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Buzz and Banter


I can see the headlines now, "GDP was up 7.2% - that has to be great for stocks." Since 1981, the correlation between Gross Domestic Product GDP Q/Q percent change and the S&P 500 is -0.15. That's right; there is actually a very slight inverse correlation. The same can be said of the last 10 year period as well, which is -0.09. Again, the GDP number fits my bullish thesis nicely, but it doesn't historically hold weight when used as the determiner of stock prices.

Whenever I hear something that seems to make sense, I research it to make sure it does. The anticipation of forward inflation, interest rates and growth are the long-term determiner of prices vs. quarterly changes in ANY economic series.
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