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May 18 Biweekly Strategy Webinar Q&A

Below please find subscribers’ Q&A for the May 18 Mad Hedge Fund Trader Global Strategy Webinar broadcast from Silicon Valley.

Q: When do you see the banks returning to glory?

A: When recession fears go away, which should happen this summer. A recession will either have come and gone, or we will have confirmation by the end of summer that there is no recession in sight for the next few years at least. This will likely trigger a monster rally in the banks, which could all jump 50% from here. Obviously, Warren Buffet is putting his money where his mouth is by loading up on Citibank (C) yesterday. This would take us to new all-time highs by the end of the year. So, again, use these down-1000-point days to go cherry-picking among the generals who have been executed. If that’s not mixing metaphors, I don’t know what is!

Q: Should I listen to CNBC?

A: No, do not listen to the talking heads on TV. They are on TV because they don’t know how to make money. If they did know how to make money, they’d be locked up in a dark basement somewhere like me, grinding out millions for their firms. In fact, watching TV is the perfect money destruction machine because on down days, they bring out the uber bears, and on up days they bring up the hyper bulls. They are trying to egg you to get you to do the exact opposite of what you should be doing. They’re not interested in you making money; they’re interested in getting traffic on their websites and making money for themselves. CNBC can be highly dangerous to your financial health.

Q: Will we get stagflation?

A: No, because I think that once the year-on-year comparisons kick in—literally in a month or two—inflation will drop from the current 8.3% to down maybe 4% by the end of the year. That also is another factor in your monster second-half rally.

Q: Do you think the bounce in the market yesterday is the beginning of an upward trend or a dead cat bounce?

A: Definitely a dead cat bounce. I expect we’ll keep chopping around in the current range for the next 3, 4, and 5 months, and then we catapult into a monster year-end rally. That is a typical bottoming-type process.

Q: Is the wisdom “Go away in May” still alive or is your best bet that this year may prove different and the market goes up in the latter part of the year?

A: Actually, you should have gone away in November. That’s when all tech stocks peaked; only energy went up after that. If you’d gone away in November and said “come back in August” that would have been a good strategy because I think that’s when the year-end rally begins. If anything, May could be the bottom of the entire move.

Q: Is it time for LEAPS (Long Term Equity Anticipation Securities)?

A: Not yet—it’s too soon for LEAPS territory. You only want to do LEAPS when you are on a sustained long-term uptrend in a stock. We are nowhere near sustained anything, we are still in a bottoming phase, and could be there for months. At the end of those months is when we’ll be looking at LEAPS, where you can double your money every 6 months.

Q: Is it time to start nibbling on China stocks (FXI) now that COVID news is marginally better?

A: I’m going to avoid Chinese stocks because the American ones are so much better. You want to buy the quality at the discount, not the marginal, high-risk political footballs at a discount. And China will remain high-risk as long as they are abandoning capitalism. If you have to buy one Chinese stock, I would say Alibaba (BABA); you could get a double on that. But remember it is a high-risk trade—if the Chinese government wants to roll Jack Ma up in a carpet and kidnap him to Western Chinese re-education camp, the stock will get slaughtered. And that’s been happening increasingly with the heads of major companies in the Middle Kingdom.

Q: When this current route comes to an end, should we look to enter the market with 50% margin on stocks like Tesla (TSLA)?

A: It’s never sensible to go to 50% margin because if the stocks drop 50%, you are completely wiped out—you’ve lost everything. Plus, coming back from a loss is one thing; coming back from zero is impossible. So, I would not recommend that. You might do a safe stock like Apple (APPL), with a 2% dividend, and then at least you’re getting a double dividend. You only do the 50% margin on the safest, high dividend stocks.

Q: Amazon (AMZN) is on its way down. What is your expectation for the $3200/$3400 vertical bull call spread in January 2023?

A: I think you could make money on that. It may not be the full amount of the spread, but you’ll definitely get a big increase from current levels, because when we do get a second half rally, it will be tech-led, and Amazon has already had a horrific decline. What you might consider is rolling your strike down, taking the loss on the 3200/3400 and rolling down to like a $2,000/$2,200 in twice the size, and you’ll make your money back that way.

Q: For those of us thinking about LEAPS, how should we start to buy in—20, 30, 50% right now?

