Today’s advance read on Q1 GDP came in weaker than expected this morning, missing forecasts by 0.3 percentage points. While economists were forecasting a SAAR reading of 1.0%, the actual reading came in at 0.7%. The fact that this report was weaker than expected should come as a surprise to no one. The table below was pulled from our Interactive Economic Indicator Database (available to all Institutional clients) and shows the originally reported advance read on Q1 GDP versus estimates dating back to 1999. In the last 19 years, this report has only been better than expected four times. In the last fifteen years, it has only been better than expected once, and in the last nine years, it has been weaker than expected every year! This trend gives new meaning to the phrase, “If at first you don’t succeed, try, try, try, try, try, try, try, try, and try again!”  When it comes to forecasting errors, Q1 GDP has been the Mother of all Seasonal Distortions (MOASD).

Amazon (AMZN) blew earnings out of the water tonight, with GAAP earnings per share coming in at $1.48 versus $1.08 expected. But all you really need to understand just how fast Amazon is creating value is the chart below. It shows three metrics, all trailing 12 month averages going back to 1998. The red line is earnings before interest, taxes, depreciation, and amortization. It’s how much Jeff Bezos and company earn before they pay interest on debt, the tax man, and cover the cost of depreciation on assets they own. It’s accelerated in a breathtaking move from less than $3 billion five years ago to more than $16 billion today. Amazon has also been pouring money into build-outs of its network of distribution centers, Amazon Web Services infrastructure, and a variety of other projects which has sent its capital expenditure surging from less than $2 billion five years ago to over almost $7.5 billion over the last 12 months. Initially, that reduced free cash flow. But EBITDA is growing so quickly, Amazon can no longer invest fast enough to soak it all up! The results? An explosion of cash that totals $10.5 billion over the last year. Relative to the company’s $440 billion market cap, that’s not huge…but it’s growing at an absurd rate, and investors think the Seattle-based company can sustain that pace. Shares are up almost 4% in the wake of results.