Month: September 2015

The Next Coming Commodity Failure: Social Media

Today, there is no other space that could experience the same fate that is now tearing through the commodity sector in my opinion than social media. This data mining area of everything social and eyeballs-as-currency I believe is about to hit a vein flooding it with so many get-out-of-Dodge sellers – there won’t even be time enough for the last person turning off the lights to take a selfie.

When it happens it will happen quick and catch just as many if not more off guard than the often comparable dot-com bubble of the late 90’s. Why? Because near to a person currently involved in anything social (even those that have been through that last bubble popping) have bought into the meme “It’s different this time” and holding onto it hook, line – and sinker.

Over the past few weeks I have been monitoring a few predominantly V.C. centered news outlets along with a few other tech based “inside baseball” formulated venues. These are the sorts where one can really get a good grasp on what is really taking place within a certain “world.” Along with how that world views itself and where it’s going. The more I listened, read, and watched? The more convinced I became its social media (along with Silicon Valley) itself that’s ripe for a boatload of disruption. i.e., crushing reality, unicorn tears, and discontent.

To my eyes no space resembles the commodity sector than social media. Commodities such as “also ran” or “me too” are everywhere. Want to take and share a selfie? Or, how about what you had for dinner, or profess to the world you showered, or, just brushed your teeth? Well, there’s an app or social media site for that.

There’s not only “an app or “site” – there’s 12,946,294,946,038 of them and counting to choose from. And: you can try every one if you wish for free. If – you have a life expectancy to match the task.

Want to know a dirty little secret you don’t need an app to view for why they’re free? Because: their “target customer group” will drop them in a nanosecond (if not faster) and rush to the next in succession if they were ever to charge. Loyalty means – “give it to me for free – or else!” And here’s another little secret, one that’s seen as blasphemy by some and pornographic by others that needs no credit card to view. When money becomes tight -150 billion (or whatever) bloodshot eyeballs that won’t pay a red cent – are worthless.

But wait I can hear through my monitor: What about ads?! You forgot to mention ads; as in ad revenue. Eyeballs for ads!!

Right. You know why I didn’t mention it? Eyeballs for ads are probably the most over-harvested, over-mined commodity social media has dredged through. And you know what? 250 billion eyeballs aren’t worth a nickel more than 150 billion if the resulting conversion rate of a sale that produces a net profit is zero. As a matter of fact – 150 billion aren’t worth one penny more than only 100 if again the sales conversion rate producing a net profit is again: Zero. And I believe many in the ad space that pay for these ads are going to re-assess and redistribute their precious ad dollars to other areas. Reason?

They have more than enough eyeballs. And they don’t need another 1. That commodity has been mined and stockpiled to near infinity. What ad dollars or media buyers now need are eye balls connected to wallets both willing and able to spend. For companies supplying those precious ad dollars are going to demand it. That’s going to be the next test of any platforms mettle in the coming weeks, months, if not years. And it’s not a commodity.

Any company that can show they can deliver 10 paying customers vs 200 trillion eyeballs free will hold the keys to this sectors vault. Regardless of what is said via the financial media as well as the main stream media; social’s not getting it done. And as the economy turns stagnant if not lower – getting it done (as in generating net profits via 1+1=2 elementary math) will be as precious, if not more so: than gold.

Recently I gave an intimate talk at a luncheon for an organization built around start-ups and V.C. funding. The organization is a considerable player within this space located in the Midwest. After my talk during the Q&A we delved a little deeper into the whole social media and start-up mindset. The discussion confirmed much of what I have been articulating previously.

For one: As far as metrics (e.g. R.O.I. per ad spending) when utilizing these platforms the results they received (I need to reiterate here, this is their space and marketplace for investment and ideas) were not horrible – they were abysmal. Engagement, and more was considered pathetic and “a complete waste of time and money.” Again, this was coming from an area one would think would be its greatest cheerleader.

Those cheer-leading days are over, and you could see it in the faces of people who have stopped drinking the KoolAid®. What you could also tell from speaking with them is being away from Silicon Valley has allowed more prescient thinking to come into play. For just like if one finds themselves in an unprofitable hole, the trick isn’t to keep digging, the trick is to stop – and more importantly; move on. Silicon Valley is still digging and still producing a commodity many once enthusiastic customers no longer needs, or wants. They’ve got more non-converting eyeballs than they want or need.

Remember: If “eyeballs” are the Be-all – End-all saving metric regardless the platform. Then why isn’t Yahoo™ (which boasts of having over 800 million monthly users) worth so much more? Or better yet, why is it falling once again like a lead balloon? Easy, it was really only a proxy for its stake, and future sale of it, in Alibaba™. Looks like neither of those things are now working out, for all one needs to do is look at a chart (or one’s 401K) to see the current falling price in “eyeballs.”

The social media space is beginning to make one wonder if they’re looking at an iron ore chart, or bulk shipper, rather than “the hottest space it all tech.” i.e., everything social. And it’s just the beginning in my opinion.

Sooner or later Wall Street is going to come knocking for either its promise of profits. Or, its money back. And when that starts (which I believe has already begun) the mad-rush to cash-in what ever value a share might have that day will be assailed with stunning speed. Much like the commodity space where stalwarts of an entire sector can find themselves struggling for solvency in mere months.

This is an inherent part of the commodity business. It’s a race to the bottom. And sooner or later, the bottom drops out and mayhem ensues. Credit lines, share prices, management, equipment, personnel, share holders, everything gets scrutinized and either split up and sold off. Or bankrupted and liquidated all together. And when it happens – it happens at a breathtaking pace. The only piece of un-surety is knowing exactly where that precipice, or demarcation line of no return is.

However, what I’m a little more than convinced of is: we’re far closer too it, if not already past it, than anyone especially those in Silicon Valley itself even realize.

© 2015 Mark St.Cyr

The Fed’s Troubling Clarity Of Confusion

Over the past few years no institution has had more consequences beholden to their words than the Federal Reserve. So much so one could reasonably argue in response to prevailing circumstances their communiques overshadowed most others; including presidents and other leaders.

The problem today is; in their effort to bring more clarity via press-ers, and more as to what might be transpiring behind the doors at the Eccles building, they’ve now communicated more confusion in the last two weeks nullifying all previous efforts. As of now they’ve not only hindered, they’ve made their communiques outright suspect for the foreseeable future. Quite literally – at the exact worst of times.

When the Fed. held back and decided to postpone raising rates by a measly 25 basis points it shocked many. The underlying (as well as whispered) issue that still dominates the reasoning is: What does the Fed. know which they aren’t telling?

One could argue this was in direct response to China’s ongoing stock debacle. Yet, the issue here was: and this is the Fed’s concern? For China itself is still standing pat on the premise they were in control and were dealing with its gyrations directly. While concurrently their GDP growth (as implied by the politburo) is still on track to be more than double the GDP of the U.S. Which begged the question: So what’s the big deal with raising rates here since it’s been the most publicized and anticipated by an amount so small (25 basis points) many see it be more of a symbolic gesture rather than anything else, if things are supposedly doing better here?

The Fed’s insertion of the words “international developments” added confusion not clarity. So now, one has to wonder what data point is now relevant for a Fed. decision? i.e., U.S. unemployment data? Or, does Brazil’s free-fall and rising inflation combined with a Petrobas™ calamity now preempt or overrule? Can (or will) other “international developments” now overshadow a U.S. economy concern? The answer to these types of questions are now totally up in the air; for the Fed. made that perfectly clear with its latest decision. Remember; the reason given for inaction over action was “international developments.” Not U.S. developments.

One can’t help but contemplate: Will access to the bond markets or bank loans for say a troubled company in Peoria, Detroit, the Dakotas et al or even a State itself be equal or given more weight if a future decision if buttressed with a concerning factor as say Brazil might be for access to Dollar swaps from the Fed.? If both are being hindered at the same time which one tips the scale? U.S. interest or development? Or, does the “international development” side take the favor? It’s now an open question based purely on the empirical evidence. Not speculation.

Again: Does a company in the U.S. with global reach draw the same, less, or more concern as to access the capital markets than say another nation does that may be in need of access to Dollar swaps or other necessaries provided via the Fed.? What “international development” will now trump a domestic one? Do interest rates (whether higher, lower, or remaining fast) borne to U.S. entities take a back seat to “international developments?” Once again, with the latest “clarity” statements emanating from the Fed. – these are open questions. For they just proved by their own votes “international” concerns trumped domestic. i.e., U.S. savers and more took a back seat to share holders in China.

