The clueless shill talking heads will attempt to spin this dose of reality into gold. But John Hussman has been proven right again. Facts are facts. Even the government manipulated and massaged GDP figure has gone negative. I’m sure it will surge in the 1st quarter of 2013 with everyone in the country getting hammered with tax increases, wages declining and gas and food prices rising. Maybe Obamacare will save the day.
It’s a full blown recession. BUY STOCKS!!!!!
Shrinkage: US Economy Declined By -0.1% In Q4
Submitted by Tyler Durden on 01/30/2013 08:40 -0500
A stunner out of the BEA which just reported a Q4 GDP of -0.1% that was leaps and bounds below the 1.1% estimate, and a plunge from Q3′s 3.1%. The factors: Private Inventories, Exports and Government Expenditures all of which contracted, by -1.27%, -0.81%, and -1.33%. The silver lining was in Personal Consumption Expenditures which added 1.52% to the negative print, most of it however driven by a surge in spending ahead of the fiscal cliff. Ironically, this was the biggest government-driven detraction from growth since Q1 2011, when GDP led to a -1.49% cut in the GDP, same in Q4 when government spending on defense fell the most since 1972. The solution is simple: print moar drones. Enter Mali. And since everything is now AMZN-ing, we can’t wait for the spin that the GDP’s margins were actually better than expected, leading to a 200 point surge in the DJIA.
Stan says:
This should put the Dow over 14,000.
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30th January 2013 at 9:41 am
Eddie says:
It’s okay. The Fed can…..uh, well…they can’t lower interest rates. They’re already buying all the toxic mortgages…all the Treasury debt..Hmmmm
Nuthin’ left but printing presses and helicopters. Maybe all those urban helicopter drills mean they’re getting ready to bomb us with $100 bills.
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30th January 2013 at 9:50 am
Administrator says:
Amazon reports a 45% decline in profits and has a PE ratio of 3,000 and the stock surges by 6% on the news.
The GDP goes negative, confirming a recession, and the stock market goes higher.
Thank you Ben – $85 billion per month can do wonders for Too Corrupt To Fail Wall Street banks.
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30th January 2013 at 9:52 am
Mark says:
Well if you’ve gotten tired of hearing about the recovery the last 4 years. Lock and reload, You’ll be hearing about the recovery for another 4 years.
Oh, and the return of Green Shoots!
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30th January 2013 at 9:54 am
wip says:
“Print more Drones”. LMFAO
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30th January 2013 at 9:58 am
Eddie says:
Amazon is my other short candidate. Besides Apple I mean.
You know I’m pretty ignorant about finance. Is 3000 to 1 a large PE ratio? LOL!
Stocks appear to be priced exactly like houses…that is to say that the only believable metric is the actual price somebody is willing to pay.
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30th January 2013 at 9:58 am
Yojimbo says:
And how is Hussman dealing with this situation? How will his funds do if the stock market keeps going up nominally, even if the value of the dollar goes down? Will his funds only go up if the stock market drops?
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30th January 2013 at 9:59 am
Administrator says:
Yojimbo
If the stock market continues higher, Hussman will lose money.
If the stock market drops, Hussman’s fund will rise.
He is 100% hedged.
You have to ask yourself one question.
Do you feel lucky? Well do ya punk?
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30th January 2013 at 10:07 am
AWD says:
And $80 billion of freshly printed cash per month is doing NOTHING to GDP:
Chart Of The Quarter: $312 Billion In Debt “Adds” Negative $5 Billion In GDP
What was it about the law of diminishing Fed stimulus returns again? But don’t worry: “the market is up.” Because if $165 billion in Q4 stimulus could not even generate a positive GDP return, at least it sent the Russell 2000 soaring.
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30th January 2013 at 10:15 am
Yojimbo says:
But can the stock market continue higher if they just keep printing money?
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30th January 2013 at 11:03 am
ThePessimisticChemist says:
The MSM has their marching orders already guys, hold off on the Champagne, they have another quarter’s worth of lies yet to deliver:
http://www.marketwatch.com/story/five-reasons-the-gdp-report-is-misleading-2013-01-30
Here are five reasons the GDP report wasn’t a disaster.
1. Consumer spending. Spending rose at a 2.2% annual rate, led by the largest increase in purchases of durable goods in two years. Consumers don’t buy durables unless they feel a bit confident that their incomes will keep coming in.
