Mad Hedge Technology Letter
December 23, 2022
Fiat Lux
Featured Trade:
(THE FUTURE IS HERE)
(NO CODE)
The future is here.
No code or low code will bring a raft of new innovative tech companies to market, and we are in the early innings of this transformative development.
What is no code?
No-code is an approach to designing and using applications that requires zero coding or knowledge of programming languages.
This type of software hits us at a perfect time when the home office is beginning to become ubiquitous.
The self-service movement that empowers business users will support the creation, manipulation, and employment of data-driven applications.
If we turn back the pages of history, companies needed an army of software programmers to develop even the measliest application.
That was then and this is now.
Fast forward to today and automated technology doesn’t only include cutting-edge industries like automotive cars, but also software on laptops that can be rejigged by individual entrepreneurs.
That’s right, one person with no coding experience will be able to design, develop, and offer a real-life application with meaningful business value without the help of expert programmers.
The research data backs up my thesis with research firms projecting a 23% increase in the global market for this type of technology.
During the pandemic, low-code/no-code tools saw steady growth due to their effectiveness in addressing some of tech’s most complicated challenges.
The essential need to digitize workflows and enhance customer and employee experiences will be a boost to the efficiency of commercial and operational teams.
No-code platforms have evolved from just facilitating mundane tasks to making it possible for a broader range of business employees to truly own their automation and build new software applications with no coding while increasing organizational capacity.
A few risks that larger companies might consider is that even for remote developers building new applications, governance is paramount.
IT staff will need to install guardrails in place and have those built into low-code/no-code platforms to maintain consistent levels of security across the organization.
Cybersecurity solutions need to be integrated into this workflow by training every employee at the organization on security behavior and using compartmentalization and limited access to prevent opportunities for mistakes.
Hard landings are hard to recover from and some can be crippling to the business model.
For no-code companies, harmonizing workflows is a key requirement for success.
In a low-code/no-code organization, departments should be able to work without silos and communicate freely across functions.
Elevated performance enabled by low-code/no-code tools will mean that the number of useful apps hurling towards the marketplace will be more and merrier than ever before.
Higher performance will no doubt usher in a new renaissance of efficiency and even better performance.
This also puts a 3 or even 4-day workweek squarely in play.
Many of the best tech minds in the world have supported the concept of working smarter instead of working harder.
A low code/no-code standard will allow for these achievements to take place.
The cratering of costs to start and run a tech firm is affected too.
Deploying startup capital to pay for other expenses will make it easier for successful incubation.
This will ultimately mean that this new type of tech company will need to embrace the fusion of IT and business staff, empowering them with composable applications to speed up the time to market for new solutions.
Low-code/no-code, APIs, and other tools are enabling companies to integrate new applications into their existing tech stack in a more seamless manner with a lift-and-shift approach vs a rip-and-replace.
At the entrepreneur level, individuals will be able to harness the technology to build $100 million companies with a snap of the fingers when it wasn’t possible to do it before.
This is finally a chance for the little guy to recapture their moxie in the vast and sometimes overwhelming business world.
“If you're not stubborn, you'll give up on experiments too soon.” – Said Founder of Amazon Jeff Bezos
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
Global Market Comments
December 23, 2022
Fiat Lux
Featured Trade:
(PEEKING INTO THE FUTURE WITH RAY KURZWEIL)
(GOOG), (INTC), (AAPL), (TXN)
Mad Hedge Biotech and Healthcare Letter
December 22, 2022
Fiat Lux
Featured Trade:
(AN INVINCIBLE STOCK THAT CAN WEATHER ANY STORM)
(MRK), (MRNA)
Given the volatility of today’s market, anxious investors look into dividend stocks for safety and security. After all, dividends are excellent sources of passive income—something that would definitely be handy when facing a 40-year-high inflation and seemingly never-ending market losses.
However, not all companies that pay out dividends are created equal. With the current economic climate and financial turmoil, choosing businesses that would less likely lower or suspend their payouts becomes even more crucial.
One of the companies that meet these qualities in the biotechnology and healthcare sector is Merck (MRK).
Merck is one of the biggest biopharmaceutical companies across the globe, with a remarkable portfolio of drugs and treatments.
Merck’s resiliency at a period when so many companies have been struggling to keep afloat has indubitably attracted investors’ attention. One of its recent accomplishments is the promising results of its personalized cancer vaccine project with Moderna (MRNA). Needless to say, this will be a massive game-changer if the two companies manage to successfully launch the product.
However, none is more widely known among its products than Keytruda, with the drugmaker continuously raking more indications for its crown jewel with no signs of stopping anytime soon.
Keytruda contributes a considerable share of the company’s total revenue. This cancer therapy is also the fastest-growing treatment when it comes to sales. In the third quarter alone, Keytruda generated $5.4 billion, growing by an impressive 20% year over year. This accounts for more than 33% of Merck’s top line, which showed off a 14% jump year over year to reach $15 billion in the third quarter.
