Is Downturn Starting To Moderate?

Is it time to bet on the downturn moderating? An important piece of that puzzle could present itself on Wednesday when the government releases the advance reading of first-quarter gross domestic product.

It’s expected to show the pace of contraction slowed to 5 percent from 6.3 percent in the fourth quarter.

True it’s a decline, but it’s also an improvement and that could be a sign of stabilization. How will GDP effect stocks?

That all depends, according to Deutsche economist Joe LaVorgna.

He says what really matters isn’t the surface number but what lies beneath. He’s talking inventories versus demand.

"Wall Street would be very comfortable if the GDP drops entirely on inventories because it will indicate a nice "V" shaped movement in the economy," he says.

Unfortunately, LaVorgna expects the drop to be as much the result of weak demand and he feels that could be bearish for stocks.

What’s the trade?

I’d position myself conservatively, counsels Karen Finerman. But no matter what the number is, I don’t think it will be that eventful.

If you’re looking for a currency trade, Joe Manimbo, a currency trader at Ruesch International suggests betting on a weaker dollar.

"We could see the dollar, perhaps, react negatively (to GDP) if we see a more encouraging result,” he says. That’s because strength in the US economy “would boost risk appetite and reduce demand for safe-haven currencies."

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Trader disclosure: On Apr. 28th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Finerman's Firm Owns (AXP), (RIG), (UNH), (TBT); Finerman's Firm Owns (BAC) Preferred; Finerman's Firm Owns (C) Preferred; Finerman's Firm Owns(MSFT) & (MSFT) Put Spread; Finerman’s Firm Is Short (IJR), (MDY), (SPY), (IWM), (USO); Najarian Owns (BX) Call Spread; Najarian Owns (BP); Najarian Owns (DNDN) Call Spread; Najarian Owns (INTC) Call Spread; Najarian Owns (MS); Najarian Owns (PALM); Najarian Owns (RHT) Calls; Najarian Owns (RIO) Calls; Najarian Owns (XHB) Cal Spread; Najarian Owns (XLB) Call Spread; Najarian Owns (ORCL) Call Spread; Seymour Owns ( AAPL), (BAC), (EEM), (FXI), (PBR); Seymour Is Short (X)