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%.