A: Well, first of all, you only do them on down days like today, when the market is down 800, and you scale in. 20% now, 20% higher or lower, and 20% again higher or lower. But you really want to be saving cash for days like this because You want to feel smarter than everybody else, and they absolutely will hit any bid on a down day, and that's where your LEAPS fills are really excellent, is on a down day like this.

Q: Can the Fed avoid another policy mistake? Because it seems that not only are they heading for high inflation, but layoffs are coming as well, and even with that I’m sure they will perform a soft landing of sorts.

A: For sure, when you take massive amounts of stimulus out of the economy, as we have in the last year, that is recessionary. In fact, the US government is close to running a balance budget right now because Biden can’t get anything through Congress other than money for Ukraine. Good for Ukraine economy, not for ours. And yes, they can do a soft landing, but has it ever been done before? No. Though this is the Fed that just keeps on surprising, so who knows. In the meantime, I'm willing to trade the ranges, and that may be all you get to do for a while.

Q: Target (TGT) shares are down 25%, as they cited higher costs that will result in rising prices for their customers. Would you buy the dip?

A: No, I generally don’t like retailers anyway. It’s a business that operates on a 2% profit margin. I like 40 or 50% profit margin businesses—those tend to be technology stocks.

Q: Would you buy retailers going into a recession?

A: No, that’s the worst thing in the world to own.

Q: Could Fluor Corp (FLR) be a Ukraine infrastructure stock?

A: Yes, once the war ends there will be a massive effort to rebuild Ukraine. Every company in the world will be involved, and Fluor and Bechtel will be the biggest, though Fluor is the only one where you can buy the stock. We already have the money to do this with all of the money that was seized from Russia. I predict discount sales on mega yachts.

Q: Why do you think all that money is going to Ukraine?

A: Because a weakened Russia is in the national interest of the United States, and it’s better that their soldiers are doing the dying than ours. I’ve done the latter and definitely prefer the former, using the other country's’soldiers as cannon fodder.

Q: On down days like today, should I be putting on one-month trades like the June options?

A: Yes, because the minimizes your risk and cuts the cost of mistakes. Waiting for the second half of the year when we get a prolonged uptrend to look at LEAPS—that is the correct way to do it.

Q: Over the next 12 months, do you think the S&P 500 will outperform Nasdaq?

A: No—for the next 3 months the S&P 500 will outperform NASDAQ. After that, NASDAQ will become an enormous outperformer for the rest of the decade. So, choose your entry points wisely.

Q: Do you think that housing is peaking out and will start to decline?

A: No, we still have a long-term structural shortage of 10 million homes in the US and I think we will flatline housing for years until we catch up with that shortfall.

Q: What are your thoughts on the Metaverse?

A: Too soon. Right now, the Metaverse involves spending only—no revenues. It could be years before you actually see any profits. So that’s why I'm avoiding Meta or Facebook (FB). But then, you could have made the same argument about the internet 25 years ago and semiconductors 50 years ago. If you waited long enough, however, you obviously made a fortune.

Q: China is hoarding 69% of their wheat reserves. Is this because they plan to invade Taiwan?

A: No, it’s because there’s a global food crisis going on. Many countries, like India, have banned exports of food to protect themselves. People miss this about China: China will never have a war or invade anybody, because the second they do, their food supplies get cut off by us, who are the world’s largest producer of food. Plus, their trade would get shut off to pay for it, so they can’t buy it from somewhere else, and that’s done with us also. So, they need to be in our good graces in order to eat. That's the bottom line and that’s why Taiwan will never get invaded. Russia’s economy can operate independently for a while, but China’s can’t.

Q: Is the baby food shortage further evidence of a food crisis?

A: No, the baby formula crisis is being caused by a monopoly of three companies that control 100% of the baby food market; and the largest of these companies, accounting for a 40% market share of the baby food making, is producing baby food that is poisonous. That's why they got shut down. This has been going on for years, and for some reason, they got a free pass on regulation and inspections by the previous administration, which is ending now, and all of a sudden we’re finding out that 40% of the country’s baby food is contaminated and is being pulled off the market. So, it really has nothing to do with the global food crisis. That’s more related to Climate change—surprise, surprise—as it’s not raining in the right places like California, the war in Ukraine, which removed 13% of the world’s calories practically overnight.

Q: Should I bet the farm here with the ARK Innovation Fund (ARKK)? I like Cathie Woods’ bet on innovation or five-year time horizon. It’s a great thing, don’t you think?

