Global Market Comments
May 15, 2020
Fiat Lux
Featured Trade:
(WHY CONSUMER STAPLES ARE DYING),
(XLP), (PG), (PEP), (PM), (WMT), (AMZN),
(WHY YOUR OTHER INVESTMENT NEWSLETTER IS SO DANGEROUS)
Posts
Today, we got a convincing signal that trillions of stimulus dollars are being diverted into one asset class – tech shares.
That’s right, even though main street has not participated in the V-shaped recovery that tech shares have basked in, tech’s profit engines have gotten through largely unscathed.
The earnings that have streamed out this week validate the big buying into tech shares and today’s price action was mouthwatering.
We had names like cloud communications platform Twilio (TWLO) rise 40% in one day, ride-sharing platform Lyft (LYFT) was up 21%, and Uber (UBER) another 11%.
Outperformance of 5% seemed pitiful today in an asset class that has gone truly parabolic.
Another sub-sector that can’t be held down is video games.
The rampant usage of video games dovetails nicely with the theme of tech companies who have triumphed the coronavirus.
There is nothing more like a stay-at-home stock than video game maker Electronic Arts (EA) who beat expectations during its March quarter.
The company reported adjusted earnings of $1.31 per share during its fiscal fourth quarter, topping consensus estimates at 97 cents a share.
Revenue also beat totaling $1.21 billion surpassing estimates by $.03 billion.
EA Sports has identified Apex Legends as their new growth asset and this free game is having a Fortnite-like growth effect.
Apex Legends was the most downloaded free-to-play game in 2019 on the PlayStation 4 system.
The full ramifications of Covid-19’s impact on EA’s business, operations, and financial results is hard to quantify for the long term and this has been a broad trend with many tech companies pulling annual guidance.
I can definitely say that the year 2020 is experiencing a video games renaissance.
On the downside, EA is heavy into sports video games, and cancellations of sports seasons and sporting events could impact results, given its popular sport simulation titles like FIFA and Madden NFL.
EA Sport’s competitor Activision Blizzard (ATVI) is positioned to reap the benefits by reimagining mainstay title Call of Duty Warzone and users have already hit 60 million players in just 2 months.
The result is accelerating momentum entering the second quarter from the dual tailwinds of strong execution and premium franchises following last year's increased investment.
With physical entertainment venues like movie theaters, live sports, and music venues closed, home entertainment services have pocketed the increased engagement.
Nintendo is another gaming company whose fourth-quarter profit soared 200% due to surging demand for its Switch game console, and that title Animal Crossing: New Horizons shifted a record 13.4 million units in its first six weeks.
Activision is riding other hit game franchises like World of Warcraft, Overwatch, and Candy Crush – to visit their roster of blockbuster games, please click here.
These blockbuster titles are carrying this subsector at a time when the magnifying glass is on them to provide the entertainment people crave at home.
Shares of EA and Activision Blizzard are overextended after huge run-ups and another gap up from better than expected earnings reports.
If there is a dip, then that would serve as an optimal entry point.
The lack of vaccine means that gaming will see elevated attention until there is a real health solution.
If there is a second wave that hits this fall, then pull the trigger on these video game stocks.
To visit Electronic Art’s website, please click here.
The tech market is telling us that the effects of coronavirus on the U.S. economy have accelerated the Golden Age of Big Tech pulling it forward to 2021.
You know, Big Tech is having their time in the sun when unscrupulous personal data seller Facebook is experiencing 10 times growth with its live camera product Portal video during the health crisis.
That is the type of clout big tech has accumulated in the era of Covid-19 and investors will need to focus on these companies first when putting together a high-quality tech portfolio.
Every investor needs upside exposure to a group of assets that is locked into the smartphone ecosphere.
There are no excuses.
Smartphones, although not a new technology, is now a utility, and the further away from the smartphone revenue stream you get, business is nothing short of catastrophic minus healthcare.
