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business newsTwo Ways To Play: The Incredible Shrinking GDP
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The equity markets got a slight boost this morning after the Commerce Department reported better-than-expected fourth-quarter GDP numbers. But stocks quickly sold off as Wall Street came to realize it was still the biggest contraction in over 2 decades.
According to Bloomberg, the US economy shrunk at a rate of 3.8%. This is considerably better than the 5.1% economists expected, but still the largest decline since 1982.
Following the report, economists at Morgan Stanley and Deutsche Bank lowered their estimates for the first 3 months of 2009. They now believe the world’s largest economy will suffer its worst performance in this period.
Equally disconcerting was the report on consumer spending, which accounts for over two- thirds of the US economy. Personal Consumption fell 3.5%, marking the first time this data point had back-to-back 3% decreases since record keeping began in the late 1940s.
For more context on the economy, see Professor Kevin Depew’s Five Things You Need To Know: Conspiracy of Fools. 
From the Bull Pen: Consider IPC the Hospitalist (IPCM), a play mentioned by Professor Dave Dispennette this week on the Buzz. If it breaks $20 resistance, we could see the stock headed much higher. Remember to keep those sell stops in place. 
From the Bear Cave: GDP looked “better” because of increases in government spending as well as “improvements” in net exports. The S&P seems to be headed towards the 800 level, and bears can continue to consider intraday plays like the Ultra short S&P ETF (SDS).
What a rough week, huh? Have a great weekend, Minyans!
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