Preliminary real GDP data on Thursday is expected to show second-quarter growth at an annual rate of 2.7 percent, compared with 1.9 percent in the first quarter.
“I think GDP for Q2 should be revised up closer to 3% given strong data on trade and inventories since the initial estimate,” Darda says. “However, with credit markets under intense strain, and leading economic indicators deteriorating, this number is likely to be more of a headfake: growth in the second half should be very weak if there is growth at all.”
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And then there’s always the FOMC minutes which will be released on Tuesday.
“There shouldn’t be any big surprises in the August 5th Fed minutes, although the credit markets have gotten worse since then. The Fed is on hold,” Darda concludes.
Bottom Line: I’d be very cautious in the near term, says Darda. There’s a systemic problem that’s going to take an extended period of time to remedy.
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