The health scare has ultimately justified the mammoth valuations of over $1 trillion that Apple, Microsoft, and Amazon command.
The next stop is easily $2 trillion and then some.
Consumers are so much more digitized in this day and age weaving in a tapestry of assets such as the iPhone at Apple, advertising at Facebook, and search ads at Google.
Can the coronavirus keep the digital economy down?
Green shoots are certainly popping up with regular consistency.
Facebook and Google have said that digital advertising has “stabilized.”
Apple, Amazon, Netflix, Facebook, and Google each reported financial results in the past week with profits and revenue that, while hit by the closure of the economy, still outperformed relative to the broader market.
Investors already priced in that Apple's iPhone sales temporarily disappeared, that Google's and Facebook's advertising revenue dropped and that Amazon is spending big to keep warehouse workers safe.
Forward expectations can only go north at this point reflecting a giant bull wave of buying that has benefited tech stocks.
Other top tier companies not in the FANG bracket have also gone gangbusters.
Zoom has turned into an overnight sensation now replacing all face-to-face meetings, sparking competition with Microsoft's Teams video chat and Google Meet.
The market grab that big tech has partaken in will position them as the major revenue accumulators for the next 25 years.
Unsurprisingly, Apple was the canary in the coal mine by calling out a dip in iPhone sales and manufacturing in China earlier in the year.
While iPhone's sales did fall, down nearly 7%, to $28.9 billion, its revenues from services and wearables, two categories that have been rising steadily for years, jumped 16.5% and 22.5% respectively.
Chip giant Qualcomm said phone shipments will likely drop about 30% around the globe in the June quarter while Apple rival Samsung, said phone and TV sales will "decline significantly" because of the coronavirus.
Google’s YouTube has grown 33% while the video giant keeps us entertained and Microsoft’s Xbox Game Pass subscription service notched more than 10 million subscribers.
Facebook said nearly 3 billion people use its collection of chat apps representing an 11% jump from a year ago.
Everywhere we turn, relative outperformance is evident which in turn minimizes the absolute underperformance in year to year growth.
The market is looking through and putting a premium on the relative outperformance.
Many are coming to the realization that the economy and population will live with the virus until there is a proper vaccine, meaning an elongated period of time where consumers are overloading big tech with higher than average usage.
President Trump’s chief economic adviser Larry Kudlow is projecting that the U.S. economy next year could see “one of the greatest economic growth rates.”
I would adjust that comment to say that big tech is tipped to be the largest winner of this monster rebound in 2021 putting the rest of the broader market on its back.
This is quickly turning into two economies – tech and everybody else.
The eyeballs won’t necessarily translate into a waterfall of revenue right away because of the nature of all the free services that they provide.
But at the beginning of 2021, a higher incremental portion of consumer’s salaries will be directed towards big tech and the fabulous paid services they offer.
Actions speak louder than words and Berkshire Hathaway’s Warren Buffett unloading billions in airline stocks is an ominous sign indicating that parts of the U.S. economy won’t come back to pre-virus levels.
The biggest takeaway in Buffet’s commentary is that he elected to not sell tech stocks like his big position in Apple validating my thesis that any investor not already in big tech will flood big tech with even more capital after being burnt in retail, energy, hotels, and airlines.
Then, when you consider the ironclad nature of tech’s balance sheets, even in the apocalyptical conditions, they will profit and rip away even market share from the weak.
It’s to the point where any financial advisor who doesn’t recommend big tech as the nucleus of their portfolios is most likely underperforming the wider market.
As the U.S. economy triggers the reopening mechanisms and we enter into the real meat and bones of the reopening, data will recover significantly signaling yet another leg up in tech shares.
Hold onto your hat!
Global Market Comments
May 5, 2020
Fiat Lux
Featured Trade:
(FIVE STOCKS TO BUY AT THE BOTTOM),
(AAPL), (AMZN), (SQ), (ROKU), (MSFT)
With the Dow Average down 1,400 points in three trading days, you are being given a second bite of the apple before the yearend tech-led rally begins.