On top of expanding the application of Keytruda to cover new indications, the company has been developing a version of the treatment that can be given subcutaneously rather than the current intravenous delivery method.
Offering Keytruda as a subcutaneous injection or a shot administered into the fatty tissues just beneath the skin would notably reduce the future damage that biosimilars could inflict on the top-selling treatment in 2028. This is because patents protecting this particular formulation of Keytruda could be extended until the late 2040s.
Apart from that, Keytruda’s subcutaneous version would be able to provide several advantages over the current intravenous delivery method. For one, the time needed to administer the drug would be substantially reduced from the current 30 minutes since patients can easily self-inject in their own homes. This will also decrease their dependency on hospitals.
This version would also ease the discomfort of patients and significantly lower their expenses, which will consequently motivate more insurance companies to opt to prescribe this branded product instead of the biosimilar alternatives.
Other critical products in Merck’s portfolio include its HPV vaccines Gardasil and Gardasil 9. The two managed to deliver combined sales of $2.3 billion in the third quarter, which recorded a 15% jump from their performance in the same period in 2021. Meanwhile, cancer treatment Lynparza racked up $284 million, which was up by 16% year over year.
Overall, Merck has a solid lineup of products and treatments and an extremely promising pipeline of candidates, which would allow the company to develop additional blockbuster drugs to beef up its portfolio. Moreover, its stable business will undoubtedly help to sustain its dividend.
To date, Merck shares offer a 2.68% yield. This surpasses the average of S&P 500, which is 1.82%. More impressively, the company has boosted its dividend payouts by roughly 20% in the last three years despite the pandemic and severe financial and economic turbulence. Looking at its history and trajectory, Merck will most likely continue to reward its investors with dividend boosts in 2023 and beyond, regardless of what the market throws at it next.
Global Market Comments
December 22, 2022
Fiat Lux
Featured Trade:
(THE EIGHT WORST TRADES IN HISTORY),
Mad Hedge Technology Letter
December 21, 2022
Fiat Lux
Featured Trade:
(FINTECH - AUTOMATION AND BANKING)
(SQ)
Automation is taking place at warp speed displacing employees from all walks of life.
Next could be you!
According to a recent report, the U.S. financial industry will depose of 200,000 workers in the next decade because of automating efficiencies.
Yes, humans are going the way of the dodo bird and banking will effectively become algorithms working for a handful of executives and engineers.
The x-factor in this equation is the $250 billion annually that banks spend on technological development in-house which is second highest after the traditional tech giants.
Welcome to the world of lower cost, shedding wage bills, and boosting performance rates.
We forget to realize that employee compensation eats up around 50% of bank expenses.
The 200,000 job trimmings would result in 10% of the U.S. banking sector getting axed.
The hyped-up “golden age of banking” should deliver extraordinary savings and premium services to the customer at no extra cost.
This iteration of mobile and online banking has delivered functionality that no generation of customers has ever seen.
Gutting bank jobs will naturally occur in the call centers first, because they are the low-hanging fruit for the automated chatbots.
A few years ago, chatbots were suboptimal, even spewing out arbitrary profanity, but they have slowly crawled up in performance metrics to the point where some customers are unaware they are communicating with an artificially engineered algorithm.
The wholesale integration of automating the back-office staff isn’t contained to the rudimentary part of the staff.
The front office will experience a 30% drop in numbers sullying the predated ideology that front office staff are irreplaceable heavy hitters.
The front-office staff has already felt the brunt of downsizing with purges carried out from 2022 representing a twelfth year of continuous decline.
Front-office traders and brokers are being rapidly replaced by software engineers as banks follow the wider trend of every company transitioning into a tech company.
The infusion of artificial intelligence will lower mortgage processing costs by 30% and the accumulation of hordes of data will advance the marketing effort into a potent, multi-pronged, hybrid cloud-based, and hyper-targeted strategy.
The last two human bank hiring waves are a distant memory.
The most recent spike came in the 7 years after the dot com crash of 2001 until the sub-prime crisis of 2008 adding around half a million jobs on top of the 1.5 million that existed then.
After the subsidies wear off from the pandemic, I do believe that the banking sector will quietly put in the call to trim even more.
The longest and most dramatic rise in human bankers was from 1935 to 1985, a 50-year boom that delivered over 1.2 million bankers to the U.S. workforce.
This type of human hiring will likely never be seen again in the U.S. financial industry.
And if you thought that this phenomenon was limited to the U.S., think again, Europe is by far the biggest culprit by already laying off 100,000 employees in 2022.
Even Europe’s banking jewel Credit Suisse is on the brink of collapsing and in need of a bailout.
Don’t tell your kid to get into banking, because they will most likely be feeding on scraps at that point.
An interesting tech stock that integrates financial payments is Square (SQ) which has given back its entire pandemic performance.
As US interest rates are expected to peak and go down in 2023, I recommend dollar cost average into this stock at bargain basement prices.
THE LAST STAGE OF HUMAN-FACING BANK SERVICES IS NOW!
