Global Market Comments
April 8, 2022
Fiat Lux
Featured Trade:
(WEDNESDAY, JUNE 29, 2022 LONDON STRATEGY LUNCHEON)
(APRIL 6 BIWEEKLY STRATEGY WEBINAR Q&A),
(SPY), (TSLA), (TLT), (TBT), (AAPL), (IBB), (GOOGL), (ADBE), (NVDA), (FXE), ($BTCUSD)
Posts
Global Market Comments
June 21, 2021
Fiat Lux
Featured Trade:
(MARKET OUTLOOK FOR THE WEEK AHEAD, or IT’S CORRECTION TIME),
(SPY), (TLT), (JPM), (BRKB), (AMZN), (ADBE), (NVDA)
Mad Hedge Technology Letter
April 16, 2021
Fiat Lux
Featured Trade:
(SHOULD I BUY COINBASE TODAY?)
(COIN), (CRM), (ADBE), (PYPL), (SQ)
Global Market Comments
July 8, 2020
Fiat Lux
Featured Trade:
(TRADING THE BLUE WAVE STOCK MARKET),
(FB), (AAPL), (MSFT), (AMZN), (ADBE), (SQ), (PYPL), (CRM), (SGEN), (REGN), (ILMN) (FEYE), (PANW), (AMD), (MU), (NVDA), (TSLA), (LEN), (PHM), (KBH), (XOM), (CVX), (XOM), (RTN), (NOC), (LMT), (KOL), (X), (GE)
Google (GOOGL) and Facebook (FB) are dominant to the extent that the U.S. administration is hoping to dismantle them.
The two companies enjoy a flourishing duopoly and guzzle up digital ad dollars.
Governments around the world are scratching their heads attempting to figure out how to put a dent in these fortresses and so far, have been unsuccessful.
Big tech has made governments look bad, to say the least, and their response has been even more shambolic.
Alphabet installed Google CEO Sundar Pichai as the top decision-maker for all Alphabet assets preparing for the onslaught of digital privacy headwinds and regulation that the E.U., U.S., and everyone else will throw at them.
Luckily, they do not need to deal with the Chinese communist party as big tech minus Apple was effectively banned years ago.
What’s on Google and Facebook’s plate right now?
Attorney General William Barr has pointed the finger at these two platforms for hiding behind a clause that gives them immunity from lawsuits while their platforms carry material promoting illicit and immoral conduct and suppressing opinions.
Barr is currently looking into potential changes to Section 230 of the Communications Decency Act, which was passed in 1996 and has been also referred to as the supercharger to tech riches.
What could eventually come of this?
Barr could decide for the Justice Department to explore ways to limit the provision, which protects internet companies from liability for user-generated content.
This could open up Google and Facebook to higher costs of managing content on their platforms and lawsuits related to malcontent in which they fail to remove.
Even though platforms love to market that they actively thwart bad actors, at the end of the day, they aren’t on the hook for what happens.
Massive alterations could fundamentally weaken their business models and force them to review each word and photo that is thrown upon their platform.
They have already hired an army of hourly paid contractors, but at their massive scale, content is simply impossible to smother.
Content generators understand how to sidestep machine learning algorithms which are based on backdated data, meaning they would not be able to catch a new iteration of past content.
Absolving themselves of any responsibility for policing their platforms has been an important catalyst in the outperformance in shares for both Facebook and Google.
The social side of this has cringeworthy unintended consequences.
The Computer & Communications Industry Association, a tech trade group that counts Google and Facebook as members want the government to stay out of it as they believe they are overreaching.
Government has been slowly making inroads in combatting the strength of these digital platforms, and the first successful foray was when Congress eliminated the liability protection for companies that knowingly facilitate online sex trafficking.
Big tech won’t go with a whimper and they will propose a range of changes to avoid direct damage to their business model such as raising the bar a smidgeon on which companies can have the shield, to carving out other laws negating attempt to weaken their platforms, to delaying the repealing of Section 230.
