posted at 11:50
Author Name: Sam Ro
Why Stocks Didnt Fall After Bad GDP Report
"The rally in stocks in the face of an appalling US GDP print again emphasizes the importance of future expectations vs. past facts." - Jan Loeys, Chief Market Strategist at JP Morgan. Not only did stocks not collapse, they actually rallied on the day of the report. "If investors had been told in January that US Q1 growth would disappoint by 5%, they would probably have sold stocks heavily," said JP Morgan's Jan Loeys on Friday. "The rally in stocks in the face of an appalling US GDP print again emphasizes the importance of future expectations vs. past facts," said Loeys. On the economy, there is strong agreement that growth is picking up from this year's appallingly weak start to just over 3% over the next six quarters and that global inflation is set to rise about 0.3% over 2013-15. Most of the data we just mentioned is consistent with underlying growth over 3.0%. It can't be emphasized enough that stocks and the economy are not the same thing. Importantly, stock values are largely based on future expectations, not the past. If there's any relationship that exists, it's between stocks and expectations for the future of the economy.

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