Last "GDP Now" Foreast Before "Official" 2Q16 GDP Released -- July 29, 2016

For all that talk about civil disobedience and demonstrations and #BlackLivesMatter, the two political conventions came off pretty well.

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2Q16 GDP

The last update before the "official" 2Q16 GDP is released. This was released July 28, 2016:

The final GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2016 is 1.8 percent on July 28, down from 2.3 percent on July 27.

After the U.S. Census Bureau's inaugural release of its advance economic indicators report, which covers retail and wholesale inventories and foreign trade in goods, the nowcast of the contribution of net exports to second-quarter real GDP growth declined from 0.17 percentage points to –0.10 percentage points and the nowcast of the contribution of inventory investment to growth declined from –0.63 percentage points to –0.79 percentage points.

I think The Wall Street Journal is a bit more optimistic.

U.S. economic growth appears to have accelerated in the second quarter after a weak start this year. Gross domestic product, a broad measure of economic output, is projected to have advanced at a 2.6% annualized pace this spring, according to economists surveyed by The Wall Street Journal. The economy grew at 1.1% in the first three months of the year.

Then this:

If the economy advanced at the rate economists forecast, it would be the fastest pace in a year. That’s significant because in the prior two quarters, U.S. output increases came in below the relatively lackluster roughly 2% pace averaged during most of the expansion, which began in 2009. An improvement in growth would suggest the economy has stabilized, as opposed to gradually slowing into a contraction.

I believe 1Q16 GDP was -- after all revisions -- 0.8%. If 2Q16 GDP really comes in at 2.5% .... well, it would be interesting. And encouraging.

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Helicopter Money

After reading this article in The Wall Street Journal I was pretty sure Japan would be dropping some helicopter money, but Japan has decided not to. Futures are down (early morning, Friday, July 29, 2016; and oil is pennies away from going below $40).

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Microsoft Dismantling Its Telephone Division

From The Wall Street Journal: Microsoft to Shed 2,850 Additional Jobs. Layoffs come as company retools sales operations, dismantles mobile phone hardware business. From The Verge, May 25, 2015, Microsoft wasted at least $8 billion on its failed Nokia experiment.

Microsoft is taking another almost $1 billion hit on its failed Nokia acquisition today. The software maker is "streamlining" its smartphone business, writing off $950 million and cutting 1,850 jobs. The cuts come almost a year after Microsoft wrote off $7.6 billion and cut 7,800 jobs.

Only a small number of former Nokia employees will remain at Microsoft, and the company's consumer phone making days are over.

Microsoft has wasted at least $8 billion on its failed Nokia experiment, including the costs of restructuring and severance payments for thousands of employees. Microsoft originally hired 25,000 Nokia employees as part of its $7.2 billion acquisition of Nokia's phone business, but a series of layoffs over the past two years has triggered the end of Microsoft's mobile subsidiary.

Microsoft's Nokia phone business acquisition was always tricky and risky, but it was a deal organized by former CEO Steve Ballmer. It has been clear from the start that Satya Nadella, Microsoft's new CEO, wasn't interested in running a phone business.

Nadella announced a strategy shift away from a "devices and services" focus just a couple of months after the Nokia acquisition finalized, and last year the strategy shifted even further away from producing multiple handsets.

Many will argue Microsoft had no choice, as Nokia controlled more than 90 percent of the Windows Phone market and had been rumored to be considering switching to Android.

Google's experiment with making its own Android phones resulted in the search giant selling Motorola to Lenovo for $2.91 billion, less than two years after paying $12.5 billion to acquire it. While Google's investment was primarily driven by the need to obtain key patents, it's not clear how Microsoft has benefited from its Nokia deal.

No mention of Apple or the iPhone.

Ballmer on the iPhone