This Week inwards Barrons: 6-16-2019:
Thoughts:
The Influencer (Part 1):
Step 1 – Recognize an Influencer: Facebook (the #1 Influencer on the planet) is bringing us Libra – their real ain crypto currency. It’s going to live a pretty large deal. Visa, MasterCard, Uber as well as others receive got each paid $10m to sign on. Others such as: Stripe, Booking.com as well as MercadoLibre are also a component of the project. These companies are NOT signing on because Libra is a stablecoin with reduced volatility. They are signing on because Libra is the get-go native, global, crossover rewards - points - currency organization ever invented. For example: say yous go regularly, receive got accumulated tons of airmiles, as well as a gazillion hotel points. You e'er acquire the upgrades, the room amongst a view, as well as never hold back inwards line. Libra takes yous to the adjacent level. Now, those same points tin can purchase yous a sweater at Nordstrom's, dinner inwards SoHo, forepart row tickets at The Garden, as well as transportation money to your bestie overseas. But wait: it gets better. You accumulate this currency (in part) – non past times slaving over your proverbial ‘day job’ as well as spending to a greater extent than money – but past times sharing your private pics of your kid’s birthday political party or liking your college roommate’s Cabo updates. This is a truthful utility coin. Everyone volition desire to re-create it – few volition succeed. Libra has the mightiness to accept crypto mainstream as well as completely obliterate banking privacy. To quote SJL tongue-n-cheek: “I but can’t hold back for a cryptocurrency amongst the ethics of Uber, the censorship resistance of PayPal, as well as the centralization of Visa – all tied together nether the proven [airtight] privacy network of Facebook.” Whether nosotros similar it or not, Facebook (our #1 influencer) has but crossed over into money management. The large losers hither are the banks as well as their fees. The three largest banks inwards 2018 earned: $1.1B inwards ATM fees, $2.3B inwards maintenance fees, as well as $5.4B inwards overdraft fees. Big tech as well as crypto are coming for those fees. With this traction, hundreds of millions of people volition acquire a sense of savour of moving money inwards as well as out of digital currencies equally they pay for goods as well as services. It’s bullish for Bitcoin, Facebook, Visa, Mastercard as well as Paypal. Yes Virginia, this is a actually large deal.
Step 2 – Acknowledge the Power of an Influencer: If yous genuinely believe that your decisions are independent of everyone else’s – yous 1st need a mirror as well as and then yous demand to encounter REVOLVE. Revolve rode the moving ridge of social media and pioneered influencer marketing. Revolve (the fashion companionship that links buyers amongst hashtags) IPO’d on Fri as well as watched their shares at nowadays double. Revolve knows that we’re no longer watching TV or reading mags – hence they encounter yous on Instagram. Revolve sells clothes nether 21 of their ain brands as well as hundreds of others – marketing them through their 3,500 influencers’ social media accounts. They throw 100’s of Coachella-esque (#RevolveAroundTheWorld) trips as well as excursions annually. It’s not but beautiful people amongst millions of followers. It tracks fashion styles based upon what's getting clicked, shared, as well as bought past times its 3m+ Insta-followers. Its algorithms observe patterns across information inwards social club to create upward one's heed what’s inwards as well as what’s out. Their goal is: “constant awareness.” Their competitive reward is: “less inventory risk.” Their termination is: “79% of theirclothes were sold at total toll concluding year.”
Step three – Be an Influencer: If you’re at nowadays thinking that peradventure there’s something to this Influencerthing, as well as then MJP has some thoughts for yous becoming one:
- Embrace the Strategy: Skate to where the puck is going to be. Flatten the jerk who’s standing in that location now. Take that puck as well as seize amongst teeth it inwards half. Own that puck.
- Understand the Sale: Take no prisoners. “You are inwards for a battle of wits for which yous are totally unprepared"… G. Gordon Liddy. Learn to live efficient. Know when to burn as well as close.
