Mad Hedge Technology Letter
September 24, 2018
Fiat Lux
Featured Trade:
(BAD NEWS FROM MICRON TECHNOLOGY (MU),
(MU), (BABA), (KLAC), (LRCX), (INTC), (AMD), (NVDA), (HPQ)
Tag Archive for: (NVDA)
If your stomach was on edge before, then you must feel quite queasy now.
That’s only if you didn’t get rid of your chip stocks when I told you to.
The chip sector has been rife with issues for quite some time now, and I’ve been firing off bearish chip stories the past few months.
Intel (INTC) was one of the last chip companies I told you to avoid like the plague, please click here to review that story.
The contagion has spread wider.
Micron (MU), the Boise, Idaho-based chip giant, delivered poor guidance from its latest earnings report, adding more carnage to this trouble sector.
It’s been rough sailing for many American-based chip companies lately that are not named Advanced Micro Devices (AMD) and Nvidia (NVDA).
The protracted ongoing trade war between America and China that sees no end in sight is the fundamental reason to stay away from these chip companies that are the meat and potatoes inside of all electronic devices.
Cofounder of Alibaba (BABA) Jack Ma, who recently stepped down from his position as chairman, told news outlets that this trade war could last “20 years” and is “going to be a mess.”
Micron is affected by this trade war more than any other American company, with half of its annual revenue derived from the Middle Kingdom.
Out of the $20.32 billion in annual revenue last year, more than $10 billion was from China alone.
Micron is a leader in selling DRAM chips, which are placed in most portable electronic devices such as smartphones, video game consoles, and laptop computers.
The commentary coming out from chip executives has been overly negative and spells doom and gloom - supporting my view to be cautious on chips through the end of the year.
At the Citi 2018 Global Technology Conference in New York, KLA-Tencor (KLAC) chief financial officer Bren Higgins characterized the winter season DRAM market as “little less than what we thought,” describing margins as “modestly weaker.”
Lam Research (LRCX), once one of my favorite chip plays, offered bearish rhetoric about the state of chip investments, saying on its earnings call that is expected “lower spending on new equipment by some of its memory customers.”
It doesn’t take a rocket scientist to know that “memory customer” is Intel, which is in the throes of a CPU chip shortage rocking the overall personal computer market.
Personal computers face a steep 7% drop in sales volume for the rest of the year, and the knock-on effect is rippling throughout the industry.
The lower volume of produced computers means less memory needed, adding up to less sales for Micron.
This rationale forced Micron to guide down its revenue growth from 22% to 16% for the last quarter of 2018.
Intel’s monumental lapse has offered a golden opportunity for competitor Advanced Micro Devices (AMD) to steal market share from Intel in broad daylight.
This was the exact thesis that provoked me to urge readers to pile into AMD shares like a Tokyo rush-hour subway car.
Shares have gone ballistic to say the least.
(AMD) is poised to seize and reposition itself in the global CPU market with a 70/30 market share, up from the paltry 90/10 market share before Intel’s debacle.
To make matters worse for Intel, widespread reports indicate its shortage problems are “worsening.”
Such is a dog-eat-dog world out there when a company can triple market share in a blink of an eye.
The rotation is real with HP (HPQ) planning to integrate AMD chips into 30% of its consumer PCs, and Dell already mentioning it will use AMD chips to make up for the shortages.
The resilience in chip demand remains the silver lining for this industry as price weakness and production shortages will be finite.
Server demand remains particularly robust.
Google, Amazon, Facebook, and Microsoft coughed up $34.7 billion on data centers to serve cloud-based operation in the first half of the year in 2018, a sharp increase of 59% YOY.
Investors have been paranoid of the boom-bust nature of the chip industry for decades.
Each cycle sees spending and chip pricing rocket, only for inventories to build up and demand to evaporate in an instant.
The beginning of the end always starts with lower guidance, followed up with missed earnings the next quarter.
This playbook has repeated itself over and over.
Micron guided first quarter revenue of 2019 in a range between $7.9 billion to $8.3 billion, lower than the consensus of $8.45 billion.
And, if all of this horrid chip news wasn’t reason to rip your hair out - here is the bombshell.
To wean itself off the reliance of American chips, Alibaba has created a subsidiary to produce its own chips called Pingtouge Semiconductor Company.
Pingtouge refers to honey badger in the Chinese language, symbolic for its tenacity in the face of adversity – perhaps a thinly-veiled dig at the American political system.
