GDP Revisions Expected To Trend Upwards

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In his podcast addressing the markets today, Louis Navellier offered the following commentary.

Upward GDP Revisions

The Atlanta Fed is estimating second-quarter GDP growth at a 1.8% annual pace. However, in the wake of this week’s stronger-than-expected economic news, I am expecting upward GDP revisions.

Another factor that will cause many economists to revise their second-quarter GDP growth higher is the fact that the Commerce Department announced on Wednesday that the trade deficit in May declined 6.1% to $91.1 billion as imports dropped 2.7% to $254 billion and exports declined 0.6% to $162.8 billion.

Speaking of GDP, the Commerce Department on Thursday revised its first quarter GDP calculation to a 2% annual pace, up sharply from a 1.3% annual pace previously announced. The primary reasons for this big upward revision were due to consumer spending being revised to a 4.2% annual pace, up from a 3.8% annual pace previously estimated.

Furthermore, exports surged to a 7.8% annual pace, up from a 5.2% annual pace. Overall, I am now expecting second quarter GDP growth to exceed first quarter GDP due to rising consumer confidence and favor trade data.

Tight Labor Market

There was good news on the labor front this week since the Labor Department announced on Thursday that weekly unemployment claims declined to 239,000 in the latest week, down from a revised 265,000 in the previous week.

Continuing unemployment claims fell to 1.742 million, down from a revised 1.761 million in the previous week. As a result of these declines, the four-week moving averages of continuing and existing unemployment claims are also heading lower.

A Wider Chip Ban On China

There has been a major development on the AI front this week. NVIDIA Corp (NASDAQ:NVDA) gets about 20% of its revenue from China. Due to the Biden Administration’s restrictions on AI chips to China and Russia, Nvidia designed a special AI chip with a smaller bus, so the data travels slower.

However, the Biden Administration is now evaluating a wider chip ban on China, so Nvidia, Advanced Micro Devices and other semiconductor stocks got hit with profit-taking this week. Robert Lea, an analyst at Bloomberg Intelligence, said “Chinese AI firms may also be able to source dedicated AI chips from third-party countries. So I think it will be hard for the U.S. to enforce the regulations.”

What is interesting about the Biden Administration is that they never removed the trade tariffs on China and are now boosting trade restrictions. Furthermore, the Biden Administration infuriated the European Union with the Inflation Protection Act, which caused Tesla to move its battery manufacturing from its Berlin, Germany plant to Austin, Texas.

To appease Europe allies, the Biden Administration has extended the $7,500 electric vehicle (EV) tax credit to European manufacturers, as long as the EV is financed with a U.S. financial institution.

This anomaly actually caused me to lease an Audi e-tron GT, versus buying the EV, since the $7,500 tax credit was not available on an outright purpose. I have never leased a vehicle before, but I found it interesting that the lease terms were more attractive than the outright purchase terms due to the $7,500 EV tax credit.

War On Pizza

In the ridiculous news this week, New York City’s Department of Environmental Protection (DEP) has drafted new rules that would order restaurants to reduce their carbon emissions by 75%. This would require restaurant owners to buy expensive emission control devices on their pizza ovens, which also require expensive maintenance.

DEP Spokesman, Ted Timbers, said “All New Yorkers deserve to breathe healthy air, and wood and coal-fired stoves are among the largest contributors of harmful pollutants in neighborhoods with poor air quality.”

This brewing DEP war against iconic Italian restaurants and pizza joints in New York City is not going over well. Since New York Mayor Eric Adams on Earth Day (April 17th) asked New York City residents to eat less meat and dairy to reduce carbon emissions, I suspect that Italian restaurants and pizza joints will not get any symphony from City Hall. As a result, I am predicting that the next New York City mayor will be a pizza-loving Italian.

Coffee Beans: Still More On Pizza

A still-life fresco discovered recently in the Pompeii archaeological site looks like a pizza, but it’s not according to experts. The image is instead believed to be a focaccia covered with fruit, including pomegranate and possibly dates, finished with spices or a type of pesto. Source: AP News. See the full story here.