Soft GDP, Hard Markets

Good Friday morning. Markets were again in rally mode yesterday as major indices tacked on 0.50-1.0% on top of the big Apple induced rally of Wednesday.

This morning’s economic data point the 1st go round of Gross Domestic Product for Q1 2012 (advance estimate). It came in light at annualized rate of 2.2% vs expectations of 2.7% growth rate. This is down fromĀ 3.0% annualized gains in Q4 2011. That is before we get the revisions, which can go either way.

This is pretty much what we should expect from a post-credit crisis recovery.

The S&P is about as close to 1400 as you can be — 1399.98 — and the Nasdaq is comfortably over 3k at 3050.

The key takeaway has been the resiliency shaking off a tide of worrisome elements from slowing global growth to the crack up of the EU to mixed US economic data. The Bulls call this resiliency while the bears describe it as complacency. So far, profits have remained robust enough to support the bull case.

Despite the econ miss, markets are set to open flat. The silver lining for the bulls is that rates remain subdued, and the Fed is in no hurry to remove that accommodation.

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WHAT I AM WATCHING: If you have been paying attention, you know it is not the news but markets reactions to them that are so telling. Hence, I will be watching the market internals, technicals, and fund flows. My bias here remains to the upside, so the hunt is for data/risk factors that challenge that premise and present risk to capital.

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Source:
National Income and Product Accounts
Gross Domestic Product, 1st quarter 2012 (advance estimate)
BEA, April 27, 2012
http://www.bea.gov/newsreleases/national/gdp/2012/pdf/gdp1q12_adv.pdf

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