- Behave similar an Influencer: Always comport amongst respect, grace, honesty, integrity as well as intensity. “Make your prospect WANT to exercise concern amongst you."
The Market:
Last calendar week Morgan Stanley’s main investment officeholder wrote to his clients:“The economical information continues to deteriorate equally we’re seeing: weak durable goods orders, disappointing working capital missive of the alphabet spending, soggy retail earnings, lackluster freight shipments, as well as a real soft jobs lay out equally evidence of an economic scheme running on fumes. This raises the gamble that companies volition exercise whatever it takes to protect margins, as well as spell labor is the concluding lever they volition delineate – they volition delineate it if they demand to.”
Nobody on Wall Street is exclusively blaming U.S. – China merchandise tensions. Our economic scheme was already slowing pre-China catastrophe. If you’re waiting for lower involvement rates to ignite a rally – don’t. Specifically, if yous think a 2nd half recovery is correct around the corner – I believe that is unlikely to materialize. I similar beingness overweight inwards some growth areas similar cannabis as well as crypto, as well as proceed to similar utilities as well as consumer staples inwards this environment. Even the Morgan Stanley Business Conditions Index cruel past times 32 points inwards June, to a flat of thirteen from a flat of 45 inwards May. This is the largest one-month reject on record. “The reject shows a sudden deterioration inwards sentiment this calendar month that was broad-based across sectors,” said economist Ellen Zentner. The reality is the next are falling: durable goods orders, industrial production, truck orders, air freight orders, PMI, wages, housing, as well as our chore numbers. Our involvement charge per unit of measurement curves are showing inversions, as well as China is buying more gold than it has inwards the past times three years.
I think yous acquire it. Reality says that this marketplace should live 10K points lower, but the facts are that we’re close to build all-time highs. I’m seeing companies that are rich inwards old fashioned things (like Walmart, Disney as well as McDonalds) pass a lot of their fourth dimension as well as attending transforming themselves into the spitting icon of their upstart competitors. Disney wants to aspect similar Netflix. Walmart wants to retail similar Amazon. And McDonalds wants to live equally habit-forming as well as celebrated for its freshness equally its sometime protégé – Chipotle.
In general, I tend to shy away from markets where I view dogs sleeping amongst cats, as well as our electrical current province of affairs is no exception.
InfoBits:
- Wedding's off: Fiat Chrysler and Renault planned a $40B summertime merger, but their Japanese relatives canceled the nuptials. Renault has a long as well as incestuous human relationship amongst Japan's Nissan. I approximate Nissan felt betrayed that it wasn't asked past times Renault for its merger blessing, hence Fiat Chrysler pulled out over the theatre unit of measurement drama.
- You're dead to me, Amazon: That’s what FedEx said when it made the bold displace to end its frenemy human relationship amongst the ecommerce beast. Amazon started getting deeper inwards the transportation game, as well as lately it opened an air cargo hub inwards Kentucky. When AMZN produced it's drone delivery teaser – that was the concluding straw.
- See Data, Engage Customers: Salesforce is acquiring Tableau Software, a information visualization company, for $15.7B inwards an all-stock deal. "Tableau helps people view as well as sympathise data. Salesforce helps people engage as well as sympathise customers," said Salesforce CEO Marc Benioff regarding the deal.
- Flying High: United Technologies is merging amongst Raytheon (RTN), the defense strength contractor, inwards an all-stock deal. This volition build them the second-largest aerospace as well as defense strength companionship inwards the basis – behind Boeing. The novel companionship volition live called Raytheon Technologies Corporation, as well as volition receive got annual revenue of close $74B. Raytheon makes missile defense strength systems as well as cybersecurity products. United Technologies makes jet engines as well as elevators.
- E3 inwards a Nutshell: Microsoft as well as Sony are coming out amongst game consoles adjacent year. Cyberpunk, Halo Infinite, as well as the Final Fantasy VII remake volition come upward out adjacent year. Bethesda, Sony, Microsoft, as well as Google are all coming out amongst game streaming services this year. There, your’re all caught up.
