The latest revision to 1Q GDP was horrific.
And it had little effect on equities. How come?
This was the third revision of 1Q14 GDP. In this market near the end of 2Q14 that is ancient history.
If we had gotten an initial print for 1Q14 GDP of -2.9% the markets would have been freaking out. So they slowrolled it, and it worked. No one paid attention.
There is a very cynical game going on here. The government pretends to put out legitimate measures of economic activity, and the markets pretend to believe them where it suits their purposes.
There is a general understanding that 1Q passed the test of believability that it was all due to the weather, so the bureaucrats piled on the bad news making it a 'kitchen sink' quarter.
Everyone can ignore all that bad news because it was a while ago, and was due to a one-off, a very bad winter. And so this terrible quarter will provide a very favorable comparison for the next quarter, and probably the one after that, which will be conveniently in time for the November elections.
The real economy is what it is, despite all the fluff and papier-mâché. And it will have consequences. But for now, it is all happy time in New York and Washington.
GoPro is pricing their IPO after the bell tonight. Aereo was crushed by a Supreme Court ruling that knocked down their prevarication of a business model.
Have a pleasant evening.
