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Much to do About Statistics

February 26, 2010 – 11:16 am

This morning the government reported their final revision of last year’s 4th quarter GDP number. There is always an initial report of GDP and then two revisions. This one showed an increase to 5.9% from a previous report of 5.7%. Most of the revision was for inventory adjustments.  Do not expect that kind of growth this year. Most likely GDP growth for 2010 will be in the 1 to 2.5% range.

Also this morning was the Chicago PMI report which was up to 62.6 in February from 61.5 in January. Then a few minutes later February’s University of Michigan Consumer Sentiment Report was released which was down to 73.6 from 74.4 in January.

None of these numbers really affected the market when they came out.

By 7:00 this morning the existing housing sales number came out. Earlier in the week we had the new home sales report which was very weak (down 11%) and that put downward pressure on stock prices. This morning’s report when it came out pushed prices down a little but not by much and the market recovered it all. Existing home sales fell 7.2%, more than expected, and inventory increased to 7.8 months in January from 7.2 months in December.

This week was full of statistics and none of them changed the picture of our economy. It is growing but sputtering and it is not producing any jobs. This has heightened fear in the stock market and that is not a bad thing as it means stock prices are not overheating, but neither is there much reason for the market to rise. It is going to be a stock picker’s environment.

Good Trading
Steve Peasley

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