GDP growth galloped along today at 3.9%, and yet YOUR Fed cut rates. Interesting.
Our all-knowing eye in the sky Fed calculates GDP by obtaining "nominal" GDP then subtracting a price deflator (in other words, they subtract some inflation amount from nominal GDP) Nominal GDP growth was 4.7%, the deflator is .8%, and so we get that 3.9% number...which was mid/late 90s type of growth.
I will not get into details, but, suffice to say, I don't believe that the GDP Deflator was a 40yr. low .8%. This is important because the deflator is subtracted from current nominal GDP growth (4.7%) to obtain "real" GDP growth: 3.9%.
I simply do not take such a sanguine view of inflation, in light of obvious indicators of increased inflation expectations (gold, dollar index, commodities, etc., etc.) no matter what data the Fed is providing at the moment. I will take market reaction over a central government's data processing unit any day of the week.