Come join John Thomas at the Mad Hedge Fund Trader’s Global Strategy Luncheon, which I will be conducting in Atlanta, Georgia, on Monday, October 15, 2018 at 12:00 noon. A three-course lunch will be followed by an extended question-and-answer period.
I’ll be giving you my up-to-date view on stocks, bonds, foreign currencies, commodities, precious metals, energy, and real estate. And to keep you in suspense, I’ll be throwing a few surprises out there, too. Tickets are available for $238.
The lunch will be held at an exclusive private club in the downtown area of the city that will be emailed with your purchase confirmation.
I look forward to meeting you, and thank you for supporting my research.
To purchase tickets for the luncheons, please click here.
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In another resplendent display of corporate expertise, Amazon (AMZN) debuted its stunning new lineup of smart home products aiming to dominate your inside walls.
In total, Amazon gave consumers 15 new devices to dabble with – an unprecedented amount.
Amazon Echo, Amazon’s smart speaker, also received a software update.
Jeff Bezos’ company is traversing where they have never been before, infiltrating the car with the Echo Auto, executing location-based routines such as directing drivers running on a brand-new operating system.
Other products in the shop window were smart devices related to security, a clock, an upgraded Echo Dot, and a microwave.
The biggest nugget delivered in this release event was the advent of the Amazon Echo-on-a-chip – Amazon Connect Kit.
Essentially, it would allow any third-party manufacturer that vies for smart home supremacy to embed an Amazon produced chip into its product and design the architecture around it.
This foray has already turned heads with appliance companies already raving about this new development.
Consumer product companies such as Hamilton Beach (HBB) and Procter & Gamble (PG) are in the midst of engineering its own products centered around the Amazon connect kit.
North America sales and marketing senior vice president at Hamilton Beach Scott Tidey said his company has been “surprised at how easy it is to use the Alexa Connect Kit to prototype devices and create Alexa commands with just a few lines of code.”
In the near future, consumers could be maneuvering around their homes with products possessing a legion of these new Amazon proprietary chips.
Amazon is bent on penetrating your home and turning it into the smart home you always dreamed of, and this is one of the in-roads that will take them to the holy grail.
This hard-charging approach has been effective.
Wait to see which products go viral, then go after market share like crazy.
This approach made the Amazon Kindle a favorite of many tablet goers.
It helps that Amazon products are crafted with intense precision and great attention to detail.
As more consumers devour new Amazon devices, the synergistic effects benefit its comprehensive eco-system.
Once a customer becomes entirely drenched in Amazon products, it becomes the backbone to a customer’s existence.
Ask the millennial generation, and a good portion of them entirely depend on Amazon to fuel their daily routine.
Any replacement services would waste them hours and be a whole lot pricier.
As the voice assistants become widely adopted, it could blow a hole in Google (GOOGL) search.
Google search is still reliant on its desktop search, even though more and more people are migrating to its mobile search platform.
But if Amazon can stay ahead of Google in the voice assistant race, it could supplant Google as the premier search engine.
It might be an existential crisis for Google search and the minions of Google ad tech engineers.
Google is still wholeheartedly reliant on advertisement revenue, which is its profit engine.
Although, the cash cow digital advertisement business has made the company famously rich, regulation is a ticking time bomb, as the government has a bull’s-eye marked at this Silicon Valley mainstay.
Amazon has smartly moved up the value chain of search, and believes voice-activated search will be the revolutionary search function in the next few years.
It’s hard to argue with its prognosis.
Providing enough high-caliber accoutrements that mesh with its voice supported portfolio will expedite adoption and put strenuous pressure on Google to evolve faster.
Even worse, the golden years for digital advertisement have passed and the pressure on margins could exacerbate.
Fighting Amazon would provoke the margin bears and in one fell swoop, Alphabet, which is waiting on Waymo to take off, could get hip-checked by the Seattle-based company.
As the FANGs start to bleed over into each other’s business, these new product events take on a more important meaning.
