The first estimate for economic growth in Q4, which tends to be little more than a guesstimate, came in below expectations. The Commerce Department reported this morning that GDP grew by 1.9% in the October through December period, which was well below the consensus expectations for a growth rate of 2.2%. If it stands when the revisions are complete, the Q4 rate would represent a sharp deceleration from the 3.5% rate seen in Q3.
For calendar year 2016, the economy grew at a rate of just 1.6%, which would be the weakest rate seen since 2011. As such, Brian Wesbury’s characterization of the “Plow Horse” economy would appear to be an accurate assessment of 2016.
The good news is that Mr. Wesbury, who is First Trust’s Chief Economist, recently upgraded his view on economic growth going forward. In essence, Wesbury says the Plow Horse is dead and the policies of the Trump administration should usher in an economy that more closely resembles a race horse.
From a shorter-term perspective, traders appear to be focused on the earnings parade from the big boys in the technology sector with names like Microsoft and Alphabet in focus this morning.
Current Market Drivers
We strive to identify the driving forces behind the market action on a daily basis. The thinking is that if we can both identify and understand why stocks are doing what they are doing on a short-term basis; we are not likely to be surprised/blind-sided by a big move. Listed below are what we believe to be the driving forces of the current market (Listed in order of importance).
1. The State of Trump Administration Policies
2. The State of the U.S. Economy
3. The State of Global Central Bank Policies
4. The State of Bond Yields
Thought For The Day:
“The difference between successful people and really successful people is that really successful people say ‘no’ to almost everything.” Warren Buffett
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