Turkeys Were Optimistic On Wednesday – Unicorns May Have Less Than A Week

If you’ve ever read any of Nassim Nicholas Taleb’s work (which should be a requisite for anyone in business) you’ll know one of his often used analogies to explain the psychology of many prior to a Black Swan event is the turkey, and its view of the world up and until Thanksgiving.

A brief description goes something like this: All the time prior the turkey believes life is grand and will continue forever, and the farmer has nothing but his best interest at heart, caring for him with plenty of food, water, and shelter. To convince him otherwise is a fools-errand. Then – Thursday happens.

A similar event may also be on the horizon, but this time – it doesn’t involve turkeys. No, this time it involves a creature once considered so far above and beyond reproach, to even question its business model, metrics, or valuation was seen as blasphemy. And for those that did? Let’s just say – the long knives came for you.

With that said, a lot has changed over the last year. And by “a lot” I mean just that. For if you’ll recall in 2015, everyone within not only the tech world, but the financial/business media at-large were all touting 2016 was going to be “The rebirth of the IPO!”

Everyone that is, except yours truly.

I’m on record stating precisely the opposite. So much so that earlier in the year as to answer, or respond to the critics (aka “Valley aficionados”) I dared openly ask in an article “Did Apple’s Didi Investment Just Kill All The Unicorns?” the following. To wit:

“Didi is Uber’s™ business nemesis and competition in China. Whether or not this is a “good investment” for ride-sharing dominance in China from my perspective is irrelevant. What should be the focus here is what such a move brings to the entire Silicon Valley narrative. And, in particular; the entire “unicorn” mythical valuation story. For it just might be that Apple single-handedly opened the seal on the unicorn apocalypse.

One thing in business never changes: Cash burn is a death sentence only kept at bay by either generating net profits, or, raising additional funding via loans and/or investors. Without the former, the latter is a never-ending begging and pleading process that ultimately ends in disaster because focusing on “investors” as the customer, rather, than actual customers with the ability and willingness to pay is no longer paramount. Only funding.

But “funding” has the ultimate “Achilles’s heel”: Perception. And once perception changes? Like I stated earlier – everything changes along with it. And I do mean – everything.”

Have you seen a “unicorn” IPO filing and launch in 2016 or since? I know, trick question. For it really can be yes and no. And for those of you who did scramble to “get-in-early” on the whole Twilio™ offering? You have my condolences, once again.

So to define and all be on the same page: when we think of “unicorns,” what we’re really talking about here are what “the Valley” likes to now call “Decacorns.” You know, because when it comes to “The Valley;” stating you’re only worth $1Billion is considered “low rent.” You now need to state you’re worth $10’s of Billions otherwise – you may not get invited to the best of parties. And, after all, that’s the only true metric that matters, right?

So, now with that said. Who is it to dare take on the IPO world making rumblings? It seems it’s non-other than the once deemed “When these guy’s file it’ll be a the signal everyone in the IPO world is waiting to hear!” Sounds great! But there seems to be a problem with that once held viewpoint. The problem?

It seems they didn’t want anyone to hear about it until they were sure it didn’t fall on deaf ears.

For Snapchat™ did so file, but “confidentially.” You know, because the markets at record high levels one can only assume they didn’t want to announce too much good news, right? Oh yeah, and it’s for 2017 not ’16. So, that throws (like I argued in 2015) that “In 2016 IPO’s are back!” argument out the window.

So what is it that I’m implying with “Next Week” you may be asking. Well, it’s this:

Next week the E.U. is set to hear whether Uber will, or will not, be subject to the laws that govern other businesses when it comes to employees, and expenses. If Uber loses this battle, I believe, things don’t just change, rather, the meme “It’s different this time” may portend far more onerous revelations going forward.

Here is where the entire “unicorn” meme, and stated metrics when comes to valuation, growth projections, and more may suddenly find much like many a turkey found its neck on Thursday morning. i.e., about to be cleaved. And, it’s hard to weigh which way this decision may go. Presidential pardons excluded.

