The stock market was down slightly on Tuesday. Snap (SNAP) stock was down 11% to a 21 handle. While Snap doesn’t have a large market cap, it’s significant because it represents the latest excess of Wall Street. The company has a lock on the attention of teenagers and 20-somethings, but is burning cash quickly. It will fall below the IPO price at some point because cash flows matter, even though they didn’t matter in the first day of trading. It’s tough for me to assign reasons for the stock market’s fall because it’s down less than 1.5% from the peak on Wednesday. However, when I describe bearish factors, I can simply say the market still hasn’t priced them in fully.

One big piece of economic news that was released on Tuesday was the Atlanta Fed’s GDP Now forecast for Q1. The forecast had a big dip lower from 1.8% to 1.3%. This decrease was caused by the forecast for real personal consumption expenditures growth slowing from 2.1% to 1.8% and the forecast for real nonresidential equipment growth slowing from 9.1% to 7.3%. These changes were caused by the weak motor vehicles sales report. I’ve discussed in the past the weakness I’m expecting to see when the auto market bubble bursts. It will get much worse than the February report. Also, the forecast for the contribution of inventory investment to Q1 GDP fell to -0.72% from -0.52% because of the latest manufacturing report.

The optimism small businesses and investors are showing is about the future. The question remains if the present economy matters. Will the optimism continue if the economy continues to weaken before we get to the ‘promised land’ where taxes are cut and the economy accelerates? The reason why present data and even recent past data is important is because it acts as a signal for what the future may look like. Recent past data is much more relevant than optimism based on legislation which we don’t know the specifics of and may not pass. The U.S. Macro Surprise Index continues to show positive survey surprises while the real data surprises are stagnant.