“If something's important enough, you should try. Even if you - the probable outcome is failure.” – CEO of Tesla Elon Musk
"Japan has gone from Paul Volcker to Ben Bernanke overnight," said legendary hedge fund manager, Stan Druckenmiller.
Mad Hedge Hot Tips
April 25, 2019
Fiat Lux
The Five Most Important Things That Happened Today
(and what to do about them)
1) Q1 GDP Comes in at a Red Hot 3.2%, despite the government shut down, trade war, and terrible winter. Many estimates were below 1%. Of course, the stock market knew this already, rising almost every day this year. Did stock rally just get another leg up, or this the greatest “Sell the news” of all time? Click here.
2) However, All Asset Prices Moving in the Opposite Direction, with stocks falling and bonds rising on the news. Is THIS the sell the news message? I’m taking profits on my bond longs before the market figures out its wrong. Click here.
3) And Tech Stocks Are Really Not Buying It, in the wake of weak Intel Earnings. Buy (INTC) and other techs on the dip. Click here.
4) Oil Especially Crashes 3%, on Trump tongue wagging, promising he will order the Saudis to increase production, which they won’t. Really, it was extremely overbought and due for a correction. Click here.
5) So Will the Fed Raise Rates Now? A normal Fed would in the face of the hot GDP number. But nothing is normal anymore. Click here.
Published today in the Mad Hedge Global Trading Dispatch and Mad Hedge Technology Letter:
(HOW TO RELIABLY PICK A WINNING OPTIONS TRADE)
Global Market Comments
April 26, 2019
Fiat Lux
Featured Trade:
(HOW TO RELIABLY PICK A WINNING OPTIONS TRADE)
Mad Hedge Hot Tips
April 25, 2019
Fiat Lux
The Five Most Important Things That Happened Today
(and what to do about them)
1) Risk in the Market is Rising. Look at the big overreaction to weak 3M earnings this morning. With the Mad Hedge Market Timing Index at 69, there is only a 31% chance that your next “BUY” will make money. Click here.
2) Tesla Loses $700 million in Q1, but the stock rallies anyway. It’s tough to press the world’s most heavily shorted stock down here. It’s all because the EV subsidy dropped by half since January. Look for a profit rebound in quarters two and three. Capital raise anyone? Tesla junk bonds now yielding 8.51% if you’re looking for an income play. Click here.
3) Microsoft Knocks it Out of the Park, with great earnings and a massive 47% increase in cloud growth. Stock looks hell-bent to hit $140, and Mad Hedge followers who bought the stock are making a killing. (MSFT) is now the third company to join the $1 trillion club. Click here.
4) All Eyes on Amazon which reports after the close. Will they pop 5% like the other FANGs? Or will the focus be on the divorce? Click here.
5) Chipotle Gets Hammered. Earnings were good, but they disclosed the existence of a criminal investigation stemming from a few unfortunate burritos last year. This business never gets old. Click here.
Published today in the Mad Hedge Global Trading Dispatch and Mad Hedge Technology Letter:
(2019 MAD HEDGE WORLD TOUR)
(THE REAL ESTATE MARKET IN 2030)
(XHB)
(THE RESILIENCE OF TWITTER)
(TWTR), (FB)
Mad Hedge Technology Letter
April 25, 2019
Fiat Lux
Featured Trade:
(THE RESILIENCE OF TWITTER)
(TWTR), (FB)
Twitter’s (TWTR) earnings offer a rough snapshot into the health of current internet users and Twitter pulling off a strong quarterly performance is a strong indication of how tech earnings as a whole will pan out.
Readers of the Mad Hedge Technology Letter know well that CEO of Twitter Jack Dorsey is one of my favorite tech CEO’s in the valley and I believe he should be leading Apple instead of Twitter and Square.
Twitter had an ideal quarter smashing estimates by surpassing every meaningful metric.
This company has turned the corner and has become the choir boy of social media in relative terms.
Purging the bots in the summer of 2018 was the right move in hindsight, and the performance in the first quarter vindicates Dorsey in making the tough decisions to clean out its system.
As Twitter grows in its Daily Active Usership (DAU), they risk becoming too large to regulate and grabbing back control over their model was the smart thing to do at the time.
Twitter has shifted from emphasizing Monthly Active Users (MAUs) to Daily Active Users (DAUs) in a sign of intent preferring to become integrated with users on a daily basis.
Total revenue of $787 million was up 18% YOY batting away any whispers that the company could be decelerating.
Another bonus was the diversity in ad revenue with 46% coming from the international segment signaling to investors that Twitter is not over-reliant on American Tweets.
American ad revenue rose 26% compared with international ad revenue rising just 10% showing that if you do social media properly instead of hatching cunning plans, it is still a growth business at its core.