A: Not so great when you drop 70% in the last year. And it is a high-risk bet that of her ten largest holding companies, you only need one of them to work for the fund to bring in a decent return. Of course, you may have to write off nine other companies to do that. But yes, it’s a great thing to own on the way up, not so great on the way down. I know some people who started scaling into ARK in November and came to regret it. I would wait on it—this is your highest leverage technology play, and if you really want some punishment, there’s a hedge fund that’s bringing out a 2X long ARK fund in the next couple of months. Then it’s basically option money you’re throwing out. If you want to put some money in that, you could get a 10x on the 2x ETF if you’re playing a recovery in ARK. So watch it; don’t touch it now because ARK is having another heart attack today, but something to consider if you like gambling.

Q: I am full up with a thousand shares of PayPal (PYPL). It’s now down 76%. What should I do?

A: I recommend you learn the art of stop losses. I stopped out of this thing last fall, and it’s continued to go down virtually every day. Whenever you buy a new position, automatically enter into your spreadsheet your stop loss for that position. Because things can drop by 80 or 90% and you work too hard for your money to throw it away on these big losses.

Q: What do you think about Steve Wynn and Wynn Hotels?

A: I’d be buying down here down 62%; it was announced today that Steve Wynn has secretly been acting as an agent for the Chinese government where (WYNN) has a major part of its operations. Who knew? With all those high rollers being flown in on private jets from China, sitting at the tables in the closed rooms. So yes, this is a recovery play and it will do just as well as all other recovery plays, but remember it’s a China recovery play. And I think, in any case, his ex-wife owns a big part of the company anyway. So I don’t think Steve Wynn is that closely connected with Wynn hotels because of past transgressions with the female staff.

Q: Is it time to scale into Freeport-McMoRan (FCX)?

A: I’d say yes. On a longer-term view, I expect (FCX) to go to $100. And for those who have the May $32/$35 call spread that expires on Friday, my bet is that you get the max profit—but you may not sleep before then.

Q: What do you have to say about a post-Putin scenario and impact on the market?

A: The day Putin dies of a heart attack, you can count on the market being up 10%, if that happens right now—less if it happens at a later date. But it would be hugely bullish for the entire global stock market, and oil would also collapse, which is why I refuse to put on oil plays here. That is a risk. Putin can give up, have an accident, or get overthrown. When the Russian people see their standard of living decline by 90%, this is a country that has a long history of revolutions, putting their leaders in front of firing squads and throwing the bodies down wells. So, if I were Putin, I wouldn't be sleeping very well right now.

Q: What's the reason for air tickets (UAL), (ALK), (DAL) going up sharply?

A: 1. Shortage of airplanes 2. Soaring fuel costs 3. Labor shortages and strikes 4. It is all proof of an economy that is definitely NOT going into recession.

To watch a replay of this webinar with all the charts, bells, whistles, and classic rock music, just log in to www.madhedgefundtrader.com, go to MY ACCOUNT, click on GLOBAL TRADING DISPATCH, then WEBINARS, and all the webinars from the last 12 years are there in all their glory.

Good Luck and Stay Healthy,

John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader

With Lieutenant Uhuru

May 19, 2022

Bitcoin Letter

Mad Hedge Bitcoin Letter
May 19, 2022
Fiat Lux

Featured Trade:

(EXCHANGES LOSE CONFIDENCE)
(BTC), (COIN), (TGT)

Exchanges Lose Confidence

Bitcoin Letter

Where there’s smoke, there is fire.

That is how you need to approach the crypto industry right now as systemic risks creep in.

Withdraw your money from Coinbase (COIN) immediately and switch to trading crypto-based ETFs on the New York Stock Exchange.

Why?

In the event the crypto exchange goes bankrupt, Coinbase says, its users might lose all the cryptocurrency stored in their accounts too.

Coinbase told us “crypto assets we hold in custody on behalf of our customers could be subject to bankruptcy proceedings.”

Coinbase users would become “general unsecured creditors,” meaning they have no right to claim any specific property from the exchange in proceedings. Their funds would become inaccessible.

CEO of Coinbase Brian Armstrong is trying to swindle investors out of their money by putting in place the infrastructure to not return funds if bankruptcy happens.

To even talk about this in public is stirring unease and sowing mistrust within the management team there.

