November 27, 2019
As we discussed yesterday, with the melt-up in stocks and the easing market angst surrounding trade, the stage is set for some positive surprises in the economic data to start shifting the sentiment on the global economic outlook.
With that, we had reports on October durable goods orders today, and a second reading on the Q3 GDP. Both came in hotter than expected.
The October orders for big-ticket manufactured goods (Durable goods orders) were expected to fall – it rose. And instead of a 1.9% reading on Q3 GDP, it came in at 2.1% — another jolt of fuel for stocks.
And now we start looking at the prospects for a big upside surprise in Q4 economic activity. As you can see in the Atlanta Fed’s GDP forecast, the expectations bar is very low (looking for just 0.4% growth in Q4).
When the market reopens on Friday, the focus will be on the performance of Black Friday. With that, remember, we’re beginning to see a rise of the disrupted. And no industry has been more disrupted/damaged than retail.
As we’ve discussed, with the regulatory screws tightening on the disruptors (the tech giants), we may finally be entering the stage where we see the disrupted/survivors, competing, if not beating the disruptors. If the survivors have moved aggressively to align with the changing economy, in many cases they have the distribution and scale to win back share, if not become the ultimate winner (e.g. Walmart).
Have a great Thanksgiving!