“Don't chase a girl, let the girl chase you.” – Said Founder and CEO of Softbank Masayoshi Son
Mad Hedge Technology Letter
September 4, 2020
Fiat Lux
Featured Trade:
(WILL NEUROSCIENCE SUPERCHARGE BIG TECH?)
(NEURALINK)
The wonky world of Tesla’s Elon Musk trucks ahead with his neuroscience firm one step closer to inserting a chip into your brain.
You would think this is straight out of science fiction, but mark my word that in our lifetime, we could all be operating digital devices from our heads if Musk gets his way.
Scary as it does seem now, this will probably be the first of many artificial procedures to infuse humans with more artificial intelligence.
Musk believes humans will be a robot hybrid in the future because competition is trending in that way and this direction in humanity is ultimately existential.
Improvements in the technology will periodically be announced, but we are nowhere close to the actual implementation of these neuro devices into a human brain let alone the consumer and economic implications to this technology.
As for today and now, we are in the early innings and testing it out on pigs.
Better them and not me.
Neuralink’s dramatically simplified design for an implant that hopes to create brain-to-machine interfaces is a big deal and partly because of the star power backing the project who can literally move mountains.
The previous design consisted of a bean-shaped device that would sit behind the ear, but now it is the size of a large coin, and it goes in your skull.
I expect the final iteration to a millimeter wide.
The in-brain device could enable humans with neurological conditions to control technology, such as phones or computers, with merely thoughts.
The other use case is solving neurological disorders from memory, hearing loss, and blindness to paralysis, depression, and brain damage.
The current prototype – referred to as version 0.9 – measures at 23 millimeters by eight millimeters, and has 1024 electrode "threads" attached to it that are implanted into the brain.
It is designed to replace a coin-sized portion of the skull and sit flush so it would be physically unnoticeable. It would be inductively charged, the same way you would wirelessly charge a smartwatch or a phone.
The surgical robot, which is programmed to insert the neural threads safely into the brain, was done by US design company Woke Studios.
Woke Studio’s robot would be able to insert the link in under an hour without general anesthesia, with the patient able to leave the hospital right away.
The robot will eventually do the entire surgery – so everything from incision, removing the skull, inserting electrodes, placing the device, and then closing things up.
It will be completely automated.
Test pigs are being used to test the device which offers important insights into the process of inserting a chip into a brain.
The implant sends real-time signals from the pig’s brain whenever it touches something with its snout.
Described as "healthy and happy", one of the pigs was given an implant two months ago, while another pig has dual Neuralink implants, demonstrating that it is possible to have multiple chips in your head at one time.
A third pig has no implant. According to Musk, each of the animals are "indistinguishable" from each other.
Musk also showed a pig that previously had a chip inserted into its brain, but had since been removed, to show that the procedure is reversible without any serious side-effects.
Neuralink’s Breakthrough Device designation by FDA supports Musk’s neuroscience objectives. The startup is now preparing for its first human test case, pending required approvals, and further safety testing.
When and if this technology is green-lighted by the federal government, I envision a free for all into this technology from the likes of Facebook, Google, Apple, and Microsoft, and so on.
If you thought “tracking” was bad now, then once tech firms are granted access to consumer’s brains, it could open up a pandoras box of moral conflicts of interest as well as an avalanche of revenue opportunities.
Will American society really get to the point where Facebook is selling your “thoughts” to neural advertisers?
It’s scary to think about but that is the track we are headed down.
If you view this through the lens of big tech, battering down the hatches to get access to consumer’s “thoughts” is the holy grail of access points.
In 2020, humans still need to digest thoughts and carry out functions through fingers into a phone interface.
Getting rid of all that and extracting data and behavioral results from the original source is worth trillions of dollars.
Not only will physical devices be useless at that point, but it will spawn a mega cloud storage business that is hooked straight to the mind.
An economic analyst can digest how cloud companies like Amazon and Google would rake in the trillions by storing libraries of data that a mind can tap in at any time.