Former Chairman Ma pocketed this chip company Hangzhou C-SKY Microsystems last year. It will will be given ample leeway and resources to team up with Alibaba to roll out its first commercial chip next year.
Alibaba has rapidly grown into the third-largest cloud player in the world, and require an abundant source of chips moving forward.
Chips tricked out with artificial intelligence will be adopted by not only its data centers, but integrated with its autonomous driving technology and IoT products, which are markets that Alibaba is proud to be part.
You can find Alibaba’s cloud products present in more than 20 countries. And the company that Jack Ma built forecasts to generate more than 50% of its revenue from overseas markets soon.
It could be Jack Ma laughing all the way to the bank.
Ultimately, Micron produced fair results last quarter, but like Facebook found out, if investors believe the company is about to fall off a cliff, it offers little resistance to the share price on a short-term basis.
Could the cyclicality demons start to awake to drag this company down?
Partially, yes, but there are still many positives to take away from this leading chip company.
China will need years to remedy its addiction of American chips.
It will not be able to produce the scope of quality or quantity to just stop buying from American companies for the foreseeable future.
The authorized $10 billion share buyback gave Micron shares a nice lift earlier this year, but the industry dynamics are now deteriorating rapidly.
Chip sentiment is at its lowest ebb for some time, and I reaffirm my call to avoid this sector completely unless it’s the two cornerstone chip companies showing systematic resiliency - (AMD) or Nvidia (NVDA).
The administration initially slapped on a tariff rate of 10% on $200 billion worth of goods with intentions to scale it up.
If nothing is solved, the increase to 25% will cause another 5% to 10% drop in Micron and Intel.
Then if the administration plans to go after the rest of the $250 billion of Chinese imports, expect another dive in chip shares.
Either way, each jawboning tweet as we head deeper into this trade conflict will damage Micron’s shares.
This sector is getting squeezed from many sides now, and if you don’t go outright short chip companies, then stay away until the storm clouds pass over and you can reassess the situation.
Global Market Comments
September 21, 2018
Fiat Lux
Featured Trade:
(SEPTEMBER 19 BIWEEKLY STRATEGY WEBINAR Q&A),
(SPY), (VIX), (VXX), (GS), (BABA), (BIDU), (TLT), (TBT),
(TSLA), (NVDA), (MU), (XLP), (AAPL), (EEM),
(MONDAY, OCTOBER 15, 2018, ATLANTA, GA,
GLOBAL STRATEGY LUNCHEON)
Below please find subscribers’ Q&A for the Mad Hedge Fund Trader September 19 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 expect a correction in the near term?
A: Yes. In fact, we may even see it in October. Markets (SPY) have been in extreme, overbought territory for a month now, the macro background is terrible, trade wars are accelerating, and interest rates are rising sharply. The only thing holding the market up is the prospect of one more quarter of good earnings, which companies start reporting next month. So once that’s out of the way, be careful, because people are just hanging on to the last final quarter before they sell.
Q: I just got out of my cannabis stock, what should I do now?
A: Thank your lucky stars you got away with that—it was an awful trade and you made money on it anyway. Stay away in droves. After all, the cannabis industry is all about growing a weed and how hard is that? This means the barriers to entry are zero. In fact, I’m thinking of growing some in my own backyard. My tomatoes do well, so why not Mary Jane?
Q: The Volatility Index (VIX) is now at $11.79—should I buy?
A: No, the rule of thumb for the (VIX) is to wait for it to sit on a bottom for one to two weeks and let some time decay work itself out. You’ll see that in the ETF, the iPath S&P 500 VIX Short-Term Futures ETN (VXX). When it stops breaking to new lows, that means it’s ready for another bounce. I would wait.
Q: What do you think about banks here? Is it time to get in?
A: No, these are not promising charts. If anything, I’d say Goldman Sachs (GS) is getting ready to do a head and shoulders and go to new lows. I would stay away from financials unless I see more positive evidence. The industry is ripe for disruption from fintech, which has already started. That’s said, they are way overdue for a dead cat bounce. That’s a trade, not an investment.
Q: Would you short Alibaba (BABA) and Baidu (BIDU) here?
A: No. Shorting is what I would have done six months ago; now it’s far too late. If anything, I would be a buyer of those stocks here, based on the possibility that we will see progress or an end to the trade war in the next couple of months. If the trade wars continue, they will put the U.S. in recession next year, and then you don’t want to own stocks anywhere.
