April 2021

Alphabet is a $3,000 Stock

A company that did $182 billion of annual revenue last year expanding first quarter revenue at a 34% clip year-over-year is something that is hard to contemplate; but that is how big the big have gotten, and at the top of the heap is Alphabet (GOOGL).

Expect similar type of earnings reports from Amazon (AMZN).

The 4 tech firms of Alphabet (GOOGL), Apple (AAPL), Microsoft (MSFT) and Tesla (TSLA) were in perfect strategic position going into the public health crisis, and now we find ourselves almost at the climax of it, they are validating their current position in 2021 as companies that flourished through the pandemic and now find themselves with only green pastures in front of them.

Google has said it operates in a “competitive market place” but I do not know anyone who uses an internet search service that isn’t named Google.

It’s like trying to live in China without using Wechat, Alibaba, and Baidu.

We are talking about services that perform like utilities.

Just analyze consumers’ behavior during the onslaught of the public health crisis.

Their first reaction was to delegate these important moments to Google Search.

Billions of searches every day for “COVID” and related health information took place.

At the same time, people started to job search on Google as million lost their jobs and these unemployed first reaction was to do a google search on unemployment benefits and where they could find a job.

To help them, job seekers can now use Search quickly and easily find roles that do not require a college degree and Google is working together with the top employment websites to make the service even better.

And if you thought the reach of Google stopped there, then what about when not searching for jobs or health solutions on Google search.

Well, first, food delivery searches on Google, then, conveniently, since lockdowns pervaded the world, YouTube’s video streaming had its best year.

Users continue to find all types of informational content, from educational videos to podcasts on YouTube.

In fact, according to a recent study conducted by Ipsos, 77% of respondents say they used YouTube during 2020 to learn a new skill.

YouTube Shorts, Google’s TikTok imitation service, continues to gain popularity with over 6.5 billion daily views as of March, up from 3.5 billion at the end of 2020.

The financial metrics backed up the popularity in YouTube with YouTube advertising revenues of $6 billion, up 49%, driven by exceptional performance in direct response and ongoing strength in brand advertising.

Network advertising revenues of $6.8 billion, up 30%, driven by AdMob and Ad Manager.

What if you don’t have a device to watch YouTube or search on Google Search for jobs and food delivery?

Easy answer, buy a Google device.

Other revenues were $6.5 billion, up 46%, primarily driven by growth in Play and YouTube non-advertising revenues, followed by hardware, which benefited from the addition of Fitbit revenues. Google Services operating income was $19.5 billion, up 69%, and the operating margin was 38%.

Google has you covered.

Then what about the people who have jobs and need a cloud to store their files.

Google’s Cloud segment, including GCP and Google Workspace, revenues were $4 billion for the first quarter, up 46%.

GCP's revenue growth was again meaningfully above Cloud overall. Strong growth in Google Workspace revenues was driven by growth in both seats and average revenue per seat.

Google has that covered as well and fusing their cloud operability with Google’s suite of services like Gmail has been reliable for many work from home workers.

This company has covered all their bases and they were doing this before the public health crisis.

Alphabet currently has $1.55 trillion of market cap, but this is easily a $2 trillion company on its way to $3 trillion with no headwinds in sight.

I wouldn’t even call regulation that big of risk and obviously investors keep piling into this stock because they know that even if Google gets broken up, each individual part will be worth more unpacked as a single service because they are the best of breed already.

Microsoft and Alphabet are the two companies vying for the best and most powerful in the world.

At, $1.97 trillion in market cap, Microsoft is more expensive than Google because even though they both earn over $40 billion in profits per year, Microsoft makes that on 27% less revenue than Alphabet which is why they have a higher premium.

Microsoft is more efficient than Alphabet, but again, if Alphabet is broken up, watch for efficiency metrics to skyrocket as each individual business isn’t hindered by the bureaucracy that has turned into how Google operates.

If Alphabet can inch up the margin story, they will be a $2 trillion company and $3,000 stock by the end of 2021.

April 28, 2021 - Quote of the Day

Tech Letter

“I don’t want to be liked.” – Said Founder and Former CEO of Alibaba Jack Ma

Trade Alert - (DAL) April 28, 2021 - BUY

Trade Alert

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Trade Alert - (MSFT) April 28, 2021 - BUY

Trade Alert

When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more

April 28, 2021

Diary, Newsletter, Summary

Global Market Comments
April 28, 2021
Fiat Lux

Featured Trade:

(WHY TESLA IS TAKING OVER THE WORLD),
(TSLA), (GM), (TM),
(TESTIMONIAL)

April 27, 2021

Biotech Letter

Mad Hedge Biotech & Healthcare Letter
April 27, 2021
Fiat Lux

FEATURED TRADE:

(THE FUTURE OF MEDICINE)
(CRSP), (VRTX), (EDIT), (NTLA), (PFE), (NVS), (GILD), (RHHBY),
(BMRN), (QURE), (SGMO), (CLLS), (ALLO), (BEAM)

The Future of Medicine

Biotech Letter

Winning the Nobel Prize in 2020 provided biotechnology companies more traction on Wall Street.

