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Stay on the bull or get the horns!

Jan 19, 2022

Good morning!

A rebound or dead cat bounce?

Frankly, it’s too early to tell.

Here’s my playbook.

1 – Morgan Stanley: stay on the bull

The super-savvy Maria Bartiromo asked what I expected from Morgan Stanley coming into the numbers ahead of earnings this morning and that’s what I said, “stay on the bull.” The company has the world’s number one equities trading business and is a key player in technology and telecom M&A. (Watch)

I think it’s very likely that the Microsoft/Activision tie-up sparks a new round of consolidation in both segments. And the markets suggest I’m on to something.

Electronic Arts and Take-Two Interactive rose following news of the MSFT/Activision tie-up with hopes that other big tech names will make Microsoft-like buys of their own. Interestingly, Sony tanked in Tokyo, falling 13% on the news.

Stick with the best, avoid the rest!

2 – Why the FAA hates 5G and what will happen next

The FAA (the people in charge of all things aeronautic) and AT&T/Verizon are butting heads as the latter prepares to deploy new C-band 5G services around the country. This is a critical issue because this specific band of 5G impacts radar altimeters critical to instrument flying in low-visibility conditions like heavy fog or rain.

International airlines are already suspending flights into the US which could jam an aviation recovery when it’s needed most. (Read)

3 – WH: We’re gonna have a problem here

Press Secretary Jen Psaki has an amazing command of the obvious, stating yesterday that the Russians could now attack at any time. No kidding.

Here’s an interesting map of ISR (Intelligence, Surveillance, and Reconnaissance) flights taking place near the border:

As I’ve noted repeatedly for months now, the smallest miscalculation or itching trigger finger could have devastating consequences with this much military hardware concentrated in such a small area. (Read More)

As much as I hate the thought, buying a few speculative puts or inverse funds on the S&P 500 and Nasdaq makes a lot of sense. If you’re up for an adventure in speculative trading, consider shorting ARKK because tech’ll go first. Or, simply get long volatility.

4 – Is Amazon losing its mojo?

Ford and ADT are teaming up to provide a new on-car video security system that watches your car, van or truck, your stuff and the area around it. Think Ring, but for your vehicle.

About time. More than $7.4 billion worth of work-related stuff was stolen from vehicles in 2020 and that’s only getting worse as the pandemic drags on and thieves become more brazen. (Read)

Thing is … you know damn well that it won’t be long before insurance companies jump all over this as a way to jack already sky-high insurance rates.

5 – Why people hated Keurig

Epson and HP – two of the most popular printer makers out there – use digital rights management chips (DRMs) in their ink cartridges. Those are in short supply so cartridges are being shipped without ‘em.

Problem is that users are now apparently being bombarded with obnoxious warning messages normally reserved for anybody trying to use cheaper 3rd party alternatives. Others are being prevented from printing entirely. (Read)

Keurig tried the same thing with coffee pods once upon a time and customers went straight to Starbucks in a caffeine-deprived rage. The number one Keurig-related Google search result at the time - if memory serves - was “Keurig hack.” I also recall a third-party cup manufacturer giving away a special assembly they called the “Freedom Clip” that fooled Keurig machines into believing they were making the genuine thing.

99.9% of all investors will miss the implication.

Companies that understand why their customers buy and what they want will do considerably better than those that don’t.

For example, Apple fans want Apple products to live their lives no matter what they do. Keurig coffee machine buyers wanted convenience but didn’t care who supplied the caffeine. Similarly, Epson and HP customers just want to print.

There’s a reason Apple hit $3 trillion but Epson is banging along at $8.67 a share and HP is struggling to remain relevant.