Q: Is Apple (AAPL) going to get hit by the trade wars?
A: So far, this has not been the case, but they are whistling past the graveyard right now—an obvious target in the trade wars from both sides. For instance, the U.S. could suddenly start applying a 25% import duty to iPhones from China, which would make your $1,000 phone a $1,250 phone. Similarly, the Chinese could hit it in China, restricting their manufacturing in one way or another. I’m being very cautious of Apple for this reason. The stock already has one $10 drop just because of this worry.
Q: Can the U.S. ban China from selling bonds?
A: No, they can’t. The global U.S. Treasury bond market (TLT) is international by nature—there is no way to stop the selling. It would take a state of war to reach the point where the Fed actually seizes China’s U.S. Treasury bond holdings. The last time that happened was when Iran seized the U.S. embassy in Tehran in 1979. Iran didn’t get its money back until the Iran Nuclear Deal in 2015. Before that you have to go back to WWII, when the U.S. seized all German and Japanese assets. They never got those back.
Q: What are your thoughts on the chip sector?
A: Stay away short-term because of the China trade war, but it’s a great buy on the long term. These stocks, like NVIDIA (NVDA) and Micron Technology (MU) have another double in them. The fundamentals are outrageously good.
Q: Is the market crazy, or what?
A: Yes, it is crazy, which is why I’m keeping 90% cash and 10% on the short side. But “Markets can remain irrational longer than you can stay liquid,” as my friend John Maynard Keynes used to say.
Q: What’s your take on the Consumer Staples sector (XLP)?
A: It will likely go up for the rest of the year, into the Christmas period; it’s a fairly safe sector. The uptrend will remain until it doesn’t.
Q: Should we buy TBT now?
A: No, the time to buy the ProShares Ultra Short 20+ Year Treasury ETF (TBT) was two months ago. Now is the time to sell and take profits. I don’t think 10-year U.S. Treasury yields (TLT) are going above 3.11% in this cycle, and we are now at 3.07%. Buy low and sell high, that’s how you make the money, not the opposite.
Q: Does this webinar get posted on the website?
A: Yes, but you have to log in to access it. Then hover your cursor over My Account and a drop-down menu magically appears. Click on Global Trading Dispatch, then the Webinars button, and the last nine years of webinars appear. Pick the webinar you want and click on the “PLAY” arrow. Just give us a couple of hours to get it up.
Q: Can Chinese companies use Southeast Asia as a conduit to export to the U.S.?
A: Yes. This is an old trick to bypass trade restrictions. For example, most of the Chinese steel coming into the U.S. is through third countries, like Singapore. Eventually they do get found out, at which point companies or imports from Vietnam will be identified as Chinese origin and get hit with the import duties anyway, but it could take a year or two for those illegal imports to get discovered. This has been going on ever since trade started.
Q: Will the currency crisis in Argentina and Turkey spread to a global contagion?
A: Yes, and this could be another cause of a global recession late next year. The canaries in the coal live there (EEM).
Q: Would you use the DOJ probe to buy into Tesla (TSLA)?
A: No, buy the car, not the stock as it is untradeable. This is in fact the third DOJ investigation Tesla has undergone since Trump came into office. The last one was over how they handled the $400 million they have in deposits for their 400,000 orders. It turns out it was all held in an escrow account. There are easier ways to make money. It’s a black swan a day with Tesla. This is what happens when you disrupt about half of the U.S. GDP all at once, including autos, the national dealer network, big oil, and advertising. All of these are among the largest campaign donors in the U.S.
Time to Bring Out the Big Guns
Global Market Comments
September 12, 2018
Fiat Lux
THE FUTURE OF AI ISSUE
Featured Trade:
(THE NEW AI BOOK THAT INVESTORS ARE SCRAMBLING FOR),
(GOOG), (FB), (AMZN), MSFT), (BABA), (BIDU),
(TENCENT), (TSLA), (NVDA), (AMD), (MU), (LRCX)
Mad Hedge Technology Letter
September 4, 2018
Fiat Lux
Featured Trade:
(READY PLAYER ONE’S INSIGHT INTO THE FUTURE OF TECHNOLOGY),
(MSFT), (SQ), (TTWO), (AMD), (NVDA), (EA), (ATVI), (PYPL), (GOOGL), (FB)
The technology-laced film Ready Player One gives viewers a snapshot into the future where technology, income inequality, and society have run their course, and the year 2045 looks vastly different from the world of 2018.
