GDP: Second Reading -- 1.3% Vs 1.2% Estimate -- May 30, 2024

Locator: 47990ECON.

Personal investing:

• will add to my position in NVDA today. By rule, and by special circumstances. No recommendation. 
• initiated position in ING. Dividend. Diversifies out of energy, tech. No recommendation. 
• initiated position in GLW. Replaced another tech stock (SNOW) in the portfolio. Unlike SNOW which was a short-term play, GLW will likely be a long term holding. No recommendation. 
• see disclaimers.

Talking heads still mis-using "stagflation."

• groceries: prices coming down quickly -- at least at the three stores at which I stop (Kroger, Tom Thumb, Walmart) -- but the prices cutting is not consistent.
  
• only one outlier right now: price of houses; and that's not going to change.
  
• car insurance? the big jump has already occurred; the "bar" has re-set to accommodate price of EV repair; cost of repairing luxury vehicles.

This is 1Q24, smallest since 2/22:

The good news: talking heads can't agree what this means. LOL.

GDPNow, 2Q24: 3.5%

Definition of a "soft landing." Two problems:

• I see no numbers; and,
• I see no timeline.

The first is not a real problem -- a "negative" GDP -- no matter how small two consecutive quarters = a "hard landing." However, each month without a "negative" GDP moves the goalposts another ten yards down the field. Pretty soon, the "soft landing/hard landing" goalpost in a Ft Worth, TX, high school stadium will be in a Dallas, TX, high school stadium. 

I do believe someone has been talking about a hard landing since at least March, 2022 -- that's two years ago, and it looks like a negative GDP is not in the cards for at least one more quarter.

But this is what keeps me excited. If/when the Fed sees the risk of a "hard landing" and/or a "first reading" of a negative GDP in any quarter, the Fed has seven arrows in its quiver, each quiver representing 25 - 50 basis points. 

I still see a Goldilocks economy for investors. When it comes to the Fed, it's binary:

• higher for longer: investors have learned to live with that; savers happy;
• first cut: it will all be psychological; will have no "real" effect -- just one cut will have no effect -- but the market will surge, all things being equal with that first cut; in fact, that "carrot" is probably what keeps the market more green than not.
  

**************************
Re-Posting

My favorite chart, link here:

When you see this chart, what's the first question you should ask? If you ask the right question, you will note that it's a "binary question." It has only two possible answers. I'll leave it at that.