Tag Archives: Amazon

Friendly Reminder That Jeff Bezos Is Still Trying To Take Over The Universe, by Caitlin Johnstone

Posted on November 15, 2017 | 2 comments

Jeff Bezos is proving as adept at expanding his power base as he has been at building Amazon. From Caitlin Johnstone at medium.com:

Jeff Bezos, currently the wealthiest human being on planet Earth, did not purchase the Washington Post in 2013 because he was expecting newspapers to make a lucrative resurgence. This self-evident fact doesn’t receive enough attention.

I will say it again for emphasis: Jeff Bezos, who has used his business prowess to become the wealthiest person in the world, did not purchase the Washington Post in 2013 because he was expecting newspapers to make a profitable comeback. That did not happen.

What did happen is the world’s richest plutocrat realizing that he needed a mouthpiece to manufacture public support for the neoliberal corporatist establishment that he is building his empire upon. This is why WaPo ran sixteen smear pieces on Bernie Sanders in the span of sixteen hours at the hottest point in the Democratic presidential primary battle. It is also why it continues to publish filth like this:

Washington Post

✔@washingtonpost

“How will Democrats cope if Putin starts playing dirty tricks for Bernie Sanders (again)?” http://wapo.st/2hodRiM  via @PostOpinions

Opinion | How will Democrats cope if Putin starts playing dirty tricks for Bernie Sanders (again)?

Division, not ideology, is Russia’s goal, and it’s time to think ahead.

washingtonpost.com

Last year Silicon Valley venture capitalist Chamath Palihapitiya said thatAmazon is “a multi-trillion-dollar monopoly hiding in plain sight.” In June Stacy Mitchell, co-director of the Institute for Local Self-Reliance, wrote that Amazon is trying to “control the underlying infrastructure of the economy.”

Bezos continues to get cozier and cozier with the US power establishment as his empire metastasizes across human civilization. He kicked WikiLeaks off Amazon servers in 2010, he scored a 600 million dollar contract with the CIA in 2013, he joined a Pentagon advisory board in 2016, he hung out with Defense Secretary James Mattis in August, and he’s spent nearly ten million dollars this year lobbying the federal government, which is likely what led to an NDAA amendment gifting Amazon a $54 billion market it’s expected to dominate as a supplier to the Pentagon.

To continue reading: Friendly Reminder That Jeff Bezos Is Still Trying To Take Over The Universe

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De-FANGed: Five Ways The Disrupters Could Be Disrupted, by Tyler Durden

Posted on November 11, 2017 | Leave a comment

Everybody loves the FANG stocks: Facebook, both Apple and Amazon for the A, Netflix, and Google (now Alphabet). That may not last. From Tyler Durden at zerohedge.com:

We highlighted the launch of the ICE FANG futures contract earlier this week (here) and what an auspicious moment it was for the launch.

The argument put forward by our guest author, Kevin Muir via The Macro Tourist blog, was that it is possible to be “bearish on the FANG stocks, but not be some perma-bear who thinks the world is about to collapse”. As Muir explained.

The reality of today’s limited alpha market is that when an investing theme gets some legs, it often becomes overdone and prone to disappointment. I have written about how, all too often, this results in a series of rolling mini-bubbles. There is nothing wrong with observing that the new era tech stocks are stupidly overbought, and that the risks are to the downside in the coming months. You can be bearish on FANG without thinking all stocks are going to zero…This new FANG contract offers some great opportunities to short the speculative names that have been the source of such over-exuberance, while maybe hedging it with a long position in the S&P 500 futures contract.
Muir commented wryly that now he would be able to get in as much trouble as high-profile bear, David Eeinhorn of Greenlight Capital by buying “old economy stocks and shorting the new tech darlings.” Another investor, with more than one gray hair of experience, has penned a thoughtful bearish piece on the FANGs in recent days, this time Neil Dwayne of Allianz Global Investors. Dwane’s piece is titled “De-FANGed: 5 Ways the Disrupters Could be Disrupted.” Dwane begins by noting that while consumers love the services they provide, the regulators are taking an increasingly close look at their anti-competitive practices.

