The good news is that the economy grew in the second quarter. The bad news is that it was less than expected and there was a revision into negative territory for last year’s fourth quarter. We believe that was the headline that got the futures markets spooked the most. If the first-quarter somehow gets revised into negative territory, it will have been an “official” recession. A revision of that magnitude is unlikely, but is possible. Q4 was revised down by 0.8%, so 0.9% is in the realm of possibility.

However, the market has fought back after a weak open though as traders might be focusing on the fact that negative inventories had a big impact in dragging down the headline GDP number. Real final sales actually rose at a brisk 3.9% pace, which is considered a better indicator of economic strength. So as usual, one has to dig a little deeper for the true story.