These questions at first sound vague or even preposterous. However, I must implore it’s by the Fed’s own actions and reasons why per their latest decision – they are anything but “unimaginable.”

Imagine you’re a company trying to deciding on whether you should now make any large capital expenditures based on Fed. policy for interest rates. With what you just witnessed over the last two weeks – do you have more clarity as to “pen a deal?” Absolutely not. If anything, you’re going to sit back and wait, (and quite possibly just buy back more shares) which is exactly the opposite of what the Fed. is trying to push forward. i.e., cap-ex spending. This problem, again, has been exacerbated by their own hands. For they just pushed most considerations not only back into the neutral position, but quite possible park with the emergency brake securely applied.

Many think the decision to not move forward at this last meeting was its own version of a “one and done.” In other words, just an obvious blunder not to move when clearly they should have and will be long forgotten in the coming weeks. However, I believe there was far more to this latest policy error than what was taken at first blush.

What transpired both during as well as right after Ms. Yellen’s FOMC presser was anything but a clarification of where the Fed. as a whole thinks, or believes is happening not only in the U.S. – but globally. And it was in this clarity for the observer, not the Fed., where the realization of troubling issues were on display for anyone caring to look with a concerning eye; rather than the usual sycophantic ear displayed by most of the financial media.

Here are a few things where I was left dumbfounded as to not be pursued or pressed with vigor by any of the financial media during that conference. For the implications are far from minuscule:

Why did “international” eclipse domestic concerns? If China is stating publicly they have things under control, why is the Fed. basing its decision to avoid “normalization” for domestic monetary policy? And if “international” was not a code word for China, then what other global development was the decision based on?

How is it during the weeks and months of this most telegraphed “intent” to raise where Fed. officials have been more vocal about the need, as well as the ability, to move off of the zero bound since the economy has improved via the Fed’s own talking points. Yet – did not? Were officials just talking up the economy? Or, are we in worse straights than we’re being told from official channels?

Is the Fed. underestimating the potential backlash for second guessing future decisions as this one inherently clouds certainty rather than clarifies? The exact opposite of what the Fed. has tried to dispel.

Last but not least: How is it for the first time in Fed. history a member openly stated (via the Dot Plot) the forethought or desire that Fed. interest rate policy would not only remain low but in fact cross the Rubicon into a negative rate policy when clearly the Fed. itself is signaling an improving economy? The two not only don’t fit, but the timing of such a declaration is counter-intuitive.

And that last one is the very question that has changed everything in ways I truly believe the Fed. itself (and most of the financial media) doesn’t understand. Which in and of itself – is another very troubling matter from my viewpoint.

During her presser Ms. Yellen gave what many take as the typical “Fed. speak” responses to questions such as (I’m paraphrasing) “Not something we seriously considered.” Or: “We would look at all available tools and evaluate it under ….” And so forth. However, the issue here is while everybody wants to think of it as a parting members final statement. No one can be sure if it wasn’t Ms. Yellen herself. Because, after all – they are made and publicized in anonymity. It could be any member.

Speculation has now become a clarifying qualifier. And that’s a very new, very troublesome epiphany I would imagine the Fed. has yet to fully comprehend.

Thought exercises such as the following are not relegated to the conspiratorial. With what has taken place over the past few weeks, if you’re not asking questions and trying to come up with answers that seem absurd today – you aren’t thinking hard enough. Especially if you’re in business that demands understanding of how your interests coincide and are either influenced, or altered, alongside Fed. policies and decisions. To wit:

Maybe it wasn’t some “parting shot” (e.g., a dot in the negative field on the Fed’s Dot Plot) as others have reported. Maybe it was intentional as to get this subject on the table for current Fed. members. In other words not out of spite, but rather, as a farewell (agreed upon) parting gift.

Let’s not forget. An institution like the Fed. is just that – an institution. And a powerful one at that. If it was done as some form of “parting shot” the implications of just how bitter and divided the Fed. has possibly become are staggering. For such an action as this one risks being seen as a pariah, and quite possible shunned in retaliation from anything “banker” related for the rest of one’s life. And if one has spent their life as a “banker of bankers” doing so would have even more onerous implications. Don’t let the implications inherent on so many levels be lost on you. Truly ponder this, for those implications are extraordinary.

Let me illustrate with this. Imagine how much of an “off-the-reservation” or “political-nightmare” the following hypothetical would be:

Imagine if there were the equivalent publicized communique emanating from the Joint Chiefs of Staff which included the President along with the House and Senate leaders, where they publicly stated anonymously their forecast for a nuclear strike via a “dot plan.”

It would be one thing for some of those “dots” to appear near a so-called “inevitable” line from time to time. However, if it were during a time of heightened tensions and sabre rattling from not just one, but rather a consortium of rival nations. If one of those “dots” appeared for the first time in history to be in the “need to launch today” area. It changes everything, and I do mean – everything. For nations would have to speculate – It very well could have been the President! And not doing so would be a dereliction of one’s duty or office where lives, and national sovereignty are at risk. What it would also do is saddle every foreseeable press conference with an almost unavoidable stampede of demands at the exclusion of nearly all else for “clarification” on this one sole premise.

This is what happened in-kind with the Federal Reserve’s latest publishing of their own Dot Plot. One of the members placed their “dot” in the monetary equivalent of the “nuclear option” showing their forecast or propensity that the Fed should not only not be raising rates, but rather, should relinquish ZIRP for NIRP. e.g. from zero to negative. This changes everything in ways I’m not sure even the Fed. itself has estimated.

As I stated earlier, one could use all the conjecture one wants as to speculate with near certainty it was this member or that member, or never this one, or that. However, it’s all just that: conjecture. Because anonymity allows for exactly the opposite arguments of; it very well could be Ms. Yellen herself. No one knows. But the trouble is, it is now the most important speculative thought exercise everyone must now carry around and contemplate along with everything else. For that Genie is now out of the bottle.

Adding to all this which quite possibly made matters even worse was Fed. Chair Yellen’s latest speech in Amherst Massachusetts where towards the end she experienced obvious health complications. The speculation is now swirling as to what type of “event” did she experience. i.e., Dehydration? Or something worse? Although it’s all speculation from afar the one thing I heard from people I asked who are in the medical field that was unanimous: The impetus was more than likely stress related.

Personally that diagnosis makes absolute sense in my view. However, one thing still scratches at the back of my mind. At first they said “dehydration.” Fair enough it’s a reasonable conclusion. Yet, being from Boston I’m personally well aware some of the finest facilities in the world capable of diagnosing her are available. If the Fed. wanted to dispel any rumors or at the least quell many concerns all a press agent needed to do was to say something like the following:

“It appears like a dehydration issue and the EMT’s (I’m assuming they were called) concur with this. However, Ms. Yellen is going to be have a quick exam and possibly an MRI as to make sure it was nothing else before she returns. (for a person of Ms. Yellen’s stature the pathways would have been cleared with immediacy) After all, we’re very fortunate such an event happened within such a renowned medical area.”

Simple, easy, and squashes a boatload of speculation. Also, is that not just plain commonsense? Why would you not? Or, they did and they won’t say. For as of this writing Fed. official channels are remaining tight-lipped on any further details.

And as such, as I related to earlier once again there are far more questions interjected via the Fed’s own hand that have global implications for uncertainty and resolutions rather, than give any clarity for the foreseeable future such as…

Did a parting member decide to stick it to the current Fed. and open up a can of worms? A can the Fed. may not be able to settle out in the near future? And if so – what does that say for the unity or condescension of current members?

Was the “nuclear option” seen within the current Dot Plot a choreographed move done as to give cover to current members or Chair as to get the issue on the table in some form of “test balloon” scenario wrapped in plausible deniability with a very Keynesian thinkers parting?

Was this action of no action so contentious between members that the decision was more of an arm twisting consensus rather than a consensus of agreeing minds? And if so, why so?

Did the Chair have a near revolt on its hands with standing pat? For many of the once dovish viewed members were speaking publicly very hawk-ishly including the Chair herself.

Who or what changed as to allow not only what many saw as a complete reversal of previously choreographed and publicized intent  – but have a publicly stated Fed. communique showing a never before in history vote (via the Dot Plot) for negative, repeat; neg-a-tive interest rate policy? All while members continue to publicly state the U.S. economy has and still is recovering.

Scenarios such as these one can easily presume would bring on quite the stressful situation for any Chair.

