Thank GDP it’s Friday!

At 12:52 yesterday I officially went long on the markets.

This could be a big mistake (in fact, that’s what I said to Members at the time) but the logic was Bernanke would be confirmed (he was) and that we’d have a big GDP number today.  Now the reason we’re going to have a big GDP number is because we will have a big build in inventories (we discussed this effect on Jan 14th) as manufacturers got all excited and produced goods that nobody bought and, because it is assumed that goods are only produced in accurate anticipation of demand – this kind of nonsense comes in a positive to our GDP. 

Production collapsed during the recession as companies sold from their existing inventories but didn’t order new goods, because of uncertainty about future customer demand. These inventory declines dragged on GDP for six consecutive quarters, the longest streak on record since 1948.  The turnaround in inventoris could give us a Q4 GDP in the 5% range.  Rational economists prefer to look at final sales to domestic purchasers, a subset of GDP that doesn’t include inventories and trade, to better gauge U.S. economic activity. That category is likely to grow at only a 2% pace, similar to the third quarter but shhhhhhh! – we don’t want to wake the rational economist – who has clearly been asleep since the the mid 90s…

So we went bullish (speculatively), not because we are going to be excited by a 5% GDP number that makes us look like some overheating Third World economy even as another 2M people lost their jobs in Q4. No, we’re bullish because we cynically believe that the sheeple are clueless and will stampede into this number as if the US is recovering and nobody told them until this morning. 

Meanwhile, I have a message for the sheeple:  Please keep selling us you Google stock.  I think this chart of the day is self-explanatory but you never know.  This is a chart of the amount of money Google makes per employee, per quarter.  Currently they are gernerating $1.34 MILLION dollars for each person they hire (and they’ve been hiring).  For a comparison, Yahoo generates $500,000 per employee yet GOOG currently has a p/e ratio that is 1/2 of Yahoo’s. 

Microsoft’s 98,000 employees generate $623,000 each, ORCL’s 86,000 employees pull in just $267,000 each.  It’s not a definitve indicator but consider how well they have managed that number through the recession, which…