Amazon can't be stopped.
Action Alerts PLUS holding Amazon (AMZN) - Get Report can't be stopped, won't be stopped and refuses to even think within the confines of its Seattle HQ that it can be stopped. Ever. Overall, the feeling of invincibility (ahem, President Trump) coupled with Jeff Bezos' will to dominate came across loud and clear in his latest letter to shareholders. That's a powerful investment thesis on Amazon if there ever was one, and one that should cause concern for numerous companies.
For example, 100 million Prime members? That's sick and something that should at least cause a bit of trepidation in the winning hallways of Netflix (NFLX) - Get Report . Working on secret projects for Amazon Web Services to catch up to leaders such as Microsoft (MSFT) - Get Report and Salesforce (CRM) - Get Report ? That's worrisome for each of those companies looking out over the next 10 years. Nearing the roll-out of Amazon Prime benefits into Whole Foods stores? Look out Kroger (KR) - Get Report , Walmart (WMT) - Get Report , Target (TGT) - Get Report and others.
Amazon Music is on fire, Bezos said. How isn't that a major risk for newly minted public company Spotify (SPOT) - Get Report ? The reality is this: If investors are embedding Amazon Dominance Risk into their financial calculations (where applicable) they are doing themselves a disservice.
Respect the beast. Fear the beast. And hopefully survive the beast's attack on your home.
Commodities are on Fire
What's happening in the commodities space should be raising red flags to market bulls. Global crude oil prices blew past a two-and-a-half year highs on Thursday, pointed out TheStreet's Martin Baccardax. Apparently Saudi Arabia is chill with $100 oil. Nickel prices popped as much as 9.3% on Thursday after a 7.5% gain on Wednesday (gains were fueled by Russia sanctions). Wonder how that will change the cost structure for those Tesla (TSLA) - Get Report batteries rolling off the production line?
Since the start of April, aluminum has skyrocketed 30% (also because of Russia sanctions). Campbell Soup (CPB) - Get Report may want to switch to plastic containers for all its soup cans or risk jacking up prices 10% this spring.
The point here is that the market is planting the seeds for an inflationary outbreak this summer. And in turn, that could force the Federal Reserve to act with a quicker pace of rate hikes or sound more hawkish in its external communications. Sleep with one eye open, bulls.
Around the Markets
A simple thought-provoking statement from Yardeni Research on Thursday. Since the market's Feb. 8, bottom here's how the major S&P 500 I:GSPC sectors have performed: Technology (up 10.5%), Energy (up 8.6%), Utilities (up 7.3%), Real Estate (up 5.5%), S&P 500 (up 4.9%), Consumer Discretionary (up 3.8%), Materials (up 3.6%), Industrials (up 3.2%), Health Care (up 2.9%), Financials (up 1.6%), Telecom Services (down 0.1%), and Consumer Staples ( down 0.6%).
But the action is weird considering we are supposed to be heading toward the land of higher interest rates. It's as if the market is saying something in the economy is happening that will warrant a more benign Fed this year. "Perhaps it's just early days in this latest market bounce, but the sectors leading the way since the February bottom aren't those you'd normally expect if all were well in the world. The market's leadership, outside of Technology and Energy, is coming from sectors that benefit from interest rates that have fallen slightly since the 10-year Treasury yield peaked on Feb. 21 at 2.94% and now stands at 2.87%," said Ed Yardeni.
That's food for thought.