Second quarter preliminary GDP came out this morning at 3.4%. PCE – the consumer – is slow at 1.3%, the rest is noise. Don’t be confused by the number, the bubble is over. Credit spreads are wider again this morning, although the stock market has stabilized. Sentiment is still very bullish. That’s bearish, especially considering the turbulence in both debt and equity markets.

Perhaps the most interesting consequence of this number will be if it keeps the Fed looking the wrong way, worrying about “inflation” rather than economic growth. Not that they have any way to fix the problem, but they can always make it worse because that is their only real power. Which, of course, they have exercised to great effect to date.

As I write, markets are generally lower except that the party in large-cap tech continues, accompanied by buying in the homebuilders. Talk about hope springs eternal. Ah well, bulls, gotta love ‘em.