The Five Most Important Things That Happened Today
(and what to do about them)
1) Lyft Prices at $72 a Share, the top end of expectations, valuing the company at an eye-popping $24 billion. Never mind that the company is losing money hand over fist, it’s all about potential. The tech IPO bubble top has started! Click here.
2) Pending Home Sales Drop 4.9% YOY, and 1.0% in February. Give it another month or two for ultra-low interest rates to kick in for the lagging indicator. Avoid homebuilders (ITB). Click here.
3) Wells Fargo CEO Tim Sloan Resigns, over the sins of his predecessor in the giant cross-selling scandal. Next scapegoat, please. Still, (WFC) is the cheapest bank around. Too bad I hate banks, even though I love the horses and stagecoaches on their checks. Click here.
4) New Home Sales Up 4.9%, to 667,000 units in February in a rare positive data point. Could low interest rates finally be kicking in? Still, avoid homebuilders. Click here.
5) Consumer Sentiment Rises to 98.4 in February, says the University of Michigan. Watch out for quarter end window dressing today. They’ll try to close them high. Click here.
Published today in the Mad HedgeGlobal Trading Dispatch:
https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png00Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2019-03-29 11:53:282019-03-29 11:53:28Mad Hedge Hot Tips for March 29, 2019
The Five Most Important Things That Happened Today
(and what to do about them)
1) The US Government Sues Facebook, claiming they enable housing discrimination through its advertising. Expect more government attacks against the FANGs. The west coast is not loved by this administration. Click here.
2) Q4 GDP Final Report Comes in at 2.2%, as expected, down a third from Q3. Expect that figure to more than halve in Q1 2019. Put on your hard hat. Click here.
3) Massive Broker Layoffs Presage Coming Recession. Cutting the overhead is crucial if you’re going to survive the next downturn. It doesn’t help that FinTech is eating their lunch. Click here.
4) Foreign Investors Pour into the US Bond Market, driving ten-year US Treasury yields down to 2.33%. When everyone else in the world has negative yields, our bonds become the highest yielding in the world. Click here.
5) But the Stock Market is Getting it Wrong, seeing plunging rates as a sign of imminent recession. When the market figures this out, stocks will rally hard to new highs. Maybe that’s why we’re only falling 100 points a day. The recession is next year’s business.
Published today in the Mad HedgeGlobal Trading Dispatch and Mad Hedge Technology Letter:
(JOIN US AT THE MAD HEDGE LAKE TAHOE, NEVADA CONFERENCE, OCTOBER 25-26, 2019)
https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png00Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2019-03-28 10:32:342019-03-28 10:32:34Mad Hedge Hot Tips for March 28, 2019
(JOIN US AT THE MAD HEDGE LAKE TAHOE, NEVADA, CONFERENCE, OCTOBER 25-26, 2019)
(THE REBIRTH OF THE MASTER LIMITED PARTNERSHIP),
(USO), (AMLP), (FPL), (MLPS), (MLPX)
If McDonald's is using more technology, then maybe your company should be using more too.
In its most dynamic deal since divesting from Chipotle (CMG) in 2006, McDonald’s acquired artificial intelligence software company Dynamic Yield.
The company is an Israeli startup specializing in software that customizes content to the user.
The result of this ramp up in technology means that your McDonald's experience is about to improve, become easier and faster.
This is not your father’s McDonald’s.
At handpicked locations in America last year, McDonald's tested the artificial intelligence software which provides functions such as cross-selling different items on a sidebar and taking into consideration the current weather and time of day.
For example, on hot summer days the machine learning software will most likely recommend colder items such as desserts and soft drinks, and on colder days lean towards a hotter, more filling option.
Another likely consequence is after choosing a full meal of some sort, the software will further prompt the customer of the choice of popular à la carte items via the sidebar.
The theme of digital transformation is upon us and following the lead of other fast food companies such as Domino's Pizza (DPZ) will make operations more efficient and appeal to different segments of society.
The decision to gentrify and digitize the customer experience could be a result from a stagnating fast food industry that is in a price war down to the bottom.
Did you know you that you can buy 10 chicken nuggets for $1 at Burger King now?
Or even a simple cocktail at Applebee's for just $1?
QSRs (quick service restaurants) have lagged posher establishments caused by the cutting down of immigration and the struggling of the low-income class that is squeezing out fast food restaurants’ go-to clientele base.
And as construction rates have crashed because of the surging material costs induced by tariffs and a lack of foreign workers, McDonald's has been forced to look to replace demand.
Construction workers are a healthy portion of McDonald’s domestic lunch demand.
