What is the GDP impact from California drought?

Generally speaking a 270 point rise in the Dow Jones industrial average — like that on Friday — is a good thing for investors and 401(k)s, generally.

Friday soaring stock averages was not based on a good thing however.

Equities rose on a tepid jobs number for April (223k) and a huge revision downward in March to 75k to celebrate the fact that easy money is in the offering for at least 6 more months. Readers here know I have said all along that there will be no rate rise this year.

So Main Street investors did jump in on this news, no this money came from institutions and overseas. It’s not based on fundamentals, it’s based on return.

The whole rise from the day was in by 10am and churned sideways until the close.

So for all you newly hired bartenders and waitresses, here’s to you. If you had a 401(k) then you could raise a glass with us. But there are no bennies with that job.


I recently put out a question on Twitter, which I will pose here as well.

What are the expectations of GDP, when you figure in the California drought?

Sixth largest economy in the world if it stood on its own, what effect will it have on Q2 and Q3 US GDP?

I’ll venture a guess this will be the newest reason that equities soar when we go negative growth for three quarters this year.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s