So, it is with great satisfaction that I am rewriting Arthur Henry’s Mad Hedge Technology Letter’s list of recommendations.
By the way, if you want to subscribe to Arthur’s groundbreaking, cutting-edge service, please click here.
It’s the best read on technology investing in the entire market.
You don’t want to catch a falling knife, but at the same time, diligently prepare yourself to buy the best discounts of the year.
The Coronavirus has triggered a tsunami wave of selling, tearing apart the tech sector with a vicious profit-taking few trading days.
Here are the names of five of the best stocks to slip into your portfolio in no particular order once the madness subsides.
Apple
Steve Job’s creation is weathering the gale-fore storm quite well. Apple has been on a tear reconfirming its smooth pivot to a software services-tilted tech company. The timing is perfect as China has enhanced its smartphone technology by leaps and bounds.
Even though China cannot produce the top-notch quality phones that Apple can, they have caught up to the point local Chinese are reasonably content with its functionality.
That hasn’t stopped Apple from vigorously growing revenue in greater China 20% YOY during a feverishly testy political climate that has its supply chain in Beijing’s crosshairs.
The pivot is picking up steam and Apple’s revenue will morph into a software company with software and services eventually contributing 25% to total revenue.
They aren’t just an iPhone company anymore. Apple has led the charge with stock buybacks and gobbled up a total of $150 billion in shares by the end of 2019. Get into this stock while you can as entry points are few and far between.
Amazon (AMZN)
This is the best company in America hands down and commands 5% of total American retail sales or 49% of American e-commerce sales. The pandemic has vastly accelerated the growth of their business.
It became the second company to eclipse a market capitalization of over $1 trillion. Its Amazon Web Services (AWS) cloud business pioneered the cloud industry and had an almost 10-year head start to craft it into its cash cow. Amazon has branched off into many other businesses since then oozing innovation and is a one-stop wrecking ball.
The newest direction is the smart home where they seek to place every single smart product around the Amazon Echo, the smart speaker sitting nicely inside your house. A smart doorbell was the first step along with recently investing in a pre-fab house start-up aimed at building smart homes.
Microsoft (MSFT)
The optics in 2018 look utterly different from when Bill Gates was roaming around the corridors in the Redmond, Washington headquarter and that is a good thing in 2018.
Current CEO Satya Nadella has turned this former legacy company into the 2nd largest cloud competitor to Amazon and then some.
Microsoft Azure is rapidly catching up to Amazon in the cloud space because of the Amazon effect working in reverse. Companies don’t want to store proprietary data to Amazon’s server farm when they could possibly destroy them down the road. Microsoft is mainly a software company and gained the trust of many big companies especially retailers.
Microsoft is also on the vanguard of the gaming industry taking advantage of the young generation’s fear of outside activity. Xbox-related revenue is up 36% YOY, and its gaming division is a $10.3 billion per year business.
Microsoft Azure grew 87% YOY last quarter. The previous quarter saw Azure rocket by 98%. Shares are cheaper than Amazon and almost as potent.
Square (SQ)
CEO Jack Dorsey is doing everything right at this fin-tech company blazing a trail right to the doorsteps of the traditional banks.
The various businesses they have on offer makes me think of Amazon’s portfolio because of the supreme diversity. The Cash App is a peer-to-peer money transfer program that cohabits with a bitcoin investing function on the same smartphone app.
Square has targeted the smaller businesses first and is a godsend for these entrepreneurs who lack immense capital to create a financial and payment infrastructure. Not only do they provide the physical payment systems for restaurant chains, they also offer payroll services and other small loans.
The pipeline of innovation is strong with upper management mentioning they are considering stock trading products and other bank-like products. Wall Street bigwigs must be shaking in their boots.
