It looks like the world isn’t ending after all. Here’s a brief round-up of some of the day’s more important events:
- Q2 GDP came in at 1.5%, higher than the 1.2% reading analysts expected. But it’s nothing to get overly excited about. As the following Econoday summary shows there was broad weakness in the report:
“The recovery lost steam in the second quarter. GDP growth decelerated to 1.5 percent annualized from 2.0 percent in the first quarter. Today’s report includes annual revisions and the first quarter was revised up slightly from 1.9 percent. The advance estimate came in higher than the consensus forecast for a 1.2 percent rise.
The component mix showed a slowing in demand. Final sales of domestic product increased an annualized 1.2 percent in the second quarter after a 2.4 percent rise in the first quarter. Final sales to domestic purchasers (excludes net exports) gained 1.5 percent, following a 2.2 percent advance in the prior quarter. First quarter final sales numbers were revised up moderately.
Deceleration in the second quarter came largely in consumer spending with PCEs posting at 1.5 percent in the second quarter versus 2.4 percent the prior quarter. Also slowing were nonresidential structures to up 0.9 percent from up 12.9 percent and residential structures to up 9.7 percent from up 20.5 percent. Imports worsened to up 6.0 percent from up 3.1 percent.”
- The biggest news from the last 24 hours has been the ECB’s “commitment” to do whatever it takes to keep the Euro alive. This was emphasized again today as Merkel and Hollande reportedly stated their willingness to “do anything to protect the Euro”. The rhetoric is nice and all, but it would be nice to see some real action to back up these words. So far it’s just jawboning the markets around. If they’re really intent on making the Euro last then these leaders need to come together on some form of fiscal pact that permanently eliminates the solvency crisis. I still stand by my long standing position that the Euro is moving towards further integration, not collapse. But it’s not easy getting there….