When it comes to economic news today, we could call it a GG day. And no, we're not talking about Bloomberg's Gigi Stone, although she may be reporting on some of this news.
There has been a lot of concern lately over the sovereign debt of Greece. Greece's debt has been pounded recently, as speculation over whether or not its deficit reduction measures will allow it to avoid defaulting on its loans. Greece's finance minister said that the country would "draw blood" with its plan to cut spending and to increase revenue over the next three years. The country is not contemplating outside help to shore up its financial condition, George Papandreou added.
A big part of this, Papandreou added, would be addressing corruption in Greece. "I have said let us clean the slate and put in rules and regulations so we move away from this negative legacy. It is not part of our DNA. It may draw blood from us all, but it will create a more credible political system."
And Greece will have to clean up its mess by itself, as the European Union says that it will rely on the country to fix its problems and that there is no alternative plan. Christine Legarde, France's finance minister, said "Any single member state, France, Germany, Greece, is not alone. We're jointly accountable to each other. [The eurozone] is a monetary zone which holds us together. There's no way out. There's no bail-out system and we have to deliver on the commitments that we made."
The bad news on Greece will be countered by good news on American GDP. The Commerce Department reported today that GDP rose by 5.7 percent in the fourth quarter. One indicator beyond the top line number was that spending on equipment and software purchased surged by 13.3 percent. This, along with Intel's blowout earnings, revenue, and profit margins, seems to indicate that the much anticipated boom in technology is occurring.
The consensus estimate for GDP growth was for an increase of 4.7 percent, with estimates ranging from three percent to 7.5 percent. The actual increase in GDP was the largest since the third quarter of 2003.
Part of the reason for the increase in GDP was the increase in disposable personal income. This jumped by 4.8 percent in the fourth quarter, four times the 1.2 percent increase in the third quarter. Since consumer spending accounts for two thirds of the economy, a growth in disposable personal income is sure to help bolster the economy.
And consumers weren't spending all of their bigger paychecks, as the savings rate ticked up a notch, going to 4.6 percent from the third quarters 4.5 percent. Keep in mind that for a time during the housing bubble, the savings rate actually dropped below zero for a time.
The GDP news is a positive development. This seems to give credibility to the Fed's decision to end its quantitative easing as well as its conclusion that the economy is recovering.
Traders may want to establish positions in stocks they've been looking at since they've sold off over the past few weeks. With the economy showing signs of picking up, the dip may be a good buying opportunity.
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There has been a lot of concern lately over the sovereign debt of Greece. Greece's debt has been pounded recently, as speculation over whether or not its deficit reduction measures will allow it to avoid defaulting on its loans. Greece's finance minister said that the country would "draw blood" with its plan to cut spending and to increase revenue over the next three years. The country is not contemplating outside help to shore up its financial condition, George Papandreou added.
A big part of this, Papandreou added, would be addressing corruption in Greece. "I have said let us clean the slate and put in rules and regulations so we move away from this negative legacy. It is not part of our DNA. It may draw blood from us all, but it will create a more credible political system."
And Greece will have to clean up its mess by itself, as the European Union says that it will rely on the country to fix its problems and that there is no alternative plan. Christine Legarde, France's finance minister, said "Any single member state, France, Germany, Greece, is not alone. We're jointly accountable to each other. [The eurozone] is a monetary zone which holds us together. There's no way out. There's no bail-out system and we have to deliver on the commitments that we made."
The bad news on Greece will be countered by good news on American GDP. The Commerce Department reported today that GDP rose by 5.7 percent in the fourth quarter. One indicator beyond the top line number was that spending on equipment and software purchased surged by 13.3 percent. This, along with Intel's blowout earnings, revenue, and profit margins, seems to indicate that the much anticipated boom in technology is occurring.
The consensus estimate for GDP growth was for an increase of 4.7 percent, with estimates ranging from three percent to 7.5 percent. The actual increase in GDP was the largest since the third quarter of 2003.
Part of the reason for the increase in GDP was the increase in disposable personal income. This jumped by 4.8 percent in the fourth quarter, four times the 1.2 percent increase in the third quarter. Since consumer spending accounts for two thirds of the economy, a growth in disposable personal income is sure to help bolster the economy.
And consumers weren't spending all of their bigger paychecks, as the savings rate ticked up a notch, going to 4.6 percent from the third quarters 4.5 percent. Keep in mind that for a time during the housing bubble, the savings rate actually dropped below zero for a time.
The GDP news is a positive development. This seems to give credibility to the Fed's decision to end its quantitative easing as well as its conclusion that the economy is recovering.
Traders may want to establish positions in stocks they've been looking at since they've sold off over the past few weeks. With the economy showing signs of picking up, the dip may be a good buying opportunity.
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