​Did Internet Sales Tax Ruling Break Online Shopping? Save Brick Retailers?

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That doesn’t mean Best Buy  (BBY), Target  (TGT), Macy’s  (M), Home Depot  (HD) or others are all home-free. It does suggest the advantage of typically 4%-10% sales-tax in the various states, plus discount pricing, was enough to move buyers to online shopping even faster.

The market might still have rebounded more Thursday if it were not for …the Supreme Court.

The high court’s decision giving states the power to impose and also to compel internet sales taxes is only overdue by years in some eyes.

Regardless of the yin and yang regarding trade, tariffs, and a few other concerns, particularly the OPEC meeting, I’ve tried to point out how the DJIA gets trade-related relief or not and the NASDAQ’s thrust led by FANG-type stocks was of a blow-off style.

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The Supreme Court’s decision will somewhat even the playing field, for at least some brick & mortar retailers. And it will do for retail monopolization in online (aka: Amazon  (AMZN)) what the Justice Department’s Antitrust Divisions have failed to do for years, under the guise of a need to freely develop the internet and online commerce.

I was unaware there was a mandate to do that at the expense of decimating conventional retail, but that did occur to a very large degree. Like trade, politicians do nothing until it’s virtually so late in the game, that the die is cast.

And of course, exporters like China, at this point are fully ramped-up so that their economies are structured for all the export-oriented business and would truly suffer if it all reversed. That’s not happening either. This is a waiting game for negotiations presumably. Risks are more tariffs kick-in and then face-saving takes the fore.

But for now, this is about sales taxes and that alone is a deal-breaker for some.

Thursday, the very stocks we’ve warned about like Amazon and Google  (GOOGL) took it on the chin, along with many fellow-travelers, while physical retail got a bit of a respite.

I thought the FANG+ rally, fully leading NASDAQ, was for many of those stocks a secondary test of prior highs, or a blow-off conclusion to their moves, as the case might be.



Now I’m confident the HFTs (High Frequency Traders) and ETF managers will try to catch this falling group of dominoes and bring them back once more to varying degrees, then attempt another short-squeeze if they are able to get enough rebound traction.

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On top of that, until a given state imposes sales taxes (some have), it will be possible that online buying will actually pick-up for larger items as a general consumer awareness that higher prices are coming is grasped.

As you also have tariffs kicking in (barring a deal), that’s even more reason.

I don’t think this breaks the back of online shopping. That’s ingrained at this point. But I do think it balances things out a bit, since there are things we’d like to do off-line, besides go out to eat, get a haircut or visit the gym.

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Among the decliners Thursday was AT&T  (T) with generally poor understanding of the release regarding free AT&T Watch as Rogers Cable as well as a couple analysts thought this was poor as what they get from the merger.

Oh please. I’ve made it perfectly clear this was coming, and it is just a tease of what's ahead.

The real victim is the critical cable industry, so of course they hate this as AT&T is proving the absurdity of paying so much for cable or satellite packages, especially if you don’t care about all kinds of sports programming, or specialized channels with low audiences.

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To understand this, one has to realize (other than NFL deals and such) all cable companies pay a couple pennies a month for each customer to the channels. That is how they survive, since most can’t claim big audiences or advertising revenue. That’s why you see so many My Pillow or other low revenue fill ads that get great bulk insertion rates at certain hours.

In this case AT&T probably hopes those introduced to “Watch” will upgrade to the far more robust and Cloud DVR DirecTV Now, which of course includes financial channels absent from the free package.

AT&T’s magic will revolve around ads and content; and that’s why they’re in talks to acquire two companies that specialize exactly in that field, so I hear.

Give them time and the fear the others try to dispel, of competing a bit with Amazon Prime and Netflix (NFLX)), will actually start to become visible.

This could take a year or two for it to really start making inroads, but it’s coming.

Whether or not those now trying to “bear” AT&T are analysts, cable executives, competitors, or fund managers loaded with the overpriced FANG stocks, we think differently as to the future.

Even if it drops 5 bucks (unlikely other than in a market crash) my idea is scaling-into weakness starting at the 29-32 area and adding more after the July/August reallocation shifts, whether that’s at a higher or lower price at the time (for a good average).

View a short video interview with Gene Inger on his stock pick: LightPath Technologies (LPTH) here

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