If Armstrong wanted a crypto winter, he is doing everything in his power to trigger it by his behavior by killing crypto adoption rates.

Bank accounts in the U.S. are protected by deposit insurance offered by the Federal Deposit Insurance Corporation. In the event a bank fails, the FDIC steps in to protect deposits up to $250,000, preventing depositors from going broke along with the bank.

Crypto exchanges are unsecure and not insured so that’s where the risk is.

As customers had to pay Coinbase a fee for every crypto transaction, the fintech generated rip-roaring growth over the last two years - revenue surged from less than $200 million in the first quarter of 2020 to $2.5 billion in the fourth quarter of 2021. Similarly, net profit increased more than 26-fold from $32 million to $840 million.

Bitcoin dropping to under $30,000 from the high of $65,000 has been a catastrophic disaster for Coinbase.

They essentially rely on higher volume to build growth and when their customers are busy getting impoverished, it doesn’t set the stage for Coinbase to build higher trading volume.

Setting up management to secure a get out of jail-free card for utter failure is another issue I have as an investor.

At the bare minimum, the optics are terrible, and questions arise about fiduciary duty which could result in a tsunami of lawsuits against Armstrong and Coinbase.

Sadly, the price of Bitcoin, which was promoted as an inflation hedge has in fact proved to be the polar opposite.

In times of hyperinflation, people want physical stuff like food, medicine, gas, and housing. Not digital currency.

I do believe cryptocurrency is a great investment when people aren’t paying $6 per gallon of gasoline.

The sudden spike in energy costs was triggered by terrible foreign policy mistakes by the current administration.

Now everyone in the crypto industry is running around with their head cut off scared of potential liability to these digital coins and digital exchanges for which there is no historical precedent.

How does the court behave if a crypto exchange blows up?

Nobody has a clue.

This is where we are at this point in the crypto narrative and the bears are piling in like no other.

Target (TGT) reported dire earnings reporting severe margin contraction because of higher costs.

The net result is yet another ax to risk assets and crypto is one of the most speculative out there.

The rest of the year will be a tough slog for crypto and it won’t work itself out until inflation is back under control.

But as many people understand, the US Central Bank is not interested in taming inflation and is professional at downplaying any risk.

The result is that hyperinflation explodes, risk assets sell-off, and investors go to cash.

Brian Armstrong gleefully telling investors he will fleece us is just another strong signal and supportive data point of my overarching thesis.

Price of Bitcoin is on its way to $20,000 soon.

December 27, 2021

Tech Letter

Mad Hedge Technology Letter
December 27, 2021
Fiat Lux

Featured Trade:

(SWITCHING CAMPUSES FOR FULFILLMENT CENTERS)
(AMZN), (TGT), (WMT)

Converting Campuses For Fulfillment Centers

Tech Letter

Moving on to tomorrow’s tech and the decisive trends that will power your tech portfolio, you can’t help but think about what will happen to the American university system if we are slammed with another delta dropkick.

A bachelor’s degree has already been massively devalued with each subsequent “wave” knocking off an extra 20% from a 4-year achievement.

Another unstoppable trend that shows no signs of abating is the “winner take all” mentality of the tech industry.

The virus was a great catalyst for U.S. tech companies and U.S. asset holders in stocks and real estate to cash in with a smash and grab of the century effectively leaving the rest of the uncompetitive global economy in its wake.

Remember this is all while China is destroying their own tech companies with zeal because they perceive them as too powerful at this point and a legitimate threat to the interest of the communist party.

Now, tech giants will apply their huge relative gains to gut different industries and have set their sights on academics and the buildings they operate from as their next exercise in destroy and conquer.

Recently, we got clarity on big-box malls becoming the new tech fulfillment centers with the largest mall operator in the United States, Simon Property Group (SPG), signaling they are willing to convert space leftover in malls from Sears and J.C. Penny.

The next bombshell would hit sooner rather than later.

College campuses will become the newest of the new Amazon (AMZN), Walmart (WMT), or Target (TGT) eCommerce fulfillment centers, and let me explain to you why.

When the California state college system shut down its campuses and moved classes online due to the coronavirus in March, rising sophomore Jose Antonio returned home to Vallejo, California where he expected to finish his classes and “chill” with friends and family.