To reiterate; one can easily see there are far more questions today than answers. All from an institution that has set as its communication policy – more is better – as to clarify and help remove uncertainty from both the markets as well a what their intents going forward will be.

In my eyes it seems to be working exactly the same as its other policy outcomes: adding confusion, uncertainty, and having the exact opposite of intended results.

© 2015 Mark St.Cyr

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Fed. To Main Street: Screw You – Wall Street Matters More

In a world where the Fed. articulates its reasoning for any policy decisions as “data dependent.” One has to now ask – exactly who’s data? For if one originally assumed “data dependent” meant U.S. data – one would now be incontrovertibly proven wrong.

The parlor game projections as to whether or not the Fed. would, or, would not raise rates by many of the so-called “smart crowd” on Wall Street was often hysterical. And the word hysterical could be used twice in the same sentence. Once, as to describe the sheer hysterical begging by those whose salary is based (as well as bonuses) solely on whether or not the Fed. give-ith or the Fed. take-ith away their “punch-bowl.” And second; for the sheer comedic value in that begging. I guess when you’re charging 2 and 20 – you gotta do, what’cha gotta do. And If you’re not begging clients against redemptions – might as well beg the Fed. for it.

There were quite a few discrepancies made manifest in the Fed’s decision not to begin the process of monetary normalization with its standing pat of not lifting interest rates off the zero bound by 25 measly basis points. Even if it was seen as being only a symbolic start in effect.

One of those discrepancies is this: What happened to all that “great” data we’re forced to ascribe to when we turn to most financial media outlets? Apparently the “data” the Fed. watches is not the same which we’re told. For if unemployment is statistically within range of what is considered full employment (e.g., 5.1 per the latest report) how can the economy be so shaky as to delay one of the most anticipated hikes in years?

One can add to that list another data point which seems apparent of no consequence for consideration: Not only has there been a tripling from the “generational low” coined by many on Wall Street (i.e., the low of 2008). Rather, that tripling has resulted in the markets being well above their previous life time highs that occurred immediately before the crisis. And yet, even with a 1000 point panic induced sell off which it all but erased in a week, they still not only hover well above those previous heights, they remain within the proximity of their “never before seen in the history of the market” highs!

One would think the Eccles building would have its own banner hanging proclaiming “Mission Accomplished.” Yet, we’re to infer by the latest policy act those data points must be irrelevant. For they chose inaction – as action.

Remember when just a mere few months ago Wall Street’s next in rotation fund managers, economists, chief investment officers, et al nearly stampeded over one another in bullish form as to get to a microphone, keyboard, or camera and profess “Earnings are beating expectations! 60% or _________(fill in your own and be bold!) are beating as compared to missing. The economy has turned a corner. No fear of a rate hike should be expressed. As a matter of fact – a hike would be even more bullish so buy, buy, buy!”

It seems that didn’t last long for it’s now been turned about so quickly it would make a merry-go-round blush. i.e., “Oh my heavens! A rate hike in this poor climate would be disastrous! Please, please, please!! Someone do something! My bonus! My house in the Hampton’s!! My cocktail party invites!!! Oh the humanity!!!!

Then there’s the 800 pound panda bear in the room: China.

It seems with all its fantastic (i.e., made up) data points coming out of the politburo, is “data” made for slinging right down the Fed’s alley. In other words; goalseeked data fueled by the utilization of the Fed’s QE programs that are now falling apart since its ending has created a free fall in their stock markets. It seems this is just the “emergency” the Ph.D’s ordered as to brush aside any relevant data States side, and keep the free money spigot open indefinitely.

Not only this; one can’t help being left slack-jawed witnessing that the Fed. has just publicly inserted itself into geopolitics via its monetary policy as de facto first responder/savior of all economies. Even if it puts U.S. savers, retirees, along with its economy in the back seat. I wonder how the Bank of International Settlements feels about this latest move? But I digress.

Some may be thinking “Well it’s not like they didn’t do similar during the 2008 crisis. So what’s the big deal?” The big deal is exactly that: crisis. As in whose? Theirs? Ours? Everyone’s? For there are many a crises right here still not being addressed. Let it not be lost on anyone: Ms. Yellen in her press conference said she was “impressed” with the strength of the U.S. economy. However, it was the newest data from “international developments” that now seems to be more compelling to the Fed. than any lingering crises that are still churning within our own economy based on their maniacal grip to a zero bound rate policy. Crises such as:

If you’re a person trying to live off what amounts to a meager savings here in the U.S. – you’re having a crisis.

If you’re someone relying on a private pension to remain solvent, as the manager of one searches in futility to find lower risk yield – you’re in a crisis.

If you’re working, running, or own a business that’s in direct competition with a company being kept alive via “free money” policies attainable only by them – you’re in crisis.

If you’re an entrepreneur and are seeking needed banking services such as loans or other business products – you’re in crisis.

And if you have any sizable working capital within a bank structure? You just found out you’re in pre-crisis mode. Why?

Because; for the first time ever the Fed. publicly stated (via their Dots chart) negative, repeat, neg-a-tive interest rates are being openly considered as a viable tactic of monetary policy. i.e., The banks will legally bleed your account like a parasitic leach and will be looked upon as giving you the privilege for them to do it.

However, all this data seems to be falling on deaf ears. Yet miraculously when Wall Street speaks – the Fed. not only listens – they deliver! And now with “international developments” interjected as a new data consideration – it’s a free money ride made to order.

Sure, China’s stock market is currently experiencing major turbulence. All one needs to do is look at a price chart. Yet, China continues to report that GDP growth is somewhere around 7% give or take. Is that “data” suspect in the eyes of the Fed? And if so – why so? Is deciphering China’s imperial stated GDP data now an additional “mandate” that’s up to the Fed. as to calculate and react accordingly? Wall Street thinks so. And demanding that so too does the Fed.

Surely a stock market bubble that’s popped within an economy growing at 7% is precarious. However: why does China need the intervention of the Federal Reserve as to not begin its own nation’s monetary policy towards normalization? For if China is growing at a rate far above our own – aren’t they in a better position to handle their own issues? Wall Street has been telling us for years “China is the economy that will lead us out of this economic malaise.” What happened to all that “great” data? All gone in mere months?

And there lies the open question. Exactly what “data” is the Fed. watching which they’re clearly not revealing? Maybe that “data” are their phones and in-boxes being hammered from Wall Street demands as to act by not acting? For what little credibility in transparency and foreknowledge they’ve professed to be executing has now not only been shattered – it’s been out-rightly laughed out of the markets. Unless: that laughter is now coming from none other than those that now know “data” means “what they say it is – or else!”

Yes, Wall Street did put on quite the horse and pony show in stunningly quick order as to demand a stay the course action of no rate increases. However, if one wants to be cynical (if not down right conspiratorial) all one needs to contemplate are the following “data” point theories.

Imagine pulling the plug on the HFT imaginary liquidity machines at precisely the right time, and for about the right coinciding duration (Oh let’s say 10% or so should be enough) and you can scare the Fed. to stand pat when needed. Or, you can increase the duration (Oh let’s say 20% or so) and you’ll probably have an even better shot at triggering another round of QE. It’s a manipulators dream come true when viewed from this light. Is this a “data” point that now needs to be considered?

Or better yet imagine another to help coincide with their new “international developments” data concerns.

Let’s imagine right before the Fed. dares to show any backbone or display any credible signs of actually beginning the process as to normalize interest rates. You (let’s pretend) may be in charge of an economy that will suffer at the hands of such a process. You then just out-of-the-blue send war ships right off the U.S. coast. Then, follow it up by sending ground troops, heavy arms, and rattle sabers in a menacing fashion right where the U.S. will declare your actions as hostile or provocative. e.g, Syria.

Chances are that too has a good chance of interjecting global concerns into Fed. decisions. After all – all one needs for empirical evidence as to whether or not such a thing is plausible or probable is to look at what took place a mere 24 hours after the Fed’s decision on Friday.

In an about-face only rivaled by the Fed’s – Russia and the U.S. conveniently embraced diplomatic talks in Syria. (For more clarity on this reference here’s an article I penned “Could An Interest Rate Hike Be The Last Straw Before War?”)

As for China? Well I would imagine it didn’t hurt that the Fed. stood pat, for it could have put far more pressure on the dinner conversations as China’s leader visits Washington next week. After all, with what the Fed. decision resulted in as well as how it was explained. The only logical conclusion one can come away with is these seem to be the only “data” points that either mattered or were taken as important considerations.