On the one side you have many of the top-tier E.U. politicians wrangling for some form of a delay in the case (such as the E.U. Commission) in reasoning a ruling favoring Uber might cause some form of populist backlash. One could infer this signals that maybe people such as Mr. Juncker may have derived some form of “insider” insight and concluded the decision will rule in Uber’s favor. It’s very possible. However, we all know how well E.U. politicians have been at reading “tea leaves” of late. e.g., Brexit.

On the other hand, there’s the recent decision lost via a London tribunal as it pertains to drivers. From this point of argument one could make the case where politicians/judges may now be more inclined to protecting the-devil-they-know as opposed to one they don’t. i.e., Current cabbies, the companies that employ them, the taxes they generate, and the votes they represent.

Surely after Brexit, and now with the U.S. election as an additional “lens” to peer through, anything including the word “populist”   where a legal challenge and decry is called for might now have different weighing in the minds of any one in the “political arena.” If it didn’t: Why is the term and idea of “worry” being used by E.U. politicians to describe it?

Yet, the real one’s to worry in my view are the entirety of unicorns. And I mean just that – all.

I say this because if you take a step back you have to remember there are a few very important points that many need to be reminded of. First: Unicorns (and that means all) are stated to be worth their valuations because, in a nut shell, the companies believe that’s what they are worth, based on metrics they decide. And that metric (i.e., worth $Billions upon $Billions) can only be interpreted as “priced for perfection.” Remember, most are currently only still cash burn machines. Net profits are “in the future.”

Uber, along with AirBnB™ are by far the most prominent and bellwether unicorns being followed by not only “the Valley,” but financial institutions, V.C.’s, sovereign wealth funds, traders, and more everywhere. If these unicorns show anything revealing weakness or potential harm to their valuation metrics? i.e., Legal challenges showing everything they claimed for the future may have doubts based on court rulings. As I iterated before “It’s different this time” takes on a meaning never thought possible, much like a turkey’s revelation this past Thursday.

So far AirBnB has not fared as well as it once thought was its birth right. i.e., The San Francisco and N.Y.C. outcomes. And they are facing ever more, both here in the U.S. as well as globally. Uber has since lost China (as you read at the beginning) and now is facing a very tumultuous decision if it goes against them in Europe.

That’s quite a change in market “domination” and “pricing valuation” for the future if it goes against them, no?

And if it does? Do you think that will reflect not only the eagerness, but rather, who buys into the next “funding round?” Funding rounds which are the life’s blood of both valuation metrics, as well as life support for cash burning entities.

Remember, without funding rounds – cash burn is the only metric that matters. Because it is finite, it reflects upon the entire unicorn meme, complex, as well as “the valley” in total.

And I would presume this newest “reflection” about to show its face in Europe will be watched more closely, and with so much scrutiny – it would make a Kardashian blush.

© 2016 Mark St.Cyr

Standing Alone: For What Comes Next Is Anyone’s Guess

Since we are in the Thanksgiving lull of the “markets.” I wanted to express something that takes place in my own head around these times. Where I (and believe others) may also share some of the same conflicted feelings as we not only try to give thanks, we simultaneously ponder thoughts to what the future might portend, and how we are going to move with it. For in the game of business as is life: the decision process never rests.

I used the term “conflicted” for a reason. If you’re anything like me (and I believe we’re all the same, it’s only how we deal with things that makes all the difference) they run the gamut from not just the good or bad, but some may range from the exuberantly spectacular – to the down right terrifying.

Then last, but certainly not least, buffeted with either a single-minded focus – to outright scatter-brained confusion, notwithstanding the myriad of combinations of some, if not all of them at once.

Nobody knows what the future may portend. Everything (and I do mean everything) is a best guess with whatever evidence you have at your disposal; a willingness to believe in your gut, and your abilities; and the willingness and fortitude to live with/by your decisions. That sounds simple enough, yes. However, it’s in the application, and the willingness of follow through, which makes all the difference. That’s the hard part.

