(AMZN) Archives - Page 86 of 101 - Mad Hedge Fund Trader

How to Play “Software as a Service”

If you have read any of our content in the first year of the Mad Hedge Technology Letter, the content is distinctly bullish technology stocks.

A fundamental driver propelling this cogent argument is the dominant Software-as-a-Service (SaaS) industry booming inside the confines of Silicon Valley.

If you want to boil down your tech investment thesis to one indispensable rule – only invest in tech companies that carve out prominent SaaS businesses.

If you stick with this nostrum, you will be delivered profits in spades.

We have recently taken in a swarm of new tech letter subscribers and understanding the panacea that is SaaS will entrench your portfolio in a glorious position to reap untold profits.

What is SaaS?

SaaS is a distribution method in which software is diffused to paid subscribers, usually on an annual, reoccurring payment plan, and the software is remotely stored on a centralized cloud platform awaiting use.

Unsurprisingly, SaaS remains the most lucrative segment of the cloud market.

In 2017, the tech industry did $60.2 billion in annual SaaS sales, that number is poised to explode to $117.1 billion in 2021.

The near doubling of sales underscores the robust nature of these tech firms setting up businesses of this ilk, and the positive effects dripping down to the bottom line.

Simply put, no SaaS business, no reason to invest.

SaaS isn’t the only cloud revenue companies can carve out. Tech firms also offer platform-as-a-service (PaaS) and infrastructure-as-a-service (IaaS).

However, SaaS is by far the prominent growth lever in the high-margin cloud industry.

The indomitable presence inside the SaaS industry is Bill Gates’ creation Microsoft (MSFT).

Microsoft leads all companies with a 17% global share of the SaaS market.

The Redmond, Washington, outfit blew past stalwart Salesforce (CRM) nine quarters ago.

Microsoft’s sizzling SaaS business is an oversized contributor to its 45% revenue growth rate, which is head-and-shoulders above the industry average.

Salesforce (CRM), Adobe (ADBE), Oracle (ORCL) and SAP (SAP) fill out the top five largest global SaaS businesses, but it is really a tale of two stories.

Oracle and SAP, which are competing in the same market, are grappling with legacy database businesses and legacy tech, which are punished by investors.

John Dinsdale, a chief analyst at Synergy Research Group, mentioned two outliers of “Cisco (CSCO) and Google too who are making ever-bigger inroads into the SaaS market” leveraging Cisco’s multitude of software assets and Google’s G Suite.

The thing that makes SaaS the x-factor for tech companies is that inevitably every company from every walk of life will adopt this mode of software, giving legs to this distribution model.

Vendors are scrambling to put together some resemblance of a SaaS product together, and this trend is a vital contributor to an industry that is growing 32% YOY worldwide.

Kevin Cochrane, chief marketing officer of SAP Customer Experience lay bare his thoughts about this type of service describing it as the “Golden Age of SaaS.”

Companies are becoming digital first from end to end, explaining the sharp rise in IT professional salaries and rise in quality software products.

As we look around the corner to the IaaS part of the cloud industry, which is growing at around 30% YOY, there is one dominant player, and everybody knows its name.

Amazon (AMZN) is the No. 1 vendor with Microsoft, Alibaba (BABA), Google, and International Business Machines Corporation (IBM) trailing behind.

The top four IaaS players have carved out a total of 73% of the global market ravaging any resemblance of competition.

Amazon is the industry standard with the best record of customer success.

If Amazon branched off into the SaaS industry, it could unlock an additional $100 billion in annual revenue.

A shift into this direction could pad Amazon’s margin’s even more after successfully boosting North American e-commerce margins from 2.4% to 4.7%.

It’s not entirely inconceivable that Amazon could break the $2 trillion valuation in three to five years, as its revved up digital ad business registered growth of 129% YOY last quarter.

Microsoft seized the runner-up position in the IaaS market to Amazon by growing 98% YOY with sales eclipsing $3.1 billion in 2017.

Wherever you turn, whether toward the cloud business or gaming, investors can find Microsoft making sales.

Microsoft has been a favorite of the Mad Hedge Technology Letter and it’s hard pressed to find a better public tech company in operation now.

The SaaS industry is not a one-size-fits-all proposition.

Thus, there is abundant room for niche offerings that quench companies’ demand for specific services.

This is the reason why cloud companies have participated in a non-stop buying binge of smaller companies that fit their needs.

