The markets spent last week digesting recent gains ahead of the three day holiday weekend. However, on Friday when the markets were closed, the US Government released a revised 4q15 GDP report. According to that report, the US economy grew at an annualized rate of 1.4%. Economists were expecting 1.0% growth.
The opposing camps – bulls and bears – are each going to spin that report to fit their own thesis. Let me give you both sides of the argument.
The bears are going to say that FOMC will have to raise rates given faster than expected growth. In contradiction to that opinion, they will also point out that the quality of economic growth is poor as earnings are deteriorating for US companies. Their conclusion is that a recession is eminent.
The bulls, for whom I believe have a stronger case; will point toward continued levels of moderate economic growth, which will keep the FOMC on the sidelines. They will also argue that if you exclude the impact of the strong US Dollar and declining energy prices, then earnings growth is more robust. Looking ahead to the 1st quarter of 2016, the US Dollar has given up gains while energy prices rebounded, a welcome reversal to feed the bullish case.
This is the last week of the quarter and the BLS (Bureau of Labor Statistics) jobs report for March is being released on Friday. All told, there will be a battle between the bulls and bears to try to eke out a quarterly gain or loss. I expect, at least through Thursday that the markets will remain in a tight range.
Most of the cooler talk this week will be about the NCAA Men’s Final 4 next weekend. So far it’s tuned out to be an upset laden tournament. A single #1 seed remains, North Carolina. As much fun as it was to watch this weekend’s games in my backyard here in Nevada, it will be even more fun to watch everything unfold in person at NRG Stadium in Houston next weekend. My bags are packed.
I am rooting for the Tar Heels; who I watched win in the Louisiana Superdome in 1982. Do you remember these last few seconds of play?
Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC held no positions in stocks mentioned; although positions can change at any time.
Scott Rothbort is the President & Founder of LakeView Asset Management, LLC, a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website. LakeView Management, LLC is a Nevada LLC, with its principal office located in Henderson, NV and branch office located in Millburn, NJ
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant, beverage and agricultural stocks. An individual subscription to the newsletter can be ordered at www.restaurantstox.com Furthermore; Scott is also a professor at the Seton Hall Stillman School of Business in South Orange, NJ.
– Read Scott’s intra-day thoughts and comments on Scutify for which he is a co-founder of its parent company Wall Street All-Stars, LLC
– You can email Scott at email@example.com
© 2016 LakeView Asset Management, LLC. All rights reserved.