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What I’m watching this week and why

Jul 14, 2022

Good morning!

‍Let’s get busy – it’s earnings season.

And, while we’re at it, don’t forget it’s National Slurpee Day which means you can stop by your favourite 7-11 for a freebie!

Here’s my playbook.

What I’m watching this week and why

I enjoyed a conversation this morning with Stuart Varney on the Fox Business network who asked me which stocks I’ll be watching this week and why.

My answers may surprise you! (Watch)

Musk is a tactical genius

Musk has indeed walked away from Twitter.

Brilliant move … Twitter now has to disclosure the precise nature of bots/spammers in court.

My guess is the company settles for two reasons: a) because Musk won’t blink and b) they won’t want to disclose the truth about bots/spammers potentially making up far more than 5% or that management is sufficiently out of control that they don’t know in which case there’s an SEC problem. (Read)

Bait … or breakup?

Google is being investigated for digital ad brokerage and advertising practices. The Justice Department says the company has abused its position which doesn’t come as a surprise; in fact, we’ve been talking about it for years.

What makes this one different – and interesting from an investing standpoint – is that Google is offering concessions for the first time including potentially separating the ad-tech business from the mother ship. That’s a $31.7 billion proposition or roughly 12% of Alphabet’s total revenues.

This, plus the upcoming split, makes it super appealing to my way of thinking because “unlocking” Google’s business units is a good thing.

I’ll share my latest thinking with One Bar Ahead™ readers later this morning.

Frequency wars

The FCC recently received 95,000+ comments from existing Starlink users protesting the expansion of Dish’s mobile internet rollout in a specific 12ghz band, because it may degrade Starlink service.

Two things strike me here:

First, the comments sent in suggest that Starlink has already had a very real and noticeable effect on rural America. The notice that Dish was doing this only went out on June 28th, and to have the scale of response this quickly means Starlink is really working for the people. (Here are the comments if you want to read ‘em)

Second, this is a classic case of the incumbent – Dish - being caught napping and trying to bully their way back into the fight. It also goes to show that being an incumbent means nothing when innovation knocks at the door in a way you didn’t expect – and to a point we talk about frequently, there are a LOT of old giants ready to be disrupted.

Make no mistake about it.

Digitalization is the single biggest investing trend of our lifetime, possibly in human history. That’s why it is the largest and most profitable of the “5 Ds” we follow.

Invest accordingly.

Long-time, seemingly well-entrenched companies that seem like they’re going to last for centuries can be made obsolete with a few keystrokes.

Like, ahem … Dish.

One US casino that could buck Macau’s closure

Macau is China’s hotspot for gambling and authorities there have just shut more than 30 casinos in an attempt to curb covid. That just about writes off Q3 IMHO. Not surprisingly, gambling stocks have gotten crushed with Sands China down nearly 10%, and Melco International, Wynn Macau and Galaxy Entertainment also taking a hit. (Read)

I never thought I’d say this, but Vegas-only casinos look downright glamorous as a result!

Red Rock Resorts (RRR), for example, might be worth a look if you’ve got a hankering to put some money on the table, pun absolutely intended. The yield of 3.17% isn’t too shabby either.