It really is a gigantic step to the computerization of humans - big tech is first in line to reap the profits and literally control our brains.
“When something is important enough, you do it even if the odds are not in your favor.” – Said Founder and CEO of Tesla and Neuralink Elon Musk
Mad Hedge Technology Letter
September 2, 2020
Fiat Lux
Featured Trade:
(THE 2020 TECH BUBBLE)
(TSLA), (APPL), (AMZN), (NFLX)
It was February 19 when the tech comprised Nasdaq index swan dived from a liquidity crisis of epic proportions triggered by the virus only to recover the 30% of loss gains in 3 months.
When the Nasdaq made a V-shaped recovery, experts were shocked by the pace of the recovery as the Fed deployed every tool in the toolbox at saving the stock market.
Well, three months on from the Nasdaq index pulling level year to date, tech stocks are 20% higher as main street still labors under an economy that has seen net job losses of 10s of millions.
The liquidity poured into the system has been overwhelming, but many investors aren’t complaining.
Insane price action is the crucial signal to this market frothiness and can be seen in Tesla (TSLA) whose stock has gone from $85 in March to almost $500.
Apple (AAPL) has surpassed the $2 trillion mark.
The market is “looking through” any bad news and is putting a high premium on tech shares that have usurped the mojo of the rest of the broader economy.
Investors need to be in tech because it’s not only where the growth is, but it is where business models are mostly protected.
Last time I checked, computers and smartphones cannot get the coronavirus.
Billionaire Mark Cuban, team owner of Dallas Mavericks in the NBA, sees a huge tech bubble reminiscent of the infamous dot.com fiasco in the late 1990s and early 2000s.
Suddenly, the get-rich-quick crowd is investing with reckless abandon. It seems these upstarts have a fear of missing out and are chasing the market. Cuban is skeptical about the market rally and the bubble could burst in a couple of years.
Unlike the tech debacle at the turn of the millennium, Cuban opines that this year’s version has the Federal Reserve’s help. The U.S. central bank is pumping money into the pandemic-battered economy, but unintentionally supporting risk appetite on Wall Street. Bolder investors are even picking up shares of bankrupt companies.
People have a newfound interest in the stock market and hopping on the bandwagon because the Feds are injecting money to prop up the economy.
Cuban has investments in Amazon (AMZN) and Netflix (NFLX).
Shopify happens to be the largest publicly-listed company in Canada as of July 31, 2020, besting bank giant Royal Bank of Canada.
The 16-year old e-commerce company year-to-date gain is 170%.
I believe in the wisdom of crowds, and that markets have gotten it right far more often than they’ve been wrong.
Ultimately, there are simply too many dollars chasing too few trades.
Tech stocks have driven much of the U.S. market’s gains since March. Were it not for a handful of them, the S&P 500 may have performed more in line with other economies’ stock indices.
Between the market bottom on March 23 and August 20, shares of Apple, Amazon, Microsoft, Facebook, Alphabet, and graphics processor designer NVIDIA were responsible for a heart-stopping 33 percent—an entire third—of the uptrend in the S&P 500.
Apple alone was responsible for more than 11 percent of the market’s moves. Last week, the iPhone-maker became the first U.S. company to surpass $2 trillion in market capitalization, nearly as much as all the companies in the Russell 2000 Index of small-cap stocks combined. Apple is now valued more highly, in fact, than German stocks in the Deutsche Boerse Index and is closing in on Canadian stocks in the S&P/TSX Composite Index.
We are seeing unprecedented price action in the tech sector with the old normal of 1% gains in one trading day turning into 3% or 5%.
We will need some type of liquidity prevention event to experience a real major sell-off in technology and it is true, the higher we go, the harder we will fall.
“I want to put a ding in the universe.” – Said Co-Founder of Apple Steve Jobs
Mad Hedge Technology Letter
August 31, 2020
Fiat Lux
Featured Trade:
(WALMART’S QUEST TO BECOME THE NEXT AMAZON)
(WMT), (MSFT), (ORCL), (GOOGL), (AMZN)
U.S. tech is about to hit a 10-bagger when TikTok is set to choose between the Microsoft (MSFT)-Walmart hybrid offer or one from Oracle (ORCL) in the next 48 hours.
