Q1 2015 GDP Growth Forecast Plunges From 1.9% to 0.2%

“The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2015 is 0.2 percent.”

“The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2015 is 0.2 percent.”

Source: www.frbatlanta.org

What is really scary is that the GDP growth forecast for Q1 2015, has plunged from about 1.9% on February 2, 2015, to just 0.2% as of March 30, 2015!

Check out this chart I created from the GDPNow data. Make sure to share this with your closest trading buddies to give them a heads-up.

You are probably wondering how this Q1 2015 GDP growth forecast is calculated and if it is credible. In my opinion, it is very credible. The Atlanta Fed GDPNow model copies the methods used by the BEA to estimate real GDP growth. The GDPNow forecast is constructed by aggregating statistical model forecasts of 13 subcomponents that comprise GDP.

You might be wondering why not just wait for the actual GDP number to be released. In no other discipline is the cliche “time is money” more true than in stock trading. Traders are always trying to get information, even just milliseconds, ahead of the competition. The problem with the traditional GDP report released each month is that the data is so old. GDPNow forecasting model provides a forecast of the official estimate way before its official release.

Chicago PMI Signals Severe Slowing of US Economy

“For the second straight month, we have a terrible economic data point out of the Midwest.”

“For the second straight month, we have a terrible economic data point out of the Midwest.”

Source: www.businessinsider.com

The Chicago PMI came in at 46.3 in March following 45.8 in February. Any reading below 50 indicates contraction.

The last two months of sub-50 readings confirm Q1 2015 weakness for the nation’s economy as a whole.

The U.S. economy is experiencing a severe slowdown in manufacturing because of the rising U.S. dollar.

Below is a chart of the Chicago PMI to the U.S. dollar. Notice how they are practically a mirror image of each other.

Bad weather and the West Coast port slowdown are the reasons given, but we know that’s not really true from the chart above.

The Federal Reserve and Wall Street firms seem to be soft-coating the negative impact of the rising U.S. dollar every chance they get.

+82% Monster Win In Gordmans Stores Stock


I hit a +82% win in Gordmans Stores stock, ticker GMAN.

On January 13, 2015, I posted this article on the Gordmans Stores downtrend channel breakout.

What caught my attention via a stock screener was that Gordmans Stores stock had just done a downtrend channel breakout:
Gordmans Stores Stock Chart

Check out the chart of Gordmans Stores stock as of market close on March 27, 2015:

Folks don’t get me wrong. The downtrend channel pattern was great but that’s not why this stock turned into a monster win. The secret to success in the Gordmans Stores stock pick had everything to do with the rising EPS forecast.

Did I know the EPS forecast would be raised after I recommended the stock? Of course not. The logic was that the downtrend channel breakout on huge volume caught my attention via the stock screener. I then drilled down into the EPS forecast and found that it was NOT falling. My guess was that the downtrend channel breakout off a double bottom, on huge volume, meant that the smart money was positioning early and that the EPS forecast was likely to rise. That reasoning turned out to be correct.

Janet Yellen Speech On March 27, 2015

“With continued improvement in economic conditions, an increase in the target range for that rate may well be warranted later this year.”

“With continued improvement in economic conditions, an increase in the target range for that rate may well be warranted later this year.”

Source: www.federalreserve.gov

Federal Reserve Chair Janet Yellen finished delivering her highly anticipated speech in San Francisco on March 27, 2015.

Janet Yellen came swinging right out of the gate with this controversial statement, “With continued improvement in economic conditions, an increase in the target range for that rate may well be warranted later this year.”

What improving economic conditions is Janet Yellen talking about?

I’m not just hating on the Federal Reserve like a gold bug. I really don’t see the economic data improving like Janet Yellen has been talking about for the last 3 months. Below is an infographic I did that shows the last three data points for the major monthly economic reports. Overall, this does not warrant the language “improving economic conditions”. In fact, someone could argue that it looks like deteriorating economic conditions.

