U.S. 2nd Quarter GDP at 1.5%, Better Than Expected

     While this number is obviously not earth shatteringly good, it did beat expectations which had estimated GDP of 1.3% in the second quarter:

      "U.S. economic growth slowed less than expected in the second quarter as consumers spent at their slowest pace in a year, potentially pushing the Federal Reserve closer to pumping more money into the economy."

       "Gross domestic product expanded at a 1.5 percent annual rate between April and June, the weakest pace of growth since the third quarter of 2011, the Commerce Department said on Friday. Dow Jones consensus estimates forecast growth at a 1.3 percent pace."

       "First-quarter growth was revised up to a 2.0 percent pace from the previously reported 1.9 percent. Output for the fourth quarter was raised to a 4.1 percent rate from 3.0 percent."

       http://www.cnbc.com/id/48350928

       Clearly it's not a good thing that consumer demand was down to its slowest pace in a year, and while the GDP was better than expected it's still not fast enough to even keep the employment rate stable-for that we need to see 2 to 2.5%

       Still the picture is better than expected, particularly after you factor in the revised up numbers for the previous two quarters.

       In the immediate aftermath the markets opened higher. The Nasdaw is up at present over 10 points after being dragged down recently form Apple's losses. Facebook, despite having met it's earnings expectations yesterday after the bell. is down over $4.

       Is that a buy at this point? Or will it be? On the fundamental level it's hard to believe Facebook is in trouble, was this not the site that facilitated the Arab Spring? On the other hand I have to admit I don't do Facebook much since I discovered Twitter.

       No one I've talked to likes the idea I mention sometimes of trying to go long Bank of America. So far nothing has happened to prove them wrong! Honestly, it's just so cheap. But, like dwb suggests things are cheap for a reason. 

       I wonder if anyone likes the idea of Facebook. Or is the business really on the way down? Mark Zuckenberg has been proven right in resiting all this for as long as he did. Do any of you guys-Nanute, Woj,, dwb, etc. have a view on Facebook? I would ask Nick Rowe but I don't know if he pays attention to the American stock market. A lot of the Macro guys stay away from ever trying to play the market-as the believe the market is efficient, they presume that no one can successfully beat the market in the long run.

      If there is a bullish play, maybe it's Caterpillar (CAT). They had bang out numbers yesterday and they're often seen as a proxy for the entire economy. I see they're pushing up against $84 right now. I could see them at $100 in the not so distant future. They've been there before. Also Ford which is very cheap-that word again. They had good earnings too. Of course arguably Ford is no longer low hanging fruit as it was in 2009 when the entire U.S. auto industry was hanging form a thread.

    Of course, there is lots of speculation about what the Fed will do. Maybe Draghii's comments are going to shame Bernanke-he can't let the European be more Chuck Norris than an American. On the other hand, maybe the fact that the numbers were better than expected will make him less liable to act?

     UPDATE: While we were talking it was just announced that Merkel and Hollande had a very "productive" conversation where the two of them vowed to do what it takes to save the euro. Talk is cheap but at least they're talking.

     Of course, what usually happens is that it sounds good until you later realize that Merkel and Hollande both thought they agreed on two very different things.

    In another late breaking flash, consumer confidence actually came in higher than expected.