The recently departed CFO Sarah Friar triggered a 10% collapse in share price on top of the market meltdown. The weakness will certainly be temporary, especially if they keep doubling their revenue every two years like they have been doing.
Roku (ROKU)
Benefitting from the broad-based migration from cable tv to online steaming and cord-cutting, Roku is perfectly placed to delectably harvest the spoils.
This uber-growth company offers an over-the-top (OTT) streaming platform along with the necessary hardware and picks up revenue by selling digital ads.
Founder and CEO Anthony Woods owns 21 million shares of his brainchild and insistently notes that he has no interest in selling his company to a Netflix or Apple.
Roku’s active accounts mushroomed 46% to 22 million in the second quarter. Viewers are reaffirming the obsession with on-demand online streaming content with hours streamed on the platform increasing 58% to 5.5 billion.
The Roku platform can be bought for just $30 and is easy to set-up. Roku enjoys the lead in the over-the-top (OTT) streaming device industry controlling 37% of the market share leading Amazon’s Fire Stick at 28%.
The runway is long as (OTT) boxes nestle cozily in only 40% of American homes with broadband, up from a paltry 6% in 2010.
They are consistently absent from the backbiting and jawboning the FANGs consistently find themselves in partly because they do not create original content and they are not an off-shoot from a larger parent tech firm.
This growth stock experiences the same type of volatility as Square.
Be patient and wait for 5-7% drops to pick up some shares.
It is a basic concept of life that people will risk their lives for economic gain.
This is what the protests are about that have erupted all over the U.S. and will continue as families run out of food in the kitchen pantry.
Back in the world of the stock market where tech stocks have benefited from the Fed backstopping equities, Amazon (AMZN) reminded us that just because business is booming in volume, profitability can be a completely different story.
Amazons’ earnings disappointed after many analysts believed the quarter would be untouchable.
The company that my friend Jeff Bezos built became inundated with too many orders that almost broke their supply chain.
Amazon’s share price got ahead of itself which was up 34% on the year through last Thursday and only a beyond perfect earnings beat on the bottom and top line would propel the stock to newer highs.
The stock cratered by 8% after investors had time to digest the report.
Profitability came in significantly lower with Wall Street anticipating earnings per share of $6.25 and Amazon only producing $5.01.
The most important number in the earnings report was $4 billion which is the amount of additional expenses next quarter caused by the COVID-19 phenomenon.
The productivity headwinds in Amazon’s facilities were meaningful as the company spent on social distancing, allowing for the ramp-up of new employees and investments in personal protective equipment (PPE) for employees.
In addition, setting up an Amazon fulfillment center in the age of COVID-19 encompassed cleaning and sanitizing facilities, higher wages for Amazon’s hourly teams, and hundreds of millions of dollars to develop COVID-19 testing capabilities.
Amazon also needed to allocate another $400 million of costs related to increased reserves for accounts that participated in price gouging as Amazon third-party sellers tried to rip off buyers by jacking up prices to take advantage of the shortage in some products.
Amazon said they suspended more than 10,000 sellers from its platform for violating policies against price gouging.
The sudden spike in costs will result in an operating loss of $1.5 billion to an operating income of $1.5 billion based on its expectation of spending $4 billion on coronavirus-related costs.
The ultimate problem for Amazon’s eCommerce division was that “essential items” didn’t harvest the bumper type of premium that other products can command.
Not only did they suffer at the margins, but they also had to extend the shipping period from one to four days, and then further on non-essential items.
Groceries were the segment that saw explosive growth, but everyone knows that supermarkets have slim margins.
Amazon had to increase grocery delivery capacity by more than 60% and expanded in-store pickup at Whole Foods stores from 80 stores to more than 150 stores.
Amazon’s best of breed execution was utterly swamped by the health phenomenon.
It got so bad that Amazon had to restrict selected products that were coming into the warehouses and focus on essential products.
A big chunk of the new costs will come in the form of hiring an additional 175,000 new employees.