Microsoft purchased developer favorite GitHub for $7.5 billion earlier this year, and similar examples are scattered all over the tech ecosphere.

Artificial Intelligence (AI) will be the kicker that powers SaaS performance to new heights because incorporating this groundbreaking technology will enhance functionality and, in return, raise profits for all involved.

The scalability of SaaS products has allowed companies to offer software for affordable prices allowing the smallest of firms to adopt a digital-first strategy.

This software connects with other software seamlessly integrating an array of productive apps that help teams overperform and overdeliver.

In the American workplace, 73% of companies will be exclusively using SaaS to function by 2020.

American companies are using 16 apps on average per day, a 33% jump in the number of apps they were using just two years ago.

The migration to mobile has swallowed up SaaS products as well with more mobile-specific software rolling out to mobile devices.

The meteoric rise of SaaS offerings has cut IT security budgets substantially as security has been delegated to the cloud instead of in expensive in-house security teams.

No longer do tech firms need to beef up guarding their own gates.

Protection is provided on a centralized cloud with a third-party company ensuring safety.

This development has helped a new industry rise – cloud security.

Whether people realize it or not, the SaaS industry is here to stay and will become more prevalent in every industry going forward.

This is incredibly bullish for companies that sell SaaS products as revenue will continue to rise.

________________________________________________________________________________________________

Quote of the Day

“Growth and comfort do not coexist,” – said CEO of IBM Ginni Rometty.

September 10, 2018

Diary, Newsletter, Summary

Global Market Comments
September 10, 2018
Fiat Lux

Featured Trade:
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(THE MARKET OUTLOOK FOR THE WEEK AHEAD,
or “IT WASN’T ME!”),
(AMZN), (NKE), (SPY), (PCG)

September 10, 2018

Tech Letter

Mad Hedge Technology Letter
September 10, 2018
Fiat Lux

Featured Trade:
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The Market Outlook for the Week Ahead, or “It Wasn’t Me!”

Diary, Newsletter

First of all, I want to confirm absolutely and without any doubt that I did not write the anonymous and controversial New York Times op-ed entitled “I Am Part of the Resistance Inside the Trump Administration.” It wasn’t me.

During the 1970s I tried to write for the Grey Lady about the Chinese Cultural Revolution, the threat to the U.S. posed by the Japanese auto industry, and the coming appreciation of the Japanese yen. But they would have none of it.

That’s because they only ran copy from their own full-time journalists and didn’t accept work from freelancers. The Wall Street Journal, Barron’s, The Economist, no problem. The New York Times, no way Jose.

Anyway, anyone with any knowledge of military aviation knows who wrote it. Yes, it’s that obvious.

I was driving over the Oakland Bay Bridge on my way to San Francisco the other day and what I saw stunned me.

This time of year, you usually see 18 enormous Chinese container ships waiting to offload their cargo at the Port of Oakland in the run-up to the Christmas shopping season. This time I saw only 10.

Either the Chinese are sending their toys, electronics, and apparel to other U.S. ports, or they are not sending them at all. If it’s the latter it means that U.S. consumer demand is about to fall off a cliff, driven away by the high prices demanded by the new 25% import duties.

I called around to see if this was just a local problem. In fact, U.S. port landings are down 10% year on year, and off by a dramatic 25% in the hardest hit ports such as New Orleans, a major agricultural exporter.

If this is true, the consequences for U.S. investors are dire.

Let me give you one of my secret trading insights borne of a half century of stock market research. Real world observations front run official government data releases by three to six months. This is why I spend so much time in the field kicking tires, chatting up store managers, and flying over auto landing docks. If this is true, you could see early signs of a recession by early 2019.

The August Nonfarm Payroll Report came in at 201,000 on Friday, with the headline Unemployment Rate unchanged at 3.9%. June and July were revised down by 50,000 jobs.

The real news here is that Average Hourly Earnings popped to 2.9%, the biggest gain in nine years, proving that inflation is edging its way closer.

Health Care added 33,000 jobs, Construction 23,000, and Transportation up 20,000. Manufacturing lost 3,000 jobs, a victim of the trade wars, while Retail lost 5,000.

The U-6 broader “discouraged worker” unemployment fell to 7.4%, a new decade low. Certainly, the job market is firing on all cylinders.

The news gave us a nice little gap down in our short position in the bond market, taking the 10-year U.S. Treasury yield up to 2.95%, a one month high.

