When Silly (Valley) met Wally (Street)… Gotham’s reckoning is finally here in a very Christopher Nolan like fashion. Reports have surfaced that Alphabet, the stock formally known as Google ($GOOG), has made the no-brainer decision to enter the financial industry and create an asset management arm. The tech goliath will leverage the data generated by their customer’s search queries to predict movement in the financial markets. I already foresee a thorough “inside information” investigation by the SEC most likely piggy-backed by the Wall Street fat cats. They always look out for our best interests, right? But we’re finally here, the suits versus the hoodies. And you bet the suits saw this coming and have been building their own capabilities with every major financial institution pouring money into financial technology. Google’s entrance into the financial industry has the potential to transform the way money is managed. Rather than stock pickers relying on excel models and intuition, money will be managed using highly complicated neural networks that predict, trade, and improve autonomously. Break out the popcorn folks and stay tuned.
Oh No! China is growing below 7%. Somebody call the WAHmbulance! Last week, China reported third quarter growth at a measly 6.7%. The market actually responded quite well but talk has continued by the “experts” (aka noisemakers that didn’t receive enough hugs as children) about fears of a “hard landing,” a doomsday scenario where the Chinese GDP stagnates and we all eat PB&J for the rest of our lives. A quick recap to how we got here, China’s growth rate has decelerated from double digits during the period of unsustainabilitywhere we were allliving even further beyond our means than we are today. And apparently 6.7% growth is a major problem compared to close to no growth in the United States. I remain highly optimistic about a country with a population of over 1.3 billion and that is currently in the process of shaping and implementing their future economic strategy. China will continue to provide large tailwinds to the global economy which is beneficial for you guessed it… stocks. Stay bullish my friends.
Fiscally responsible frackers are starting to get real aggro and I’m thinking the energy sector may finally rebound. First off, let’s ignore that the lack of oversight and accountability around fracking is making Oklahoma look like San Andreas (because of the earthquakes, not the video game you simpletons). Let’s also ignore the fact that one horizontal well emits more methane than the entirety of all Chipotle patrons (and that’s before the e. coli scare– don’t quote me on that statistic because I made it up). Renewable energy is still a ways away from being ready for primetime so despite what Elon (aka Tony Stark) says, you are most likely burning natural gas or coal when you charge your Tesla. We have now seen several smart Oil and Gas E&Ps (defined as those who chose not to take on as much debt as they could to pour into the ground when oil was at $100/barrel) go out and make enormous acquisitions when compared to their market values. Examples include Synergy Resources ($SYRG), PDCE Energy ($PDCE), and RSP Permian ($RSPP). While it still appears we still have a major glut of oil supply that needs to be exhausted, I think it’s an important data point for investors monitoring the industry. This shift in paradigm could be a major reversal signal. Here’s another interesting update from Apache Corp ($APA).
Remember John McAfee, that odd bird that ran for president? He’s back! That’s right, the man who inspired the white walker is back in the public eye after being appointed the CEO of slot machine stock MGT Capital Investments ($MGT) in May. Quick refresher: McAfee was a pioneer in the cybersecurity space who eventually sold his company to Intel ($INTC) in 2010. Additionally, the former Tales from the Crypt host is a poster child for why you should not do drugs and has been entangled in numerous legal issues post Intel acquisition. All jokes aside, McAfee has made a splash in the his first months at the helm by acquiring intellectual property from a slew of cybersecurity companies as well as launching a major bitcoin mining operation in Washington State. What’s fascinating about the Bitcoin operation is that the facility has been strategically placed in an area that can leverage low cost hydro power which is important as electricity is the largest ongoing cost in a Bitcoin mining operation. While things are already shaping up to look a bit sketchy (one only needs to look at the press release page on yahoo finance to see the barrage of lawsuits already being pursued against the company), this should be an entertaining stock to watch as McAfee executes his strategy. Who knows, maybe this will be the second coming of McAfee. Another funny tidbit, he’s suing Intel to get his name back.
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