- No to a greater extent than plastics: Add Canada to the growing lay out of countries that are banning single-use plastic items past times 2021. No to a greater extent than plastic bags, straws, cutlery or stirring sticks. The United Kingdom of Great Britain as well as Northern Ireland is banning such items adjacent year, as well as the E.U. has passed its ain single-use plastics ban.
- 'Merican Oil: The U.S. is producing a tape high of 12 1000000 barrels of crude oil a day. And inwards 2018, the U.S. had the largest growth inwards natural gas as well as crude oil production inwards a unmarried year.
- Lessons learned? The Real Real is an online consignment store for luxury goods. They’re IPOing shortly – trading nether the ticker REAL. A fun fact is their CEO Julie Wainwright – is the sometime CEO of Pets.com. Let’s hoped she’s learned a few things since those days.
Crypto-Bytes:
- AON Insurance: AON is the world’s second-largest insurance broker. They receive got brought together a panel of insurers to covert digital property disasters. They volition offering insurance on everything from hot as well as mutual frigidity wallets to natural disasters to third-party hacks.
- You been Jacked! Crypto-hackers receive got but unleashed a novel malware inwards Microsoft systems that steals figurer resources to mine the privacy money - Monero (XMR).
- Build-Your-Own: You tin can at nowadays create your ain Crypto Fund = https://www.iconomi.com/create-your-own-crypto-fund. Iconomi are goodness people – give them a endeavour if yous receive got a minute.
- Visa – keeping amongst their: “Everywhere yous desire to be”unveiled a Blockchain-based B2B Connection Platform for cross-border corporate payments.
- The Rally’s dorsum on: Crypto-technicals suggest the continuation of a strong growth menses inwards crypto. Bitcoin bulls volition live dorsum inwards the painting in 1 lawsuit Bitcoin (BTC) rallies inwards a higher house $9,100 (currently at $9,100.)
- Coinbase: Launched its crypto-debit bill of fare in 6 to a greater extent than European countries.
- Lunch amongst Warren Buffett: Tron CEO Justin Sunday is moving his $4.6m dejeuner engagement amongst Warren Buffett to “the heartland of tech,”aka Silicon Valley. This is the get-go fourth dimension since the annual “power lunch”tradition started inwards 2000 that the repast volition accept house inwards San Francisco. “We desire this dejeuner to live a span betwixt the cryptocurrency community as well as the traditional investor,”Sun said. Buffett told Bloomberg, “I’m delighted amongst the fact that Justin has won the dejeuner as well as am looking forrad to coming together him as well as his friends.”
- John’s Back: None other than John McAfee – the noted cybersecurity skillful as well as eccentric crypto fan has launched a cryptocurrency trading platform. The site claims to allow users “trade cryptocurrencies on multiple exchanges inside a unmarried dashboard, automatically as well as manually.” Notably, the commutation appears to live non-custodial, amongst users’ crypto holdings remaining on 8 other commutation platforms. When a merchandise is executed, funds are transferred from those accounts to consummate the transaction. I’m trying to figure out what is unique close this … $0 transfer fees across platforms … NOPE! Still looking…
Last Week:
“Two crude oil tankers receive got been damaged inwards a suspected assault inwards the waters betwixt the United Arab Emirates as well as Islamic Republic of Iran equally they were leaving the Western Farsi Gulf. This is the 2d incident inwards 4 weeks, as well as raises the query of who gains what from them. Fingers volition for certain live pointed at Islamic Republic of Iran equally the mastermind behind these events. But the potential benefits to the Western Farsi Gulf acre are outweighed past times the risks. And fifty-fifty if Tehran isn't responsible, it could even hence endure the consequences.” No 1 has taken responsibleness for this, but the implications are piece of cake to see. Israel wants the U.S. to destroy Iran, as well as the state of war hawks are willing to accept upward that cause. The piece of cake playbook is that Islamic Republic of Iran gets blamed for all this, despite the fact that they potentially receive got picayune to gain past times pulling this off.