2. Business investment. Capital spending rose at an 8.4% rate, reversing a 1.8% decline in the third quarter. Spending on equipment and software increased at a 12.5% pace, the best in more than a year. Businesses don’t invest unless they think customers will keep coming in.
3. Home building. Housing is crawling back. In the fourth quarter, home construction grew at a 15.3% annual pace. Home building added 1.5 percentage points to growth in the quarter.
4. Inventories. Businesses slowed their inventory growth by $40 billion, in part because sales were higher than they expected. Inventory levels are low, so many businesses will now need to buy or produce more goods to fill the demand.
5. Government spending. If the poor GDP report shows one thing, it’s that cutting government spending actually hurts economic growth, at least in the short run. Government spending fell at a 6.6% annual rate, mostly because of the timing of defense purchases. The money the government didn’t spend in turn wasn’t earned by the workers, contractors and suppliers. The contraction in government spending reduced GDP growth by 1.3 percentage points.
In fact, the fourth-quarter GDP wasn’t terrible at all. Private demand was strong: Final sales in the U.S. private sector rose at a 3.3% annual rate in the fourth quarter, the fastest growth in nearly a year.
MY projection: The stock market will keep going up, and the MSM will keep spin-doctoring. Things won’t go to hell until Q12013 results are released. Another contraction will destroy their spin, and the race to the bottom will be on.
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30th January 2013 at 12:14 pm
Administrator says:
TPC
Marketwatch is owned by the Wall Street Journal, which is owned by Rupert Murdoch, who owns Fox News. He is one of the oligarchs. They will spin the worsening economic situation until the cows come home. Billionaires will do whatever it takes to retain their wealth and power.
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30th January 2013 at 12:25 pm
Hollow man says:
Wow, during the Christmas season too.
Might be a good time to egt out of the dollar China man! Lol.
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30th January 2013 at 12:43 pm
AWD says:
Without the Fed creating $80 billion per month, without Q4 debt increase of $312 billion, without the annual budget deficits of $1.2 trillion, our economy would collapse. Even with all this debt and created cash, GDP is going negative quickly.
Any takers on what GDP would be without almost $2 trillion in Fed/government money creation and spending per year?
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30th January 2013 at 12:52 pm
Administrator says:
by Karl Denninger
GDP: Told ‘Ya So
Told ‘ya so, given the leading indicators in the Fed indices
Real gross domestic product — the output of goods and services produced by labor and property located in the United States — decreased at an annual rate of 0.1 percent in the fourth quarter of 2012 (that is, from the third quarter to the fourth quarter), according to the “advance” estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 3.1 percent.
That will be the end of that.
CNBC is spinning like crazy, but it’s hard to spin this number. It sucks.
The decrease in real GDP in the fourth quarter primarily reflected negative contributions from private inventory investment, federal government spending, and exports that were partly offset by positive contributions from personal consumption expenditures (PCE), nonresidential fixed investment, and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, decreased.
The downturn in real GDP in the fourth quarter primarily reflected downturns in private inventory investment, in federal government spending, in exports, and in state and local government spending that were partly offset by an upturn in nonresidential fixed investment, a larger decrease in imports, and an acceleration in PCE.
Yes, the government was real. But the real inventory numbers are more meaningful.
“Buying” growth with federal spending doesn’t work. Rick Santelli is hammering on this and he’s right — this is a crap report and is underlining exactly what has been going on for the last several years.
There were other big distortions in the data that were helpful to the number — for example, “equipment and software” which was up big, but almost all of that is likely attributable to the fear of expiring tax credits for accelerated depreciation (which means “look out below!” for first quarter’s report in another three months!
Exports are down big (5.7%) and that is likely not related to tax policy.
Government spending’s decrease was all defense; ex-defense it was up 1.4%.
Finally, real gross domestic purchases were only up 0.1% .vs. 2.6% in the third quarter. That’s real final demand — and it collapsed. Note that this was into the holiday season and thus would be expected to be seasonally strong.
Disposible personal income was up big — and that will require some investigation. A large part of this may be pulled-forward asset sales to get under the tax increase window. The “savings rate” increase implies this was at least partly the case, and may be entirely the case.
Current-dollar GDP (adjusted for inflation) was up only 0.5%, which sucks.
