Advisor Login Contact Us

Today Third Quarter GDP is Revised.

Today third quarter GDP is revised. Consensus is now expecting third quarter growth to be 3.3% versus the previously reported 3.5% rate.  Is this of any significance?

I would argue no, as the vast majority of real time indicators are suggesting a further acceleration into the fourth quarter.  Yes there may be some second and third tier data points that may not fit this narrative but generally speaking the statistics are indicating greater strength.

Generally speaking the data in Europe is also stronger than forecasted albeit considerably more choppy than the US counterpart.

To some, such as me, the drop in oil has been unexpected and uncomfortable.  However to economy, the drop in price for a gallon of gas to under $3.00 from $3.80 less than five months ago may provide an unexpected global boost especially going into the pivotal holiday shopping season.

I think it is of great significance China imports about 60% of its oil.  Europe around 80% and Japan almost 100%.

OPEC is meeting at week’s end.  There is not a prevailing consensus as to its outcome but the weaker countries—those that are already experiencing geopolitical and socio economic pressure—a group that also includes Russia need a production cut.  Will it occur?

If a reduction is announced, will OPEC members cheat as such is the norm?

At this juncture, it is more about psychology.  Oil is essentially flat during the past 45 days but the narrative about the decline has gone nuclear.

Commenting about yesterday’s market activity, the Russell 2000 vastly outperformed other indices, perhaps under the realization that economic activity may accelerate.  The 10-year was flat.

Last night the foreign markets were up.  London was up 0.16%, Paris up 0.63% and Frankfurt up 1.04%.  Japan was up 0.29% and Hang Sang down 0.21%.

The Dow should open quietly higher as trading is expected to wane as day the progresses as many make this four day holiday into four and a half.  The 10-year is up 1/32 to yield 2.30%.

Return To Index Page
Ken Engelke

Chief Economic Strategist Managing Director

The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. This material is being provided for informational purposes only. Any information should not be deemed a recommendation to buy, hold or sell any security. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such information is accurate or complete. This report is not a complete description of the securities, markets, or developments referred to in this material and does not include all available data necessary for making an investment decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. If you would like to unsubscribe from this e-mail distribution, please reply to this e-mail and indicate that you wish to unsubscribe in your response.