The Amazon-effect has the tendency to destroy smaller company’s stocks, but going forward, large companies will be just as badly affected as Amazon branches off into new spheres spearheading revolutionary initiatives.
This speaks volumes to the innovation of Amazon, and why the best innovators will always stay one step ahead.
Amazon is rated the No. 1 company by the Mad Hedge Technology Letter and after this stellar debut of various IoT products, it’s hard not to like them even more.
And if Amazon’s connect kit catches fire and Google is forced to concede this hardware to Amazon, it would be a kick in the midsection to Google whose IoT strategy is not sticking as strongly as it would like.
Amazon does not want to co-exist with other companies. However, it smartly concedes certain segments until it is confident in taking that segment over.
This is why Amazon’s in-house brands are starting to wreak havoc on the third-party sellers on its e-commerce platform.
Amazon ingenuously chose to make a microwave because the technology hadn’t changed much in a generation, yet it was in dire need of simplification.
Seize the low-hanging fruit before you tackle the more difficult challenges.
Once Amazon masters the simpler devices in the home, watch out!
The rest of the home will be up for grabs too because of the same reason many companies heed way to Amazon – it does it way better than any other company for a fraction of the cost.
The multiplier effect will be in full force when Amazon finally constructs its shiny new headquarter somewhere outside of Seattle giving Amazon more manpower to fulfill Bezos’ vision.
My bet is that it will be placed smack dab in the middle of Washington D.C. – a stone’s throw away from the White House where Bezos has been increasingly active adding to his army of lobbyists.
With regulation on the verge of breaking social media’s back, Bezos is acutely aware of protecting his assets as if his life depended on it.
Bezos also has a house in Washington and owns the Washington Post.
Amazon doesn’t rest on its laurels because it doesn’t dominate 80% of the Android market, and it must be the aggressor and the disruptor at the same time.
Rolling out 15 smart products blew away the drooling audience and left them befuddled and craving for more.
Amazon must do it another way than Google and its way; the Amazon way, is the winning strategy.
It’s hard to imagine that Google is still reliant on a legacy business to print them money. And as the digital ad industry sinks, Google will sink, too.
Google still hasn’t found the next answer that can marshal it to safe waters.
Its eggs are still in one basket – unlike Amazon.
As Amazon steamrolls the little companies that never had a chance, the threat of them taking out a Google- or a Facebook-size company grows exponentially.
Ironically, Amazon’s digital ad business is set to surpass $4 billion by the end of the year, and it’s not even the main aim for Bezos.
The digital ad business is a side business for Bezos.
His visions are grander and awe-inspiring, and this product rollout affirms this vision.
This is the beginning of something much more powerful. Any investor who thinks Amazon shares are expensive is crazy.
The report of bribery in Amazon’s system and the subsequent short-term weakness in the shares is a great chance to buy Amazon on the dip because this stock is going higher.
Anybody would be a fool to short Amazon.
This company exudes quality, and many would agree with me.
Just The Beginning And More Smart Products On The Way
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“Everything needs more data. The day is not far when you’ll need a gigabyte of flash in a smart phone,” said Sanjay Mehrotra, the CEO of Micron Technology.
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“People who are right most of the time are people who change their minds often,” said Jeff Bezos, Amazon cofounder, chairman and CEO.
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The Five Most Important Things That Happened Today
(and what to do about them)
1) China Cancels Trade Talks, and markets hate it, delivering the worst trading day this month. Things are going to get a lot worse before they get better. Are U.S. technology companies the next target? Buy the Volatility Index (VIX) on dips. Click here.
2) Hurricane Florence Bill to Hit $50 Billion, and very few of the 250,000 homes damaged or destroyed had flood insurance. That means a local recovery in the economy will be muted. Click here.
3) Barrick Gold (ABX) Buys Randgold (GOLD), creating the world’s largest gold miner. Both stocks pop big time. Deals like this are often a sign of a long-term market bottom. Do your Christmas shopping early? Click here.
4) Michael Kors (KORS) Buys Versace, for $2.4 billion. The future is in the high end of the market with big margins, where Amazon can’t compete. Click here.