For all the rest like savers, retirees or the overall U.S. economy? It seems they’re expendable. For as far as those previously outlined crises here in the U.S. Not only are they not going away, they may in fact be exacerbated. It seems many on Friday took a look at what the Fed. proclaimed as “data” and decided we’re in a whole lot more trouble than the Fed. understands – or can deal with.

© 2015 Mark St.Cyr

Could An Interest Rate Hike Be The Straw For War?

The world today sits upon a very precarious point. Today’s tipping point is unlike most yet, extremely similar to a select few. Those “few” are the one’s usually reserved and noted in the old analogy of “The straw that broke the camel’s back.”

What makes these different from most are two things. First: It’s realized as well as scrutinized by a growing chorus that indeed things are not well and on the verge of not just failing, but falling apart all together in complete and utter catastrophe. The second: To many observers before, and after the fact it’s clear – all it will take (or took) is just the slightest of increments to bring it about. This is why one should pay close attention when this analogy fits the circumstances. For they portend outright total disaster – not some measured or partial one.

This isn’t a conversation about fear mongering or any of the such. This is about understanding where we might be within a given reflexive point based on empirical observations as well as an understanding of the true possibilities that may play out, and how that may affect or disrupt any business both large and small in the near future.

Some will say, “they don’t have time to pay attention to such things.” Or, “they’ll cross that bridge when they get to it.” The problem is as I’ve explained many times, “What happens when you find there is no bridge? That it’s gone. Now what?” I’m sorry, but if you’re in business: not having an informed understanding of macro events as well as micro, and how they can possibly disrupt or wreak havoc on your business, is inexcusable for anyone who takes business seriously. Period. e.g., A port strike on one coast (or in another country) can cause product or food shortages on the other. In a “just in time” inventory supplied world. Everything is now weekly if not daily dependent. Forget monthly.

So with that said here we sit just days away from the Federal Reserve’s decision on whether to raise interest rates or not. The anticipated implications for stock market volatility has never been higher. And where it goes – nobody knows. It’s all guessing.

Yet, based on common sense observations; weight has to side on the market reacting negatively. How much so will be in a matter of degrees with the potential for outright pandemonium as witnessed in August when all the major index futures were halted before the opening. Why? Because the Fed’s decision is exponentially more connected to global carry trades and others that are holding up the markets. Again – globally.

We witnessed how precarious China’s market (which is #2) was to the slightest of changes and the spill over effect that washed ashore here. This time – it’s the #1 market. How the reversing of over 100 months of no hikes will be met once again is anyone’s guess.

One thing that’s not a “guess” is the way nations or economies have dealt with economic turmoil. History is far too littered with varying forms of “war” as not only the response, but also as the direct consequence of failed economic policies. Either of their own making or brought about by another. It doesn’t matter whether self-inflicted or not. The end game is the same: Currency war, Trade war, Diplomatic war, right down to actual combative kinetic war. e.g. WW1, WW2, etc.

Why “It’s not different this time” is like so many others in history It’s where economic upheaval that turns into political unrest breeds the perfect situation where tyrants, dictators, and others of that ilk routinely look for scapegoats as to direct the public’s ire away from their own ineptitude, and focus it elsewhere. And a Fed. raising interest rates that could further send these teetering economies into outright free-fall and disarray could be the very thing (or excuse) needed for conspicuous consumption and deflection.

Right now as I type this not only is China throwing everything it has including the kitchen sink at its stock market and economy desperately trying to hold it all from falling off the precipice entirely. So too is the entire emerging market arena. And what is the primary tool they are using? Cutting rates, and devaluing their currency.

What could (or would?) all but seal their fate for outright calamity? A hiking of U.S. interest rates which in turn would surely cause the Dollar to rise, as well as pull scared investment dollars out of those struggling economies right into U.S. based “safe” asset vehicles.

The Federal Reserve would be doing precisely, as well as solely, the exact opposite of what most of the world is doing. While at the same time possibly setting up for a massive heave of capital outflows crippling already embattled emerging markets both in their stock markets, currency, exports, right down to their political. It’s a situation made for a Hollywood movie yet it’s not a movie this time – it’s all a real possibility with gargantuan consequences.

Last year I wrote an article titled “Will History Record The Ending Of QE As An Archduke Moment?” In that article I posited the idea that with the upcoming ending of QE and the distortions it had created throughout the financial markets globally, that one needed to pay very careful attention to tensions as well as reaction with a far more focused eye than at any time previous, for the implications and their resulting conclusions could have truly catastrophic outcomes. Here are a few excerpts from that article.

“Nothing rallies a nation faster than the threat of an enemy. And nothing serves a political class born of dictators than using any and every tool at their disposal as to rally the glaring eyes of political unrest and affix it to another as to release their ire. And what better straw-man has the world offered the tyrannical powers of the world at large than the interventionist monetary policies of the Federal Reserve via their QE program.”

“One can’t help but find the timing hauntingly coincidental that Vladimir Putin decided the window of opportunity to make his move on former parts of the Soviet Union was in near unison with the Fed. Revelations that in fact QE was being wound down. i.e., In February when the announcement of the 2nd $10 Billion dollar reduction made manifest that in fact the QE wind down was on schedule. (A schedule many across the financial media said wouldn’t happen.) Now economies such as Russia and others would find themselves once again at the center of any political unrest, while simultaneously being economically hamstrung screamed opportunity to use it to their advantage with Machiavelli inspired actions.

Tag onto this that other land mass with far more people to cast political upheaval than Putin has to contend with: China.

Suddenly the economy touted as “the” economy that will save us all is not only slowing, it’s contracting at a pace far more quickened as a direct result of QE being pulled.”

And where do we find ourselves today?

Over the last few weeks not only has China for the first time in history sent warships off the coast of Alaska in an obvious showing of “Hey, nice place you have here. It would be horrible if anything ever happened to it.” But so too did Russia within the same time period. Oh yeah, all at the same time the President toured it for the first time ever by a sitting president. All coincidence we’re asked to accept. Sure it is.

Now there’s the ever-growing Syrian escalation crisis. Refugees are now fleeing into Europe at such a pace old world means of border enforcement not seen since the fall of Eastern Europe are being not only revitalized, but implemented at Blitzkrieg speeds reminiscent of WW2. Armed military checkpoints behind walls of razor-wire are being constructed and deployed over hundreds of miles within days.

China supported U.S. agitator N.Korea is once again openly threatening U.S. interests. Russia? They’ve now moved heavy arms and soldiers directly into Syria in what can only be taken as an “in your face” move.

Russia and China have publicly announced as well as propagated a means as to circumvent Dollar denominated trade and clearing measures with their own. And many of the emerging markets that will be thrown into chaos with a Federal Reserve mandate of a rate hike are far more aligned with these two countries than the U.S. A conflict of any magnitude would be just what the dictator doctor ordered to suspend any or all protocols of settlement demands.

Europe is right now contending with utter chaos within, as well as, its surrounding borders throughout the Zone. The EZ is made up of countries, not states as in the U.S. Political, as well as social fears, become a tinderbox ripe for flash-points with the breaking of; as well as the forging of new alliances that can happen in what seems as mere moments; as opposed to a time where people have breathing room and can think clearly. Rash decisions usually get made out of frustration. Sometimes with disastrous consequences.

The outbreak for WW1 from the incident in Sarajevo took a mere month. And that was in response to a direct assassination. It’s now been a little under a year since the ending of QE and many have been outright vocal in their accusations that the Federal Reserve has their economies directly in their cross-hairs as to bolster U.S. hegemony. And one would not be too far off the mark if looking at the current disruptions as well as fore-footing of military arm flexing and parading of weaponry being flexed by countries directly effected in obvious ways via the capital markets and central bank policies that a precipice may in fact have been reached – with onerous resolutions at the waiting.

Surveying the global landscape regardless of one’s political views or leanings along with weighing the possibilities for either any obvious business disruptions, as well as possible long-term interruptions, whether one is a sole practitioner or CEO of a global concern is a must, and needs to be included right alongside any other calculations that may come with an interest rake hike. Even if that hike (right now the consensus is for .25 basis points) in the scheme of things appears inconsequential. For that is exactly my point.

When one views the global landscape both politically as well as economically with an eye of understanding through the old adage of, “History doesn’t usually repeat, but it sure does rhyme.” We are at an extraordinarily precarious moment in time.

