Except for Intel and Tesla, the markets finished the week on a good note. News on the China trade front is positive as President Xi in a speech said trade wars are not good for China and signaled a willingness to sign a deal with the US in June. At the close the Dow was up 81 points on lighter trading volume at 26,543. For the week the Dow lost about 43 points. Oil prices fell big after the US pressured Saudi Arabia to pump more oil.
Amazon reported better than expected earnings as revenue was up 17% and net income gained 117%. The company’s web hosting service, AWS, saw revenue rise 41% while North American retail sales were up 17% and international e-commerce was up 9%. Amazon continues to build out data centers in Asia and now has 7 in the region. They also just paid $195 million for an office building in downtown Bellevue which they will expand into a hub like what they have in Seattle. New York’s loss is Bellevue’s gain. Amazon also announced it was rolling out a fleet of vans to give Prime customers “one day free shipping”. The gurus think this will pressure margins, but forward guidance issued by the “big orange smile” were positive. Shares moved higher on the day.
The Q1 GDP estimate came out this morning and it stunned every economist except Brian “Mr. Sunshine” Wesbury over at First Trust. The 3.2% reading was well above the 1.7% average over the past 8 years. Net exports, consumer spending and inventory builds. Housing was a drag on the reading. Going forward, the pace of GDP could slow a bit as the pace of inventory building should return to more normal levels. Its interesting that just a few months ago most economists were hinting of a recession but this reading throws water on that notion at least for now.