Because of this as well as other geo-political news, the marketplace was managed, ever hence gently this past times week. The goal for the powers-that-be was to maintain the marketplace (S&P as well as DOW) inwards a higher house their respective 50-day moving averages. Giving credit where credit is due – they did a masterful chore at that. Each dip downwards to the moving average (or slightly below) was bought but in-the-nick-of-time to salve the day. For five days now, we've been crawling ‘magically’ sideways. On Mon nosotros closed amongst the S&Ps at 2,886, as well as nosotros closed on Fri (I can’t build this up) amongst the S&Ps at 2,886. That is non a random walk, or the gratis marketplace but beingness free. This is somebody carefully playing ‘Pin the Tail on the Donkey’ without a blindfold. Therefore, the ass wants to rest inwards bull mode, inwards a higher house the 50-day moving average. So far they’re managing it real well.
Weed:
As the inwards a higher house nautical chart shows, the density of marijuana stores is slow surpassing that of Starbucks & McDonald’s inwards many mature cannabis markets. Recently released facts demo that marijuana retailers inwards Denver, Colorado as well as Portland, Oregon outnumber Starbucks past times unopen to 2 to 1. McDonald’s, some other iconic as well as recognizable brand, was outpaced inwards all 4 markets tested. A lesson that tin can live taken from the information is that if customers receive got a less-than-positive experience at whatever given recreational cannabis store, they probable receive got dozens of other shops inwards the same vicinity they tin can visit. Moving forward, retailers volition demand to render consumers a compelling argue to see as well as return, such equally depression prices, particular service, character production alternative and/or convenience.
After half-dozen months of operation, Massachusetts adult-use marijuana sales proceed to rising at an average monthly charge per unit of measurement of 21% per month. The average client spends $44 per visit. Raw blossom comprises but nether one-half of all dollar sales, amongst concentrates, consumables, as well as topicals accounting for the other half. Estimates for 2019’s recreational sales inwards Massachusetts volition live around $500m, amongst corresponding taxes approaching $150m.
Weed Deal Watch: Public companies led the accuse inwards acquisitions this past times week, targeting private firms for growth inwards geography as well as production lines inwards to a greater extent than than 2/3rds of the deals closed. But equally to a greater extent than cannabis companies accept to the populace markets, the manufacture may start to view to a greater extent than public-to-public deals. A duad tidbits from concluding calendar week are: (a) Cresco Capital Partners closed a $60m enhance for its CCP Fund II – which is $10m to a greater extent than than the cannabis fund’s initial target. This fund specifically deploys working capital missive of the alphabet across the marijuana industry, from plant-touching companies to ancillary services. And (b) multistate operator Jushi (which commenced trading on the NEO commutation this calendar week nether the ticker symbol JUSH.B) closed a enhance of $68.2m.
Next Week:
The whole tariff story is getting old already. Pretty before long mortal is going to start a new merchandise state of war as well as nobody volition care. No affair the markets immediate reaction, I hold back the eventual unwind to live pretty ugly. Staying little is the best investment advice ever. Think dorsum to 2005 - 2007. If yous were amongst me then, yous know I was pounding the tabular array that the housing madness would come upward to a real bad halt, as well as nosotros were going to view a massive melt down. Well, it happened, but at that indicate the Central Banks had NOT completely colluded amongst each other to maintain crashes from happening. So, dorsum as well as then it wasn't terribly difficult to predict as well as turn a profit from an enormous crash.
What is “different this time” is: (a) Central Banks (CBs) receive got embraced the movie ‘Fight Club’ – taken their gloves off, telling the basis that anything goes. (b) CBs are at nowadays working seamlessly inwards concert. And (c) CBs inwards 2007 did non ain over $1T worth of stock. Remember what it cost them to purchase those stocks? It cost them the electrical nib to run the computers which created the digits.
