GDP disappoints, but it's what the Fed says that matters

Federal Reserve Chair Janet Yellen speaks at a news conference following the two-day Federal Open Market Committee meeting in Washington March 18, 2015.
Joshua Roberts | Reuters

S&P futures were weaker ahead of the first quarter GDP report, dropped about 4 points immediately after and then bounced. That's a fairly modest response.

Bulls argue that a weak first quarter GDP—which showed the economy grew at just 0.2 percent—was well-telegraphed and that the question is to what extent we'll get a bounce back in the second quarter.

Peter Boockvar, chief market analyst at the Lindsey Group, this morning noted that hopes for 2 percent-type growth for the full year was still alive, but 3 percent was now highly unlikely.

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What does this mean for the Fed meeting that concludes Wednesday? My bet is the members will recognize the weakness of the economy, but will say that many of the forces responsible for the poor showing—weather, low oil—will likely be "transitory."

The third factor, a strong dollar, may also be transitory if we continue to get these lousy numbers.