The victory led to commercializing the 2012 discovery, Crispr-Cas9, at breakneck speed, with gene editing companies like CRISPR Therapeutics (CRSP), Editas Medicine (EDIT), and Intellia Therapeutics (NTLA) gaining considerable boost in their values.

Since then, the total market value for the products of these three has more than doubled in recent months to reach $23 billion.

Basically, Crispr-Cas9 functions like molecular scissors.

What makes this technology incredible is that Crispr-Cas9 can classify a single address out of 3 billion letters within the genome by using only a particular sequence. With this, we can repair thousands of genetic conditions and even offer more potent ways to battle cancer.

The market favorite among the gene editing companies so far is CRISPR Therapeutics, with $8.72 billion in market capitalization.

In comparison, Editas has $2.76 billion while Intellia Therapeutics has $4.15 billion.

CRISPR Therapeutics is currently working on a treatment that would implant tumor-targeting immune cells in cancer patients. The company is also prioritizing therapies that could edit cells to treat diabetes.

So far, it has made significant progress in developing treatments for a genetic disorder called sickle cell.

In the US alone, at least 100,000 people suffer from sickle cell disease, with 4,000 more born every year. Conservatively, we can estimate at least 3,000 patients availing of this one-time treatment at over $1.6 million a pop.

To date, CRISPR Therapeutics has five candidates under clinical trials for diseases like B-thalassemia, sickle cell disease, and other regenerative conditions.

It has four more queued, which target diabetes, cystic fibrosis, and Duchenne muscular dystrophy.

Compared to its rivals in the space, it’s clear that CRISPR Therapeutics is ahead when it comes to product development and trials.

Two of its candidates, transfusion-dependent beta thalassemia treatment CTX001 and sickle cell disease therapy CTX110, have already been submitted for clinical tests for safety and efficacy.

Recently, Vertex (VRTX) boosted its 2015 agreement with CRISPR Therapeutics by 10%, with the deal reaching $900 million upfront to push for quicker results in developing CTX001.

This is a crucial move for Vertex, but more so for CRISPR Therapeutics as CTX001 holds a highly lucrative addressable market.

The additional funding significantly widened the gap between the Vertex-CRISPR team and bluebird bio (BLUE) in the race to launch a new gene editing therapy targeting sickle cell disease and beta thalassemia.

To sustain its growth, CRISPR Therapeutics’ strategy is to develop drugs that only require mid-level complexity but can rake in generous financial rewards.

This is a similar tactic used by bigger and more established biotechnology companies like Pfizer (PFE), Novartis (NVS), and Gilead Sciences (GILD).

Evidently, this strategy is a great way to ensure cash flow.

Aside from its earning from the commercialization of these products, CRISPR Therapeutics can also attract larger companies to buy the intellectual property of their breakthrough treatments.

After all, startups generally get 100% premiums in contracts with Big Pharma.

Good examples of this are Novartis that bought AveXis and Roche’s (RHHBY) purchase of Spark Therapeutics.

The Roche-Spark agreement led to the first-ever FDA-approved treatment since gene therapy trials started in the 1990s. It was for the genetic blindness therapy Luxturna, which received the green light in 2017.

The second approved treatment was a muscle-wasting disease therapy Zolgensma, which was the fruit of the Novartis-Avexis acquisition.

Both conditions are rare, but the financial rewards are impressive.

At $2 million for each treatment, Zolgensma sales reached $1.2 billion annually. At the rate the therapy is selling, Novartis estimates that Zolgensma will surpass the $2 billion mark in 2021.

Novartis and Roche aren’t the only ones partnering with smaller gene editing companies.

Pfizer has been working with biotechnology companies BioMarin Pharmaceutics (BMRN) and UniQure (QURE) to develop a treatment for blood-clotting disorder hemophilia.

The COVID-19 frontrunner is also collaborating with Sarepta Therapeutics (SRPT) to come up with a treatment for Duchenne muscular dystrophy.

Gene editing has also served as the foundation for several biotechnology companies out there today like Sangamo Therapeutics (SGMO), Cellectis (CLLS), and Allogene Therapeutics (ALLO).

The market size for gene editing treatments is estimated to be worth $11.2 billion by 2025, with the number rising between $15.79 billion to $18.1 billion by 2027.

This puts the compounded annual growth rate of this sector to be at least roughly 17%.

While this is already groundbreaking with only a handful of companies knowing how to utilize the technology, the gene editing world has come up with a more advanced technique than Crispr-Cas9.

The technology is founded on the “base editing” or “prime editing” technique, which is the simplest type of gene editing that alters only one DNA letter.

So far, one company holds exclusive rights to this technology: Beam Therapeutics (BEAM).

When the technology became public, Beam stock has increased sixfold since its IPO in February 2020.

This latest development can resolve thousands of genetic diseases. However, it still requires further trials since “base editing” can also trigger damaging responses from the body.

Overall, I think CRISPR Therapeutics is the safest among these high-risk stocks.

The data from two of its candidates, CTX001 and CTX110, are incredibly promising. Plus, the added funding from Vertex boosts the confidence of investors that regulatory approval is well on its way.