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A Monstrous Bubble—The Destroyer Called Amazon, by David Stockman

Posted on October 31, 2017 | Leave a comment

Amazon loses money every sale, but they make it up on volume. From David Stockman at davidstockmanscontracorner.com:

As far as we can tell, Jerome Powell is worse than Janet Yellen with a tie. That’s because he is the kind of Swamp based RINO (Republican in name only) who has no clue that Keynesian central banking is a mortal threat to capitalist prosperity; and because his history as a crony capitalist beneficiary of that regime at the Carlyle Group has left him blind to the wanton destruction it is unleashing.

Since there is a small chance that the Donald’s glandular impulses may accidentally do the world a favor and opt for Kevin Warsh as the next Fed chairman on Thursday morning, we will hold off on the hell and brimstone denunciation that Powell deserves. After all, no one with an inkling about sound money and honest price discovery would have voted 45 straight times for the money printing depredations of Ben Bernanke and Janet Yellen as did Powell during his tenure on the Fed since 2012.

But when it comes to wanton destruction we can think of no better evidence than the $63 billion market cap eruption visited upon Amazon (AMZN) owing to its purported “blow-out” earnings report on Friday.

Except it wasn’t all that. Not remotely.

In the year ago quarter AMZN’s pre-tax earnings came in at $491 million, which was actually alot more than the $316 million figure posted for Q3 2017. In fact, the company’s niggardly profits during the current quarter represented a 36% plunge from prior year, but thanks to its tax cut “selfie” the headline reading robo-machines didn’t even notice this rather dramatic setback.

To wit, AMZN effective tax rate plunged from an aberrantly high 46.6% last year to a quite low 18.4% this year. As a result, its reported net income remained exactly flat relative to prior year—even though it sales jumped by $11 billion (in part due to the Whole Foods acquisition).

Stated differently, the blow-out earnings figure of $0.53 per share reported Friday was the very same $0.53 per share reported last year. Alas, the “blow-out” part was due to the “beat” from the $0.02 street consensus.

Then again, the street consensus had been for $1.91 per share only 90 days ago!

As per usual, it had been “guided “down by 99% in the interim. If nothing else, this proves that the whole SEC “Fair Disclosure” (FD) regime is an absolute farce and that the SEC itself is an utter waste of taxpayer money.

To continue reading: A Monstrous Bubble—The Destroyer Called Amazon

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The Big Amazon Subsidy is Doomed, by Wolf Richter

Posted on October 10, 2017 | Leave a comment

One huge advantage for Amazon over it’s brick-and-mortar competition is that it hasn’t had to collect sales taxes. From Wolf Richter at wolfstreet.com:

But for many retailers it’s too late.

Amazon battled states for years to avoid having to collect sales taxes. Walmart was on the other side of the fight, along with state revenue offices. Walmart had to add sales taxes to all its sales in California, whether online or brick-and-mortar, which at the time ranged from 7.25% to 9.75% depending on location. For shoppers, that price difference was reason enough to switch to Amazon. It was in essence a massive taxpayer subsidy for Amazon.

But Amazon lost that battle and started charging sales taxes in California in September, 2012. State after state followed. By early 2017, Amazon was charging sales taxes in all 45 states that have state-wide sales taxes and in Washington DC.

Still, even in 2016, online retailers dodged paying $17.2 billion in sales taxes on out-of-state sales, according to the National Conference of State Legislatures. For them, it’s a massive price advantage that other retailers didn’t get.

The fight over sales taxes is based on a Supreme Court case of 1992 – Quill Corp. v. North Dakota – that barred states from forcing companies to collect sales taxes if they didn’t have physical facilities in those states, such as stores or warehouses.

For Amazon, this got increasingly complicated as it is building out its distribution network, with warehouses and facilities around the country. So now Amazon is collecting sales taxes.

Problem solved? Nope.

Amazon only collects sales taxes on sales of inventory that it owns (first-party sales). But Amazon is also a platform that sells merchandise owned by other sellers (third-party sales). About half of the goods sold on the Amazon platform fall into this category. Amazon leaves sales tax collections to the 2 million merchants on its platform. But they claim that it’s not their job to collect sales taxes, and most of them don’t collect them. Hence, third-party sales still get the taxpayer subsidy.

Amazon isn’t the only out-of-state retailer or platform. It’s just the biggest one. eBay and many others are impacted by it too. Legally, this remains murky. But states and brick-and-mortar retailers are fighting to get the subsidy scrapped.

