Registered Investment Adviser Caleb Lawrence
The major averages enter the final hour mixed on little real news, though Trump takes the first shot in what could become a trade war slapping significant tariffs on select Chinese and South Korean goods.
The State level employment report shows 6 states reporting lower unemployment rates, including California that hit a new series low of 4.3% along with Hawaii 2% and Mississippi 4.6%. 1 state reported higher unemployment, the rest were unchanged.
The New York regional manufacturing survey fell .3 points to 17.7 in January, a 7-month low on significant drops in employment and new orders.
Black Knight reports that mortgage delinquency continues to climb following hurricanes Harvey and Irma that added 20% to the figures that hit 5.36% in December for delinquent and in foreclosure mortgages.
At the beginning of 2000 just before the Dot-Com bust I remember the analysts making the rounds telling everyone about the Dot-Com companies “blowout quarters” as they are doing today, just before the wheels came off. Netflix is the latest company to report “blowout numbers” as per the analysts who really, really like the company despite it’s junk credit rating, 2 billion in losses during 2017, 2018 is expected to see 3-4 billion in losses, the loss curve has grown rapidly and consistently for a number of years now. Based on the company’s balance sheet, Total liabilities jumped by 41%, or nearly $5 billion, to $15.4 billion, then there is the small matter of tax law changes that will limit the deductibility of interest on debt, particularly for unprofitable companies. Tesla, another analyst darling is in a similar financial position, in debt up to its eyeballs, never made money and isn’t expected to do so anytime soon. Extend, pretend, and fake it until you hopefully make it. We’ve tried this before, it ended in tears, I sure hope it’s different this time.