Set in a semi-dystopian backdrop, the movie offers us a deeper insight into how certain technology trends will permeate into everyday life.
The first and most obvious future trend is the copious use of avatars.
Avatars will become the new normal. The first place that humans will find them is through the use of social media and entertainment, as children eventually becoming a part of us like our social media profiles today.
The Mad Hedge Technology Letter has incessantly hammered home about the phenomenon of gaming, and this will incorporate virtual reality allowing gamers access to a new digital world.
This was the on show in the film where the likes of protagonist Wade Watts, played by Tye Sheridan spent most of his life playing in the virtual world of Oasis using his character Parzival.
This could be your child in the future.
Wade Watts character is the new cool for Generation Z, as they are largely unconcerned about underage drinking and partying like the generations before them.
Gaming and hanging out on their preferred social media platforms are the new cool.
The companies dictating the current video game industry will have the first crack at it to realize profits and develop new businesses such as Microsoft (MSFT), Nvidia (NVDA), Advanced Micro Devices (AMD), Electronic Arts Inc. (EA), Take-Two Interactive Software, Inc. (TTWO), and Activision Blizzard, Inc. (ATVI).
Children just aren’t going outside like they used to and per most studies, they are addicted to the smartphone you bought them at age 10.
Most studies have found that once a child becomes hooked on technology, it is hard to reverse the habit, as once they enter into adult life and start their career, they become even more reliant on the technologies that got them to that point in the first place.
If your kid is already staring at tech devices three to four hours per day now for activities other than school work, expect that to grow to a minimum of six to seven hours per day once he hits puberty and smartphone time limits begin to fade away.
This all means that VR and gaming could be the handsome winner in all this, and the use of social media platforms will reap the benefits as well.
Generation Z just surpassed Millennials in terms of population comprising 25% of the American populace.
Neither of these generations have grown up with VR in their daily lives because the technology wasn’t advanced enough to really make a dent in their lives.
More than 75% of Generation Z has access to a smartphone, and they can truly be called the first generation of digital natives.
Avatars will push deeper into everyday life because the facial tracking technology has advanced by leaps and bounds.
Instead of cartoon-like avatars, lifelike avatars have replaced the less refined versions. It will be a tough time going forward distinguishing what is real and what is fake.
If you think fake news is a problem now, imagine how fake it will become in the future.
This could devastate the news industry as news organizations run the risk of melting down at any point, or just being completely taken over by tech companies and their algorithms, which is already happening now with Alphabet (GOOGL).
The future looks bleak for all newspaper assets, and the ones with the most advanced digital strategies will survive.
Newspapers only have so much time they can hang on with digital ad revenue, the reason they are still in business.
Viewers don’t want to see ads – period. And at some point, they will be disrupted as well.
Swashbuckling youth already have downloaded ad-blockers to completely remove ads from their lives, and refuse to open any website that forces them to white list a website.
There are children in Generation Z who might never have seen an ad before because their digital native capability allows them to navigate around ads with adept skill.
Or the easy solution for many Millennials is just watch Netflix because the platform is ad-less. The aversion to ads is so strong that traditional media giants such as Fox are experimenting with six-second ads because that is all a viewer can tolerate these days.
The traditional media giants were forced to adopt this new format after Alphabet’s YouTube rolled out micro-ads.
Popular browser Mozilla announced it will block all tracking scripts by default beginning in 2019, thwarting unregulated data collection and relentless ad pop-ups.
The reason why digital ads will have an existential crisis is because companies will be able to monetize the pure data, forcing companies with huge digital ad businesses such as Facebook (FB) to battle with the new competition that only wants your data and not hawk ads.
This is already happening in the e-brokerage space with disruptors such as Robinhood, which charges no commission and is more interested in collecting data and getting by with interest payment revenue.
Let’s face it, digital ads are not a high-quality business even though they are a high-margin business. As tech moves forward, the quality of tech will rise eliminating all low-grade tech that is still profiting in 2018.
On the business side of things, automation is replacing humans faster than humans realize, and the replacement will be an avatar representing the face of a company.
For lower-end services, an avatar chosen by the customer will populate to often give better service than a human can provide.
If this type of service is scaled, it would offer a massive cut in costs for American corporations saving on employee costs.
It will have the same effect that self-checkout kiosks have at supermarkets, wiping out another position at the low-end.