There is too much shareholder value on the line and as the coronavirus rears its ugly head, it’s ironic that investors perceive safety in not only the U.S. dollar but in the vaunted FANG tech group.
Ultimately, the math wins out and these companies with gargantuan earnings can weather any storm with a moat as wide as ever.
It’s to the point that a $10 billion fine is a massive victory, and what other group of companies can boast about that?
We can only trade the market we have in front of us and not the one we want.
I pulled the trigger on a Google call spread and I believe this narrow group of power tech players and their partners in crime cloud stocks of the likes of Twitter (TWTR), eBay (EBAY), Fortinet (FTNT), Adobe (ADBE), and a few others will hoist the market on its back like I predicted it would at the beginning of the trading year.
Some might say that we were due for a revaluation of growth tech stocks.
They have contributed greatly in this nine-year bull market.
Profit-generating software stocks are the order of the day.
Tech has led the overall market higher after projected quarterly earnings growth of -9% came in better than expected at -5%.
We have ebbed and flowed from pricing in a full-out recession in mid-2020 to now believing a recession is further off than first thought.
The pendulum swing ruptured many growth stocks from Workday (WKDAY) to The Trade Desk, Inc. (TTD) plummeting 30%.
We have retraced some of those losses but momentum in share appreciation has shifted to the perceived safer variation of tech stocks.
Investors have cut volatility and headed into bulletproof companies of Apple (AAPL), Google (GOOGL), and Microsoft (MSFT).
These companies have significant competitive advantages, Teflon balance sheets, and print money.
The tech markets just about priced in the U.S - China trade war in the fall as broad-based volatility plummeted because of optimism around making a deal.
This, in turn, has boosted chips stocks along with investors front running the 5G revolution and the administration granting Huawei a reprieve was a cherry on top.
The Mad Hedge Technology Letter has taken every dip to initiate new longs in safe trades like software companies Adobe (ADBE) and Veeva Systems (VEEV).
Tech is at the point that all loss-making companies are out of the running for tech alerts because the moment there is a recession scare, these shares drop 10% and often don’t stop until they lose 30%.
Now there is a deeply embedded set of narrow tech leadership by a few dominant tech companies buttressed by a select set of second-tier software stocks.
I would put PayPal (PYPL) and Twitter (TWTR), which I currently have open trades on, in the ranks of the second tier and they should do well as long as economic growth does better than expected.
Their share prices dipped on weak guidance and the bad news appears to have been shaken out of these names.
Professional investors could also be hanging on to meet end-of-year performance targets.
I do expect unique entry points on software stocks that drop after bad future guidance.
Profitability has moved to the fore as the biggest factor in holding a name or not.
Newly minted IPOs have fared even worse showing the markets' waning appetite for loss makers like Uber (UBER) and Lyft (LYFT).
Loss-making companies often tout their ability to change the world and disrupt industry, but that has been discovered as nothing more than a ruse.
They aren’t disrupting the way we change the world. For example, Uber is a dressed-up taxi service and the new CEO has failed to create any new momentum in the unit economics that spectacularly fail by any type of metric.
Even worse for these growth stocks, as the economy starts to falter, there will be even less appetite for them, and even more appetite for safer tech stocks.
A worst-case scenario would see Uber drop to $10 and Lyft to $20.
New all-time highs have crystalized with Google (GOOGL) under the gauntlet of regulation hysteria displaying the domination of these big tech machines.
The ongoing, consistent rotation out of growth and into value hasn’t run its course yet and fortunately, by identifying this important trend, our readers will be well placed to advantageously position themselves going into 2020.
Growth stocks won’t make a comeback anytime soon and deteriorating conditions could trigger renewed synchronized global monetary policy easing and central bank stimulus.
And yes, more negative rates.
I believe Oracle (ORCL), Fortinet (FTNT), Akamai Technologies, Inc. (AKAM) could weather the storm next year.
Tech growth is slowing and trade uncertainty is high, and readers must have a sense of urgency to avoid the losers in this scenario.
U.S. economic growth could slow to 1.3% next year, avoiding a recession, and the lack of enterprise spend will reduce software sales and combine that with peak smartphone growth and it won’t be smooth sailing.