The company is also capitalizing on the surging price of its stock and investing aggressively across different rare disease programs.

While the company has yet to be considered a major force in the biotechnology world, the potential multiple successes of its products could generate a company worth hundreds of billions.

This potential alone offers an investing opportunity with a substantial asymmetric advantage for its current share price.

However, bear in mind that the stock is still a risk and should be played as a long-term investment. Hence, you should buy on dips.

crispr

Trade Alert - (MU) April 27, 2021 - BUY

Tech Alert

When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more

April 27, 2021

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April 27, 2021
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Featured Trade:

(THE SECRET FED PLAN TO BUY GOLD),
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The Secret Fed Plan to Buy Gold

Diary, Newsletter, Research

With the latest effort to expand quantitative easing through the Fed purchase of individual corporate bonds, we must consider what else our central bank has up its sleeve.

With American interest rates already near zero, the markets will take the rates for all interest-bearing securities well into negative numbers. This has already happened in Japan and Germany.

At that point, our central bank’s primary tool for stimulating US businesses will become utterly useless, ineffective, and impotent.

What else is in the tool bag?

How about large-scale purchases of Gold (GLD)?

You are probably as shocked as I am with this possibility. But there is a rock-solid logic to the plan. As solid as the vault at Fort Knox.

This theory gained credence when my old friend, Judy Shelton, was appointed to the federal reserve, a noted gold bug.

The idea is to create asset price inflation that will spread to the rest of the economy. It already did this with great success from 2009-2014 with quantitative easing, whereby almost every class of debt securities were hoovered up by the government.

“QE on steroids”, to be implemented only after overnight rates go negative, would involve large-scale purchases of not only gold, but stocks, government bonds, and exchange-traded funds as well. Corporate bond purchases are simply a step in that direction.

If you think I’ve been smoking California’s largest cash export (it’s not the raisins) you would be in error. I should point out that the Japanese government is already pursuing QE to this extent, at least in terms of equity-type investments and ETFs, and already owns a substantial part of the Japanese stock market.

And, as the history buff that I am, I can tell you that it has been done in the US as well, with tremendous results.

If you thought that President Obama had it rough when he came into office in 2009 with the Great Recession on, it was nothing compared to what Franklin Delano Roosevelt inherited.

The country was in its fourth year of the Great Depression. US GDP had cratered by 43%, consumer prices crashed by 24%, the unemployment rate was 25%, and stock prices vaporized by 90%. Mass starvation loomed.

Drastic measures were called for.

FDR issued Executive Order 6102 banning private ownership of gold, ordering them to sell their holdings to the US Treasury at a lowly $20.67 an ounce.

He then urged Congress to pass the Gold Reserve Act of 1934, which instantly revalued the government’s holdings at $35.00, an increase of 69.32%. These and other measures caused the value of America’s gold holdings to leap from $4 to $12 billion. That’s a lot of money in 1934 dollars, about $208 billion in today’s money.

Since the US was still on the gold standard back then, this triggered an instant dollar devaluation of more than 50%. The high gold price sucked in massive amounts of the yellow metal from abroad creating, you guessed it, inflation.

The government then borrowed massively against this artificially created wealth to fund the landscape-altering infrastructure projects of the New Deal.

It worked.

During the following three years, the GDP skyrocketed by 48%, inflation eked out a 2% gain, the unemployment rate dropped to 18%, and stocks jumped by 80%. Happy days were here again.

Monetary conditions are remarkably similar today to those that prevailed during the last government gold buying binge.

There has been a de facto currency war underway since 2009. The Fed started when it launched QE, and Japan, Europe, and China have followed. Blue-collar unemployment and underpayment are at a decades high. The need for a national infrastructure program is overwhelming.

However, in the 21^st century version of such a gold policy, it is highly unlikely that we would see another gold ownership ban.

Instead, the Fed would most likely move into the physical gold market, sitting on the bid for years, much like it recently did in the Treasury bond market for five years. Gold prices would increase by a multiple of current levels.

It would then borrow against its new gold holdings, plus the 4,176 metric tonnes worth $200 billion at today’s market prices already sitting in Fort Knox, to fund a multi trillion-dollar infrastructure spending program.

Heaven knows we need it. Millions of blue-collar jobs would be created, and inflation would come back from the dead.

Yes, this all sounds like a fantasy. But negative interest rates were considered an impossibility only years ago.

The Fed’s move on gold would be only one aspect of a multi-faceted package of desperate last-ditch measures to extend economic growth into the future which I outlined in a previous research piece (click here for “What Happens When QE Fails” by clicking here).

That’s assuming that the gold is still there. Treasury Secretary Stephen Mnuchin says he saw the gold himself during an inspection that took place on the last solar eclipse over Fort Knox in 2018. The door to the vault at Fort Knox had not been opened since September 23, 1974.

But then Steve Mnuchin says a lot of things. Persistent urban legends and internet rumors claim that the vault is actually empty or filled with fake steel bars painted gold.

But is it Really Gold?

You Can See the Upside Breakout Coming Clear as Day