Quote:
Originally Posted by TwistedChief
No, this isn't right. The negative GDP number meant nothing. It was impacted in a major way by trade (imports over exports) and inventories. Final demand was incredibly strong. The Fed understands the composition and this wouldn't have concerned them at all (and the markets understood this as well and the GDP figure had no major impact).
The Fed isn't dovish by any stretch but there's a limit to the neverending hawkishness that the market needed to subscribe to.
|
I disagree to some extent as the Fed also tempered future increases to 25 basis points, maybe higher, but ruled out 75. First quarter GDP may have been effected mostly by trade and inventories, but the economy is showing signs that high ticket items, and housing, both leading indicators are heading down. Housing starts are down for the third month in a row. Also, with stimulus funds drying up and inflation, specifically food and energy, reducing purchasing power, we definitely are at risk for an economic pullback. I think the fed realized while the economy is not terribly bad, there are indications it starting to weaken, and the negative GDP tempered their original glide path...