Registered Investment Adviser Caleb Lawrence
The major averages enter the final hour with modest gains. The Standard and Poors 500 Index while essentially unchanged for the week did manage to set a new record high with a 3 point intraday gain from Monday. The NASDAQ enters the final hour with a large advance and is up 52 points for the week or .8%.
3rd quarter Gross Domestic Product or GDP beat expectations with an advance gain of 3% marking a 2nd consecutive quarter of growth of 3% or better for the 1st time since mid-2014. This pushed the year to date growth rate to 2.48% and closed the output gap as well. A strong result to be sure let’s see if the economy can snap its recent trend of 2 strong quarters followed by 2 weak quarters.
Despite the solid economic growth data 2017 has also featured an all-time record number of store closings north of 6,700 a figure a good bit higher than the 6,163 seen in 2008 at the height of the previous crisis.
Amongst the retail carnage Amazon’s supposed blowout numbers for the quarter contain some nasty details conveniently being overlooked by the mainstream media. Their net margin fell from -9.2% to -15.62% for the quarter, meaning their losing 15.62% on every sale. Other highlights include gross margin falling by nearly half from 10.09% to 5.52% as costs rose substantially, while web services and international sales disappointed. With a trailing Price to Earnings ratio nearing 250 and a forward ratio of 120, more details are in the earnings report, what’s not to like as evidenced by the triple digit share price gain because nothing matters with buyers present regardless of price, value, or fundamentals.