The Service Sector of the US economy is a big deal. It comprises over 70% of US GDP.
The U.S. economy’s service sector expanded to 54.5 in March, a signal that business conditions are moving at a positive pace.
Digging down into the overall growth, we see an important number.
The business activity index rose to 59.8 from 57.8 the month before.
Things look good, right? Now, here is where it gets interesting – bad news makes the good news look even better.
Goldman Sachs, the leading Wall Street bank, and one of the most dependent on revenue from trading and deals, had its per-share profit estimates cut by 45% when compared to the same period last year.
The financial industry (big banks for sure) contributes over a trillion dollars to the Services Sector of the US economy. When Goldman Sachs and other big banks are taking a hit financially (bad trading, lack of IPOs, poor bond sales), and the Services Sector is still growing, what does this say about the underlying strength of the US economy?
My answer … Here are two biotech companies that have market caps larger than their cash on hand (OVAS and CARA). Neither has any debt, their fundamentals are weak, but their markets are straight forward – fertility and pain relief. Oh, and one more thing – each has heavy insider buying. Speculation anyone?