Other Important Quotes From the Janet Yellen Speech On March 27, 2015

Other important quotes from the Janet Yellen speech were:

Slower Than Normal Rate Hikes

“If conditions do evolve in the manner that most of my [Fed] colleagues and I anticipate, I would expect the level of the federal funds rate to be normalized only gradually, reflecting the gradual diminution of headwinds from the financial crisis and the balance of risks I have enumerated of moving either too slowly or too quickly.”

Tighten On Anticipation Not On Actual Economic Data

“We need to keep in mind the well-established fact that the full effects of monetary policy are felt only after long lags. This means that policy makers cannot wait until they have achieved their objectives to begin adjusting policy. I would not consider it prudent to postpone the onset of normalization until we have reached, or are on the verge of reaching, our inflation objective.”

US GDP Final Estimate For Q4 2.2%

With recent data showing anemic activity, economists are expecting more subdued growth in the first quarter of this year.

Source: www.nytimes.com

Everybody on Wall Street and in the mainstream financial media said that lower oil was going to explode GDP. Some sensational reports even went as far to say that for every $0.10 a gallon the price of gas drops, it adds another 0.2% to GDP.

What a snow job that was.

Fourth quarter GDP growth was unrevised. The economy grew 2.2 percent in the fourth quarter compared to the second estimate of 2.2 percent and the advance estimate of 2.6 percent. Expectations were for 2.4 percent.

With recent data showing anemic activity, economists are expecting more subdued growth in the first quarter of this year.

Source: www.nytimes.com

Everybody on Wall Street and in the mainstream financial media said that lower oil was going to explode GDP. Some sensational reports even went as far to say that for every $0.10 a gallon the price of gas drops, it adds another 0.2% to GDP.

What a “snow job” that was.

Continue reading “US GDP Final Estimate For Q4 2.2%”

First Quarter 2015 GDP Growth Estimates Lowered

Could the U.S. economy be seeing a repeat of last year’s winter contraction? The latest estimates are moving in that direction, though they’re still in positive territory.

Source: blogs.wsj.com

This could be much worse than last year. Last year, while GDP was down because of the polar vortex and abnormal winter weather, this year, the GDP is being revised lower because of deteriorating economic data spurred on by a rising U.S. dollar.

The U.S. is one of the biggest exporters in the world. The U..S. dollar is up more than +18% since March 25, 2014. That is REALLY a big move for a currency. It means that the price of U.S. goods on the world market have gone up +18% over the last 12 months. Think about that. During a time when our biggest trading partners like Europe, China, Japan, and the UK, are rolling over and looking to cut costs where they can, we are raising our prices! In the business world that would be considered suicide. On top of that, the U.S. dollar is rising on speculation of the first Federal Reserve rate hike since June 2006. Even as the economy continues to slow, the Fed is saying it will hike rates by the end of 2015.

These and a few other slowing economic data points make this year’s GDP contraction much different than last year’s in my opinion.

Could the U.S. economy be seeing a repeat of last year’s winter contraction? The latest estimates are moving in that direction, though they’re still in positive territory.

Source: blogs.wsj.com

This could be much worse than last year. Last year, while GDP was down because of the polar vortex and abnormal winter weather, this year, the GDP growth estimate is being revised lower because of deteriorating economic data spurred on by a rising U.S. dollar.

The U.S. is one of the biggest exporters in the world. The U.S. dollar is up more than +20% since March 25, 2014.

This is a horrific move in the U.S. dollar. Currencies generally don’t move like this under normal circumstances. Janet Yellen and the Federal Reserve are down playing the negative effects of the rapid rise in the U.S. dollar.

That is REALLY a big move for a currency. It means that the price of U.S. goods on the world market have gone up +20% over the last 12 months. Think about that. During a time when our biggest trading partners like Europe, China, Japan, and the UK, are rolling over and looking to cut costs where they can, we are raising our prices! In the business world that would be considered suicide. On top of that, the U.S. dollar is rising on speculation of the first Federal Reserve rate hike since June 2006. Even as the economy continues to slow, the Fed is saying it will hike rates by the end of 2015.

The GDP is not just going down in the U.S. Check out this infographic I created that shows the GDP forecast by country for 2015 as well as the actual GDP numbers in 2014.