Still, you have to wonder why the stock market behaved so poorly after the release of such a healthy number. Was it “buy the rumor, sell the news,” the September effect, or the end of the 8 ½-year bull market? Obviously, I came out of my long (VXX) position too soon.

All doubts were removed when the president delivered a sucker punch to stocks by announcing new tariffs on a further $267 billion in Chinese imports. This is on top of the duties that applied to $200 billion of imports on Monday. The trade war steps up another notch. Now ALL Chinese imports are subject to punitive U.S. duties.

Amazon (AMZN) finally topped $1 trillion in market capitalization, delivering for my followers a ten-bagger on a recommendation I made several years ago.

Nike (NKE) delivered the ad campaign of the century, led by former San Francisco 49ers quarterback Colin Kaepernick. Just think of all the new demand created in the market by all those burning shoes.

The State of California passed a bill to stick the utility PG&E (PCG) with the bill for last year’s big fires. The company will pass it on to rate payers. Thank goodness I went all solar three years ago!

With the Mad Hedge Market Timing Index diving from 78 to 52 we definitely got some topping action in the market, and our short positions paid off handsomely. Both of my remaining positions are making money, my longs in Microsoft (MSFT) and my short in the U.S. Treasury bond market (TLT).

We are off to the races in September, giving us a robust return of 1.37%. My 2018 year-to-date performance has clawed its way back up to 28.39% and my nine-year return appreciated to 304.86%. The Averaged Annualized Return stands at 34.51%. The more narrowly focused Mad Hedge Technology Fund Trade Alert performance is annualizing now at an impressive 29.59%.

This coming week only has one important data release, the Fed Beige Book on Wednesday afternoon.

On Monday, September 10, at 3:00 PM, July Consumer Credit is out and should be at an all-time high as people max out their credit cards at the top of an economic cycle.

On Tuesday, September 11, at 6:00 AM, the NFIB Small Business Optimism Index is released at 6:00 AM.

On Wednesday, September 12, at 2:00 PM, the Federal Reserve discloses its Beige Book, which includes the data from the 12 Fed districts the Federal Open Market Committee at its September 19-20 meeting.

Thursday, September 13 leads with the Weekly Jobless Claims at 8:30 AM EST, which saw an amazing fall of 10,000 last week to 203,000.

On Friday, September 14, at 9:15 AM, we learn August Industrial Production. The Baker Hughes Rig Count is announced at 1:00 PM EST.

As for me,

Good luck and good trading.

41.79% Trailing One Year Return

It Wasn’t Me!

Google’s Breakfast of Rotten Eggs

Tech Letter

In a recent interview Google CEO Sundar Pichai admitted he is “not a morning person” and maybe that was his argument for skipping out on the grilling that his contemporaries Facebook (FB) COO Sheryl Sandberg and CEO of Twitter (TWTR) Jack Dorsey received in front of Congress.

Or maybe Pichai managed to down a rotten egg that morning when eating his favorite staple breakfast “omelet with toast," because his decision to abort his date with Congress was a shocking error of judgment for a CEO that has had a flair for controversy lately.

With the whole world watching, the empty chair with a simple name tag with Google plastered over it represents the arrogance and excesses of Silicon Valley all mixed into one incongruous mixture.

This rookie move will open a can of worms for the company made famous by its search algorithm that dominates the developed world.

Google will have a target on its back going forward while creating a massive public relations backlash for a company that must fiercely defend its ad-laden profit engine going forward.

Instead of taking it on the chin like Facebook and Twitter, Google has voluntarily veered into a sticky situation, and all to avoid a few stomach wrenching questions from Congress.

How did this all happen?

In the beginning of June, Google decided to scrap its relationship with the U.S. Department of Defense.

Project Maven, as it was known, provided Google’s artificial intelligence (A.I.) technology to systematically analyze drone footage for the U.S. government.

Pichai chose to avoid renewing the contract, and Google Cloud CEO Diane Greene agreed it was a black eye for the company that applied its own technology to conspire against damaging human life.

Throwing fat on the fire, Pichai followed up by dismantling Project Maven and giving the thumbs up for code-name Dragonfly. This was a secret project aimed at the mainland Chinese market and rolling out a censored version of Google’s search engine by altering its construction of unique search algorithms for a mainland Chinese audience.