5) Oil Breaks $80, a four-year high. OPEC calls Trump’s bluff and cuts back output. That other destroyer of economies, in addition to interest rates, is making its move. Click here.
Published today in the Mad Hedge Global Trading Dispatch and Mad Hedge Technology Letter:
(THE MARKET OUTLOOK FOR THE WEEK AHEAD, or IT’S FED WEEK),
(SPY), (XLI), (XLV), (XLP), (XLY), (HD), (LOW), (GS), (MS), (TLT),
(UUP), (FXE), (FCX), (EEM), (VIX), (VXX), (UPS), (TGT),
(TEN TIPS FOR SURVIVING A DAY OFF WITH ME),
(BAD NEWS FROM MICRON TECHNOLOGY),
(MU), (BABA), (KLAC), (LRCX), (INTC), (AMD), (NVDA), (HPQ)
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While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to six-month time frame, Mad Day Trader, provided by Bill Davis, will exploit money-making opportunities over a brief ten minute to three day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points.Read more
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Global Market Comments
September 24, 2018 Fiat Lux
Featured Trade:
(THE MARKET OUTLOOK FOR THE WEEK AHEAD, or IT’S FED WEEK),
(SPY), (XLI), (XLV), (XLP), (XLY), (HD), (LOW), (GS), (MS), (TLT),
(UUP), (FXE), (FCX), (EEM), (VIX), (VXX), (UPS), (TGT)
(TEN TIPS FOR SURVIVING A DAY OFF WITH ME)
20/20 hindsight is a wonderful thing, especially when all of your predictions come true.
In February, I announced that markets would trade in broad ranges until the run-up to the midterm elections. That is what has happened to a tee, with the decisive upside breakout taking place last week. From here on. You’re trying to buy dips for a year-end run-up to higher highs.
For many months I was the sole voice in the darkness crying out that the bull market was still alive, it was just resting. Now quality laggards are taking the lead, such as in Industrials (XLI), Health Care (XLV), Consumer Staples (XLP), and Consumer Discretionary (XLY).
Home Depot (HD), which I recommended a month ago has taken off for the races, as has competitor Lowes (LOW), thanks to a twin hurricane boost. Even the long dead banks have recently showed a pulse (MS), (GS).
Technology stocks are taking a long-needed rest after a torrid two-and-a-half-year run. But they’ll be back. They always come back.
It’s not only stocks that have broken out of ranges, so has the bond market (TLT), the U.S. dollar (UUP), and foreign currencies (FXE). Will commodity companies like Freeport-McMoRan (FCX) and emerging markets (EEM) be the last to pick themselves off the mat, or do they really need to see the end of the trade wars first?
Markets are essentially acting like the trade war is over and we won. Why would traders believe this? That’s what a Volatility Index touching $11 tells you and is why I have been telling them to avoid buying it all week. Because the president told them so.
Another not insignificant positive is that multinationals have been slow to repatriate foreign funds, so there is a lot more still abroad to buy back their own stocks.
Weekly jobless claims hit another half century low at 201,000. Major U.S. companies such as UPS (UPS) and Target (TGT) are planning record levels of Christmas hiring. By the way, this is what economic peaks look like.
The Senate passes a mini spending bill that keeps the government from shutting down until December 7. The budget deficit keeps on soaring, but apparently, I am the only one who cares. Live through a debt crisis like we had during the early 1980s and you’d feel the same way.
The data for housing continues to be terrible, and we saw our first increase in inventories in three years.
Finally, with people camping out overnight and lines around the block, Apple’s CEO Tim Cook opens the doors to the Palo Alto, CA, store at 9:00 AM sharp on Friday to three new phones. But did the stock peak at $230, as it has in past release cycles?
Last week, the performance of the Mad Hedge Fund Trader Alert Service forged a new all-time high and then gave it up on one bad trade. September is now unchanged at -0.32%. My 2018 year-to-date performance has retreated to 26.69%, and my trailing one-year return stands at 38.23%.
