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Important Numbers

July 30, 2010 – 5:07 pm

This morning the first look at the second quarter GDP showed growth coming in at 2.4% when the expectation was for 2.5%. The weaker than expected second quarter number sent stock prices down at the opening but within the first hour July’s Chicago PMI number was released and it was much stronger than expected followed by the final look at July’s consumer sentiment which was revised up from just a couple weeks ago. The market began to recover.

Even in the weaker GDP number for the second quarter there were some bright spots. Imports increased 28.8% while exports increased 10.3% which resulted in a drag on GDP of 2.78%. This import/export surge is a good thing (imports and exports are only part of the computation of the GDP). It shows strength not weakness, but imports detract from our economic growth while exports add. The difference in the two numbers impacts growth of GDP. There was also weakness in the GDP report. Retail sales, while up for the quarter, showed a consumer that is not spending much.

The next big economic statistic everyone will be looking forward to is the jobs report for July. It will come out next week or the week after. There won’t be much in the way of new job growth. However, whatever that number is, it will move the market.

Good Trading
Steve Peasley

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