This is a crap report but has hair all over it. While there will undoubtedly be plenty of people pointing fingers when you get the one-time distortions from the fiscal cliff fears out of the report the real issue is found in inventory and domestic purchases — and both of those suck.
Update: As expected, the detail tables tell the tale — the personal income addition was from asset sales and special dividends, presumably to get in front of tax rate changes. Specifically, wage income increased by $62 billion, but income receipt on assets was up $141.6 billion on the quarter, a monstrous change. Last quarter this figure was slightly negative and historically it tends to be reasonably stable.
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30th January 2013 at 1:01 pm
AWD says:
America’s Four Socioeconomic Classes
Submitted by Charles Hugh-Smith
1. Parasitic financial Aristocracy (creates no value, skims national surplus)
2. High value creation (employed, heavily taxed)
3. Low value creation (employed/informal economy, lightly taxed)
4. No value creation (unemployed, dependent)
It just doesn’t pay much to have a job these days:
When people that create value are taxed enough (to death), they will no longer support this corrupt and tyrannical system, and it will collapse. Redistributing the wealth of others always ends in societal collapse.
http://www.zerohedge.com/news/2013-01-30/guest-post-americas-four-socioeconomic-classes
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30th January 2013 at 1:31 pm
Colma Rising says:
Jefe Hussman will be receiving a call from a small-fish soon.
He has what, 3 funds? He also has a high price tag for a dinner which gives a potential investor a sad face…
OK, I’ll admit it, potential investors and budding quants with some questions, but that’s neither here nor there at that plate price.
Market goes up now, short term expectations in the mix, will dive his price a bit so grab lightly.
In real terms, the markets will get the usual chop. We’ll see about this “100% hedge”.
I still have a healthy distrust of the Stanford boys but wtfn?
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30th January 2013 at 1:51 pm
ragman says:
AWD: great pic! Da wheels comin’ offa da Soul Train. The Bernank is out of airspeed and ideas. His bullshit programs aren’t working. Our Black Messiah’s gun control program is falling on deaf ears. Gun “buybacks” are turning into incredible buying opportunities for collectors and citizens(Seattle). Taxes are going up and taxpayers are totally tapped-out. GDP is down, but I’d bet if the truth is known the GDP has been going down for a while.
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30th January 2013 at 1:57 pm
Hope@ZeroKelvin says:
Man o man – if the “official” numbers suck this bad, I wonder what the REAL numbers are showing.
I wonder what will happen when the economy tanks on Lord Ovomatoid’s watch? What’s a narcissistic psychopath gonna do?
More preps, more ammo, time to hunker down.
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30th January 2013 at 2:25 pm
AWD says:
“I wonder what will happen when the economy tanks on Lord Ovomatoid’s watch? What’s a narcissistic psychopath gonna do?”
Do what all narcissistic psychopaths do: blame somebody else:
White House: GOP responsible for contracting economy
http://thehill.com/homenews/administration/280129-white-house-republicans-responsible-for-gdp-shrink#ixzz2JUV7e200
White House blames Sandy, spending cuts as economy shrinks
http://news.yahoo.com/blogs/ticket/white-house-blames-sandy-spending-cuts-economy-shrinks-152505590–politics.html
Democrats blame GOP for economy’s downturn
http://dailycaller.com/2013/01/30/democrats-blame-gop-for-obamas-economys-downturn/
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30th January 2013 at 3:05 pm
Dorkus Maximus says:
I think I hear the sound of helicopters firing up their engines as Ben Bernanke hustles wrapped bundles of something onboard.
Maybe its live turkeys.
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30th January 2013 at 5:14 pm
Chronic Agitator says:
Eddie, I understand that rates can actually go lower as in negative return—you pay to store your money. It will cost you to put your money in a Swiss bank. Is that inflationary or deflationary?
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30th January 2013 at 9:49 pm
TeresaE says:
My hub is PISSED at me, big time.
You see, it is MY FAULT that this is happening.
Because I’ve been trying to wake him up and get him to protect himself (us, allegedly).
He made a comment along the lines of “all we need is the market to crash, then you’ll be happy you’re right.”
I told him that was bullshit. Since he refuses to listen, when the market crashes so does our savings, I don’t want to be “right.”
I want to be protected.
Maybe in the next life.
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30th January 2013 at 8:06 pm