Shares of Amazon fell as much as 10% after hours on Thursday after the world's second biggest retailer reported decent earnings then announced plans to spend $200 billion next year, some 60% more than expected. with virtually none of the money going towards enhancing the shopping experience.
Friday's market reaction was an overdue bounce but not irrational, when it came to the big box merchants. Costco, Walmart and Target were all materially higher. The first two are outperforming Amazon in stores and outgrowing Amazon online. Target, still on something close to life-support, isn't going to be bought by Amazon but it's not going to get snuffed by the Everything Store, either. If 10% of Amazon's spend went towards physical retail it would be an existential threat to little Target. AWS and satellite launches are not.
In the below video I go over how I'm trading Amazon's quarter (spoiler: I'm not trading Amazon at all), what the weakness in Consumer Discretionary over the last two weeks means and why doing less during times like these has served me well for nearly 30yrs.
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