This incensed the higher-ups on Capitol Hill, as this move was largely viewed as pandering toward the Chinese communist government for monetary purposes at an uber-sensitive time between the two powerhouse nations, which remain mired in a tumultuous trade war.

The timing couldn’t be worse for Pichai.

Dragonfly is already in beta mode and could be rolled out in the near future. However, I see it as dead on arrival, because there is no hope that Google can penetrate the fortress that is the Chinese business world.

Naturally, Google employees were dismayed and shocked by these startling revelations.

Pichai’s conspicuous no-show was in part driven by the potential wrath he would have faced by these recent reckless decisions that seemed to put the American government’s interests below the Chinese communist government.

The circus was there for everyone to see.

Sheryl Sandberg put on her bravest face.

It was obvious she had rehearsed every word to the utmost precision while Dorsey vehemently guarded his brainchild with honesty and zeal.

The testimonies made social media look perceivably criminal with a congressman even hinting the reason they aren’t allowed to do business in China was mainly a business model issue, and more specifically a legal issue.

Another congressman from West Virginia suggested Facebook’s Instagram was the source of the opioid epidemic ripping apart his state.

The only thing getting ripped apart during the intense grilling was Sheryl Sandberg’s well-practiced smile.

Dorsey and Sandberg were visibly uncomfortable with the line of questioning and rightly so.

Google would have looked worse if it showed up. But it managed to look 10 times worse than that by stonewalling the government’s invitation.

In a recent Pew Survey, data revealed 44% of youth between 18 to 29 last year deleted Facebook on their mobile phones.

Facebook is already a legacy platform in the throes of disruption cannibalized by its own asset - Instagram.

Instagram will be the sole survivor of Facebook by taking out Facebook itself, and that is bearish for overall business.

And that is if social media can hang on that long before it’s taken down by the hawks circling above in Washington.

When Facebook’s Cambridge Analytica scandal broke, the government was at sixes and sevens at attempting to figure out what on earth was going on behind the smoke and mirrors of the big data theatrics.

CEO Mark Zuckerberg was let off the hook with questions he wriggled out of, and Facebook shares powered on unabated.

This time it’s different.

Regulation is an imminent threat to social media revenues and could hurt earnings this quarter.

Investors need to migrate to higher tide, meaning Amazon (AMZN) and Microsoft (MSFT), because the waves still aren’t yet reaching those levels.

Amazon and Microsoft need to send a thank you note to Alphabet for screwing the pooch.

The administration has felt it convenient to barrage Silicon Valley to solidify the Republican base, and this tactic has resonated with the administration’s diehards.

A smorgasbord of FANG-bashing was the recipe to this madness. But now sights will be zoned in on dismantling Google, and Microsoft and Amazon will benefit from avoiding nasty, gut-churning headlines that turn up in the form of Twitter blitzkrieg.

Yes, Sheryl Sandberg, Facebook was “too slow” to react to foreign interference in the elections. But it is more accurate to characterize the battle social media faces against outside nefarious forces as impossible.

It is impossible for these social media platforms to police themselves while policing the whole world.

The incessant whack-a-mole scenario is the best-case outcome for the self-policing prospects of social media.

Once social media algorithms figure out how to stopgap one method of circumvention, the bad actors will move on to a more advanced way to manipulate the algorithmic police.

What does this mean for social media?

Costs are going up and will seep into profit margins.

Highlighting the upward trend of rising expenses for social media platforms is the daily cost of keeping CEO Mark Zuckerberg safe.

And remember, he lives in Palo Alto, California, one of the safest places on planet earth with a medium household income of $137,000.

In 2017, Facebook divvied up $7.3 million for Zuckerberg’s security detail and costs associated to it.

In 2018, shareholders approved a $10 million security package to keep Facebook’s head honcho safe. This underscored the ballooning risk of leading this controversial technology forum littered with conflict of interests, and on the verge of potentially perverting western democracy.

By the end of 2018, Facebook will increase its security division from 10,000 employees to 20,000.

And that is just the beginning.

Facebook’s security division is the fastest-growing division of fresh hires at Facebook.

Before Facebook and Twitter can ring in the profits, they face an exorbitant war against foreign “bot armies” intent on muddying the free flow of accurate information on domestic shores that target individuals deemed unaligned to the foreign actor’s interests.

There will be collateral damage and lots of it.

This does not sound like an easy road to profits, and it is not.