Things can go in any direction. And yes, even all the above can be for not and we rocket back towards “everything is awesome” land filled with rainbows and soon to be IPO’s unicorns. However, I must state again, although it is possible – it’s still all up in the air in a coin toss like state. We can only wait, react, then watch and see how it all plays out. For right now the most truthful of the known is: Nobody knows.

Yet, one thing is clear. Many are either looking or won’t look till they see an event large enough to peak their interest for concern, for only then do they feel is it the proper time for concern. However, it is the diligent that doesn’t rely on hubris or laziness as to not be inquisitive about what is happening around them and think about possible scenarios. Along with how they might deal with them and how it might affect their families, businesses, employees, suppliers, et al before hand. Not after the fact. For that may be too late.

Remember, why the camel analogy might suit all the above so fittingly is just for that reason: A 100lb. bag of straw vs 1 single stem produces the same effect. And all we’re talking about here is a raising of 1/4 of 1%.

Has so much weight on world markets ever been so close to the edge – for so little?

© 2015 Mark St.Cyr

Apple’s Bruised Presentation: A Warning Sign Rarefied Air Is Becoming Exhaust Fumes

On Wednesday of this past week Apple™ held its much-anticipated annual roll-out of new products and features to the Apple lineup. However, this latest presentation caused more head scratching as well as out right consternation than any in recent memory. There was one other, but I’ll get to that later when there’s more context as to compare.

Whether it be within the confines of media reviews or tech blogs. It seems almost to a person the reaction to this latest event was anything but celebratory. Rather, the overarching theme revolved around the questioning of: Did they just witness the initial confirmation that many have pondered now these last few years. i.e., Has Apple lost, or, is rapidly losing their soul/spirit of innovation? Or, just the outright feeling of confirmation: without Jobs – Apple is an also ran.

Like many I too was flummoxed when watching the event. However, unlike some I saw things a little differently. What I saw; and the way I saw it, I’ll illustrate, as well as counter how I believe many of the obvious missteps, as well as outright blunders were made should have been handled and addressed differently.

Although I’m going to address my assertions through my business eye (for that’s what I do professionally) as if I were called into the board of Apple in a hypothetical sense and asked my opinion. I want to make sure it’s known for the record I could be what one considers an Apple “fan boy.” I use their products near exclusively and have great respect for the company. Yet, much like if I saw a family member doing the obvious wrong things; being openly harsh, critical, or straight forward in that criticism doesn’t mean any lack of respect. Quite the contrary.

So first things first: For the first time since the inception of these stylized “Event” roll-outs one thing was clear to almost everyone that viewed it. The “presentation” along with its cinematic star quality infused theatrics more often than not didn’t help nor bolster the products or presenters. Again, for the first time that I can remember – it actually seemed to take it away.

A few things were obvious. One of these is the incessant use of the glorious styled verbiage made famous by Apple when trying to invoke awe inspired anticipation. The problem this time were the products they were introducing. There were obvious trip wires that needed to be addressed that one could see for miles. Yet, it seemed as if Apple was going to pay no attention to them and roll them out because “They’re Apple therefore you’re going love it.”

The Apple Watch™ fits into this category probably more than any other. The problem? It seems the push is to present the watch as a fully formed device which it clearly is not. Yes there is the nod that more and more applications are forthcoming. However, it is quite obvious the main focus is all too centered on fit and finish. The push about what band one can now choose and the on, and, on aspect of the details of these bands subliminally pushes one to assume – I guess that’s all they have to show right now.

I believe the watch will be a great product in the future. And it’s easy to understand it’s a work in progress that needs to be out in the public a little before prime time as to see just where the market wants to take it. And there’s nothing wrong with that. That said, the more that Apple makes this almost sycophantic push towards fit and finish currently? It doesn’t hide or subvert its obvious current limitations – it pushes them more into the fore front.

If you wanted more proof of the “We’re Apple therefore you’re going to love it” attitude that I believe allowed for the lack of self-awareness to see obvious issues or miscues. All one had to do was watch the introduction of the Apple Pencil®. It went something like this…

Ladies and gentlemen. May I draw you’re attention to the big screen behind me and behold. Never before in the history of mankind has such a device ever been thought of by mere mortal man. Ladies and gentlemen I introduce to you – the pencil!

And there on the screen stood what at first blush was a representation of the one thing Jobs railed against: a stylus. You could hear either a collective chuckle or, YAYYYYyyyyy….wait a what? The set up for this product buzz-killed its own introduction.

Another was when the new IPad Pro® was revealed to show it with its newly designed specific keyboard. What seemed at first like thunderous applause drifted quickly to be silenced by the obvious knee-jerked gasp when the big screen showed what everyone instinctively recognized as a product resembling what no one seems to use or want – a Microsoft Surface®.

These weren’t the only missteps – just the most obvious. A few others? Well, there was the “let’s show you just what you can do on this fantastic, great, super, stupendous, mind altering, supercalafragilous new product. We’ll start by bringing on our next guest speakers from – Microsoft. Even the crowd within the center went speechless. It was a clear awkward moment. Again, all self-inflicted.

Think about it. Within the span of a few minutes a new product was introduced that for all intents and purposes can really be a game changer with applications for both personal as well as enterprise use never before available to Apple. And within the course of those minutes did nothing but leave the impression this great new product has a stylus, and a keyboard configuration that looks all to close to a Surface; and cemented that impression with introducing none other than a Microsoft representative to demonstrate how Microsoft Office™ will run on it. Again, think about that. And as bad as that progression was – it was enhanced. And not for the better in my view.

The next guest or representative in the line up? Adobe™. You know that company which right before Jobs passed was still calling them out for shipping lousy software. One silently wondered if Pages® or Keynote® were going to still run on Apple products because other than what seemed as a hat tip to Garageband®; one was left feeling unclear. And remember, this is Apple’s premier event! The missteps as to the attention to detail of presentation flow was nothing less than stunning. I personally can not remember such outright blunders in previous roll-outs. And I was not alone, for what I heard from others who just wanted to see what was new reacted in ways I previously never encountered.

Here was my first confirmation that it wasn’t just me. All the above overshadowed what has been the usual star of these events: The iPhone®. Nobody that I talked to could even remember what new innovation or updates were made to the newest version. All they seemed to remember was there’s now an “S” version, but other than that, it was all about “What is up with that new iPad?” Or, “A stylus?! Are you kidding me? A freaking stylus?!! WTF is up with that?!!!”

And that seemed to be the cumulative summation I distilled from both my personal exchanges, as well as what I’ve seen in both tenor and tone reported almost everywhere.

This is, and should be taken by Apple as a clear warning sign this bruised “Event” could be the one that spoils the “whole bunch” going forward. The event showed to my eyes in stunning clarity that Apple delivered this presentation via the viewpoint and execution of: We’re Apple – and you’re gonna love our new products and upgrades because – we’re Apple, and we’re saying so because – we’re Apple.

Again, whether intentional or not. Too my eyes, it was a clear illustration of: Rarefied air has become breathing one’s exhaust fumes.

Now here’s where I take a different tack from everyone else: Personally, I believe the upgrades as well as new products are noteworthy. It’s all about the delivery as well as introduction I take issue with. And this area of difficulty is a first for Apple. How they mange their way around as well as through this obvious debacle will be one of Apple’s greatest challenges post Steve Jobs in my view. For perception is just as big as product to no other company as it is to Apple.

So that’s my descriptive view. Now let’s delve into the prescriptive.

Right off the start let’s address the greatest of overhangs that is not, nor will not, go away unless Apple itself stops trying to push it themselves: Tim Cook is not, nor will he ever be seen in the same light as Jobs. Period, end of story. Not by anyone at Apple itself, nor the public at large. So stop trying. Again, period. It’s hurting Apple’s, as well as Mr. Cook’s image, more than it’s helping. So again – stop. Please for the love of humanity – just stop.

Although I don’t know Mr. Cook personally I’m sure he’s a great guy, and we know he’s a competent executive for he has done some great things since Jobs passing in helping to lead and maintain Apple’s core structure. We also know Jobs had great admiration for his executive qualities. However, no one can replace Jobs. And the more one tries (or desperately hangs on to the idea) to replace rather than move forward is in effect moving backwards. This is why the more one tries – the worse the comparisons fester. And Apple seems to be trying far, far, too hard in this one area alone.

