I am in the market for a new laptop. Nothing urgent, but I have been looking and studying various models, prices, etc….. So, imagine my disappointment when a highly hyped Amazon Prime Day rolled around and I wasn’t able to find anything.
For what I wanted, prices barely changed and after browsing for half an hour I couldn’t find anything worthwhile. It was the same situation at the matching Walmart sale. In fact, I could have probably found better deals at a local Staples or Best Buy store. And while my story is anecdotal at best, apparently other people had a similar experience. Amazon Prime Day is on and customers are bummed out by the virtual ‘garage sale’
As an investor, this leads me to two quick observations.
- If even Amazon and Walmart were unable to squeeze “Deals” out on their highly hyped sales, corporate margin expansion or corporate earnings must be at their peak right now.
- Based on what I have read thus far, it appears people were not in a shopping mood. This seems to coincide with Bank of America’s Consumer Spending Survey which has been showing signs of a rather rapid deterioration since the beginning of this year.
Although there is no data set available yet to prove all of the above, if true, we should see earnings compression appear on corporate income statements over the next few quarters. And that’s not good when Shiller’s S&P P/E ratio is at 27.