Inflated costs were the bombshell of Amazons’ earnings but looking down the road, the future looks bright.
Amazon is the only platform that can systematically service customers at scale and effectiveness during the crisis which will breed increased customer loyalty and faster adoption of e-commerce, despite higher costs in the near term.
Work-from-home dynamics are here to stay translating into significant Amazon market share gains and a longer Amazon growth runway.
This is also the first stage of Amazon developing a protective gear strategy for staff and customers as a potential point of competitive advantage.
Sterility of packages and products could be the new x-factor going forward and Amazon will likely lead in developing this new packaging and contactless delivery style.
This leads me to believe that the coronavirus is a springboard into the revenues of healthcare for big tech enabling unlimited resources with an industry offering unlimited low-hanging fruit.
Big tech is the only solution out there to America’s dysfunctional healthcare system, and Amazon could become the leader in setting off a new deflationary decade in healthcare costs.
Amazon and Microsoft are the best companies in the country and any pullbacks should be met with a torrent of fresh buying.
To visit Amazon’s webpage, click here and to see why Microsoft is the best tech company not named Amazon, then please click here.
Armed with the best management and stickiest tech products in the U.S., Microsoft (MSFT) has shown why every tech investor needs to own shares.
We just took profits from deep-in-the-money MSFT bull call spread and I’d be looking to get back into this name on any and every dip.
This tech company is unstoppable and the data underpinning their greatness reaffirms my point of view.
Microsoft said that 2 years of digital transformation has happened in the past 2 months.
The health crisis has shown that consumers cannot function without Microsoft and that will help fend off the regulatory monkey off their back.
Microsoft announced $35 billion in quarterly sales when analysts forecasted just $33.76 billion.
Tech companies have had to reduce their future projections as the health scare has done great damage to consumer demand with many pulling guidance completely.
Overall, tech companies were locked in for a 5% earnings decline which was the best out of any industry, but they are coming in higher than that.
Even more impressive, Microsoft’s management disclosed that COVID-19 had “minimal net impact on the total company revenue.”
That was really all you need to know about Microsoft who possesses services that consumers can never get rid of.
Everything else is just a cherry on top.
To get into the weeds a little, Azure cloud-computing business and Teams collaboration software, have become mainstay products as workers are forced to stay home and their companies need computing power and tools to support them.
Many of those products are bundled with ones that may not fare as well, however — for instance, Microsoft combines revenue from on-premises server sales with its Azure business.
The “Intelligent Cloud” segment that includes Azure rose to $12.28 billion in sales from $9.65 billion a year ago, beating the average analyst prediction of $11.79 billion.
“Productivity & Business Solutions,” which comprises mostly of the cloud software assets, including LinkedIn, grew to $11.74 billion from $11.52 billion a year ago, beating analyst predictions of $11.53 billion.
The most important nugget awaiting the masses was forward guidance.
Microsoft expects continued demand across Windows OEMs, Surface and Gaming to shift to remote work play and learn from home.
The outlook assumes this benefit remains through much of Q4, though growth rates may be impacted as stay-at-home guidelines ease.
Reduced advertising spend levels will impact search and LinkedIn and the commercial business.
A robust position in durable growth markets means Microsoft expect consistent execution on a large annuity base with continued usage and consumption growth.
LinkedIn will suffer from the weak job market and increased volatility in new, longer lead-time-deal closures.
A sign of strength and a pristine balance sheet was when Microsoft signaled that they could absorb higher costs by saying, “a material sequential increase” in capital-expenditure spending in the current quarter will “support growing usage and demand for our cloud services.”
Even best tech companies have mostly been trimming capex and freezing hiring in anticipation of weaker revenue targets.
I knew when Google announced 13% annual sales growth and Facebook saying that ad revenue “stabilized” meant that Microsoft would only do better.
The tech market had priced Microsoft doing quite positively which is why shares did not rocket by 8%.