Let me use an analogy based in music as opposed to strictly business: Van Halen didn’t “replace” David Lee Roth with Sammy Hagar. Sammy Hagar, nor the band, tried to be Van Halen with Sammy acting as a stand in replacement for Roth. Same can be said with AC/DC. Just like with first example, after Bon Scott there truly was no replacement. So they didn’t. They added Brian Johnson and the rest is history. Whether you liked or disliked the new band was exactly the point. Van Halen as well AC/DC were: a new band, and they weren’t afraid of the comparisons. They took them straight on and made no bones about it. This allowed the band to be its own force while still paying reverence to previous milestones without any regards to “What would David or Bon do?” Apple needs to apply the same or they’ll never get out from under “What would Jobs do?”

I’ll use as proof for my assertions using a current screenshot I took from Apple’s own public webpage:

Apple™ Home Page Screen Shot 2015-09-12 at 12.03.37 PM(Photo Credit: Screenshot taken of Apple’s public home page)

Why my criticism? First of all: It has nothing to do with Mr. Cook personally. The issue is: it shows or implies just how tone-deaf, blind, or nervous Apple is becoming. Apple seems to be bordering on desperate as to be trying to create a replacement figure, and it’s now far too striking as to evade the inserting for subliminal comparison (whether intended or not) of Cook as Jobs. And far too many have an instinctive gut reaction too it. And it’s not in the affirmative.

Jobs was, and always will be, the comparison to these events as well as “the face” of Apple. Now and for the foreseeable future. If the solitary person in this type photo is not Jobs, it should only be the closest thing possible to him; and it’s not a person – it’s the product or the logo. Anything (or anyone) else stands right out as “trying too hard” in pushing a narrative. Since the passing of Jobs no person for the immediate future will meet the mark. The only “one” that can is – the product/products themselves. Anything less hurts the image as well as brand of everyone involved by my calculations.

I believe unlike many (and I’ll wager it’s the Board itself that is the most confused on this subject) the more Mr. Cook removes himself as “the face” of Apple and puts forth the product as “the face” the more Jobs-like Apple remains in the public eye, as well as the lessening of many of the unfair comparisons Cook as well as Apple has to constantly dodge or defend against. This is where Apple is being its own worst enemy. They desperately need (as well as want) to move out from under the Jobs comparisons as time and products march on. Yet, it seems Apple itself is the one unwittingly making that trek all the more harder.

Then there were the introductions of new or improved products. Here there were far more miscues as well as missteps than I can remember. So I’ll take just the one’s that are in my front-of-mind.

First there were the transitions from introduction to video presentation. In a word, for someone who understands the importance of theater and seamless transitions: They were horrible. Apple once excelled at these – until recently. At this event? They were clumsy allowing for misconceptions to fester. No, not in the content and production value of the videos themselves. It was in the hand-off from presenter to video. They simply just didn’t flow.

There was no better example of this than when the Apple Pencil® video was shown. Personally I cringed. The video’s introduction did not match the content. The content was great, but you were trying to get over the idea that this was not a stylus – first. And it felt that way. For anyone paying attention this was an obvious flaw. And it was obvious the one’s who should have been paying attention (i.e., Apple) were not or could not see it.

The attention to details such as this was always prominent and seemed to never be lost on Jobs. However, at this event it was conspicuously not there.

And while we’re on it let’s talk about the Pencil. Not only was the roll-out worse than bad. It actually may have set back the whole adoption cycle months if not years just based in ridicule. For nearly everyone remembers one of Jobs’ strongest arguments against anything was – the need for a stylus. And the way the introduction of the Pencil was presented did nothing to alleviate that memory. In fact, it brought it out front-and-center. It’s a shame because the Pencil truly is so much more, but again, the presentation did little to change that initial perception.

It would not have been hard to take this issue head on and maybe have some fun with it. Make it their own post-Jobs product launch he would be proud of. It could have easily been done in my view if the obvious hurdles would have been addressed right from the get go, rather, than trying to act as if no one would remember the past. The diametric forces of awe-inspiring and ridicule enforcing left it up to the product itself to overcome them. A tough task when everything is running perfectly. Quite another when it’s happening within obvious missteps or miscues.

An easy way to have overcome many of the obvious would have been to remind people of a few things like: When Steve was around one thing he was not afraid to do was to change his mind if one could prove that he should. (which he did many times, but you had to prove it first to convince him, not just express or think that he should) Steve would tell anyone who asked “As soon as you need a stylus you lose” and we still believe he is right. That’s why we don’t and won’t make one. So today I introduce to you a technological instrument so advanced we gave it the only name that could match it for context, simplicity, and ease of use. Ladies and gentlemen I introduce to you today – the Apple Pencil.

It took me no longer to think of the above than to type it. It’s not perfect, but it’s far better from what was presented. i.e., act like no one’s first reaction will be: It’s a stylus! Again, this is a detail I believe would have never been allowed circa Jobs. It was far too obvious for initial reactionary ridicule. Yet, that’s exactly how it went off.

Then there was the other obvious calamity. The gut reaction to the iPad Pro with its new smart cover keyboard. Again, here we saw Apple acting as if it there was no such thing as the Surface. It was breathtakingly tone-deaf for what would be the obvious reaction. You almost could feel the collective gasps worldwide through your monitors. Again, I personally was stunned on such a misstep.

My argument is this all could have been so easily addressed and possibly as I’ve stated again, and again, been a turning point in the post Jobs era. And in a good way.

If the new IPad had been presented differently showing its new size and features for general use as associated with the current versions only. They did some of this but it was far too little. What they should have done was introduce and infuse with a little more depth some of the new features and reasoning why a physical keyboard will be necessary for upcoming partnerships with new collaborative partners such as those announced with IBM™ and highlight it with more detail. People get that.

Say things like: As game changing as the iPad was to the home and business we’ve discovered there more possibilities than ever, and these possibilities demand two new features unparalleled by any other brand today. First, with our larger screen size new enterprise functions and uses are now available that were not conducive to previous iPads. Although the bigger screen allows for a more natural feeling keyboard we know by listening to all of our customers they want an Apple designed and built dedicated IPad removable keyboard. I’m here to tell you, we heard you – and we listened. And so I introduce to you today, what at first may look like another brands however, I respectfully say: It is anything but – and here’s why…”

Instead the keyboard attached version went up on the big screen and did nothing but put front-of-mind “what the heck is that? A Surface?! That’s the new thing?!!” The following dissertation felt like Apple believed customers had never seen a similar product. No matter how well crafted and design specific for IPad this new keyboard is. The timing and delivery for its introduction, like the Pencil, was a self inflicting buzz-kill for it. I say again, this all was so blatantly self-inflicted it was painful to watch from my view.

One place that has yet to lose its luster, or fall into the lame, are the informative product videos showcasing Jony Ive. Here is where the Apple of yesterday still shows through today. Even though Ive is not shown there is gravitas in voice and reputation for we all instinctively understand many of these products are associated with his creative vision much like Jobs. However, these unlike the “Event” shake free of the post-Jobs gravitational pull. Why?

The product is the feature – not a person. It’s not lost on anyone that Ive is still responsible for the products creative attributes. But it does one thing that Apple Inc. itself has not yet learned. It allows Ive and the product to stand on their own in a post-Jobs world of Apple. And I believe not only are these displaying a tenor and tone Jobs would approve of, I believe they are showing the way Apple itself needs to start addressing this issue far more head on than seemingly trying to either avoid it, or push a persona in the fear of they don’t know of any other way. That way is right under their own noses yet, they seem somehow patently blind to the obvious.

Apple isn’t about Jobs anymore. He’s gone, and he’s not coming back. And the more Apple tries to fill that void, the deeper and wider the chasm becomes to fill by their own hand. Apple is no longer about a person – it’s about the product. And the product is the only thing capable of bridging that gap or hole left with the passing of Jobs. And the sooner Apple realizes it, and takes that to heart. The faster and better both Apple, their products, as well as the management and employees will be. Where they can all get back to doing what Jobs would be the most concerned with as well as probably proud of. i.e., Running a great company steered by smart people creating insanely great and revolutionary products second to none.

And as for that only other “Event” I mentioned at the beginning? I could think of none other than the one that caused an even more visceral knee jerk reaction than the one hosted by Jobs himself. That event?

One of the first where he introduced none other than Bill Gates on the big screen as a new partnership between the two rivals. Again, Jobs could have easily tried to hide the fact or, never speak about the collaboration he made with Gates at the time. There possibly was no worse time than then to even discuss such a possibility; never mind an already done deal. Yet Jobs did just that. Jobs instinctively knew – you can’t hide the 800 pound gorilla or act like it’s not there. You have to get past it one way or the other come hell or high-water. And they did just that.

