Are the markets manipulated?


Economists keep telling us the economy is going to grow at a 3% pace. This is too much optimism given our low level of productivity and the weakness of the incoming data (please see previous posts).

Their optimism is biasing investors in making the wrong business and investment decisions. Growth is not going to be strong given the domestic and international headwinds.

The growth rate of real GDP is a key indicator of economic activity, but the official estimate is released with a delay. The Atlanta Fed GDPNow forecasting model provides the official estimate prior to its release. 

The latest GDPNow model forecast for real GDP growth in Q1 2015 was 0.1 percent on April 16, down from 0.2 percent on April 14. The decline came after Wednesday morning's industrial production release from the Federal Reserve Board.

The above chart shows the Atlanta Fed forecast and those of the major economists. The difference is huge.

Which one should we believe to shape our investment strategy? What is the outlook for profits if the Atlanta Fed is correct? And its impact on the equity markets?

George Dagnino, PhD
The Peter Dag Portfolio
Since 1977
Author, Profiting in Bull and Bear Markets
No. 1 bond timer in the past 12 months. 

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