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Q4 GDP Higher Than Expected

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We get a big morning for economic data, and the quick-glance good news is that pre-market futures have stayed positive, even as investors try to make heads or tails of the information. The Dow is +85 points at this hour, while the Nasdaq is +125 and the S&P 500 +20 points. It looks as if tech is getting another bid as Q4 earnings season gathers traction.

The first print on Q4 Gross Domestic Product (GDP) was a tick higher that expected, to +2.9%. This comes off +3.2% reported in Q3. This follows two straight months of negative GDP growth in Q1 and Q2. Pricing came in at +2.1%, which is a good metric if you’re looking for inflation to come down; +2.3% was reported last time, and its the lowest pricing read since Q2 2020.

Quarter over quarter, PCE on headline came in at +3.9% — the first sub-4% number since Q1 2021 brought us +3.2%. A full Personal Consumption Expenditures report is due tomorrow morning for the month of December — coming off +5.5% year over year the previous month and expecting +4.4% on core, year over year. Still higher than the optimum +2% inflation rate, but we’re getting there.

Initial Jobless Claims continue to dwindle, even in the face of prominent companies laying off tens of thousands of employees over the past several weeks. Thus far, it’s not in the jobless claims data: new claims fell to a new cycle low 186K, from a slight upward revision 192K previously. It’s the second-straight sub-200K print, and the lowest monthly tally since April of last year.

Continuing Claims ticked up a bit, from 1.65 million previously reported to 1.675 million now. Longer-term jobless claims are reported a week behind new claims, so we may see these numbers head downward next week. In any case, it’s been more than a year since we’ve seen more than 2 million longer-term jobless claims, and that was back when we still have Covid effects on employment.

Durable Goods Orders for December more than doubled on headline — from +2.4% expected to +5.6% this morning — on huge aircraft orders up more than 100%. This follows an upwardly revised -1.7% previously, and mark the highest monthly level since summer 2020. Ex-Transportation shows a -0.1%, and non-Defense, ex-aircraft (a proxy for “normal” business investment in Durables) reached just -0.2%. Shipments were -0.4%. These aircraft orders for Boeing ((BA - Free Report) seem to have distorted the overall monthly weakness.

December Trade Deficit (advanced, with future revisions expected) was worse than expected at -$90.3 billion, but from a moderated revision to -$82.9 billion the previous month. Wholesale inventories came in lower than expected at -0.1%; Retail inventories came in at +0.5%, which is double what analysts on the Street were expecting.

Mastercard ((MA - Free Report) kept its long streak of earnings beats alive by posting a Q4 bottom line of $2.65 per share, higher than the Zacks consensus estimate of $2.56, and nicely above the year-ago $2.35 per share reported. Revenues also came in higher than expected at $5.82 billion, bringing yearly 2022 totals to $22.24 billion — ahead of Zacks estimates.

Zacks Rank #2 (Buy)-rated agriculture/food giant Archer-Daniels-Midland ((ADM - Free Report) also put up an impressive earnings beat this morning, with $1.93 per share a nearly +18% positive surprise over the expected $1.64. Sales beat estimates by just a smidge to $26.23 billion in the quarter, though shares are selling off -1% on the news.

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