The front-end avatar that will service you is all possible because of the rapid advancement of artificial intelligence.
Every possible situation will be programmed in the software and executed briskly.
If customers desire the human touch, they will have to pay up.
Human interaction will command a premium price because human interaction cannot be automated.
The financial industry has a huge target on its back, and swaths of financial advisors could be sacked in favor of avatars with the functional software behind it to produce profits.
In fact, many financial advisors are instructed to refrain from recommendations now and urged to collect input to enter into a proprietary algorithm that will decide the customers’ portfolio.
Big banks have enjoyed their time in the sun, but technology will disrupt them in the near future. This is why you have seen huge run-ups in innovative fintech companies such as Square (SQ) and PayPal (PYPL).
Many forms of outside entertainment are on the chopping block, as well as indoor entertainment such as Hollywood.
Hollywood A-list actors command hefty premiums to contract their services, and that could all crumble if younger audiences prefer avatar-based films with the human roles performed by unknowns.
Johnny Depp earns more than $50 million for one movie, and these insane amounts could deflate rapidly if human participation in films becomes marginalized.
Ready Player One was a test case for how much technology could be infused into a movie, and the audience easily absorbed it.
I could argue that audiences could argue even more in this VR format.
The movie had a budget of $175 million, and returned $582 million at the box office.
The resounding success will encourage more directors to inject technology into their movies, and they will have to, if they hope to tempt younger audiences to the movie theater.
Going to the movie theater is another activity that has struggled to cope against the rise of Netflix and technology.
Theaters have been forced to improve the overall experience of watching a film with prime seating, comfortable seats, and other extras that never existed.
Every industry is going through the same headache of competing with technological disruption.
Stagnation is akin to surrendering in 2018.
And it wasn’t just a fringe director creating Ready Player One, it was visionary director Steven Spielberg, one of the most famous movie directors to ever exist.
This will pave the way for other lesser-known movie directors relying on technology to pump out the profits.
They wouldn’t be the first people or the first industry to go down this road either.
The Avatars Used In Ready Player One
________________________________________________________________________________________________
Quote of the Day
“The worst thing a kid can say about homework is that it is too hard. The worst thing a kid can say about a game is it's too easy,” – said American media scholar Henry Jenkins III.
Mad Hedge Technology Letter
August 22, 2018
Fiat Lux
Featured Trade:
(WHAT’S IN STORE FOR TECH IN THE SECOND HALF OF 2018?),
(GOOGL), (AMZN), (FB), (UTX), (UBER), (LYFT), (MSFT), (MU), (NVDA), (AAPL), (SMH)
Tech margins could be under pressure the second half of the year as headwinds from a multitude of sides could crimp profitability.
It has truly been a year to remember for the tech sector with companies enjoying all-time high probability and revenue.
The tech industries’ best of breed are surpassing and approaching the trillion-dollar valuation mark highlighting the potency of these unstoppable businesses.
Sadly, it can’t go on forever and periods of rest are needed to consolidate before shares relaunch to higher highs.
This could shift the narrative from the global trade war, which is perceived as the biggest risk to the current tech market to a domestic growth issue.
Healthy revenue beats and margin growth have been essential pillars in an era of easy money, non-existent tech regulation, and insatiable demand for everything tech.
Tech has enjoyed this nine-year bull market dominating other industries and taking over the S&P on a relative basis.
The lion’s share of growth in the overall market, by and large, has been derived from the tech sector, namely the most powerful names in Silicon Valley.
Late-stage bull markets are fraught with canaries in the coal mine offering clues for the short-term future.
Therefore, it is a good time to reassess the market risks going forward as we stampede into the tail end of the financial year.
The shortage of Silicon Valley workers is not a new phenomenon, but the dearth of talent is going from bad to worse.
Proof can be found in the controversial H-1B visa program used to hire foreign tech workers mainly to Silicon Valley.
A few examples are Alphabet (GOOGL), which was granted 1,213 H-1B approvals in 2017, a 31% YOY rise.
Alphabet’s competitor Facebook (FB) based in Menlo Park, Calif., was granted 720 H-1B approvals in 2017, a 53% YOY jump from 2016.
This lottery-based visa for highly skilled foreign workers underscores the difficulty in finding local American talent suitable for a role at one of these tech stalwarts.
Amazon (AMZN) made one of the biggest jumps in H-1B approvals with 2,515 in 2017, a 78% YOY surge.