The network effect that will result from this purchase will be staggering and still underhyped in the mainstream media.
I am on record saying that Walmart is the new Fang, and their ambitions prove it.
Walmart (WMT) wanted to be the majority owner of TikTok, but the U.S. government wanted a technology company to be the lead investor.
I am not sure how that makes sense in an age where every company is a tech company.
Walmart was originally in a consortium with Google (GOOGL) before moving over in recent days to partner with Microsoft (MSFT) when it became clear the retailer would not be able to lead the deal.
Walmart is validating my thesis that it is a hybrid ecommerce company with its last earnings report 2 weeks ago.
In the company’s Q2 earnings, Walmart reported its U.S. ecommerce sales were up 97% — an increase attributed to more customers shopping online during the pandemic, stocking up on household supplies and shopping for grocery items online.
The TikTok deal first started with Walmart negotiating with SoftBank Chief Operating Officer Marcelo Claure.
SoftBank’s Claure believed Walmart’s all-American image and Google’s cloud computing infrastructure backbone could be a way in for the Japanese technology company.
The deal structure would have had Walmart as the lead buyer, with SoftBank and Alphabet acquiring minority stakes. One or two other minority holders held talks to join too but this ultimately was nixed by the U.S. government.
Walmart’s goal is to become the exclusive e-commerce and payments provider for TikTok and have access to user data to enhance those capabilities.
U.S. national security hawks need to save face by having a thoroughbred U.S. tech company lead the deal to show that this isn’t just about underhanded economic mercantilism.
Google could face significant antitrust opposition if it acquired TikTok’s U.S. assets.
Amazon is out of the picture too for anti-trust worries.
These concerns caused the consortium to crumble last week and led Walmart, which had become increasingly convinced that TikTok fits into its strategy, to partner with Microsoft on a bid instead.
TikTok is pondering which way to go – either the Microsoft-Walmart bid or a rival offer from Oracle. A deal, which is set to value TikTok’s U.S. operations in the $20 billion to $30 billion range, could be completed in the next 48 hours.
What does this mean for Walmart?
Walmart is hellbent on directly competing with Amazon prime for that same ecommerce market.
Walmart ecommerce sales now total more than $10 billion in quarterly U.S. ecommerce sales, exceeding 11.4% of the retail giant’s overall U.S. net sales for the first time.
The achievement reflects the ongoing shift toward online shopping amid the pandemic, and the increasingly fuzzy line between online and physical retail sales. It is also an example of the pandemic accelerating the shift to digital commerce at traditional brick-and-mortar retailers.
The timing isn’t a coincidence with Walmart on the verge of rolling out its own Amazon Prime service dubbed Walmart+.
Walmart’s new membership program is expected to cost $98/year, competing with Amazon’s $119/year Prime membership.
Amazon’s global online sales are 4.5X larger than Walmart’s at $45.9 billion for the quarter, up nearly 50%, and its physical retail sales were $3.8 billion, down 13% from the same period a year ago.
Walmart has significant headway to make before it comes close to Amazon Prime but there are fertile pastures in front of them, meaning I believe Walmart is a conviction buy at these levels.
At the bare minimum, this is a conspicuous sign of intent for Walmart that has successfully turned around the titanic and is a real time player in ecommerce.
They will be on the prowl for other tech purchases in the future as well as they certainly have the cash flow to pull the trigger on adding more tech talent to the lineup.
If Walmart reels in TikTok, I recommend long-term investors to buy Walmart as a tech growth asset and it is easily a $200 stock.
“The tailwinds we’re experiencing are accelerating our progress to build a healthier eCommerce busines as we add new brands, improve product mix, grow the marketplace and achieve more fixed-cost leverage.” – Said CEO of Walmart Doug McMillon