Not only is foot traffic being affected, but the fast food industry in America is saturated and funnily enough, when I travel to Europe every summer, this is one of the first comments I get from the Europeans.
The drive-thru menu will be one of the primary beneficiaries of this new software, and the projected enhancement of customer satisfaction should drive higher retention rates.
McDonald's plans to roll out kiosks that self-serve customers which is one stop on the way to a fully automated experience.
In the next 5 or 10 years, there might be only one or two McDonald's employees running a franchise.
McDonald's is clearly trending towards reducing employee headcount evident in their strategy of deciding to halt lobbying efforts to bring down the minimum wage.
Genna Gent, McDonald’s Vice President of U.S. government relations, went on record sharing that “outlets owned by the company have an average starting wage that exceeds $10 per hour.”
Most fast-food companies would be frightened to discover the House Committee on Education and Labor advanced a bill earlier this month to increase the minimum wage from $7.25 to $15 per hour by 2024 thus incentivizing McDonald’s to pick up the pace of their digital transformation.
McDonald's is not only one of the biggest employers in America, but they are one of the largest in the world.
The company had 210,000 employees in 2018 and I believe they will be able to quickly get down to 150,000 with the new software streamlining employees’ tasks allowing franchises to reduce headcount.
Getting on top of the mobile app and optimizing delivery is another step to McDonald’s digital growth strategy.
The adoption of machine learning will at some point allow customers to reorder their favorite meals on demand or before they enter the establishment, and even possibly personalizing parts of a meal that can mix and match to create alternative meals.
And the beauty of all of this, the same software rolled out to the self-serving kiosks, drive-thru platform, and mobile app can be universally adopted and managed from the cloud causing massive savings from tech efficiencies.
McDonald’s is not without its share of difficulties, sales have been plunging since 2014 and part of the response to this was to start the digital transformation.
This is just the second step of a long drawn own process that will automate the production process and customer experience.
On the flip side, the 3-year EPS growth rate is 16% demonstrating that even with falling sales, the efficiencies are falling down to the bottom line with the company profiting over $5 billion in 2018.
Ironically enough, McDonald’s profits were substantially lower with higher sales, indicating to management that a leaner version of itself has been justified.
I believe McDonald’s will continue to gentrify its menu, digitize its customer experience and production process, and sale deceleration will slow down while profit acceleration and EPS will increase.
This is a good omen for the stock’s trajectory and the company continues to be a good buy on the dip candidate because its upward share movement is entirely correlated to the increasing profitability which it continues to deliver on.
As we inch closer to a recession, deterioration of economic conditions could push an unintended growing number of customers through McDonald’s arched doors as they usually attract customers who earn less than $45,000 per year, looking to save some extra cash.
This could set the stage for a reawakening of increased sales.
https://www.madhedgefundtrader.com/wp-content/uploads/2019/03/mcdonalds-order.png506760Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2019-03-28 03:06:452019-07-10 21:38:05McDonald’s Goes High Tech
https://www.madhedgefundtrader.com/wp-content/uploads/2019/03/satya.png358412Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2019-03-28 03:05:492019-07-10 21:38:10March 28, 2019 - Quote of the Day
The Five Most Important Things That Happened Today
(and what to do about them)
1) The Global Bond Short Covering Panic Continues, with ten-year US Treasury yields dropping to an eye-popping 2.37%. Slowing global growth is to blame. Did I hear the word “refi”? Click here.
2) Apple Violates QUALCOMM Patent, rules a judge, and (AAPL) tanks. The battle continues. Click here.
3) FinTech is on Fire, as legacy banks die a death of a thousand cuts, hobbled by the cost of their massive branch networks and lagging technology. Is it time to take another look at the FinTech ETF (FINX)? Click here.
4) Mad Hedge Hits New All-Time High, with 2019 performance hitting 15% this morning. More to come. Going 100% cash by the April 18 options expiration. Click here.
5) Centene (CNC) Buys WellCare (WCG) for $15 billion. Healthcare is the last fragmented industry left so you can expect vastly accelerated M&A in the future. If you can’t compete under “single payer” you’ll soon be out of business. Every stock is now a lottery ticket. Click here. Published today in the Mad Hedge Global Trading Dispatch and Mad Hedge Technology Letter:
(JUMP ON THE VERTEX BANDWAGON),
(VRTX), (CRSP),
(MAD HEDGE FUND TRADER CELEBRATES ITS 11-YEAR ANNIVERSARY)
https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png00Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2019-03-27 11:34:062019-03-27 11:34:06Mad Hedge Hot Tips for March 27, 2019
https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png00Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2019-03-27 01:07:542019-07-10 21:38:16March 27, 2019
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