The company has started to rev up profitability by reporting first-quarter earnings per share of 37 cents crushing the consensus of 15 cents.
The healthy trajectory of the company is summed up by its rise in Daily Active Users to 134 million, an increase of 11% YOY in an environment where Twitter’s competitors aren’t growing at all.
The concerns that I had about last quarter’s tech earnings report had more to do with forward guidance than the past quarter’s performance because of the supposed deceleration of the global economy.
Twitter passed with flying colors predicting next quarter’s revenue should come in between $770 million to $830 million and operating income between $35 million to $70 million.
Dorsey sees no let down in the coming quarters as the domestic economy will attempt to push its way into its 11th year of expansion.
Headcount is estimated to rise 16% in 2019 after a 2018 where staff grew by 18%.
Total ad engagements increased 23% resulting from higher ad impressions and improved clickthrough rates (CTR) across most ad formats.
Cost per ad engagement (CPE) decreased 4% due to like-for-like price decreases across most ad formats because of an improved CTR which results in advertisers achieving the same number of engagements at a lower price, and a mix shift toward video ad formats that have lower CPEs and higher CTRs.
CPE can differ from one period to another based on geographical performance, ad formats, campaign objectives, and auction dynamics.
Just as important, the customer experience for advertisers is always improving with enhancements to Twitter’s ad platform and ad formats.
Twitter is committed to delivering better relevance making it simpler for advertisers to declare their objective, initiate a campaign, and measure performance.
The possible destructive black swan strongly hovering over social media and its business model is the threat of data privacy and the subsequent regulation to it.
Facebook (FB) and less so Twitter have been dragged into the data privacy debacle, but I believe Twitter has made the moves to get the monkey off their back for at least the next two quarters.
They have also benefitted from being more conservative in how they handle data and from the bulk of tweets being parts of public discourse instead of personalized baby photos.
The structure of Twitter has led to less chaos than Facebook, and Twitter tightening the amount of acceptable mainstream topics even more will close more loopholes into the extreme parts of society that want to disperse content through Twitter.
Twitter is taking a more proactive approach to reducing abuse on the platform and its effects in 2019 with the aim of reducing the burden on victims of abuse and, where possible, taking action before abuse is reported.
As a result, enhancements in Q1 revolved around proactive detection of rule violations and physical, or off-platform, safety — including making it easier to report Tweets that share personal information, helping Twitter remove 2.5 times more of this type of content.
Twitter has also deployed upgraded machine-learning models to detect potential policy violations enabling Twitter to pinpoint Tweets to agents for review, proactively.
The result is Twitter removing more abusive content with better efficiency.
The data backs up Twitter’s abuse prevention initiative with approximately 38% of categorized abuse proactively detected.
Twitter has been profitable for a string of quarters now, responded well to looming regulation fears, and as long as the economy chugs along at its current rate, I believe Twitter will outperform the rest of tech and the domestic economy.
The short-term health of social media also opens the path for Facebook to continue the positive momentum as the summer approaches.
Wait for an entry point on the dip to buy Twitter.
“Twitter has been my life's work in many senses. It started with a fascination with cities and how they work, and what's going on in them right now.” – Said CEO of Twitter Jack Dorsey
Global Market Comments
April 25, 2019
Fiat Lux
Featured Trade:
(2019 MAD HEDGE WORLD TOUR)
(THE REAL ESTATE MARKET IN 2030), (XHB)
Come join me for lunch at the Mad Hedge Fund Trader’s World Tour strategy luncheons which I will be conducting in June and July this summer.
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. Enough charts, tables, graphs, and statistics will be thrown at you to keep your ears ringing for a week.
I’ll be arriving early and leaving late in case anyone wants to have a one on one discussion, or just sit around and chew the fat about the financial markets.
The lunches will be held at a dozen five-star hotels around the world. The exact location for each lunch will be emailed with your purchase confirmation.
I look forward to meeting you and thank you for supporting my research. I’ll be posting the lunches individually in the coming weeks. You won’t be able to buy tickets until then.
Here is my schedule:
Friday, June 21 12:30 PM Auckland, New Zealand
Monday, June 24 12:30 PM Melbourne, Australia
Tuesday, June 25 12:30 PM Sydney, Australia
Wednesday, June 26 12:30 PM Brisbane, Australia
Friday, June 28 12:30 PM Perth, Australia
Sunday, June 30 12:30 PM Manila, Philippines
Tuesday, July 2 12:30 PM New Delhi, India
Friday, July 5 12:30 PM Cairo, Egypt
Monday, July 8 12:30 PM Venice, Italy
Wednesday, July 10 12:30 PM Budapest, Hungary
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