Again, the lesson for Apple today is right there in the Apple of yesterday. All they have to do is look. For the only thing in my opinion holding Apple back from moving forward and beyond – is Apple itself.

© 2015 Mark St.Cyr

From My Perspective: 9/11 Life and Death

In remembrance of Peter Hashem, Flight 11, Seat 20A
Struck the North Tower at 8:46:40 am EST.

Just by the very act of you reading this you are less than one degree of separation from knowing one of the actual people killed on this day. I’m sick too death of hearing people spew rhetoric in some form of arms length narrative as if the next horror again might happen to someone else and not anyone connected with them personally.

My suggestion to all of them is to stop talking and start thinking. There are more people here today (in fact exponentially more) on visas from counties that would just love to see a repeat. And more than 6000 of them have not only over stayed – but are lost somewhere within. That puts an average of 120 in each state across America. Maybe – they’re right next door to you. Now how reassured do you feel when someone in the media states the “improbable” aspect that something can’t/won’t happen to you or your family because: “They’re isolated over there.”

This whole threat to you, me, and our way of life is not something to take lightly, or to try and brush aside as if thinking you or I couldn’t be next in whatever plot is possibly conspired, because after all, if one can see the amazing proximity one can be in 6 degrees (or acquaintances) of Kevin Bacon. Once again I remind you if you wish to ponder more fully, just by reading this you are only 1 removed from my friend who was on that plane you see hitting the towers. Think about it.

Life is precious. And, when it ends for what ever the reason, at any time, chances are you will not have any control of the timing, or the circumstances. So live to your fullest everyday. Regardless of where you are in life for the unexpected, and the horrific, can happen to you, not just someone else.

When the tragedy on 9/11 happened it changed many of us, if not all. Like most, I remember exactly where I was. I also remember standing in line at my local bank moments after it happened watching the televisions while waiting in line in utter disbelief along with everyone else in the bank. For all of us – time had stopped.

The days and months that followed with the stories of heroism and the outpouring of help and support are well documented. For myself living in New England at the time one had either gone to Ground Zero personally as to try to offer any help, or someone you knew had.

I owned a local deli at the time. The owner of a company which supplied me with breads went back and forth to Ground Zero nightly to pass out muffins and pastries to the rescue teams working through the night only to drive back to New Hampshire to then start his own deliveries.

No one complained. No one ever mentioned how hard it was. No one was looking for any credit. It was just done. Period. That’s just the way it was and how everyone viewed it.

On that day many of us changed. We viewed life a little differently from that point. Life suddenly hit you with laser focus. You could no longer trivialize the sage of “life is precious.” You now clearly understood the meaning of death can come at any moment. From anywhere.

No longer was this an esoteric exercise. This was life at its core, and it was playing out in front of our eyes leaving no gray area to ponder. You either got it – or you didn’t. There was no middle ground.

To honor that tragic event I myself set new rules, new guidelines in how I was going to go forward in life. I decided I would live life – my way, by my rules. And, if I were to die today – so be it.

I could say this because I truly was going to ensure I was living.  Not just some bystander in life trying to merely exist, or just get by like so many other do. Those are not the reasons why we’re given life. It’s given to us to live. To be alive. It’s not to play in some endless game of “go along to get along.” Rather, it’s to use what ever talents we have, or develop them and push ourselves to not just survive this game, but rather, to play on offense and thrive! That, is the epitome of living in my world.

September 11, 2001 changed my life forever, Yet, to honor the lives of the people who perished on that tragic day, I decided to use it as a reminder that while on this Earth, I should make sure I was engaged in living.

Live everyday. Take nothing, nor anyone for granted. Live today.

For you see, Peter was not just someone who tragically died on that day. He was the younger brother of my close friends growing up.
Life doesn’t just happen to someone else. It happens to us all.

© 2015 Mark St.Cyr

There’s No Button For Tomatoes

When you’re running a business many times you need to add staff that might not be the most optimal of prospects you would prefer. There are times you have to “go with the flow” because one estimates – there is no other option. The problem is: Just how long will one allow the possible damage to either customer relationships or business production that may ensue in hiring the wrong person?

Weighing the difference between service and no service, or, production vs none by employing someone who nine times out of ten is prone to deliver bad decision-making skills; is an equation that leads to out of business sooner – than later.

One of the clearest warning signs to any entrepreneur/manager/CEO et al that there may (or more often than not will) be trouble down the road is when trying to fill positions the overriding premise or instruction needed to be adhered to gravitates toward the implied or mandated: Adhere strictly to the rules. Don’t think. i.e., If it’s not on a list, menu, manual, et al or directly approved by the owner/manager – it must not be done. Period. Or else!

The problem with this type of thinking and/or implementation is that it might work for a time, however, the time that it doesn’t work will more often than not be at precisely the worst of times. The term “work for a time” is an important descriptor for the simple reason; there will be a time where the most obvious of decisions, and simplest of fixes to address an issue will not be done for fear of reprimand. i.e., A product line grinds to a halt during the middle of the night that was only implemented out of the need to catch up on back-orders to complaining end users. The reason? Maybe as simple as a blown circuit breaker that only needs to be reset. Yet, the line shut down and stayed down where workers left early because they were told “What ever you do, never touch anything in that electrical box!” So nobody dared, resulting in being even further behind. Or worse.

As ridiculous as the above may sound it’s far more common than most think. It sounds so obvious where most will react in a near knee jerk action and deride “I would never let such a thing happen in my business!” Yet, as I stated “it’s far more common” than one may think.

One obvious reaction to this is “Well I would have had them call me first before leaving at least! That’s a ridiculous example.”

Sure it is, until one thinks of other such demands placed unsuspectingly by many a manager/boss/CEO/entrepreneur such as “And what ever you do, don’t call me in the middle of the night unless this place is burning down!” Ever heard of that one? You’d be surprised how closely that rule would be followed if people that night would rather get out early – than work. Don’t let that point be lost on you when trying to envision what may happen at your business.

Let me give you an example that many small business owners find themselves in that I had the pleasure of interacting with one night which supplied me with the title of this article…

One night I decided to try out a different pizza restaurant. I asked the clerk for a large pizza with fresh tomatoes as an added topping. He viewed the cash register then subsequently replied ‘Sorry, no tomatoes.” At first I thought fine. Then I noticed sitting there, right behind him, was a container full of sliced tomatoes in his sandwich making section (for they made subs also). Again, there in obvious view.

I asked him “I thought you said ‘no tomatoes?’ There are tomatoes right there.” He replied “Yeah, we have tomatoes for subs, just not for pizza.” I said “You mean to tell me I can’t have tomatoes on my pizza? What is that, some type of code violation down here or something?” (I was in KY where I’m originally from Boston) He stated nonchalantly the reason why he couldn’t was “There was no button on the cash register as to charge me extra for them.”

There was an extra pepperoni button, sausage button, onion button, etc., etc., but he didn’t have one for tomatoes. Therefor; I couldn’t have them.

As crazy as that sounds, he stuck to his guns. It was easy to dissect as the argument went further that this individual was told “If there isn’t a button, then we don’t do it.” And he was doing what he was told, and was not going to do anything other.

It was obvious this person was in place because the owner probably decided (and was the only person they could acquire) it was better to “be open” late in the evening even with questionable labor, and not lose out on any possible business. Rather, than possibly adjusting the hours to suit doing “good business.” (just because the norm is 24/7/365 doesn’t mean you need to do that also if doing so requires hiring the wrong people just to be “open.”)

The resulting exchange ended with me getting – “No tomatoes.” As for the business? I did keep an eye on it as I drove past it near daily and would occasionally recall the adventure shaking my head. Then, about 3 months or so later the inevitable happened.

They went out of business. Who’d a thunk it?

© 2015 Mark St.Cyr

ESPN: Cutting The Cord Or Political Turn Off?

The catchphrase that seems to be picking up more and more steam is “cutting the cord” when referring to those that are dropping traditional cable TV for viewing choices or alternatives by other means. The reasons why differ greatly. For some its price, or affordability. For others, its convenience with the growing numbers of alternatives. And for some; they just refuse to pay for anything in a zealot like fashion. Although each group has different reasons the outcome is the same: diminishing viewership.