“It’s a fairness issue,” Minnesota Senator Roger Chamberlain told Bloomberg. “Right now, there’s an unlevel playing field that disadvantages brick-and-mortar stores.”

To continue reading: The Big Amazon Subsidy is Doomed

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Amazon Online Grocery Boom? Not So Fast… by Wolf Richter

Posted on August 10, 2017 | 5 comments

A lot of money gets spent on groceries, but the percentage that falls to grocers bottom lines is surprisingly small. Now, with Amazon’s purchase of Whole Foods and its intention to expand online grocery shopping, that percentage will probably get even smaller. A shakeout is coming. From Wolf Richter at wolfstreet.com:

All big gorillas have been trying, but consumers just don’t want to.

Maybe Amazon has figured out that you’re not the only one who isn’t buying groceries online. Maybe it has figured out, despite all the money it has thrown at it, that selling groceries online is a very tough nut to crack. And no one has cracked it yet.

Numerous companies have been trying. Safeway started an online store and delivery service during the dotcom bubble and has made practically no headway. A plethora of startups, brick-and-mortar retailers, and online retailers have tried it, including the biggest gorillas of all — Walmart, Amazon, and Google. Google is trying it in conjunction with Costco and others. It just isn’t catching on.

And this has baffled many smart minds. Online sales in other products are skyrocketing and wiping out the businesses of brick-and-mortar retailers along the way. But groceries?

That’s one of the reasons Amazon is eager to shell out $14.7 billion to buy Whole Foods, its biggest acquisition ever, dwarfing its prior biggest acquisition, Zappos, an online shoe seller, for $850 million. Amazon cannot figure out either how to sell groceries online though it has tried for years. Now it’s looking for a new model — namely the old model in revised form?

This is why everyone who’s online wants to get a piece of the grocery pie: The pie is big. Monthly sales at grocery stores in June seasonally adjusted were $53 billion. For the year 2016, sales amounted to $625 billion:

But it’s going to be very tough for online retailers to muscle into this brick-and-mortar space, according to Gallup, based on its annual Consumption Habits survey, conducted in July. Consumers just aren’t doing it:

  • Only 9% of US households say they order groceries online at least once a month, either for pickup or delivery.
  • Only 4% do so at least once a week.
  • By contrast, someone in nearly all households (98%) goes to brick-and-mortar grocery stores at least once a month, and 83% go at least once a week.

To continue reading: Amazon Online Grocery Boom? Not So Fast…

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Is It March of 2000? by Karl Denninger

Posted on May 4, 2017 | Leave a comment

Financial markets are never rational, but sometimes they are especially irrational. From Karl Denninger at theburningplatform.com:

There was a little company called “Micro Strategy” (by the way they still exist.)

In the first week of March the stock had skyrocketed by over 50%.  The next week it “checked back” most of those gains.

The following week the stock collapsed.

A couple of weeks later, the Nazdaq cracked big.  I was house-shopping, in a hotel, woke up to CNBC full of crying babies and chuckled.

I will note that MicroStrategy was a little dogsqueeze company.  In terms of market cap it was a nothing – literally.  Even today, 17 years later, it’s a little $2 billion firm — granted, much smaller today in market cap than it was then.

In the run-up of the previous weeks and months there had been plenty of indications of trouble.  Many companies had reported slashing prices, increasingly-saturated markets were well-understood and of course there was the “burn rate” nonsense of the period.

It’s arguable that it was that MSTR collapse that upset the apple cart.  You see, when people are buying stocks of companies that have nothing but negative free cash flow as far as the eye can see or sky-high P/Es of 60, 80, 100 or more they’re betting with their eyes taped over on exactly one thing: Indefinite exponential growth of the business and, of course down the line, profits.

The problem is that this is an impossible premise.  There is no way for that to ever happen because it is mathematically impossible.

Today we have Amazon, Facebook and Apple all priced in this way.  Of the three only Apple has some argument for its valuation, but even there given the recent run of almost 50% it’s priced for indefinite exponential growth of a saturated product — iPhones.

To continue reading: Is It March of 2000?

