Funky GDP Numbers .....

Bulls cheer funky GDP numbers

The final Q1 GDP numbers were released today ... and the bulls loved them. It shouldn't surprise you to hear from me that there was plenty of discouraging news for anybody willing to read past the headlines.

According to the Commerce Department, our economy grew by 3.5% in the first quarter of 2005.
==> The Wall Street crowd was expecting the GDP number to come in at 3.6%. Now, 0.1% may sound small, but when you're talking about $1.2 trillion of business, 0.1% adds up to a whole lot of missing business.
==> Our GDP grew by 3.8% in the last quarter of 2004, so the 3.5% number for this quarter shows a slowdown. Not a giant slowdown, but we are clearly moving in the wrong direction.

==> Corporate profits grew at an annualized pace of 4.5% in Q1, which is way, way down from the 13.5% rate in Q4 of 2004.

As you can see, the GDP numbers really aren't that good, which makes today's strong rally seem unwarranted ... which it is. But the bulls are so eager to push stock prices higher that they couldn't care less about the fundamentals. That is especially true if the fundamentals don't support their perma-bullish dreams.

As is often the case, the reaction to the news is more important than the news itself and today is certainly a good example of that.