The Mad Hedge Technology Letter has the pulse of the tech market and will show you how to navigate this minefield.
Global Market Comments
November 19, 2019
Fiat Lux
Featured Trade:
(BLACK FRIDAY DISCOUNT OFFER FOR THE MAD HEDGE TECHNOLOGY LETTER),
(ADBE), (EBAY), (PANW)
The Mad Hedge Technology Letter has been on an absolute tear lately.
It has posted an eye-popping 25.25% net profit since August. The last 14 consecutive trade alerts have been profitable, a success rate of 100%. Some 20 out of the last 22 trade alerts have been profitable, a success rate of 90.9%.
We nailed the 27.3% move in the multimedia software company, Adobe (ADBE). We killed the 23.28% pop in e-commerce leader eBay (EBAY). And we hit a total home run with a positively ballistic 30.42% gain in cybersecurity giant Palo Alto Networks (PANW).
And here’s the method to our madness. While no one was looking, the stock market has made a dramatic shift from buying in large-cap tech techs to smaller cap ones. In order words, we’ve moved from the FANGs to the mini FANG’s, and WE CAUGHT ALL OF IT!
Which brings me to the topic at hand. You absolutely HAVE to get in on this move, the most important of the year. And I’m going to make it incredibly easy for you to do so. For here at Mad Hedge Fund Trader, Black Friday comes early.
I am offering the Mad Hedge Technology Letter at an insanely bargain-basement price of $998. That is a full 61% discount to the $2,500 list price offered on our website.
I’m not doing this to make money. I am chopping prices so YOU can make money. And there is nothing I like better than happy, money-making customers. For focusing in on this one crucial sector will be the most important investment decision you make in your lifetime.
With the Mad Hedge Technology Letter, you will get:
*A three times weekly morning newsletter covering the most important technology stocks and trends of our time.
*Technology trade alerts sent out at market sweet spots telling when and where best to enter the market.
*Trade alerts sent out at market tops on where best to take profits or stop out of the rare losers.
*Invitations to biweekly Strategy Webinars with live Q&A.
*The best customer support in the industry with same day answers to all questions.
*Access to a searchable ten-year database of technology research.
*Invitations to Mad Hedge Strategy Luncheons around the world (the last one was in Zermatt, Switzerland).
In order to take advantage of this one time only offer, please click here.
Let me give you a warning. We are only accepting 25 orders at this deep discounted one-time offer so it’s a first-come, first-served basis.
I look forward to working with you.
John Thomas
CEO & Publisher
The Mad Hedge Technology Letter
Mad Hedge Technology Letter
June 24, 2019
Fiat Lux
Featured Trade:
(YOU COULD DO A LOT WORSE THAN ADOBE)
(ADBE)
The bull rally isn’t dead – that is the biggest takeaway from Adobe’s (ADBE) overperformance and recent earnings beat.
They will keep posting positive earnings results unless there is some type of seismic shift that deteriorates its competitive advantage.
The company continues to show no mercy by expanding revenue 25% year-over-year to $2.74 billion in the quarter just reported.
Adobe’s portfolio of solutions is the gold standard for creating and managing the world’s digital experiences through its apps and cloud products.
Software stocks are the optimal late cycle stocks and I have been whacking every bush in the outback to spread the message that instead of opting for hardware, software protects investors from many of the treacherous traps out there now.
But the most regenerative trends out there are many companies are bypassing or delaying, exorbitant capital projects like new chip factories or new hardware product lines because of the high-risk nature of the economy peaking, in place of fine-tuning processes that are directly correlated to higher software procurement.
This stock fits that procurement bill with millions of consumers dependent on critical apps like Adobe Photoshop and PDF for personal and professional endeavors.
I know I am!
A ceaseless pipeline of enterprises the world over is relying on Adobe every day to help them transform their businesses and the success is vividly showing up in the numbers.
The branding power and the continuous product innovation and services, the deep investment in technology platforms, and a robust ecosystem of partners are enabling Adobe to serve millions of customers swelling the top line.