So why am I making these observations today one might ask? Well, it all started the other day when I received a note from a colleague questioning my thoughts after they read the following headline. To wit:

Traders Are Now 100% Sure The Fed Hikes Rates In December

Their question? “Have you rethought your call about the Fed. in December? It would seem you’re not just in the minority: you are the minority!”

It’s a fair question, as well as a point. However, with that said: No. (as I’ve previously stated I’m currently 85/15 favoring that they won’t.)

This isn’t some form of relentless death-grip to be contrarian just for the sake of it. Far from it. Rather, I am becoming even more steadfast in that position based on what I believe or “see” as compelling evidence that the Fed., regardless of what it may want to do, will have their hands tied (once again) by “international developments.” e.g. China.

Whether or not that turns out to be correct is anyone’s guess. For it is all guessing, no matter who says differently.

Yet, here is where a “spectacular” bull____ run up in “markets” may turn into a truly “terrifying” off-a-cliff stampede should just one metric change. That metric? The Yuan.

As I sit here today typing, the Chinese currency is not only still in free fall, it is resting precariously so close to the “cliffs edge” (e.g. 7.00 USD/CNY) if it falls over – it will take all markets with it. Emphasis on all. For if one thinks Aug. of 2015 was scary? Let me use this for analogy:

Aug. 2015 will look like a kiddie rollercoaster as compared to what the “markets” newest amusement park has constructed in the last few weeks if it all goes awry. And China – not the Fed. – is the one contemplating on whether or not it will open sooner, rather than later. And the clock is ticking.

Dec. 14th is the Fed’s stated “grand opening.” i.e., (they’re really, really, really going to “do it” this time) Any day in between now and then – is China’s to decide. In other words: whether to preempt or not. Or stated differently: Whatever China decides it will, or won’t do during this period dictates what the Fed. will, or won’t be able to do. Period.

If you think China is going to sit idly by so the Fed. can just raise rates, to then watch their currency tumble into oblivion forced by circumstances not of their own volition, causing capital outflows of historic proportions, which may, or may not exacerbate civil unrest within its borders, when it has (as in knows precisely the mechanism as to manipulate a possible delay to their own benefit) I believe is fool-hearty at best, willingly blind at worst.

Since I used the term “amusement” and “rollercoaster” for an analogy, let me use a current chart (or charts) to express precisely what I’m speaking to. For there seems to be quite a lot of P.T. Barnum-ing when it comes to describing these “markets” post U.S. election. And it’s not just the main-stream media, but also every next in rotation fund manager, or Ivory Towered economist who can get to a microphone or camera. And be careful not to get in their way – for you will be trampled upon. So here’s that chart. To wit:

DryShips™ stock chart from about 2 weeks ago
DryShips™ stock chart from about 2 weeks ago

The problem? Again, to wit:

Here they are as of the Thursday's close
Here they are as of the Wednesday’s close

Much like you have seen the U.S. markets with its most nascent accent, so too was DryShips.

For all intents and purposes this company was at one time regarded and held as the be-all, tell-all, bellwether (especially for one CNBC™ buy,buy,buy king) for global trade. And when the “markets” displayed a “Trump winning means we’re building again!” Everything jumped in unison to match what the so-called “smart crowd” was touting as more causation, rather than correlation. i.e., “The markets are a forward-looking indicator. So get on the bandwagon quick before it passes you by!”

As I’ve said many times before: “Beware when everyone’s on the bandwagon – except the band.”

And it would seem that’s precisely what a lot of people noticed (or at least recognized one mother of a short squeeze for what it was) and thought better of it. Sadly, for those who bought into that whole “causation” premise that was being touted across the financial/business media at large and did the whole “Buy,buy, buy!” thing? You have my sympathies – once again.

So here we are, and one needs to ponder which way, or view, is the correct one?

Here’s what I know: Nobody knows. And I mean just that: no – body.