Then Amazon announced plans to fill 100,000 positions across the U.S at fulfillment and distribution centers to handle the surge of online orders. A month later, the company said it needed another 75,000 positions just to keep up with demand. More than 1,000 of those jobs were added at the five local fulfillment centers. Amazon also announced it would raise the minimum wage from $15 to $17 per hour through the end of April.

Antonio, a marketing and communications major, jumped at the chance and was hired right away to work in the fulfillment center near Vacaville that mostly services the greater Bay Area. He was thrilled to earn extra spending money while he was home and doing his schoolwork online.

This was just the first wave of hiring for these fulfillment center jobs, and there will be a second, third, and fourth wave as eCommerce volumes spike.

Even college students desperate for the cash might quit academics all together to focus on starting from the bottom at Amazon or launching an e-store.

Even though many of these jobs at Amazon fulfillment centers aren’t the plush office job that Ivy League graduates covet, any job will do for the bottom 40% of hardworking Americans.

The rise of ecommerce has happened at a time when the cost of a college education has risen by 250% and more often than not, the price rises don’t live up to the value accretion.

Many fresh graduates are mired in $100,000 or even $200,000 plus debt burdens that prevent them from getting a foothold on the property ladder and delay household formation and there’s been no indication President Biden is about to cancel this colossal debt.

Then consider that many of the 1000s of colleges that dot America have borrowed capital to the hills building glitzy business schools, $200 million football locker rooms, and rewarding the entrenched bureaucrats at the school management level outrageous compensation packages.

America will be saddled with scores of colleges and universities shuttering because they can’t meet their debt obligations.

The financial profiles of prospective students have dipped by 50% or more in the short-term with their parents unable to find the money to send their kids back to college, not to mention the health risks.

Then there is the international element here with the lucrative Chinese student that added up to 500,000 total students attending American universities in the past.

They won’t come back as well.

The college campuses will be carcasses with juicy meat on the bones allowing Jeff Bezos to choose the prime cuts.

The coronavirus has exposed the American college system for what it is, and not every college has a $40 billion endowment fund like Harvard to withstand today’s financial apocalypse.

The only two industries now big enough to quench big tech’s insatiable appetite for devouring revenue are healthcare and education.

We are seeing this play out quickly, and once tech gets a foothold literally and physically on campus, the rest of the colleges will be thrust into an existential crisis of epic proportions with the only survivors being the ones with large endowment funds and a global brand name.

It’s scary, isn’t it?

This is how tech has evolved and certain parts of society are now diminished while others supercharged.

This is also part of how the world is changing so rapidly now because of a combustible mix of geopolitics, health scares, and accelerating technology that average people can’t recognize the world we live in anymore.

When this happens, close your eyes and buy tech stocks since most of us don’t run pharma companies or can’t extract largesse from dollar or euro-denominated governments.

college

YOUR NEW DELIVERY CENTER

July 26, 2021

Tech Letter

Mad Hedge Technology Letter
July 26, 2021
Fiat Lux

Featured Trade:

(YOUR NEW FULFILLMENT CENTERS)
(AMZN), (WMT), (TGT)

February 12, 2021

Diary, Newsletter, Summary

Global Market Comments
February 12, 2021
Fiat Lux

Featured Trade:

(TEN STOCKS TO BUY BEFORE YOU DIE)
(MSFT), (AAPL), (GOOGL), (QCOM), (AMZN),
(V), (AXP), (NVDA), (DIS), (TGT)

Ten Stocks to Buy Before You Die

Diary, Newsletter

A better headline for this piece might have been “Ten stocks to Buy at the Bottom”, except that you have to redefine the word “bottom.”

The rules of the greatest liquidity-driven market of all time demand a different explanation of The NEW bottom, and that is something that hasn’t gone up lately.

And that would be big tech, which appears ready to blast out to the upside from a six-month long sideways “time” correction.

It would be a perfectly rational thing to see in these highly irrational markets. After all, these names just announced blockbuster earnings presaging greater things to come. And these companies actually HAVE earnings, compared to recent market frontrunners, which have none at all.

Coming in here and betting the ranch is now a no-lose trade. If I’m right, the pandemic ends in three months, stocks will soar. If I’m wrong and the global epidemic explodes from here, you’ll be dead anyway and won’t care that the stock market crashed further.

Needless to say, I have a heavy tech orientation with this list, far and away the source of the bulk of earnings growth for the US economy for the foreseeable future. If anything, the coronavirus will accelerate the move away from shopping malls and towards online commerce as consumers seek to shy away from direct contact with the virus.