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She Said That? 3/9/17

Posted on March 9, 2017 | 2 comments

Alexa is Amazon’s intelligent personal assistant. If you get your own Alexa and you’re worried, with the Wikileak’s Vault 7 disclosures, that the intelligence agencies might be spying on you through your electronics, the brief video below won’t make you feel any better. Keep in mind that the CIA has a $600 million contract with Amazon’s cloud services division. From Alexa:

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What the Heck Just Happened in the Global Markets? by Wolf Richter

Posted on July 26, 2015 | Leave a comment

From Wolf Richter, at wolfstreet.com:

It was the kind of day that shouldn’t have happened. Somebody dropped the ball at CNBC, or something.

Thursday evening, after three morose days in US stock markets, Amazon came out and said it made a profit! OK, a teeny-weeny profit of $92 million, a barely perceptible 0.4% of sales, a rounding error for other thriving companies’ with $23 billion at the top line. But for Amazon, the mere fact that there wasn’t a minus-sign in front of it, for once, was huge.

Its shares soared 22% after hours. The company’s valuation jumped by $40 billion. CNBC exploded with excitement. And Friday should have been a huge day for stocks.

But oh my!

From the first minute on, Amazon’s shares lost steam, drifted lower throughout the day and gave up half of their afterhours gain. The S&P 500 and the NASDAQ lost over 1%, the Dow almost 1%.

It topped off a bad week:

• The Dow dropped 2.8%, its worst week since December 2014, broke its 200-day moving average, and is in the red for the year.

• The Dow Transportation index fell 2.8%, its worst week since March, and hit a 9-month low, down 12% for the year.

•The S&P 500 dropped 2.1%, its third worst week in 20 15, and is up a mere 1% for the year.

• The Nasdaq dropped 2.2%, its worst week since March.
• The Russell 2000 swooned 3.1%, its worst week since October 2014

It didn’t help that Biotechs collapsed.

Biogen set the tone. It slashed its sales growth forecast for 2015 in half. Its multiple sclerosis drugs, its mainstay, are in trouble. Sales of Tecfidera, its main growth driver since its launch in 2013, ran smack-dab into reports linking it to brain infections. Sales of its injectable MS drug Tysabri and interferon-based MS drug Avonex both fell more than expected. And sales of Plegridy also disappointed. Shares of Biogen plunged 22%, wiping out $25 billion in stockholder wealth.

The Biotech ETF (XBI) dropped 3.6%. XOMA, which had already been eviscerated on Wednesday, dropped another 9.6% on Friday, to 94 cents, down about 80% for the week. A total of 25 biotechs in the index plunged over 5% on Friday.

Crude oil got hammered all week.

Particularly on Friday when WTI dropped to $47.97 a barrel, just weeks after $60 a barrel had been considered the new low going forward. Energy companies got slammed. Many of them are junk-rated, and their bonds sold off this week, dragging down the world’s largest junk-bond ETF (HYG) by 1.4%.

To continue reading: What the Heck Just Happened in the Global Markets?

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Wall Street In Full Bubble Mode, by Michael Lewitt

Posted on April 26, 2015 | Leave a comment

Every so often we like to remind readers, most of whom are deeply skeptical about current financial market conditions, that they are sane; it’s the markets that are crazy. From Michael Lewitt at Money Morning, via davidstockmanscontracorner.com:

If it looks like a bubble, smells like a bubble and walks like a bubble, it is a bubble.

What we have in the certain stocks today is a bubble every bit as epic as the one that took the NASDAQ Composite Index (INDEX:.IXIC) to its previous record of 5048 back in 2000.

There are few certainties in this world, but one of them is that bubbles pop.

And like all previous bubbles, this bubble will pop too.

One of the key signs of a bubble is when investors and the analysts that cheer them over the cliff refuse to acknowledge facts that contradict their bullishness.

The Evidence Is Irrefutable

Exhibit “A” is Tesla Motors, Inc. (NASDAQ: TSLA). At the beginning of the year, analysts were forecasting that the company would earn $2.78 per share and had an average price target on the company’s stock of $269 per share – $49 per share higher than where it was trading at the time. Since then, a series of setbacks have led analysts to radically lower their earningsestimates to a mere $0.53 per share – a reduction of 80%.

But instead of lowering their price target on the stock by a commensurate amount, analysts have only lowered it by $19 per share to $251 – a reduction of a mere 7.1%.

That is bubble thinking. The psychological term for that is denial. The Wall Street term for that is careerism.

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