Saturday, August 21, 2010

JPMorgan GDP Growth Estimates Cut This Week – US, China, and UK $CAF $FXP $FXI $SPX

  • US - JPMorgan cutting eco growth outlook - for Q3 GDP from +2.5% to +1.5% and from +3% to +2% for Q4 (this is US GDP). They see 0 private sector jobs for Aug (no adds/subtractions). Given the loss of momentum in the recovery, they now think the odds favor further Fed action to expand the balance sheet before the end of the year. The most likely form that would take is a resumption of purchases of longer-dated Treasury securities.·
  • UK - GDP forecast for 4Q10 and 1Q11 cut to show growth averaging a below trend 1.25%ar. Full year 2011 GDP forecast cut from 2.6% to 2.1%.
  •   China - cutting growth ests (Wang) - Q3 real GDP from +8.2% to +7.5% and Q4 real GDP from +8.6% to +8.1%; A string of weak economic data on labor market, consumer spending and manufacturing activities in the US economy has prompted important change to the US outlook. JPMs imagesUS team believes there is significant risk of a prolonged soft-patch and lowered the forecast for US real GDP growth to a subpar pace of 1.5%-2.0% in 2H10 (previous forecast: 2.5-3%). The forecast still looks for growth to gradually reaccelerate over time and to reach close to 3% next year. Meanwhile, Japan’s growth outlook remains gloomy and EU is likely to follow the US’s growth path after a strong 2Q. Given the loss of momentum in US and global recovery in the near-term, they are now looking for China’s headline GDP growth to slow moderately to 9.8%oya in 2010 (previous forecast: 10.0%) and 8.6%oya in 2011 (previous forecast: 8.8%). In particular, real GDP growth forecast now stands at 7.5%q/q, saar in 3Q10 (previous forecast: 8.2%) and 8.1%q/q, saar in 4Q10 (previous forecast: 8.6%

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