As midterm elections creep closer and closer, Facebook and Twitter must confront elevated headline risk, and any trading day could see shares wacked with a 10% haircut.

Following the government question-and-answer period, Twitter and Facebook will be designing a new resistance to stymie villainous foreign infiltration.

Ultimately, spending the bulk of employees’ work days realigning their business models to protect democracy, instead of creating new growth drivers, is not bullish for the stock price.

It is hard to breed much confidence in social media stock’s long-term narrative after listening to Dorsey and Sandberg speak.

They kept touching on needing help from government intelligence sources to aid them in catching the miscreants.

It makes sense to gradually nationalize social media platforms to unite the disconnect between social media’s war against foreign forces and the intelligence communities war against them.

It is clear hackers are exploiting the dislocation in cohesiveness between the cracks in social media and government intelligence.

But if that ever happens, it would be the end of Facebook and Twitter as we know it, as normal users would be averse to providing free content on a government-enabled platform as well as a strong blow to democracy itself.

It all makes sense now why Dorsey and Sandberg gave the answers they gave.

Their answers were akin to a faint plea for help while appearing contrite, hoping to persuade Congress to give them more time to figure it out.

This thinly veiled attempt to elongate the profit-making process and find a solution for a problem with no solution could end badly for these two companies.

Migrate to higher quality tech names in the short-term.

The resilient American economy powers on with the heavy lifting done by Silicon Valley albeit it with fewer lifters.

If social media stocks can get through the midterm elections unscathed, there is a trade on the table for these beleaguered companies rounding out a tumultuous year.

But getting to that point will be volatile, as this group of stocks have a rocky road ahead of them for the rest of the year.

I’m Not A Morning Person

________________________________________________________________________________________________

Quote of the Day

“I'm not a regular smoker of weed. Almost never,” – said CEO of Tesla Elon Musk on The Joe Rogan Experience podcast.

September 7, 2018

Diary, Newsletter, Summary

Global Market Comments
September 7, 2018
Fiat Lux

Featured Trade:
(MONDAY, OCTOBER 15, 2018, ATLANTA, GA,
GLOBAL STRATEGY LUNCHEON),
(SEPTEMBER 5 BIWEEKLY STRATEGY WEBINAR Q&A),
(AMZN), (MU), (MSFT), (LRCX), (GOOGL), (TSLA),
(TBT), (EEM), (PIN), (VXX), (VIX), (JNK), (HYG), (AAPL)

September 5 Biweekly Strategy Webinar Q&A

Diary, Newsletter

Below please find subscribers’ Q&A for the Mad Hedge Fund Trader September 5 Global Strategy Webinar with my guest and co-host Bill Davis of the Mad Day Trader.

As usual, every asset class long and short was covered. You are certainly an inquisitive lot, and keep those questions coming!

Q: Do you think the collapse of commodity prices in the U.S. will affect the U.S. election?

A: Absolutely, it will if you count agricultural products as commodities, which they are. We have thousands of subscribers in the Midwest and many are farmers up to their eyeballs in corn, wheat, and soybeans. It won’t swing the entire farm vote to the Democratic party because a lot of farmers are simply lifetime Republicans, but it will chip away at the edges. So, instead of winning some of these states by 15 points, they may win by 5 or 3 or 1, or not at all. That’s what all of the by-elections have told us so far.

Q: What will be the first company to go to 2 trillion?

A: Amazon, for sure (AMZN). They have so many major business lines that are now growing gangbusters; I think they will be the first to double again from here. After having doubled twice within the last three years, it would really just be a continuation of the existing trend, except now we can see the business lines that will actually take Amazon to a much bigger company.

Q: Is this a good entry point for Micron Technology (MU)?

A: No, the good entry point was in the middle of August. We are at an absolute double bottom here. Wait for the tech washout to burn out before considering a re-entry. Also, you want to buy Micron the day before the trade war with China ends, since it is far and away its largest customer.

Q: Is Micron Technology a value trap?

A: Absolutely not, this is a high growth stock. A value trap is a term that typically applies to low price, low book to value, low earning or money losing companies in the hope of a turnaround.

Q: I didn’t get the Microsoft (MSFT) call spread when the alert went out — should I add it on here?

A: No, I am generally risk-averse this month; let’s wait for that 4% correction in the main market before we consider putting any kind of longs on, especially in technology stocks which have had great runs.

Q: How do you see Lam Research (LRCX)?

