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India’s latest ruling could be a “Google killer”

Jan 19, 2023

Good morning!

Well, that was quick.

The markets are in the toilet on fears that the Fed will overtighten.

On fears??!!

That’s a foregone conclusion!

The Fed remains as wrong about rates and labour as it was about transitory. Team Powell’s policies have already vaporized $30+ trillion, and they’re not done yet. The hubris is astounding.

It’s not the end of the world, though.

Remember two things on days like today:

We’ve seen this playbook before, which is why dips, corrections, drawdowns—whatever you want to call ‘em—are inevitably great buying opportunities in the rearview mirror.
The right tactics can boost your profits even as the markets make that seem impossible. Examples include stuff we talk about all the time in One Bar Ahead®… DCA, VCA, selling Cash Secured Puts, and even reinvesting.

Play offense, even if you have to start with a good defense!

Here’s my playbook.

Dimon: Rates will rise above 5%

JPM CEO Jamie Dimon sees rates rising above 5% because “there’s still a lot of underlying inflation.” (Read)

I agree.

The current bout of “easing” everybody’s so excited about is coming from two primary pullbacks: 1) oil prices being priced into a recession, and 2) a Chinese slowdown from the pandemic.

We’ve talked about both for months, so Dimon’s comments are a powerful affirmation that we’re on the right track.

What you can do about it. Buy oil and focus exclusively on companies that can protect their margins in the face of higher rates and more inflation. I bring this up because one of my favourite energy companies is on the move again and could break to new highs shortly. Upgrade to Paid

AI will create 90% of all online content by 2025

What’s happening. The pace of AI development is so exponentially fast that most people cannot wrap their heads around what’s happening. Expert Nina Schick recently noted that we might reach a point when 90% of online content [is] generated by AI by 2025. (Read)

I share that thinking, but I'm focused on something even bigger.

Most investors will miss the boat because they’re going to be focused on deals. Microsoft, for example, invested $1 billion in OpenAI. In November 2022, OpenAI released ChatGPT, which raged through the headlines. Now Microsoft is reportedly interested in investing an additional $10 billion in OpenAI.

What they should be watching is what companies like Microsoft, Apple, and Palantir do with the technology. The medical pivot I keep railing on is gathering steam, and the time to invest is now… before other investors recognize the narrative we’re already ahead of!

I’ve got a few ideas, and I’ll be sharing them with you in the February issue just a few short weeks from now. Upgrade to Paid

Fun Fact: The image at the top of this post is an award-winning piece of art… created by AI. As you might imagine, human artists are none too pleased! (Read)

AMZN isn’t just cutting jobs these days

Now you know it’s getting bad. Amazon is shutting down its charity donation program, AmazonSmile, as part of a broader plan to cut costs, according to CNBC and other news sources. Amazon says that the average donation is just $230, which, according to company reps, “has not grown to create the impact that we originally hoped.”

MyPOV: Right idea, but yet another case of poorly thought-through execution. My concern is that the same people who created this program a decade ago are now probably rising into senior management positions but may not have changed their thinking.

Stuff like this reinforces my desire to stay away for the foreseeable future. Putskies could be good, but the problem is that so many people still think the stock is a “sure thing” when it’s not.

This makes me want to short airlines

United Airlines CEO Scott Kirby had harsh words for the airline industry during his Q4 earnings call, noting that "the system simply can’t handle the volume today, much less the anticipated growth.” Then he observed that “there are a number of airlines who cannot fly their schedules. The customers are paying the price." (Read)

Recent system-wide glitches aren’t just about delays like people think. They highlight safety risks and a margin-crushing breakdown at a time when costs are rising. Southwest, for example, cancelled 17,000 flights last month after a single winter storm. Recent ground incidents at JFK resulted in the near-catastrophic collision between two planes on the runway.

Hmmm...

India’s latest ruling could be a Google killer

Google is protesting a recent watchdog order that will require it to change the company’s business practices. The antitrust order targets Google’s pre-installation and the power for users to uninstall apps, among other things. (Read)

Proponents are cheering because they think it’ll improve competition, but they’re off base. Forcing Google to stand down will allow predatory apps into the system, which is not a good idea given China’s aggression and Russia’s increasingly desperate war on Ukraine.

MyPOV: I think the ruling could be a Google killer in the making. Google powers 97% of the more than 600 million smartphones in that country. It’s also Google’s largest market.

India’s regulatory boffins are not the only government apparatchiks annoyed with Uncle Google. Couple that with the public at large who are justifiably sensitive to having their most sensitive bits weaponized against ‘em. And don’t forget, ChatGPT represents an entirely new threat and could vaporize the company’s search lead within the next 12–24 months…

I think the handwriting is on the wall. Putskies or bearish spreads could work out nicely! So, too, would an inverse tech fund, even though it’d be hard to “isolate” Google.