Amazon (AMZN) , the new retailer of choice. Home delivery. If they have it in stock. If they can sustain operations as people become infected, even their own. Reports came in over night that a worker at an Amazon warehouse in Queens, NY, tested positive for Covid-19. Two Amazon office workers in Seattle already had. The company has made public the knowledge that employees that either become infected or quarantined would continue to be paid. How viable, or reliable, can home delivery be in an era where most people are being asked to isolate at home? Huge question. Almost makes Amazon a significant corporation, whose ability to maintain operations could be central to the welfare of millions upon millions of regular citizens.
Two Seconds Ago
Yes, while writing this piece, I remembered that I came home from grocery shopping without yams. My wife had specifically asked for yams being they last outside of refrigeration. Just now, I placed an order for some yams along with a few other things at Whole Foods through the Amazon website. There is no same day delivery right now, but I was indeed given a two hour window on Saturday. Apparently, they think they can fill my order. This is a test run for me. I do consider trips to either the grocery or the pharmacy to be priorities right now, but that said... I really do not want to make extra trips to places where people congregate.
I also ordered toilet paper that if all goes well will get here in May. Seems silly? Never know. May seem like a gift from Heaven in a couple of months.
Interesting
Earlier this week a group of analysts at Goldman Sachs (GS) released some research that measures market liquidity vs. the lack thereof for individual names. Taken from an article at Barron's, the analysts say in their piece, "We use an illiquidity ratio, which is defined as the 1-month average of the daily absolute value of returns divided by the dollars of trading volumes. This metric exhibits a high correlation with bid-ask spreads since 2013." In the piece these analysts find that during what they term as liquidity shocks, stocks with higher relative liquidity outperformed. Nicholas Jasinski, the author at Barron's, wonders if this at least partially explains the more severe meltdown witnessed in markets for small cap stocks versus large caps in recent weeks.
The Goldman piece studies stocks included in the Russell 1000, which is a large cap index that encompasses a rough 90% of U.S. market capitalization. Do you know what stock the study identified as the most liquid in that index? That's right. Amazon. Do you know who is number two? Apple (AAPL) . I am long Amazon, and that stock is probably my most often used vehicle for intraday trading. Now, Apple, I had gotten out of the way prior to this market meltdown as I just did not trust foreign supply lines before this pandemic became global.
However, and there are no guarantees in the marketplace nor are there in any facet of real life, it does strike me that in this new financial order, where cash is king, and everyone seems to be selling anything they can to raise cash... that as of the most recent data, Apple had the most at $207 billion, even if that does include Treasury holdings. I am not long Apple and there is certainly going to be pain ahead for those selling non-essentials, but I am thinking about where my entry will be.
Separately, JP Morgan (JPM) analyst Doug Anmuth cut earnings estimates for the majority of internet-based firms that he covers. He did note, however, that as retailers close physical locations, that those already heavily entrenched in the business of e-commerce could benefit. He names Amazon, eBay (EBAY) , and Chewy (CHWY) as examples.
Facts
I don't have any. Next month? Later in the year? I don't know. The market will in my opinion suffer for as long as the economy does. Remember the pieces that I wrote on "Complexity Theory"? If these times do not test at least to some degree the unknown imbalances that complex systems create for each other, then I do not know what will. I do think that I am glad that I am long Amazon, and that there is a pretty good chance that at some point, I will wish that I was longer. In the meantime, I'm waiting on some yams.
(Amazon, Goldman Sachs, Apple, and JP Morgan are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells these stocks? Learn more now.)