The expanding addressable markets in the creativity, document, and customer experience management categories are an opportunity that has never been greater.
Adobe Creative revenue was $1.59 billion demonstrating 22% year-over-year growth.
Mobile is the main catalyst in the Digital Media space and Adobe is experiencing significant increases in mobile traffic and member sign-ups for Adobe’s offerings.
This is the gilded age of creativity, and the vision for the Creative Cloud is to be the creativity platform for all.
This has catapulted Adobe’s creative portfolio into must-have apps for professional content creators.
And we are just skimming the surface of how deeply creative content will penetrate into users' lives.
Whether you are a burgeoning student, an experienced designer, a commercial YouTuber, or a marketer, storytelling is the focal point to the way you communicate and connect.
The key part of the Creative Cloud growth strategy is appealing to new audience of users and Adobe is executing this tactic on all levels.
Adobe Spark, a product that easily turns ideas into compelling stories, graphics, and webpages, is swiftly gaining traction among creators from the classroom to the boardroom.
Spark traffic on web and mobile has more than doubled year-over-year.
They have enhanced their vision of platforms to include social media outlets like Facebook, Instagram, and YouTube.
Premiere Rush is rapidly becoming the solution of choice for YouTubers and social video creators. Premiere Rush is now available on Android in addition to iOS, Mac, and Windows.
When we boil down the nuts and bolts to find out the growth drivers, I am convinced about the upselling and retention of assets inciting new user growth driven by numerous global initiatives to generate demand, including targeted campaigns and promotions, leveraging the funnel of users coming to Creative Cloud through mobile apps and online engagement.
This helps continue focus on new categories including immersive media and new segments such as social media creators, Creative Cloud Photography plan subscriptions, Adobe Premiere Pro single app subscriptions in the video category, and Creative Cloud enterprise.
Adobe Stock is the fast-growing service for stock images, videos, and millions of additional creative assets grew greater than 25% year-over-year.
With Adobe Document Cloud, they are reimaging how consumers can scan, edit, collaborate, sign, and share documents in the cloud and mobile era.
Document Cloud revenue in Q2 was a record $296 million and they grew Document Cloud ARR to $921 million driven by continued strength in Acrobat subscription adoption.
Mobile is the next frontier for digital documents and our flagship apps.
Adobe Reader for mobile and Adobe Scan continue to metastasize in popularity.
Adobe Scan, which allows you to capture everything from documents to forms, whiteboard sketches or business cards, and turn them into picture-perfect, high-quality PDFs, is now the leading scanning app in iOS and Android.
Adobe Sign, the cloud-based electronic signature solution, is another winner with customers including Merck, Hitachi, and Iowa State University.
They are using Adobe Sign to provide optimal customer experience, close out deals, and win business.
The quality of the company’s apps is far-reaching with many firms turning away from Amazon and joining Adobe in droves.
The Digital Media ARR growth has been leveling down from 30%-plus range in the last couple of quarters, and investors have begun to be concerned about the long-term trajectory.
Adobe still possesses the potential for unit conversions internationally, but domestic sales will drive the business in the short term.
Even more attractive, the company is insulated from the China ruckus.
The company is one of my favorite software stocks and is part of an exclusive club of 5-7 software stocks that are part of my long-term must-buys.
This is an effective bet on the expansion and continuous development of the digital content industry.
Even if certain formats were to blow up like a Facebook, content will evolve into some other form and Adobe will be on top of the game attempting to deliver a first rate of tools to support these new operations.
Adobe is a core enterprise stock and most businesses from big to small pay for one of their services, for example, the bare minimum is likely to result in a company paying for Adobe’s PDF viewer to capture the best method of handling PDFs.
Adobe simply does a great job of providing and supporting creative software applications to drive productivity.
And I love that this company isn’t reliant on any one tool to drive profits, being a one-trick pony in this climate has forced other companies to seriously overreach in risk and addressable market.
Wait for shares to come down for $300, traders will need a better entry point as shares have bolted from the barn door.
