Daily Bullets…….For May 6, 2014

·         Narrower trade deficit……U.S. trade deficit narrowed 3.6% in March vs. February. However, the number was lower than economists forecast.

What’s the point? A lower trade deficit is positive but the problem with today’s number is that, coming in below previous forecasts, it could detract from GDP growth in the first quarter. From our perspective we would view this as more of a neutral issue as the U.S. has run a trade deficit for decades and our economy has grown. Furthermore, we see the U.S. returning to a more export-driven economy, which should help to reduce the trade deficit over time. Link: http://money.msn.com/business-news/article.aspx?feed=OBR&date=20140506&id=17590122

·         OECD cuts global forecast……OECD today cut its global growth forecast including lower growth for both U.S. and China. U.S. now forecast to grow real GDP at 2.6% in 2014, down from 2.9%; while China is now forecast to grow 7.4%, down from previous estimate of 8.2%.

What’s the point? This news may have partially contributed to today’s market weakness. Over the years, the OECD has been more of a trend follower and late on their forecast changes regarding the economy. We think the U.S. economy could probably exceed 2.6% growth, particularly in 2H-14. We do have some concern about slower growth in China and the OECD report provides some credence to that concern. Link: http://money.msn.com/business-news/article.aspx?feed=AP&date=20140506&id=17588989