The FED knows that the existent economic scheme is floundering. They know the concluding jobs study stunk, realize we're inwards a merchandise war, as well as sympathise that Russian Federation as well as China are trying to deleverage from the dollar. The latest University of Michigan sentiment numbers demo us falling over 2% - from a reading of 100 to 97.9. The latest expectations reading cruel over 3.5% from 92 to 88.6. So things are non moving inwards the correct direction. Our FED sees credit bill of fare debt spiking wildly. People buying things amongst their debit cards or amongst cash has been replaced past times credit as well as credit bill of fare interest. That’s never a nifty sign.
The FED knows that the existent economic scheme is floundering. They know the concluding jobs study stunk, realize we're inwards a merchandise war, as well as sympathise that Russian Federation as well as China are trying to deleverage from the dollar. The latest University of Michigan sentiment numbers demo us falling over 2% - from a reading of 100 to 97.9. The latest expectations reading cruel over 3.5% from 92 to 88.6. So things are non moving inwards the correct direction. Our FED sees credit bill of fare debt spiking wildly. People buying things amongst their debit cards or amongst cash has been replaced past times credit as well as credit bill of fare interest. That’s never a nifty sign.
If this marketplace gets a whiff that our FED is non going to cutting rates – they volition sell us off. Likewise, if a duad of missiles are fired into Iran's nuclear centrifuge labs – things volition boot the bucket rocky for a while. So it's best to live on your toes inwards here. At times similar these I oftentimes think Joshua’s line from ‘War Games’: “The only means to win – is non to play.”
Tips:
Top Equity Recommendations:
HODL’s:
- Aurora (ACB = $7.56 / inwards @ $3.07),
- Canntrust Holdings (CTST = $5.00 / inwards @ $3.12),
- Canopy Growth Corp (CGC = $41.18 / inwards @ $22.17),
- GBTC (GBTC = $10.80 / inwards @ $10.01),
- Hexo (HEXO = $5.61 / inwards @ $6.37),
Crypto:
- Bitcoin (BTC = $9,100)
- Ethereum (ETH = $270.00)
- Bitcoin Cash (BCH = $4300.00)
Options:
- RIOT ($2.73):
o Buy January 17, Sell $3 Call / Sell $3 Put / Buy $4 Call for $1.85 CR
o Buy January 17, Sell $2 Call / Sell $2 Put / Buy $3 Call for $1.45 CR
o (can only lose money if RIOT falls below $1).
Thoughts:
- Nasdaq (QQQ): Last Friday, Microsoft’s closing toll pushed the company’s marketplace cap over $1T for the get-go time. MSFT has boot the bucket a growth story based inwards component on its next-gen gaming platform given the naughty name: Project Scarlett. There is some marketplace confidence around the easing merchandise tensions as well as hopeful close a charge per unit of measurement cut. But peradventure equally good confident as well as hopeful. In fact, a surprise inwards whatever of the market’s bullish assumptions could whack the QQQ’s dorsum down. If yous are considering a bearish strategy inwards QQQ, the long lay vertical that’s brusque the $182 Put as well as long the $184 Put inwards the July monthly expiration amongst 33 days until expiration has a 60% probability of making 50% of its max turn a profit earlier expiring.
- American Express (AXP): Some of the main beneficiaries of the dropping 10-year Treasury yields are consumer finance stocks, as well as inwards detail AXP. It has rallied 6 days inwards a row for the equivalent of 2.3 measure deviations as well as has reached an all-time high. Warren Buffet’s Berkshire Hathaway is AXP’s largest shareholder (about 20%), as well as he must live enjoying the ride. Is it wise to fade the Oracle of Omaha? Earnings are coming upward on July 17, which could growth the volatility of AXP’s movements. So, if you’re bearish on AXP’s rally as well as are willing to accept a gamble through earnings, the long Put vertical that’s brusque the $122 Put as well as long the $125 Put inwards the July weekly expiration amongst xl days until expiration is a bearish strategy that has a 63% probability of making 50% of its max turn a profit earlier expiration.
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Please live prophylactic out there!
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