However, is “cutting the cord” really the reason for ESPN’s loss of millions viewers? Or, is that the easiest crutch of an excuse for what might really be happening? After all, media is, and always will be, the king of “inflated” numbers. So much so I garner when a CEO of any media company reads a term like “double seasonally adjusted” they smirk and think – “Rookies.”

It’s just the way it has, is, and will be played; and everyone understands it. None more so than those within the business itself, which is why a few things struck me.

Why wouldn’t ESPN™ (or Disney™ its parent company) go to great efforts to include or push the narrative that “cord cutting” doesn’t necessarily mean “all” that cut have tuned off? In other words: why aren’t numbers from alternative viewing sources highlighted as to show they might not be viewing there – but they are over here? Unless – they aren’t.

And if they’re not – why not? After all, there’s probably no other content infringement policing company for copyright and other applicable ownership rights than Disney and all its subsidiaries. You aren’t going to see it for free or on alternative platforms unless they want or allow for it. Period.

This would also imply if they allowed it (anywhere) it would be accounted for ( i.e., click views, etc.) in some manner of form from across the internet to help take the edge off. i.e., Sure we lost millions from cable, but as you can see here, they’ve just migrated over to this service/platform as an alternative. Monetizing the alternative is a work in progress. etc., etc.

However, that seems not to be the case. The case appears – they’ve not only cut: they’ve tuned out or turned off the programming entirely. Why?

It’s hard to say. However, if I use myself as an example, I believe I know a large part of the underlying reason:

ESPN (like a few notable others such as NBC™) has seemingly transformed at near hyper-speed from sports reporting – to political sports reporting. The political edge now rampant throughout the shows, games, interviews, et al is overbearing, overburdening, and overdone.

Here’s what I know from my own experience: It has become near impossible to turn on something that was originally created for pure entertainment value without now being bombarded with how the “political football” issue of the day is being addressed by the commentators, sideline crews, as well as players and coaches. e.g., I tuned in to watch a football game – not a game about how today’s “political football” is handled and won. i.e., gun control, domestic violence, civil unrest, global warming, etc., etc., on, and on.

Important issues all. However, is there no respite today as to maybe catch a breather and just enjoy a sporting event and its minutia without having today’s “political football” and all its baggage forced down my throat by sports casters, players, and more? It would be one thing if these shows mentioned these topics when appropriate. But now? One would think they were watching a Sunday morning news show rather than a sports channel. Everyday 24/7.

When I’ve watched it seems the reason for their existence (i.e., the game) is an inconvenience that must be tolerated till they can get back to what they believe really matters: the “political issue” of the day.

Yes, I know I’m probably overstating. Yet, that’s how I feel today when I’ve tried to watch most ESPN programming as well as others. My immediate reaction? Many times I’ve turned off a game entirely: for continuing was akin to waiting for another comment as to cue a push of the bamboo chutes deeper.

Personally, I grew so sick of it I now watch about a third, if that, of any sports TV I had watched previous. Again: specifically for this reason.

If I want “political football” TV there are far more choices and views to get it from. Sports were at one time a sanctuary from the realities of everyday life. There one cared only about their team. Could throw all their passion (and distaste) behind them. Hate them one day, love them the next with no regards as to affecting society. It was a place to blow off steam, have fun, and armchair quarterback yourself into the Hall of Fame of “If I were on the field – I would have called that play and won!” all time greats.

Today? It’s near impossible to escape and has been picking up steam. Need I say (or not say?) Washington Red____s?

Listen, I’m not addressing whether or not you agree with what should, or should not, be done. I’m just trying to illustrate this as just one of the latest that shows in great detail just how one will not be able to escape the discussion that is purely based in the “political football” arena.

Some sportscasters now will not say the name; even if they are the on-air live, play-by-play talent, and stumble all over themselves and their play-by-play calls trying to avoid it. Players will be asked from both the sidelines, booths, with others appearing via satellite, questioning them to defend how they can even put on the uniform for that day’s game. Insinuation, implication, and innuendo will be the “play calling” as opposed to what is transpiring on the field of actual play.

Again, as I stated earlier: whether or not you agree or disagree with the topic, just this one is a representative of all the others. If it’s not a name change – its gun control. If it’s not that – it’s another. Everyday 24/7. The game now seems to be the filler as opposed to the “issue of the day.” Need I remind anyone of that great illustration of just how determined sportscasters are now going to force the “political football” down viewers throats than NBC™ Bob Costa’s gun control rant on Sunday Night Football™?

Agreeing, or disagreeing with his take is irrelevant. My point is: I don’t turn to a sporting event, or, sports commentary program, to hear the opinion/opinions of today’s sportscasters view on the “political issue” of the day. I tune in to see sports. Period.

This seems lost on ESPN and the others as of late. And if I’m a microcosm of what others are doing. What we’re not doing is cutting the cord and viewing it elsewhere. We’re actually giving a spin to the old Timothy Leary idea:

We’re tuning out and turning off. Entirely.

© 2015 Mark St.Cyr

Profiting At The Bottom Line™

This month’s focus: When A Free Convenience Can End Up Costing You Dearly.

There are many details in business we need to first trust, then leave in others hands. What allows one to do such things is an implied trust in either a person, or, in another business relationship’s competence. Many times this may be wrapped up in the framework of: convenience. This “convenience” we may take in an effort to save time and/or money. Yet, what we infer as “trust” many times can be thwarted in ways we never thought possible. Only to then realize, after the fact, that “convenience” is exactly what might cost us dearly.

Case Study: In the early 90’s I was involved in a large ethnic wholesale/retail food market. The facility was in a tough part of town however, we had transformed the original building and were doing a bang up business. One issue that always troubled me was security, for many of the transactions were in cash. It was for this reason I opted to forgo leaving the daily receipts on premises and made what then were common “overnight deposit bag drops” at our local bank branch. The thinking was: Better in their vault than in our safe.

Rather than deposit every morning at the teller window, standing and waiting till processed. (it took considerable time to count) I would just drop it off at night into the “Night Deposit” portal and pick up my bag and receipt in the morning; for it was counted and added to my account in private before they opened. It was (and for some still is) a common practice that went without a hitch for over a year. Till one day: it didn’t.

I received a call at my office in the early morning and was notified my deposit was wrong. I was informed there were tallied checks in the deposit bag, however, the cash I had listed was not within. They asked if I forgot to put it in. Scrambling in a panic I told them I would check, for if I did, it would surely be here. Yet, it was not. I told the bank I would be there momentarily.

I then scoured every corner of my facility and more to no avail. I didn’t have it. Not only that – depositing the bag without it was near impossible. Too not notice the sheer bulk of it missing again – was near impossible. (e.g., Just for a visual representation. You may have a deposit of $10K in checks that fits in an envelope. Yet, if that same 10K was made up of $1K in one dollar bills; the bag turns into a balloon. You’ll immediately notice something isn’t correct before you leave your desk let alone put it into a hole in the wall of a bank where the worry is: Will it get stuck in the chute? More times than not.)

There was no doubt in my mind that the cash was there; and I said so. This didn’t go well at the bank as one would imagine. However, I called for an investigation to be made and was assured by the bank “a full review of the situation would be made” and I would be notified of their findings. The problem? My money was gone, and I was out of luck until (and if) they found out to the contrary. While for the record, the amount missing was not only sizable – its vanishing was a real blow to our operational capital for weekly survival.

Within a week I noticed one of the tellers I had come to know had been “let go.” When I asked why, I was informed it was for other reasons not pertaining to my incident. After a few more weeks (yes weeks) all of the tellers, including the teller manager was no longer there. When I asked why, I was once again told “for other reasons.” I was then told (in private) by a business loan originator that I had dealt with over the years currently employed by this bank in response to his questioning me on how it was being handled. He remarked, “Do not let this go, what you’re being told is garbage! Stay with this.”  And I did. (or at least tried)

In the end? There was never any resolution. The bank’s finding? The money was never there. The proof? That was what they determined. Their argument? Prove that it was – or go away. Which they knew I could not – only they could. The result? I was out the money with no recourse.

Conveniences are great. Especially when they’re free. Just don’t let the lure of convenience lull you into a too trusting position. For it will be precisely these you’ll remember as costing you the most money or trouble – at the most inconvenient of times.

© 2015 Mark St.Cyr

Profiting At The Bottom Line™ is a monthly memo, which is pithy, powerful, and to the point. It focuses on innovative techniques and or ideas that you can put to work immediately in your daily or business life.