Let’s cut to the chase. Today's Q2 US GDP report was a certified train wreck. More on that in a second.
But first, in the interest of my firm’s non-negotiable principles of transparency, accountability and trust, we humbly acknowledge that we missed this one. Why? In simple terms, because the government finally reported the right Deflator!
(For the record, this was the first GDP forecast we had wrong in 6 quarters.)
Our tracker anchored on Consumption accelerating in Q2 (which was in line with our forecast) to +2.8% of contribution.
What we missed was this.
- Government finally told the truth on the DEFLATOR (that subtracted 1.70%)
- Inventories, subtracted another -1.20%
What we didn't miss … the multi-quarter TREND in US GDP #GrowthSlowing continues. It will continue
To be clear, my analysts and I would much rather make little mistakes, while getting the bigger picture right... than being really wrong all at once.
You can go back to buying the Long Bond now (our successful, contrarian call that we’ve recommending to our subscribers). And anything that looks like a safe-yield.