It’s all a best guess scenario regardless of who says different. All you can do is try to decipher clues from the clutter as best you can, make a decision as to what you believe is the most probable outcome if correct, put yourself in the best place as to if it works in your favor (or if your proved to be right) you can, at the least, benefit from it. Whether benefit means capitalize, or alleviate any potential harm. Then, and most importantly – live with, and by, your decisions.

You can always reevaluate and adjust going forward.

I say this because I’ve been there. I’ve made some bad decisions, (actually more like terrible) and some good ones. Many of those decisions were in direct opposition to people (and what seemed to be the world-at-large) who were touted to be smarter, more experienced, better looking (much better actually) more seasoned, better educated, and with far more money or wealth than I ever had. That, and a whole lot more.

I have stood in the face of all of that saying : “What makes you so right?” And then demanded they either give a cogent argument, or, just shut up and go away. Especially when it has come down to business and/or life decisions. More often than not, the “cogent” part never materialized. My record (I’m proud to say) of right or wrong stands on its own. Yes, warts and all.

You find out as one moves along in life more things are based on “because I said/think so” rather than anything resembling a real thought process. You need to research, evaluate, then decide for yourself. Then, let the chips fall where they may.

That isn’t always easy. (Trust me, I know!) But it is the only way.

So once again, who knows what will happen from here, but I’ll end all this using a video link and song that pretty much sums up my stand today as my battle cry in response to my colleague’s inquiry to what I think may, or may not think happen as it pertains to the Fed.

I believe it fits today as it did for me back long ago. Where I remember and give thanks during this holiday time. For it wasn’t all that long ago when it wasn’t only myself contemplating going up against a world that said “What makes you think you can? ” as to try and grasp the “brass ring” of life. But also, for few friends of mine that were facing the same issues, at the same time. I know because we discussed them. (you can read a little about that here, and here if you wish)

The song and video title says it all, “I Stand Alone” And the name of those friends? They’re known as Godsmack.

What comes next? Again, nobody knows for sure. All I know is the clock is now ticking into December 14th, that is irrefutable. That, and believing the “alarm” doesn’t go off before, and is totally under the Fed’s purview, is the only thing which everyone seems complacent in. Which to my mind – is just plain nuts.

© 2016 Mark St.Cyr

The Coming Financial Backlash For Silicon Valley And Much, Much More

Silicon Valley has a problem, a very big problem. And it’s not rooted in just the geographic location. Everything (and I do mean everything) that was once assumed “a given” or, “totally worth it” or, the more memorable “it’s different this time” rationales as it pertained to startups, social media, valuations, user metrics, IPOs, unicorns, etc., etc. Is about to be piled onto the ever burgeoning trash-bin of history. Right atop 2016’s polling data. For if this election proved one thing – it was this:

This is what happens when one assumes they’re breathing rarefied air – only to find they’ve been doing nothing more than inhaling their own exhaust fumes.

Now if you think I’m going to speak about the election results? You’d be wrong. That’s for others to discuss. No, what I have been watching is far more fascinating.

I can only imagine how many businesses must be viewing much of the latest uproar with absolute horror when trying to decide whether they will, or will not spend ad dollars on any social platform going forward.

I would wager to guess there are many a marketing team, or ad-buy executive sitting back shell-shocked with ranging thoughts on the likes of: “Do I want to subject ourselves, our products, or customers to boycotting, protests, trolling, or worse, which has absolutely nothing to do with us?” I’d list more – but there’s not enough digital ink to type them all.

So using the above “revelation” let’s put some context around it on what has transpired over the last week, and see how this all might shape up in the not so distant future. And how appropriate the word “revelation” fits when using one of the metaphorical four horsemen of the “markets” to do just that: e.g., Facebook™ (FB.)

Suddenly FB finds itself on very unfamiliar ground. It would seem the “torches and pitchforks” this time are wanting to rally and surround 1 Hacker Way, rather than some other entity. It would appear “Zuck and crew” have a revolt on their hands. And in their panic (“their” meaning FB) are providing some very unsettling reasoning, commentary, and future plans on how to deal with it.

