Where is the government?
Where are the politicians who have been hectoring the big tech companies, the FANGS of the world?
Absent. That's where.
Not that long ago, we saw all of the health care stocks make a move for the ages, I am talking about the amazing run in United Healthcare (UNH) and Humana (HUM) and the drug stocks overall. It was extraordinary -- and while it is stalled right now because of the grand cyclical rally in the wake of the pending China deal, it's not being repealed.
Elizabeth Warren, that's what happened. Specifically, the peaking of Elizabeth Warren's prospects for the presidency.
Now it's not clear where her prospects went. Did she fall behind Bernie Sanders in Iowa, February 3, and New Hampshire, February 11? Did she recognize that knocking the health care system scared people and the trillions of dollars the single payor option would cost actually daunted people, shocking give the tolerance of budget deficit spending by the president and the Republicans?
She simply disappeared as an opponent of the group.
Now we are seeing a similar surge in the stocks of Facebook (FB) and Alphabet (GOOGL) -- and, once again, I am wondering how much of a challenge Warren is to the group's prospects. The days of the "break-up" of Google, Amazon (AMZN) and Facebook seems to have lost relevance along with the loss of relevance right now of her candidacy.
It's causing me to wonder whether the move in the group right now is similar to the move of the health care names.
Moreover, when someone like Mayor Pete (Buttigieg) has a surge, a candidate regarded as friendly to the interests of the valley, you run into the possibility that these stocks are now in the sweet spot.
What really happened here besides Warren peaking? I think that the somewhat stagnant nature of the stocks of Facebook, Google and Amazon changed BECAUSE of the break-up thesis. We had a number of research reports that indicated if you broke up these companies into pieces maybe their stock prospects would be met with approval. Maybe Amazon Web Services could be a stock worth having. Maybe you want shares in Instagram. Would a break up of Alphabet yield the discipline so many want from the company.
Then, just when people got comfortable with that prospect Warren peaked and you could then focus back on what seems to be a robust group, cheaper and performing well, with adherents all over the place. In fact only Amazon has been stalled and I think that's because of the Azure competition from Microsoft, not the slowdown in retail of which there really isn't one for the WATCH stocks (Walmart (WMT) , Amazon, Target (TGT) , Costco (COST) and Home Depot (HD) .).
These days Warren seems out of step, given the fact that the companies have all become wary themselves. Nary a day goes by without some soothing words from Mark Zuckerberg. Alphabet recognizes that the attorneys' general will make things tough if it isn't careful, so it is. Amazon isn't beating its chest much and has gotten smarter post the Queens shutdown at the hands of a rookie congressperson, AOC.
Meanwhile the impeachment of the president has distracted all Democrats, making the prospect of a break-ups seeming like a distraction to the bigger mission of sinking the President.
Oh, and perhaps the most incredible turn, almost all of the candidates need money from California and the way NOT to get it is to talk about taking away the power of the titans that create so many jobs on a daily basis, certainly far more than are made anywhere else in the country.
As long as these companies keep their noses clean, don't make acquisitions (how is that Google-Fitbit deal doing? It seems stalled and marks the end, possibly, of any obvious expansion) and maintain their earnings -- as it looks like they are according to much of the research we have seen -- then there is ample opportunity for more price-to-earnings multiple expansion.