Whipsaw Wednesday – GDP and the Fed, Oh My!

Yesterday went as expected.

As I told you in the morning post, the "rally" was nothing more than a prop job to allow a full day of selling right into the close.  Now that the markets are closed, the S&P is being propped back up – 0.3% as of 7:30 am.  May the farce be with you! 

Of course, this morning, there may actually be something to get excited about as the 2nd Quarter GDP Report will come out at 8:30 and economorons are expecting a full reversal of Q1s 2.9% dive with a 2.9% gain forecast for Q2.  

I don't know what numbers they are looking at (assuming they even bother – from their usual performance, they would be better off using darts) but I'm not seeing a big resurgance in Consumer Spending, which is 70% of the US economy.  I don't see how our Trade numbers improved, although we did import less oil (to create artificial shortages and drive up prices for the consumers).  

Business Investment seems to be up a bit and Inventories are a real wild card where a build will be a huge plus – even though, to me, it sort of indicates they are not selling anything and it's piling up on the shelf.  

This is the fantasy chart for the GDP that is making the rounds this morning.  Notice it's from the Commerce Department (aka MiniTru) and, like our Chinese Masters – they are able to make those numbers dance when they want to and, believe me, they REALLY WANT TO this Q as two down quarters in a row = the "R" word.  

So we'll see if the GDP can get the rally back on track and, if not, it will be up to the Fed this afternoon (2pm) to pump up the jam and get the party going again with their statement.  It's very possible the Fed timed their announcement on the afternoon of the GDP release BECAUSE they know they'll have to make a save in the afternoon.  Also, it's no coincidence that Treasury is pushing $44Bn of 2-year and 7-year notes between GDP and the Fed – just in time to…