What would I be avoiding here? Directly corona-related stocks like those in airlines, hotels, casinos, and cruise lines. Avoid human contact at all cost! There is no way of knowing when or where these stocks will bottom. Only the virus knows for sure.

Microsoft (MSFT) – still has a near-monopoly on operating systems for personal computers and a huge cash balance. Their inroads with the Azure cloud services have been impressive.

Apple (AAPL) – Even with the Coronavirus, Apple still has a cash balance of $225 billion. Its 5G iPhone launches in the fall, unleashing enormous pent-up demand. Apple’s rapid move away from a dependence on hardware to services continues.

Alphabet (GOOGL) – Has a massive 92% market share in search and remains the dominant advertising company on the planet.

QUALCOMM (QCOM) – Has a near-monopoly in chips needed for 5G phones. It also won a lawsuit against Apple over proprietary chip design. In the very near future, you won’t be able to do ANYTHING without 5G. It’s also not a bad idea to own a chip stock during the worst global chip shortage in history.

Amazon (AMZN) – The world’s preeminent retailer is growing by leaps and bounds. Dragged down by its association with the world’s worst industry, (AMZN) is a bargain relative to other FANGs.

Visa (V) – The world’s largest credit company is a call on the growth of the internet. We still need credit cards to buy things. And guess what? Coronavirus will accelerate the move of commerce out of malls where you can get sick to online where you can’t.

American Express (AXP) – Ditto above, except it charges higher fees and has snob appeal (read higher margins). Its stock has lagged Visa and MasterCard in recent years.

NVIDIA (NVDA) – The leading graphics card maker that is essential for artificial intelligence, gaming, and bitcoin mining. Another great chip play that has flatlined for half a year.

Advanced Micro Devices (AMD) – Stands to benefit enormously from the chip shortage created by the coming 5G and the explosion of the cloud.

Target (TGT) – The one retailer that has figured it out, both in their stores and online. It can’t be ALL tech.

Good Luck and Good Trading
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader

Looks Like a “BUY” Signal to Me

December 28, 2020

Tech Letter

Mad Hedge Technology Letter
December 28, 2020
Fiat Lux

Featured Trade:

(ECOMMERCE AND THE UNIVERSITY SYSTEM)
(AMZN), (APPL), (WMT), (TGT), (SHOP), (APPL), (MSFT), (GOOGL)

Ecommerce and the University System

Tech Letter

The genie is out of the bottle and life will never go back to pre-Covid ways.

Excuse me for dashing your hopes if you assumed the economy, society, and travel rules would do a 180 on a dime.

They certainly will not.

The messiness of distributing the vaccine is already rearing its ugly head with Germany botching the BioNTech-Pfizer vaccine delivery, deploying refrigerators that weren’t cold enough.

Moving on to tomorrow’s tech and the decisive trends that will power your tech portfolio, you can’t help but think about what will happen to the American university system.

A bachelor’s degree has already been devalued as traditional academics trumped by the digital economy invading its turf.

Another unstoppable trend that shows no signs of abating is the “winner take all” mentality of the tech industry.

Tech giants will apply their huge relative gains to gut different industries and have set academics and the buildings they operate from as one of their next prey.

Recently, we got clarity on big-box malls becoming the new tech fulfillment centers with the largest mall operator in the United States, Simon Property Group (SPG), signaling they are willing to convert space leftover in malls from Sears and J.C. Penny.

The next bombshell would hit sooner rather than later.

College campuses will become the newest of the new Amazon (AMZN), Walmart (WMT), or Target (TGT) eCommerce fulfillment centers, and let me explain to you why.

When the California state college system shut down its campuses and moved classes online due to the coronavirus in March, rising sophomore Jose Antonio returned home to Vallejo, California where he expected to finish his classes and “chill” with friends and family.

Then Amazon announced plans to fill 100,000 positions across the U.S at fulfillment and distribution centers to handle the surge of online orders. A month later, the company said it needed another 75,000 positions just to keep up with demand. More than 1,000 of those jobs were added at the five local fulfillment centers. Amazon also announced it would raise the minimum wage from $15 to $17 per hour through the end of April.

Antonio, a marketing and communications major, jumped at the chance and was hired right away to work in the fulfillment center near Vacaville that mostly services the greater Bay Area. He was thrilled to earn extra spending money while he was home and doing his schoolwork online.

