Q2 earnings season

Can’t wait for the Q2 earnings season to start (still 6 weeks away!)

I am particularly interested to see how Covid beneficiaries would cycle through super-tough sales comparison from this abnormal boost of Q1-Q2….
Would be really, really refreshing if we would get any downside surprises….
What if some biggies would tell us sales down 2-3%?

Q2 earnings season

11 Reasons Not To Own Any Big Tech This Year – Clear And Present Danger

  1. Big Tech $0.5-2TR market capitalization assumes endless growth and leaves no place for error.
  2. Big Tech valuations assume that these companies would never be unseated by the next generation of disruptors. History would disagree with that.  
  3. On the disruption side, hundreds of VCs and SPACs are generously funding any promising idea to unseat Big Tech.
  4. Big Tech is over-researched by brokers and buy-side.  Can you name anyone who isn’t aware that AMZN is growing?
  5. Everyone owns Big Tech. So boring!
  6. Being Covid lockdowns beneficiaries Big Tech would face very, very tough sales comparisons starting in Q2:2021.
  7. Big Tech High-multiple stocks drop during periods of inflation or cyclical upswings.
  8. Big Tech is targeted by regulators in the US, Europe and China.
  9. Big Tech is losing the best employees to new startups. 
  10. Big Tech is targeted by Unions (Karl Marx would be proud!). Unionization adds costs and reduces operational flexibility.
  11. Big Tech would be taxed globally at the higher rate – the recent minimum corporate tax of 15%+ is a big deal.  Regulators were immediately asked if that would apply to big technology companies….

Beyond these reasons, you have nothing to worry about!

See how TenViz tools spot and plot money outflows from Facebook into pro-cyclical/pro-inflationary assets.Big Tech $0.5-2TR market capitalization assumes endless growth and leaves no place for error.

11 Reasons Not To Own Any Big Tech This Year – Clear And Present Danger

Energy stocks chart is breaking out

Energy stocks chart is breaking out and has completed this beautiful  “cup and a handle”t technical formation suggesting meaningful upside.

In fact, you can argue for a double cup and a handle formation.

Energy stocks chart is breaking out

Vitalik Buterin has donated $1.5B for the Covid relief efforts in India.

Vitalik Buterin (the founder of Etherium, which serves as a foundation for most blockchain), has donated $1.5B for the Covid relief efforts in India.

What a good heart beyond that amazing brain!
 
P.S. I knew Vitalik a bit when he was a kid growing up ….

Vitalik Buterin has donated $1.5B for the Covid relief efforts in India.

Raising rates

It is totally cool for the Fed Chairman Powell still not “think about thinking” about raising rates…

Nero is taking out his fiddle…
But, the market would not only knock on the Fed’s door, it would knock down the door and the walls off when the inflation would be surging…

Raising rates

When we hear about companies “beating” earnings expectations

When we hear about companies “beating” earnings expectations, pls keep in mind that these expectations do NOT represent true market expectations. 

 
These are intentionally low-balled numbers from the Sell-Side analysts which were trained for decades to accommodate their covered companies with easy target.
This hypocritical game of Wall Street flattery still goes on.
And, yes, that practise,  reflecting conflicted objectives of Sell Side brokers, is a misservice to both retail and institutional investors …
 
 

 

 

When we hear about companies “beating” earnings expectations

This is VERY important: Janet Yellen saying that rates may have to rise somewhat to keep economy from overheating

This is VERY important:  Janet Yellen saying that rates may have to rise somewhat to keep economy from overheating

Inbox.

Again, that means that both the FED and the Treasury are actively thinking about normalizing rates.
Or, at least the market is forcing them to do that.
Again, this is a BIG DEAL

This is VERY important: Janet Yellen saying that rates may have to rise somewhat to keep economy from overheating

Technology stocks dynamics starts deviating from the moves in Interest Rates.

Technology stocks dynamics starts deviating from the moves in Interest Rates.

Yes, Technology stocks being long duration proxies benefit when rates decline (long MaCaulay duration).
Last 2 months, Tech stocks started breaking away from that pattern, essentially that their fundamentals are peaking (yes, very tough sales comparisons in Q2:2021)

 

Technology stocks dynamics starts deviating from the moves in Interest Rates.

The reopening trade reads very loudly from  the earnings commentary, and it is loudly screaming INFLATION

The reopening trade reads very loudly from  the earnings commentary, and it is loudly screaming INFLATION:

– heavy demand for metal commodities
– surging demand for shipping (cargo rates, containers, etc.)
– double-digit sales growth for residential commodities – pains, lumber, appliances
– surging demand for grains and other soft commodities

The reopening trade reads very loudly from  the earnings commentary, and it is loudly screaming INFLATION

What makes this cycle distinctly different from other cycles?

What makes this cycle distinctly different from other cycles is that we are starting off with such a high valuation across most industries and sectors…

Would be hard to observe the tug of war on valuation on the cyclical recovery plays  vs. how much the circular growther (Big Tech) which arguably had in 2021 the best year ever.
Well, if anything this cycle looks eerily similar to the 2001-2003 after the post dot.com bubble reallocation of capital

What makes this cycle distinctly different from other cycles?