A  few comments on the GNP numbers which spooked the market today. Q2 saw growth at only 2.4% (annualized) whereas the expectation was it would be 2.6%. The number in any case is off from the 3.7% growth rate of Q1.  But a slowing growth rate does not rpt not amount to a double dip. A double dip requires that there be negative growth again, which doesn’t seem likely, among other things because bellwether companies are reporting sales growth.

Another thing the gloomy reaction is ignoring is the fact that GNP numbers get revised continuously. The Dept. of Commerce now says the great contraction and the recovery both took place earlier than they had estimated earlier. And the recession was deeper than previously reported, with bigger drops in consumer spendign and a worse housing slump, according to revised numbers.

The shrinkage in Q4 2007 to Q2 2009 now is pegged by the Commerce Dept. at 4.1% vs 3.7% earlier. The DoC’s excuse for the number mixup is that turning points frequently produce revisions, and the ones it was dealing with this time round were not familiar. For what it’s worth, until the next revision, H2 2009 growth was 3.3% under the latest calculation, vs 3.9% reported earlier. The pit of the slump was in Q4 2008 (post-Lehman Bros.) when the US economy shrank 6.8% and not merely 5.4% as reported earlier. Therefor the drop in Q1 2009 GNP was already up a bit sequentially, whereas the last time round the DoC said the start of 2009 was the bottom. as reported earlier.

Another thing. The last quarter to see the economy expanding was Q4 2007 and not Q2 2008. The latter period was still a part of the recession.

The market focuses on only one number at a time. So gloom at the opening ignored the University of Michigan consumer sentiment tally, which while down was ahead of the preliminary numbers. It also failed to spot the Institute for Supply Management-Chicago business activity data, which surprised on the upside. It is also neglected the drop in the number of unemployed to 457,000, off 11,000.


I would love to look at more economic data but Nancy Drew is off this weekend for over a month in Europe. During that time there may be only two or three blogs per week because the reporting season will have ended and the news have thinned.

August vacationing is an old French habit which I religiously adhere to.I will start off based in Mudchute Manor, our London pad, but later in the month Frida Ghitis will be backing me up as needed when I explore the upwaters of the Rio Duoro in northeast Portugal, staying in Pousadas, hotels built into old stately homes, castles, and convents, with unknown Internet connectivity.

In 1991, shortly after Global Investing began (as a twice monthly print newsletter) I was in southern Portugal’s Algarve, when I saw on TV that Mikhail Gorbachev had been overthrown. I rushed to the town square to a pay phone to call my then partner and publisher, Bill Bonner of Agora Inc. in Baltimore MD with a new front page. There was no phone where we stayed. The internet had not been invented. I had a big pile of Portuguese escudos because the Euro had not been invented yet either.

Our model portfolios will not be updated during August although the web designer may be able to put up a stock ticker tracker on the site to help make up for this.

When in London, I will definitely look into the case against a swindler sold the Ritz Hotel to visiting tourists claiming he had a mandate from the owning Barclay brothers who wanted to raise cash discretely. He gathered GBP 6 mn from this variation on selling the Brooklyn Bridge in my native city.


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Of course there is a negative. You must open an account with user-unfriendly InteractiveBrokers.com/ It’s a hassle. After you fill out forms on-line, you are sent an activation code by e-mail which turns into a pumpkin in about 5 minutes.


Perth, Australia’s MOKO.mobi Ltd launched an unusual sponsored OTC-traded ADR with Bank of NYMellon as depositary, traded as MOKOY. Most OTC ADRs are unsponsored. MOKO.mobi is a global platform for cellphone or PCs to chat, meet people, upload photos and video, share links, and sample and recommend music. MOKO.mobi is available on wireless carrier portals worldwide (like KPN) and may be offered by US carriers. You can download it at www.moko.mobi/ A friend is involved in the ADR offering, one reason you are reading this. The other is that sponsoring an ADR stops the depositary bank from slapping annual fees on shareholders. I hope MOKO.mobi starts a trend.


More for paid subscribers from Brazil, Portugal, Singapore, India, Australia, Canada, Mexico, and France. And lots of other places where we are in Exchange-Traded Funds.