My nine-year return appreciated to 303.16%. The average annualized Return stands at 34.32%. I hope you all feel like you’re getting your money’s worth.
This coming week is all about the Fed, plus a plethora of housing data. On Monday, September 24, at 10:30 AM, we learn the August Dallas Fed Manufacturing Survey.
On Tuesday, September 25, at 9:00 AM, the new S&P Corelogic Case-Shiller National Home Price Index for July, a three-month lagging indicator.
On Wednesday September 26, at 10:00 AM, the August New Home Sales is published. At 2:00 the Fed Open Market Committee announced its decision to raise interest rates by 25 basis points.
Thursday, September 27 leads with the Weekly Jobless Claims at 8:30 AM EST, which dropped 3,000 last week to 201,000, a new 43-year low. At the same time an update on Q2 GDP is published.
On Friday, September 28, at 9:45 AM, we learn the August Chicago Purchasing Managers Index. The Baker Hughes Rig Count is announced at 1:00 PM EST.
As for me,
Good luck and good trading.
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I snowshoed some 600 miles last winter, most of it over 9,000 feet with a 60-pound pack.
And now the weather is getting nippy, so it is time to haul my well-worn snow shoes out of storage.
It is definitely a sport of mixed pleasures. The blisters and calluses that cover my feet hurt, but my blood pressure has dropped to 110/70. My knees ache, but my resting heart rate has plunged to 45.
In fact, the heart rate monitor at the local emergency room says that I am already dead. Did I mention that I'm developing bulging muscles in places I didn't know I had?
For those of you who wish to engage in this strenuous, bracing activity, or who are Mad enough to join me someday, I have included below a list of tips on how to get the most out of it.
1) Layer your clothes. You'll want to strip down to your T-shirt hauling a load uphill at 30 degrees. On the way down, you'll need to add a layer back on, and a second and third when the sun sets.
2) When the temperature drops below 10 degrees, you can't have any exposed skin. Bring along a knit hat, neck warmer or scarf, and a second pair of silk glove liners. No pair of pants can keep you warm when it's this cold. So REI makes these great silk long underwear, which are a must have (click here). Don't worry about changing out in the open. There's nobody up here.
3) Walking on the snow for six hours will cut through even the heaviest wool socks. So, put a heavy neoprene insert into your boots for extra insulation. It will keep those dogs warm and toasty.
4) Bring an old pair of ski goggles in case the wind picks up. That way the tears won't freeze on your face.
5) Fill your canteens with boiling water right when you leave or they will freeze solid before you get home. Drinking warm water on the slopes will reheat your core.
6) Include an expedition quality, four-season tent and a -20 degree-rated sleeping bag in your pack. If you break your ankle, or trip on your snowshoes and break your arm, it could be a couple of days before Search and Rescue finds you. (Learned that the hard way).
7) MSR Lightening Ascent 30's are to die for, the Rolls Royce of snowshoes (click here). They have a fold up bar which allows you to stair step your way straight up the side of a hill. Buy the extra five-inch floating tails for carrying heavy loads in fresh deep powder. These are highly recommended by Alaskan winter pipeline surveyors. That's good enough for me. Rental snowshoes tend to be cheap ones that you will regret.
8) Keep anything electronic, like an iPhone, a GPS, or car keys in an inside pocket where your body heat will keep them warm. Leave them in your pack and they freeze solid, becoming useless. Good luck calling the Auto Club in a snowstorm at a high mountain pass after 10 PM. (Also learned the hard way). If you ignore this advice and your keys freeze, stick them in your armpit. Your car will start right up in 15 minutes.
9) Completely plaster your face with SPF 70 sunscreen. The reflection from snow covered slopes and the high-altitude UV will fry you if you don't, especially your nose.
10) Bring an old-fashioned compass. You don't want to bet your life on the fancy electronic gizmos from Best Buy. Otherwise, you'll walk right off a cliff in the white out conditions of a blizzard. (Again, learned the hard way).
Well, I'm sure you're all raring to go after this description of my days off. See you on the mountain.
The Newsletter That Bares All
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