Microsoft is not a one-trick pony like Google and Facebook either and simply doesn’t need a potential vaccine to boost sales moving forward.
They preside over a vast empire of diversified assets with even a growth lever in streaming platform YouTube.
Even if LinkedIn and the hiring that fuels it will suffer, the rest of its portfolio will keep churning out revenue in literally any type of economic environment.
Lastly, the tech market has been utterly cornered by policymakers who, according to the IMF, have thrown $14 billion of liquidity with a chunk of that following through into big tech shares.
The level of propping up from the Fed cannot be understated and their behavior feels as if there is no way anyone could ever be underweight Microsoft because of the Fed’s unlimited balance sheet.
On top of that, we are getting a steady stream of positive health reports in the form of antiviral medication Remdesivir and who knows when the next positive announcement will come.
To cap it off -they are led by the best CEO in the U.S. Satya Nadella, who is an expert on the cloud, and this company has to either be the best or second-best company in the country along with Amazon.
It’s hard to imagine that Microsoft’s earnings report on Wednesday will be anything other than remarkable as their growth drivers plow ahead in a digital-first economy.
The only risk that could soften shares following the report is the forward guidance.
Bill Gates asserted that the U.S. economy will come back to “semi-normal” in the next 2 months, and I wouldn’t bet against management putting a positive spin on the path going forward tying the company’s short-term prospects with the comeback of the wider economy. By semi-normal, he means still falling economic growth, just at a slower rate.
There is a high probability that this “semi-normal” state of the economy will last for longer than we think, but even in that scenario, Microsoft will outperform competition widening the gap between the haves and have nots.
Another theme picking up traction is the massive volume of business that will migrate digitally and will want to work with a quality cloud provider who is not their direct competitor Amazon.
What is there to like about Microsoft?
Almost all of it is the short answer.
Momentum in Microsoft’s cloud computing platform is strong and has experienced a surge in usage becoming a lifeline to many companies that have been forced to go all digital.
Even in the cutthroat COVID-19 environment, I still believe Microsoft’s Azure cloud expanded 50% year over year in the past quarter.
Even more successful, Microsoft’s workspace communication product, Teams, has seen a dramatic surge in popularity as co-workers try to solve company problems remotely.
Teams broke a daily record of 2.7 billion meeting minutes, up 200% from 900 million minutes on March 16.
In late March, Teams has 44 million daily active users (DAU), and 93 firms have implemented Microsoft Teams in the Fortune 100.
Another strong data point is Microsoft 365 and Dynamics 365 suite of solutions.
Every company needs these platforms as a utility to boost enterprise productivity.
The subscriber base has benefited from the avalanche of remote workers with their array of tools.
Microsoft’s professional network LinkedIn platform is likely to show outperformance adding to the top line in the quarter to be reported.
Another outstanding segment that can’t be overlooked is gaming, and specifically a meaningful increase in the Xbox Live monthly active users and a boost in the adoption of Game Pass subscriptions.
The only negative segment that is probable will most likely be the hardware segment as a deteriorating trend in PC shipments in the first quarter rears its ugly head because of coronavirus crisis-induced supply constraints.
A demand shock doesn’t help as well.
Consumers just don’t have the cash to upgrade their Microsoft Surface computer-tablet hybrid device.
Total PC shipments in first-quarter 2020 declined 12.3% year over year to 51.6 million units.
Another damper on profitability could come in the form of higher investments in cloud and AI engineering, amid stiff competition from Amazon (AMZN) in the cloud computing vertical and Slack (WORK) in enterprise communication domain.
Even with the global economy coming to a standstill, growing cloud sales by 50% would represent a massive relative victory in the broader scheme of things.
As the economy opens back up, Microsoft is well-positioned to capture much more of the rapid transformation into digital the has been a dramatic side-effect form this pandemic.
The company is already worth over $1.3 trillion and in a new economic world where big tech gets bigger, I see nothing in their path that will slow them down.