A: Long term it’s another double. The demand from China to build out their own semiconductor industry is exponential. Short term, it’s a victim of the China trade war. So, I would hold back for now, or take short-term profits.

Q: Is this a good entry point for Google (GOOGL)?

A: No, wait for a better sell-off. Again, it’s the main market influencing my risk aversion, not the activity of individual stocks. It also may not be a bad idea to wait for talk of a government investigation over censorship to die down.

Q: Would you buy Tesla (TSLA)?

A: No, buy the car, not the stock. There are just too many black swans out there circling around Tesla. It seems to be a disaster a week, but then every time you sell off it runs right back up again. Eventually, on a 10-year view I would be buying Tesla here as I believe they will eventually become the world’s largest car company. That is the view of the big long-term value players, like T. Rowe Price and Fidelity, who are sticking with it. But regarding short term, it’s almost untradable because of the constant titanic battle between the shorts and the longs. At 26% Tesla has the largest short interest in the market.

Q: I’m long Microsoft; is it time to buy more?

A: No, I would wait for a bit more of a sell-off unless you’re a very short-term trader.

Q: What would you do with the TBT (TBT) calls?

A: I would buy more, actually; preferably at the next revisit by the ProShares Ultra Short 20 Year Plus Treasury ETF (TBT) to $33. If we don’t get there, I would just wait.

Q: What’s your suggestion on our existing (TLT) 9/$123-$126 vertical bear put spread?

A: It expires in 12 days, so I would run it into expiration. That way the spread you bought at $2.60 will expire worth $3.00. We’re 80% cash now, so there is no opportunity cost of missing out with other positions.

Q: Do you like emerging markets (EEM)?

A: Only for the very long term; it’s too early to get in there now. (EEM) really needs a weak dollar and strong commodities to really get going, and right now we have the opposite. However, once they turn there will be a screaming “BUY” because historically emerging nations have double the growth rate of developed ones.

Q: Do you like the Invesco India ETF (PIN)?

A: Yes, I do; India is the leading emerging market ETF right now and I would stick with it. India is the next China. It has the next major infrastructure build-out to do, once they get politics, regulation, and corruption out of the way.

Q: Do you trade junk bonds (JNK), (HYG)?

A: Only at market tops and market bottoms, and we are at neither point. When the markets top out, a great short-selling opportunity will present itself. But I am hiding my research on this for now because I don’t want subscribers to sell short too early.

Q: With the (VXX), I bought the ETF outright instead of the options, what should I do here?

A: Sell for the short term. The iPath S&P 500 VIX Short-Term Futures ETN (VXX) has a huge contango that runs against it, which makes long-term holds a terrible idea. In this respect it is similar to oil and natural gas ETFs. Contango is when long-term futures sell at a big premium to short-term ones.

Q: How much higher for Apple (AAPL)?

A: It’s already unbelievably high, we hit $228 yesterday. Today it’s $228.73, a new all-time high. When it was at $150, my 2018 target was initially $200. Then I raised it to $220. I think it is now overbought territory, and you would be crazy to initiate a new entry here. We could be setting up for another situation where the day they bring out all their new phones in September, the stock peaks for the year and sells off shortly after.

August 30, 2018

Tech Letter

Mad Hedge Technology Letter
August 30, 2018
Fiat Lux

Featured Trade:
(ON TRUMP’S TECHNOLOGY ATTACK),
(AMZN), (GOOGL), (FB), (AMD), (TWTR)

On Trump’s Technology Attack

Tech Letter

First Amazon (AMZN), now Alphabet.

In a strategic move to fortify his base ahead of critical midterm elections, the President of the United States Donald J. Trump has denounced tech behemoth Alphabet (GOOGL) describing search results using his name as “rigged.”

If Trump loses the midterm elections, it could open a can of worms and threaten his position.

It is no surprise that he plans to invest 40 days traveling around America campaigning for Republicans in November.

This is a big deal.

Silicon Valley has been a frequent bashing target for the White House.

The data privacy fiasco of 2018 has offered ample ammunition to pretty much anyone who wants to rain on big tech’s parade.

Big tech has experienced a wave of bad press shifting public opinion against them ruining future guidance for social media companies such as Facebook (FB).

How does the administration’s attack against Alphabet affect its stock price going forward?

It won’t even blink.

Alphabet’s stock barely budged after the President used his Twitter (TWTR) feed to sound off against the famous digital search engine company.

