GDP Chocolate Bunny

Tomorrow morning at 8:30 Eastern Time the Q4 GDP numbers will be released. All indications suggest we'll have positive growth again after a 2.2% increase in Q3. Some economists are suggesting even a 5.5% growth for Q4. This would be the most powerful growth rate since 2006! Great news right? Well, not so fast. (Joe, who licked the Chocolate off of your bunny?) Nobody, Joe's bunny still has its chocolate intact, but he's just a bit skeptical about anything being reporting right now during this depression which is raging stronger now every day. Let's take a look under the hood of this 5.5% growth engine.

1. The US Dollar was extremely weak during the fourth quarter, so everything we made domestically was cheaper abroad, and this likely boosted exports and decreased imports. Since net exports (exports-imports) is a component of GDP, then of course stronger exports will sweeten the GDP.

2. The Federal Government has been auctioning Treasury bills and notes like crazy and the "Federal and UnReserved Banking Cartel" has been cranking up its toys like a kid on Christmas morning. Since Government spending is also a component of GDP, and Congress is more than willing to spend it, we'll likely see a few percentage points due to government spending. Just today Hail Mary Harry's (Joe lame duck) Senate voted to raise the debt ceiling by 1.9 trillion to a staggering 14.3 trillion dollars. This was just raised a month ago by the Senate. What will it be raised to next month?

3. Inventories have been replenished after a long drought for most of 2009. For more on this click here.

What does this mean for Joe? Joe understands this GDP number could look very pretty on the outside, but on the inside it could be quite hollow. (Joe Chocolate Bunny, and it's not even Easter) While a GDP of 5.5% would seem to suggest the economy is nice and solid, a few cracks and the whole bunny could crumble to pieces. (Joe Chocolate Bunny - in the outdated clearance shopping cart a month or two after Easter) Investors have priced in a GDP number of about 5.5%, so if the GDP is less than that, expect another down day tomorrow. A close look at inventory positions within the GDP report will also be quite telling of what we can expect ahead. If inventories are high, look out for a low to negative Q1 growth rate to be reported next time around.

Ben Begs the Chinese to Become Communist

This past Sunday, Fed Chairman Ben Bernanke emerged from his black helicopter, straightened his black tie, pulled down his black sunglasses, nodded for his bodyguards to open his black briefcase and then delivered a speech on world trade. Within the speech, he specifically cited a need for a "rebalancing" of world trade and encouraged China to spend more and the US to save more. This echoed what the United States Treasury (Joe Oxymoron) Secretary Turbo Tax Timmy Geithner (Joe Oxymoron, minus the oxy) said a few weeks ago about rebalancing world trade.

So what were our fearless leaders really saying? It's unlikely Ben Bernanke really cares whether US citizens save more. If that were the case he'd simply raise interest rates to incentivize (Joe, is that a word?) saving. No, he doesn't care. What he's really doing is begging the Chinese to stop exporting so much and start importing more US products for the "greater good" of the global economy. (Jo-seph Stalin) In other words, the United States is asking the Chinese to become more communist? (Joe upside down world, with Chinese up and US down) If we analyze further, however, we realize he doesn't really care about the global economy - he cares about the US of course.

Here's why

If the Chinese export less and the US slows the import flow, then our trade deficit will improve. If the US trade deficit improves, our GPD will go up and we'll escape depression 2.0. The weakening dollar will help achieve these desired trade effects because a weak dollar makes it more expensive to import, and less expensive to export. When we understand what Ben's doing to the US Dollar (Joe Shell game), it's easy to see the true motives behind his remarks.

So what does this mean for Joe? The Chinese have to be upset about our monetary and fiscal policy aimed at destroying the US Dollar. Therefore, Joe decided to hedge against a future Chinese invasion and take up karate lessons. He told JoAnn he's going to learn hand-to-hand COMBAT just in case; and asked JoAnn if she'd like to help him prepare by giving him hand-to-hand CONTACT while they go for a walk. JoAnn simply told him since there may be some angry Chinese out there, and since he hasn't actually taken any hand-to-hand combat lessons yet, that she'd be safer inside.