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Actionable news in QQQ: PowerShares QQQ Trust, Series 1,

Negative GDP Q1, Rebound Q2


Seven factor model estimates -0.3% Q1 GDP with all data in.

Forecast is not materially different than Atlanta Fed’s of 0.3%. Two months ago they were anticipating 1.2% and our model was estimating -.4%.

Q2 should rebound. Recession likely comes after that.

The Model (shown in red) forecasts -0.3% GDP. This is the weakest model reading since the great recession. This is an improvement from two months ago when the model with four estimated data points suggested Q1 would be -0.4%. The higher estimate does not mean the new data points showed a strengthening economy, rather prior data points particularly real retail sales were revised up.

The Seven Factors

As reported or GAAP earnings (purple line) weakened in Q4 and portend a weaker Q1 GDP.

Real retail sales (orange line and dots) indicate a slight improvement for Q1, but still show fairly weak growth. The March retail sales with its one month lead suggests Q2 is off to a very weak start.

Oil for Q1 (black line and dots) averaged $33.18 a barrel, down substantially from the $41.95 for Q4. On the concurrent basis this suggests a weak economy for Q1. On a leading inverted basis the rise in price 21 months ago (shown as a drop on the...