Major averages fell Friday on higher, above average volume. Earnings continue to come in strong overall thanks in part to QE from central banks including the European Central Bank and the Bank of Japan which help US companies buy back stock. By reducing the number of outstanding shares, a company's earnings per share (EPS) ratio is automatically increased. This is only one of several artificial boosts and bubbles QE has helped to create.
GDP, however, continues to struggle once again as Friday's reports showed GDP grew 0.7% in the first quarter, the slowest in three years, while 2016 marked another slowdown in GDP growth, underscoring the futility of the trillions of Keynesian dollars spent trying to prop up the economy. Meanwhile, bank lending, the lifeblood of new companies, peaked in 2015 and has been sharply slowing over the last two quarters due to regulatory burdens such as Dodd-Frank which work against QE as they require banks to hold more liquid reserves.
So while major averages may continue their overall uptrends, always keep your focus on your downside by knowing exactly the price at which you would exit a trade. Stock markets are closed in Europe and in the UK in observance of Labor Day and Bank holidays, respectively.
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