This was just the first wave of hiring for these fulfillment center jobs, and there will be a second, third, and fourth wave as eCommerce volumes spike.

Even college students desperate for the cash might quit academics to focus on starting from the bottom at Amazon.

Even though many of these jobs at Amazon fulfillment centers aren’t those corner office job that Ivy League graduates covet, in an economy that has had the bottom fall out from underneath, any job will do.

Chronic unemployment will be around for a while and jobs will be in short supply.

Not only is surging unemployment a problem now, but a snapshot assessment led by the U.S. Census Bureau and designed to offer less comprehensive but more immediate information on the social and economic impacts of Covid showed that as recently as the period between November 25 and December 7 (including Thanksgiving), some 27 million adults—13 percent of all adults in the country—reported their household sometimes or often didn’t have enough to eat.

Yes, it’s that bad out there right now.

When you marry that up with the boom in ecommerce, then there is an obvious need for more ecommerce fulfillment centers and college campuses would serve as the perfect launching spot for this endeavor.

The rise of ecommerce has happened at a time when the cost of a college education has risen by 250% and more often than not, doesn’t live up to the hype it sells.

Many fresh graduates are mired in $100,000 plus debt burdens that prevent them from getting a foothold on the property ladder and delay household formation.

Then consider that many of the 1000s of colleges that dot America have borrowed capital to the hills building glitzy business schools, $100 million football locker rooms, and rewarding the entrenched bureaucrats at the school management level outrageous compensation packages.

The cost of tuition has risen by 250% in a generation, but has the quality of education risen 250% during the same time as well?

The answer is a resounding no, and there is a huge reckoning about to happen in the world of college finances.

America will be saddled with scores of colleges and universities shuttering because they can’t meet their debt obligations.

The financial profiles of the prospective students have dipped by 50% or more in the short-term with their parents unable to find the money to send their kids back to college, not to mention the health risks.

Then there is the international element here with the lucrative Chinese student that added up to 500,000 total students attending American universities in the past.

They won’t come back after observing how America basically ignored the pandemic and the U.S. public health system couldn’t get out of the way of themselves after the virus was heavily politicized on a national level.

The college campuses will be carcasses with lots of meat on the bones that will let Jeff Bezos choose the prime cuts.

This will happen as Covid’s resurgence spills over into a second academic calendar and schools realize they have no pathway forward and look to liquidate their assets.

There will be a meaningful level of these college campuses that are repurposed as eCommerce delivery centers with the best candidates being near big metropolitan cities that have protected white-collar jobs the best.

The coronavirus has exposed the American college system, as university administrators assumed that tuition would never go down.

The best case is that many administrators will need to drop tuition by 50% to attract future students who will be more price-sensitive and acknowledge the diminishing returns of the diploma.

Not every college has a $40 billion endowment fund like Harvard to withstand today’s financial apocalypse.

It’s common for colleges to have too many administrators and many on multimillion-dollar packages.

These school administrators made a bet that American families would forever burden themselves with the rise in tuition prices just as the importance of a college degree has never been at a lower ebb.

Like many precarious industries such as nursing homes, commercial real estate, hospitality, and suburban malls, college campuses are now next on the chopping block.

Big tech not only will make these campuses optimized for delivery centers but also gradually dive deep into the realm of digital educational revenue, hellbent on hijacking it from the schools themselves as curriculum has essentially been digitized.

Just how Apple has announced their foray into cars, these same companies will go after education.

Colleges will now have to compete with the likes of Google (GOOGL), Facebook (FB), Amazon (AMZN), Apple (AAPL), and Microsoft (MSFT) directly in terms of quality of digital content since they have lost their physical presence advantage now that students are away from campus.

Tech companies already have an army of programmers that in an instance could be rapidly deployed against the snail-like monolith that is the U.S. university system.

The only two industries now big enough to quench big tech’s insatiable appetite for devouring revenue are health care and education.

We are seeing this play out quickly, and once tech gets a foothold literally and physically on campus, the rest of the colleges will be thrust into an existential crisis of epic proportions with the only survivors being the ones with large endowment funds and a global brand name.

It’s scary, isn’t it?

This is how tech has evolved in 2020, and the tech iteration of 2021 could be scarier and even more powerful than this year’s. Imagine that!