Apple and Amazon.  Robinhood heaven.   

Maybe the market is playing a game of "fake it until ya make it".   And playing it quite well.

 


 

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Re: GDP 2nd Quarter Falls off a Cliff

Each of us has to determine our own ability to time the market (If that is what you choose to call it).

Operate within your own guide lines and be aware of your own limitations.

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Re: GDP 2nd Quarter Falls off a Cliff

Similar posts require similar answers

Stocks and bonds are doing great in the last 1-3 months regardless of the virus, the economy, GDP, unemployment . There's not high correlation between the above and the market in the short term and why you should not make decisions based on that.

After hours AAPL,FB +6%  AMZN +5%

 

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Re: GDP 2nd Quarter Falls off a Cliff

If the aggregate opinion of markets is that the economy is unimportant, then markets have nothing to fear as they can continue to build their own self-fulfilling momentum. If, however, markets don't fear the economy as long as the Fed is being very supportive, that is different. If markets subsequently become infected with fears over a 'liquidity trap' occurring, all bets are off. In fact, this was the markets initial reaction to the stimulus. It was then reversed by aggregate market wisdom predicting a V-shaped recovery. Remember, that didn't happen. Not all consumers spent their stimulus checks. Many, wisely, saved them.

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Re: GDP 2nd Quarter Falls off a Cliff

Compare Q2, US -32.9% (annualized)/4 = -8.23% (quarter-over-quarter).

Euro-zone  -12.1%

   Germany, France, Italy  -10% to -14%

   Spain   -18.5%

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Re: GDP 2nd Quarter Falls off a Cliff


@yogibearbull wrote:

Compare Q2, US -32.9%.

Euro-zone  -12.1%

   Germany, France, Italy  -10% to -14%

   Spain   -18.5%


Should we conclude that international stock % in AA should go up? 

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Re: GDP 2nd Quarter Falls off a Cliff

Carlos,

Overall, in my view, international offers greater value--all the more so with the weaker dollar.

But my saying so in no way means an investor will realize that value. Nevertheless, I have nudged up my international allocation though I continue to remain conservatively allocated to equities.

If the value is realized, it will have a modest impact on my portfolio. I'll use it for a nice trip to Europe if it will let me in. 😁

Bob 

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Re: GDP 2nd Quarter Falls off a Cliff

and stock markets goes up. There is not much correlation between overall economy and stock market as usual.

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Re: GDP 2nd Quarter Falls off a Cliff


@Mortmain wrote:

U.S. gross domestic product fell at a seasonally and inflation-adjusted 32.9% annual rate in the second quarter, the steepest declines in more than 70 years. People receiving unemployment benefits increased by 867k ending a downward trend in May. Small gains made priorly weren’t enough to offset the steep drop in output. So, many were wrong about improved conditions, and I suspect many will be wrong about 3rd quarter growth as well. Will $1 trillion in stimulus convince markets?Screen Shot 2020-07-30 at 9.02.55 AM.png

 


If you are invested in the right equity sectors that focus on the economic recovery you won’t have to worry about improved conditions. AAPL was up 10.5% today on great Q2 earnings including increase in phone sales and AMZN was up 2.74% with Q2 results. Don’t need to worry about improved conditions or 3 qtR GDP growth if You own the right stocks.

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Re: GDP 2nd Quarter Falls off a Cliff


@yogibearbull wrote:

Compare Q2, US -32.9%.

Euro-zone  -12.1%

   Germany, France, Italy  -10% to -14%

   Spain   -18.5%


The US rate is annualized. Is that the same with the Euro Zone numbers?

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Re: GDP 2nd Quarter Falls off a Cliff

WSJ article confirms Europe GDP contraction was worse than US.

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Re: GDP 2nd Quarter Falls off a Cliff


@DJANG0 wrote:

WSJ article confirms Europe GDP contraction was worse than US.


Thanks for clarification. I will fix my earlier post.

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