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| Coming Attractions - May. 23, 2005 |
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Summary
The approaching long weekend here in the United States will permit a more detailed look at one critical area in particular, the stock market.
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Over the last several days, I've published three "quickie" pieces on the equity market. The time is approaching -- the three-day Memorial Day weekend -- to expand rather materially on these. My current plan is to do so next Monday, 5/30.
By then, the market will have had an entire week to "wash through" last week's options expiration, a topic discussed in the brief missive published this morning. Something else to which the market will have had an opportunity to react is Thursday's revised first-quarter GDP numbers.
You may recall that at the end of April, the Commerce Department's first or "advance" estimate indicated that real gross domestic product expanded at a slower-than-expected 3.1% annual rate during the first quarter. The estimate currently making the rounds for Thursday is a solid upward revision, to a 3.7% rate.
The recent trade number for March, a "strange" result to be sure (euphemism for "highly suspect"), certainly argues for an upward GDP revision. But 0.6% is large, equating to more than $66 billion in annualized GDP. It is highly improbable that even the government's accounting for a narrower trade deficit could produce a swing of this magnitude.
If the 3.7% consensus estimate is correct, a lot of the higher performance will have to come from personal consumption. It indeed might. If so, however, it will be at odds with apparent consumer performance during the first quarter. So my guess is that the Commerce Department might also shave a bit off its original estimate of first-quarter inflation.
If a major upward revision comes from a strange trade result, combined with consumer and inflation numbers that don't make sense, let's see how intellectually probing Wall Street will be in questioning the outcome. (Any bets?)
Speaking of inflation, I will publish a piece tomorrow or Wednesday examining recent reported results in this area.
Finally for the long weekend ahead, I hope to get out a memorandum discussing some of the changes immediately ahead for Gillespie Research Associates. This is exciting stuff. These are changes that will materially enhance the scope and quality of what we are doing in the months ahead.
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