Look out below!
The Atlanta Fed, who were the only people to accurately predict Q1 GDP, have just put out a report showing Q2 GDP will be no improvement, coming in at 0.9%, which is 2.5% (73%) below the average consensus at 3.4%. That's a pretty big gap to fill by analysts, who usually re-issue their GDP forecasts after getting a look at Q1 earnings.
As you know, our Members didn't need to wait as we went to CASH!!! last month (see our Top Trade Review) in anticipation of the correction we got a little taste of yesterday. Thanks to that little correction, our bearish Short-Term Portfolio shot up to a 121.3% gain while our bullish Long-Term Portfolio also went up to a 50.7% gain – as we kept our materials stocks, which were the only stocks that were positive yesterday as oil tested $60 (and yes, we were long on that too, but now short /CL at $59.50).
All in all, we're at a new high in our paired portfolios and, if anything, I want to get more bearish as we could have done better on a big dip than we did yesterday. We'll review the portfolios today in our Live Member Chat Room and see if we can find a more aggressive hedge to carry us into next week.
Greece might be fixed over the weekend or China may announce more stimulus and, of course, some huge company could buy some other huge company to make an even huger company – those are the only reasons we are not MUCH more bearish on the markets because we sure don't see any upside earnings surprises or any gangbuster sales in ANY sector that's reported so far.
As I noted in Member Chat, there was a $121.9Bn increase in private inventories in Wednesday's GDP Report and that ADDED 2.8% to our GDP numbers, which were 0.2%. So without this massive build-up of unsold merchandise – our economy would have contracted by 2.6% in Q1. Growth in GDP is considered a positive because there is an underlying assumption that inventories wouldn't be rising unless retailers were…
