I said back on the 19th the US maybe actually in recession now but don't actually know it. Well, one piece of the puzzle came through. First quarter growth came in at 0.2% , after the 2nd and 3rd revisions come in this will be a negative figure. BTW consensus for 1st qtr growth in Feb was 3% and yesterday it was 1% and the actual figure was 2/10s of current consensus . One of the so called experts only recently predicted 2.4% growth in the first qtr. How can these experts get it so wrong so quickly and why do US traders continue to rely of them and indicators published by the Fed.
So how will 2nd qtr pan out. Well there aren't many forward indicators to look at because most of them have some lagging quality. Housing starts is a good indicator of future growth and it fell of a cliff in Feb and March. Jan reading was over 1m and now Feb and March are well over 100K less. The Fed's FOMC minutes from last nite even stated housing recovery is extremely slow. Consumer confidence last reading only a few days ago was shocking , 6 points down at 95. BTW Bloomberg's worst consensus figure was 100. On a positive note , payroll's were impressive for Dec and Jan but Feb's figure was a big stumbling block. LEI's reads have been good but momentum could be stalling and both consumer and business lending have increased modestly since the beginning of the year. Next month or two will tell if there is going to be a 2nd qtr revival as the experts and Fed are saying or could it be the US is heading back into recession.
Not saying this is lift off time for gold but it's not a pretty picture painted but so many in the market. BTW some food for thought not sure if this has been posted lately - Shiller index. Can't copy the graph but given the website. Only two other times in history have S & P 500 earnings been higher than 27 times the 10 year average earnings of the companies in the index.