The anticipation of the new reality that Microsoft will become more influential post-COVID gives way to a rapid recovery in shares that will only gain steam as the 5G revolution approaches.
Microsoft will easily become a $200 stock and if the U.S. economy opens up sooner than people expect, then nail down this stock for a price of $230 a share by year-end.
I am strongly bullish Microsoft for the rest of 2020.
Today’s tech newsletter might be the most important one you will ever read.
It’s my job to pinpoint exactly what is going on in tech and disburse this information in a way that readers can take advantage of.
The tech market is all about striking when the iron is hot.
The five largest stocks in the S&P 500, Microsoft, Amazon, Apple, Google, and Facebook have accrued a combined valuation that surpasses the valuations of the stocks at the bottom 350 of the index.
This means that if you weren’t in tech the past few years, chances are that your portfolio significantly underperformed the broader market.
Even in August 2018, many active managers could have thrown in the towel and said the late economic cycle was way too frothy for their taste and time to take profits.
Little did they know that betting against it would equate to self-firing themselves because to retrieve the same type of performance would have meant staying in tech through the coronavirus scare.
Many in the trading community would even go as far as to say to wait for the bear market, then big tech would get hammered first and deepest because of their lofty valuations.
These tech companies were in for a rude awakening and shares had to consolidate, right?
Well, anyone who doesn’t live under a rock is seeing the exact opposite happen with Amazon, Microsoft, and Apple valuated above $1 trillion and still soaring as we speak.
This goes to show that betting against something because they are “too expensive” or “too cheap” is a fool’s game.
Just take oil that many retail investors bought because they came to the conclusion that oil could never go below zero.
Then playing oil through an ETF with massive contango means that the index is likely to go down even if the price of oil is up.
Not only do investors bear insanely high risk in these trading vehicles, but also a systemic risk of oil ETFs blowing up.
Oil is cheap, and it can get cheaper, while tech is expensive and can get a lot more expensive.
Until there are structural changes, there is no point to bet on a sudden reversal out of thin air.
Betting against things that an individual perceives as unsustainable and secretly hoping that they cannot continue to go on is probably the worst strategy that I have ever heard of in my life.
The reality is that these things are sustainable and tech shares will keep moving higher uninterrupted until they don’t.
Active managers are the ones who set market prices and they help the momentum accelerate in tech with full knowledge that if they miss out, there is likely no other solution to hit yearend targets.
What active manager doesn’t want their year-end bonus?
Even analyze the value investors who in a normal world would not even consider tech companies because they avoid the traditional “growth” profile.
Funnily enough, these “value” investors have Microsoft in their portfolios now even though it is not even close to a value stock.
So what has Microsoft accomplished recently?
CEO of Microsoft Satya Nadella has rebuilt a company Microsoft that is now equal in value to The Financial Times Stock Exchange 100 Index, the share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization.
That’s right, one American company is just as valuable as the top 100 public companies in England.
An even broader view of tech would give us an even more stunning snapshot of tech showing that the Top 5 tech stocks are now worth more than the entire developed stock market outside the U.S. such as Europe, Canada, Japan, Hong Kong combined.
Then take into consideration that these companies are on the cusp of penetrating high margin industries like medicine and healthcare which will translate into another golden decade of accelerating revenue and elevated profits relative to the rest of the S&P index.
The U.S. is a place where unfettered capitalism is promoted and implemented, and tech’s outperformance manifests itself by underscoring the winner-takes-all mentality.
Americans like winners and the rules are no different in corporate America.
These 5 tech names have contributed 23% of the gains in the past month and until they falter, there will be no tech sell-off.
Global Market Comments
April 24, 2020
Fiat Lux
Featured Trade:
(APRIL 22 BIWEEKLY STRATEGY WEBINAR Q&A),
(SPY), (INDU), (GILD), (NEM), (GOLD), (USO),
(SOYB), (CORN), (SHOP), (PALL), (AMZN)
