Large U.S GDP Revision
U.S. GDP growth has got revised to 2.8% from previous estimate of 3.5%. Although the previous number (conspicuously high) helped to propel the market to new highs, revision doesn’t seem to raise any worries as U.S. equity futures are pointing on a higher opening.
S&P/Case-Shiller Composite 10 edged higher 0.4% in September while &P/Case-Shiller Composite 20 rose 0.35%. Prices edging higher, but we have to keep in mind that these indexes are calculated as 3-month rolling averages and are released for September, thus large time lag. The more current measures of housing prices (Loan Performance index -0.4%; the Radar Logic index -3.2% and the Zillow.com index -0.1% in September) suggest that the prices are falling.
The news of the day is definitely the Chinese banks plan to raise capital. Bloomberg story: China Banks Said to Submit Capital Raising Plan. I’m surprised how fast the lending on turbo mode reached bank balance sheets, raising many questions on Chinese economy growth. Banks across the globe sold off today.
Returning to the U.S where FED asked nine banks TARP recipients to submit the TARP repayment plans. Bloomberg story: Fed Said to Ask Banks to Submit Plans to Repay TARP. I’m not to optimistic on that as guys giving statements in the article. IPO action recently has had its share of postponements and price range reductions; massive equity issuance by these banks could spark a sector wide sell off, even a broad market correction. A catalyst to watch.
China, FED, S&P/Case-Shiller Home Price Indices, TARP, U.S. GDP