I have no idea what to think. The 1Q GDP report came in much worse than expected - down an annualised 6.1% rather than the 4.7% concensus (or 5.1% Marketwatch) expectations, and really quite bad, on the whole. But the market is jumping on a 2.2% rise in consumer spending in the report.
But I don't understand where "consumer spending rebounded to rise 2.2%" comes from given massive layoffs and massive increases in saving rates. Not to mention a 34.1% decline in imports (which tend to be consumer goods) and! a fall of 1% in prices! (Remember, that price deflation thing? You're soaking in it!) So it's not inflation, and it's not income, and it's not credit, and it's not imports, and it's certainly not manufacturing capacity (at record lows), it's not government spending (still down 1Q, and tax revenues are cratering - the sales tax numbers scream that this 2.2% number is bullshit) and sure, inventories are down - implying fire-sales - but not as much as expected. So where's the money coming from and what are they buying?
I mean, sure, I've been calling shenanigans on some government statistics for a while (c.f. how the savings rate across a two year period magically got revised upward) and yeah, every first-report stat for the last two years has been revised worse a month or a quarter later when nobody's paying attention, but this simply isn't their style - the internal WTFery of this report is just a bit much.
What's really bothering me is that so many of my data collection points have been rendered invalid. They've hidden all the TARP and other-related-plan details, they've wrecked any real ability to collect data on fundamental interest rates through "extraordinary measures," they've fucked the nonborrowed reserves data in the banking system (by letting borrowed reserves count as nonborrowed, because hey, why not?), they've hidden the ABX and CMBX historical data behind firewalls (surprise! that's new), they corrupted the inflation data back in the 90s to cut social security while pretending they weren't, the same for the Federal spending numbers in the Bush era, and and and.
THIS IS NOT TRANSPARENCY.
That... confusing... consumer-spending number, by the way, added a whole point and a half to GDP. It's mostly in durable goods (+9.4% what!), but it's up across the board (nondurable +1.3%, services +1.5%), in theory. Kick that out to flat - which would still be a sharp improvement over the previous two quarters - and you're looking at a decline of 7.6% annualised. If any of these numbers mean anything.
Look, when it comes right down to it, we're going to get a good test of Keyesnian economics here, and one of the things they're going to test is whether the bond market will put up with it. If the bond market will go along, it has a chance of success - tho' at what spending cost I can't say. So far, the bond market is going along. Brad Setzer says foreign central bank purchases - in particular, China - are not as important going forward, based on plummeting US imports. And functionally, the non-lending of banks granted massive TARP funds has resulting in them acting as sterilisers - isolators, if you will - of a mass issuance of t-bills. So that's were we are right now.
Here, have misc news:
The surviving Washington Mutual holding and investment company is suing JP Morgan over US$4B that WaMu owns but JP Morgan won't release. BBT is yet another bank revising its loan failure rates climbing. Bank of America may need another $60-$70B, according to one of the firms involved in the "stress tests" being performed by the Fed et al. And commercial mortgages are in trouble at four times the year-ago rate, as of 4Q 2008 vs. 4Q 2007. 1Q 2009 should come in worse, if the data I'm seeing are good indication.
AIG has convinced an important trader not to leave, a departure which would've triggered $234B in unwinds, to which I can only go what the fuck kind of contracts you writing, people?! The UAW workers will own a 55% stake in Chrysler, under current plans - but it may not survive that long, with talk of forced bankruptcy by the end of the week if creditors don't relent.
Chinese oil demand fell 6% in 1Q 2009, but that excludes any purchase made to build stockpile reserves. Power output fell 1.3%; this implies more slowdown than is being reported.
More local money, this time in Pittsboro, NC. And Marketwatch's Paul Ferrell wants racketeering charges against Goldman Sachs.
That's all for now. Good luck.