The vote of non-confidence in hiring Americans shines an ugly light on American youth who are not applying themselves to the domestic higher education system as are foreigners.
For the lucky ones that do make it into the hallways of Silicon Valley, a great salary is waiting for them as they walk through the front door.
Reportedly, the average salary at Facebook is about $250,000 and Alphabet workers take home around $200,000 now.
Pay packages will continue to rise in Silicon Valley as tech companies vie for the same talent pool and have boatloads of capital to wield to hire them.
This is terrible for margins as wages are the costliest input to operate tech companies.
United Technologies Corp. (UTX) chief executive Gregory Hayes chimed in citing a horrid “labor shortage in the U.S. and in Europe.”
He followed that up by saying the company will have to grapple with this additional cost pressure.
Certain commodity prices are spiraling out of control and will dampen profits for some tech companies.
Uber and Lyft, ridesharing app companies, are sensitive to the price of oil, and a spike could hurt the attractiveness to recruit potential drivers.
The perpetually volatile oil market has been trending higher since January, from $47 per barrel and another spike could damage Uber’s path to its IPO next year.
Will Uber be able to lure drivers into its ecosystem if $100 per barrel becomes the new normal?
Probably not unless every potential driver rolls around in a Toyota Prius.
If oil slides because of a global recession instigated by the current administration aim to rein in trade partners, then Uber will be hard hit abroad because it boasts major operations in many foreign megacities.
A recession means less spending on Uber.
Either result will be negative for Uber and ridesharing companies won’t be the only companies to be hit.
Other victims will be tech companies incorporating transport as part of their business model, such as Amazon which will have to pass on more delivery costs to the customer or absorb the blows themselves.
Logistics is a massive expense for them transporting goods to and from fulfillment centers. And they have a freshly integrated Whole Foods business offering two-hour free delivery.
Higher transport costs will bite into the bottom line, which is always a contentious issue for Amazon shareholders.
Another red flag is the deceleration of the global smartphone market evident in the lackluster Samsung earnings reflecting a massive loss of market share to Chinese foes who will tear apart profit margins.
Even though Samsung has a stranglehold on the chip market, mobile shipments have fell off a cliff.
Damaging market share loss to Chinese smartphone makers Xiaomi and Huawei are undercutting Samsung products. Chinese companies offer better value for money and are scoring big in the emerging world where incomes are lower making Chinese phones more viable.
The same trend is happening to Samsung’s screen business and there could be no way back competing against cheaper, lower quality but good enough Chinese imitations.
Pouring gasoline on the fire is the Chinese investigation charging Micron (MU), SK Hynix, and Samsung for colluding together to prop up chip prices.
These three companies control more than 90% of the global DRAM chip market and China is its biggest customer.
The golden days are over for smartphone growth as customers are not flooding into stores to buy incremental improvements on new models.
Customers are staying away.
The smartphone market is turning into the American used car market with people holding on to their models longer and only upgrading if it makes practical sense.
Chinese smartphone makers will continue to grab global smartphone market share with their cheaper premium versions that western companies rather avoid.
Battling against Chinese companies almost always means slashing margins to the bone and highlights the importance of companies such as Apple (AAPL), which are great innovators and produce the best of the best justifying lofty pricing.
The stagnating smartphone market will hurt chip and component company revenues that have already been hit by the protectionist measures from the trade war.
They could turn into political bargaining chips and short-term pressures will slam these stocks.
This quarter’s earnings season has seen a slew of weak guidance from Facebook, Nvidia (NVDA) mixed in with great numbers from Alphabet and Amazon.
Beating these soaring estimates is not a guarantee anymore as we move into the latter part of the year.
Migrating into the highest quality names such as Amazon and Microsoft (MSFT) with bulletproof revenue drivers would be the sensible strategy if tech’s lofty valuations do not scare you off.
Tech has had its own cake and ate it too for years. But on the near horizon, overdelivering on earnings results will be an arduous chore if outside pressures do not relent.
It’s been fashionable in the past for market insiders to call the top of the tech market, but precisely calling the top is impossible.
The long-term tech story is still intact but be prepared for short-term turbulence.
________________________________________________________________________________________________
Quote of the Day
“By giving people the power to share, we're making the world more transparent,” – said cofounder and CEO of Facebook Mark Zuckerberg.
Mad Hedge Technology Letter
August 21, 2018
Fiat Lux
Featured Trade:
(THE CHIP MINI RECESSION IS ON),
(NVDA), (AMD)