The stock closed down 0.83% on the day.

We have seen this story again and again with the administration lashing out at certain sectors or individuals, only for the stock market to shrug off any resemblance of weakness and power higher to new all-time highs.

Resiliency would be the best way to characterize this market.

Ironically, Trump found time yesterday to tweet that the Nasdaq had just surpassed 8,000 for the first time, showing off the tech strength underpinning the nine-year bull market.

The FANGs are front and center the stars of the show. Grumbling about a prominent member of this cohort will do nothing to stop the profit engines that tech companies have constructed.

Stellar corporate earnings are the secret sauce in this recipe and investors would be crazy to veer away from that.

Investors have no reason to panic because the tech narrative will not go away anytime soon, and the market knows that.

Political turbulence has been baked into the pie, and it would be eerie if the airwaves went silent.

Investors have largely avoided pinpointing non-economic issues and focused on the economy and its robust 4% growth rate.

It helps that the unemployment rate has fallen to 3.9%, and the full labor market is a net positive, even though inflation and wage growth has yet to contribute as much as initially hoped.

Of course, politics play a substantial role in influencing the stock market. But looking back at the past crisis, the stock market reacted the same as it will now and go much higher.

The market is still very much a tech story, and last week’s price action confirmed this.

The Mad Hedge Technology Letter is still net negative on chip stocks, but the two chip stocks that circumvent my negative calls are companies I recommended recently and that have seen a breathtaking leg up.

Not all chip companies are made equal and Advanced Micro Devices, Inc. (AMD) proved that by spiking 35% so far in August, 23% in the past week, and more than 140% this year.

The hockey stick move has seen (AMD) short sellers singed to a tune of $3 billion in 2018.

Chip stocks were supposed to get crushed by the weight of the trade war. However, these two stalwarts prove that if you are in the right names, you’ll avoid the carnage, which has beset many smaller chip companies that have the bulk of revenue tied to China.

Tech companies have bought back more than $1 trillion of their own stock since the beginning of 2009 because they have the money to do so.

Silicon Valley companies continue to purchase back their own stocks at a furious pace, putting a floor under many cash cow tech firms to the benefit of share prices.

Whether you want to believe or not, the market is metamorphizing into an all-tech story as every sector migrates to the cloud and the heavy use of big data.

Industrial giants are turning into industrial IoT companies.

Turn over any stone and you would be hard pressed to not find some sort of tech in new products.

Silicon Valley is on the cusp of rolling out its self-autonomous driving technology for commercial operations with Alphabet’s subsidiary Waymo.

If that wasn’t a good reason to buy Alphabet, then let’s review the other positive levers in their portfolio.

Alphabet is one member of a two-man team dominating digital advertising revenues with Facebook.

Global media spend is expanding at 13% YOY as the migration to mobile sees no end.

Google has the best search engine in the world. There are no competitors even close to supplanting its holy grail search engine business, unless you consider bing.com a worthy competitor, which it isn’t.

Data is the new oil, and Alphabet is able to douse itself in data because of the gobs it possesses.

This is the reason Google knows everything about most people in the world outside of China.

Alphabet will be able to leverage this enormous treasure trove of big data and monetize it using artificial intelligence technology.

Add it all up and Alphabet is massively profitable and positioned on the vanguard of every future groundbreaking technology in the world.

Picking on the big boys won’t do much, and the stock price will power on unabated for the foreseeable future.

As the midterm elections draw closer, Trump could also double down on his foreign exploits attempting to consolidate political capital.

That means virulently attacking China’s trade policy, which could go into overdrive as they could give him the source of expansive buffer for which he is looking.

However, it is a double-edge sword as many constituents in red states could be the recipient of higher costs that elevated tariffs would bring.

At the bare minimum, Trump has cast a light on China’s unfair trading policies that has tapped an uneasy nerve for many other countries quietly agreeing with the American president.

This could create a whack-a-mole scenario as China could experience growing problems with numerous undeveloped countries felt wronged, and these headaches could take on different forms such as the Forest City project in Malaysia.

Back in the equity world, the smaller chip companies are baring the brunt of the administration’s scathing rhetoric toward China, but the economy, stock market, and consumer health will hum along as if nothing happened.

The damage is limited, giving Trump sufficient leeway to speak out about side issues as the vital midterm elections roll around.

The bull market is not close to dying and there is still room to run.