- Amazon is coming to a store near you…
- The surprising news in Robinhood’s earnings…
- Venezuela’s new attempt to fix its hyperinflation…
Dear Reader,
Don’t forget about my first-ever crypto livestream tomorrow night. It’s going down at 8:00 p.m. ET sharp. That’s when I’m going on air to reveal our first major push into blockchain technology and the cryptocurrency markets here at Brownstone Research.
We have been working behind the scenes to uncover novel ways for investors to play the hottest trends in blockchain today. And now, it’s finally time for us to launch our own cryptocurrency investment research product.
I’ve been anxiously awaiting what I call an inflection point in the industry. That’s the point at which the infrastructure is mature enough for all investors, and we still have explosive growth ahead of us. That’s what gets me excited.
We’ve had surges in the crypto markets before, but they were fleeting. That’s because the market was still too young… too immature… built only on hype. The infrastructure wasn’t in place. That’s why I have not made investment recommendations in the crypto space before.
But that’s all changed.
I’m finally ready to dive head-first into blockchain technology, cryptocurrencies, and other digital assets. It’s time.
And we have identified several incredible investment opportunities that are available to all investors right now.
For my readers interested in crypto and the blockchain industry, please tune in tomorrow night at 8:00 p.m. ET for all the details.
I will talk about the most exciting developments in the space. We’ll discuss where the industry is going from here. And, of course, I’ll reveal the investment ideas we have been working hard on here at Brownstone Research for the last few months.
This is one that you won’t want to miss!
The livestream will be free for all readers of The Bleeding Edge. I just ask that you reserve your spot in advance. To do so, just click here to automatically reserve your free seat.
See you tomorrow night.
Amazon is going bricks and mortar…
We’ll start off today with a shrewd move from Amazon. The e-commerce giant just announced that it plans to open 30,000-square-foot retail locations across the country, starting in California and Ohio.
And get this – they aren’t grocery stores. Amazon’s new retail locations will be small department stores. Amazon is entering a market that has largely been suffering. It will sell clothing, household items, and Amazon’s own array of electronics.
This may seem surprising on the surface. But it turns out that Amazon is now the largest seller of clothing in the United States. It has overtaken Walmart. That’s hard to believe.
So it appears Amazon’s new department stores will double down on this success. After all, many people would prefer to try clothes on before making a purchase.
Plus, these retail locations will allow Amazon to feature its own brand items, including its vast lineup of electronics.
And here’s why this is such a shrewd move…
We just witnessed a wave of department store bankruptcies thanks to the COVID-19 pandemic. JCPenney, Neiman Marcus, Lord & Taylor, Stage Stores, and others declared bankruptcy last year.
As a result, JCPenney and Neiman Marcus have new ownership. Lord & Taylor only sells online. And Stage Stores liquidated entirely.
And this created a situation where shopping malls across the country have large vacancies. Some of them are sitting half-empty. And they are desperate to bring in new stores. That means commercial real estate is cheap.
So I’m sure Amazon can secure commercial retail space for pennies on the dollar. It can take advantage of all the physical store closures last year.
This is certainly an interesting move in a world where we would expect more and more things to be going online only. Here we have Amazon going in the other direction.
Ultimately, this will put Amazon in an even more dominant position in the marketplace. Amazon is one of the few companies with the financial strength to expand its brick-and-mortar presence today.
I expect the company will use these retail locations to handle e-commerce returns as well. Customers would love that.
Thanks to its Amazon Web Services division, Amazon’s overall gross margins are now above 40%. And next year, it will generate a mind-boggling $44 billion in free cash flow. It can use a fraction of that money to fund brick-and-mortar expansion to further entrench its brand.
We’re already up 83% on Amazon in our Near Future Report portfolio, and we’re looking at even higher gains as the giant continues to grow and expand.
Even in multitrillion-dollar companies, it’s still possible to double our money if we are investing in the right growth stocks. This is the second time we have made great profits off this tech giant.
What’s driving Robinhood’s growth…
It’s been several months since we have checked in on Robinhood. This is the stock trading platform that allows investors to buy stocks right from their phones. It largely caters to millennial investors.
