I still expect that growth will hit 5% to 6% annual GDP growth in the third quarter. The Commerce Department on Thursday lowered its first-quarter GDP calculation to a 1.6% annual pace, down from 2% previously estimated. Higher than expected inventories were the primary reason the Commerce Department cited for its first quarter GDP revision. ortunately, second-quarter GDP growth is much stronger and is currently estimated at a 4.3% annual pace (to be revised today) according to the Atlanta Fed.
As evidence of accelerating GDP growth, the Commerce Department on Thursday announced that surged 7.9% in April, up from a 1.3% increase in March. Economists were expecting a 3.5% annual surge, so the April durable goods report was much stronger than anticipated. Transportation orders surged 21.5% in April. Excluding transportation, durable goods orders rose at a robust 1.1% pace in April, which was much stronger than economists’ consensus estimate of a 0.5% increase.
Meanwhile, Wall Street does not want the party to end, especially due to SpaceX and other IPOs that will enrich investment banks like . Goldman Sachs, which is the lead underwriter on the upcoming SpaceX IPO and set to collect record underwriting fees, on Tuesday raised its end-of-year target to $8,000 from $7,600 because it expects valuations to be supported by continued growth in corporate profits. Goldman Sachs, , and also have S&P 500 price targets of $8,000. I should add that Ed Yardeni has an $8,300 price target for the S&P 500.
A surprising AI-related play is Ford (F). Specifically, Ford announced a new energy storage subsidiary, namely Ford Energy, which is using batteries for energy storage systems for AI data centers, utilities, and large industrial customers. Ford has an alliance with China’s CATL, so it is using iron phosphate (LFP) batteries for energy storage.
Ever since the tragic battery fire at PG&E’s Moss Landing facility, which deposited cobalt in rich agricultural fields where strawberries and artichokes are grown, there has been a big push to replace lithium phosphate energy storage batteries with LFP batteries that are much less likely to catch on fire. So essentially, Ford Energy is now competing with Tesla for LFP battery storage.