As a reminder, Robinhood fueled the GameStop trading controversy earlier this year. And Robinhood contributed to the “meme” stock craze where retail investors drove shares of companies like AMC and Hertz through the roof.
Well, now that Robinhood is a public company, we can see what’s actually happening under the hood. And there was a surprising nugget in the company’s second-quarter 2021 earnings report.
Robinhood’s earnings release shows that cryptocurrency transactions made up more than half of its transaction-based revenue for the quarter. That’s surprising given that we typically associate Robinhood with stock trading, not crypto.
And this was a sharp jump from the first quarter. In Q1, cryptocurrency trading made up only one-fifth of Robinhood’s transaction-based revenue.
The numbers don’t lie – investors want crypto right now. Retail investors are diving head-first into this exciting asset class.
And it gets even more interesting…
Robinhood investors weren’t scrambling to buy the most popular cryptocurrencies like bitcoin and ether (Ethereum). Instead, Dogecoin – the meme coin that started as a joke – made up 62% of Robinhood’s cryptocurrency transaction revenue in the second quarter.
Perhaps that’s not so surprising given Robinhood’s user base. Dogecoin is kind of like the equivalent of GameStop or Hertz in the world of cryptocurrencies.
Obviously, Robinhood can’t rely on Dogecoin trades to drive sustainable transaction revenue month in and month out. It’ll be interesting to see how Robinhood’s crypto buyers evolve over time.
However, the numbers do show that crypto assets are on the rise.
That’s why the timing is absolutely perfect for the launch of our first cryptocurrency investment research product here at Brownstone Research.
As I mentioned above, I’ll be broadcasting live tomorrow night with all the details regarding what we see as the hottest trends in the space right now. For those who haven’t already, please plan to join us tomorrow at 8:00 p.m. ET.
To reserve your spot, just click here to be automatically signed up.
Venezuela is launching a CBDC…
We’ll wrap up today with yet another currency reset in Venezuela.
Venezuela has been the perfect case study on how not to do monetary policy over the last 20 years. Venezuela’s central bank has had to redenominate the currency three times over the past two decades. That’s when a country has to essentially “swap out” its currency to change the face value.
And it’s all because the Venezuelan government has destroyed its currency by printing huge quantities of money to pay for government programs.
The economic term for when a government destroys its currency is “hyperinflation.”
And it’s happening again in Venezuela right now.
When a currency hyperinflates, the practical result is that consumer prices for everything explode higher. And prices in Venezuela have shot up about 2,300% in just the past year alone.
Imagine living in a country where prices for basics like bread and milk go up 20x. It makes life incredibly difficult for everybody.
Well, Venezuela’s plan to fix the ongoing currency crisis is to launch a central bank digital currency (CBDC). That will happen on October 1.
As a reminder, a CBDC is a digital representation of a national currency. It incorporates some aspects of blockchain technology, so it functions much like a cryptocurrency. The difference is the central bank retains full control over the currency. It can issue new currency units as it sees fit.
If Venezuela implemented a CBDC with a transparent and responsible monetary policy, it certainly could help modernize the country and alleviate the currency problems of the past 20 years.
But a CBDC is only as good as the monetary policy behind it. And I bet that the Venezuelan government uses this as just another shell game to spend money it doesn’t have. I would not be surprised to see the CBDC itself hyperinflate in the next five or 10 years.
After all, Venezuela attempted to launch a new cryptocurrency called the “petro” back in 2018. It was supposed to be backed by the country’s reserves of oil and other natural resources. In theory, that’s not necessarily a bad idea.
However, the technology behind the petro was questionable, and there was no evidence that it was backed by oil. What’s more, scams around the petro became endemic, and the project never took off.
So I have very little confidence that Venezuela’s new CBDC will fare much better.
If I’m right about that, the blockchain industry should be clear that this isn’t an indication that CBDCs as a whole are flawed. Instead, Venezuela will simply be an example of what not to do when implementing a CBDC.
One way or another, we’ll be sure to watch how this story plays out…
Regards,
Jeff Brown
Editor, The Bleeding Edge
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