Let’s try to square-a-few-circles, shall we? And just to remind you: this is about business, not the political.

Remember when FB was accused of censoring conservative news or views? First: FB made statements that its news feed (or whatever they called it) was purely algorithm based. i.e., No human real-time meddling. Only to be found out: Oh yeah, sorry, we forgot about those humans who actually curate in real-time censoring via their personal political bias which seems to be of the exact opposite viewpoint.

So, gee-whiz, by-golly, they’re going to stop doing that. And, from this day forth, you can be assured (because they had a meeting and it was said Mark really looked like “he cared”) it’s algorithms are us! The problem?

Well, if they did just that (taking them at their word.) How did so many “fake news” stories, or “conservative viewpoints” get shared, posted, and read on FB that may have caused such an upset? After all, that’s what all the outcries are about, correct?

Oh, oh! That would indicate FB has far more users of “that” political spectrum than to the liking of the other. And what is FB going to do about it?

Basically, in a nutshell – add humans and any other filter it deems appropriate and censor them (“them” being only those of the sanctioned viewpoint) via their “approved” metrics.

Can you see a very, very, (did I say very?) big problem here? Hint: Goodbye user metrics and revenue projections.

To the horror of one side of the political spectrum. A call (more like setting torches ablaze) has gone out to FB as to change its policy. Which, for the record; is absolutely their right to do as a private company. That policy change?

Basically, if you read between the lines it’s a reversal of their previous “Oh, by-golly, gee-whiz” promise to be fair and impartial, to reconstituting something which may even be more partial, and biased than the previous.

So now if you’re one of this newly targeted content creators or sharer, or consumer pariah. It’s now been made crystal clear by both the current users – as well as the management: what you post; share; or possibly even pay for when it comes to “reach.” Will; can; or may be censored without your knowledge or consent.

So with the above inferred: Are you going to remain there? Or, better yet: Pay? As in “eyeballs for ads.” And, with all of the above, are you going to blindly trust what you’re being told, or sold in any forthcoming ad-buy based upon just the latest ooopsy?

(On an aside: When it comes to “fake?” It’s getting harder, and harder to control my laughing at all the irony.)

What if just 10% of the users, and/or 10% of the ad-buyers (and that could be a best case scenario) decides – “Thanks, but no thanks!” And jettisons the platform altogether? Especially after witnessing both the outpouring hostility, along with managements stated reaction to this angry cohort. All with a response that, for all appearances, is totally one-sided. i.e., If you’re not of the approved political view – all is fair game to vanquish you, your business, your ad-buy, _______ (fill in the blank.)

Do you think that will effect metrics in a negative way? Metrics that keep a stock valuation at “priced for perfection” levels? Do you think others haven’t noticed or thought through the same?

Remember: Did you see this kind of visceral reaction from “Zuck and crew” when it was about the “other political view-point?” Far from it, and trust me – people are not only noticing – they’ve noticed.

Want to see just how dedicated some of social media’s management is as to the ethics of “Making minds right” as opposed to making business decisions based on business ethics? To wit:

Jack Dorsey Exposed: How Twitter’s CEO Restricted Advertising For Trump’s Campaign

Ah yes, just what every fledgling social media (or canary-in-a-coalmine) songbird needs to do: Restrict access and ad-dollars from its platform during one of media’s (in general) most profitable times: i.e., During an election period.

This move ranks up with one of the more stupid, ill-advised, and ill-informed business decisions I’ve seen by a CEO. Especially one that is supposedly in “media.” I mean, seriously. forget your political stance: Can you see the NYTimes™ turning down millions of ad $dollars during an election cycle from any candidate? Repeat – any?

And Twitter™ in the sh___er that it is, unable to find a buyer, a business model that for all intents and purposes is on the bottom of the cage sprawled out, comatose, decides it’s above taking ad revenue from any side of the political spectrum? During an election? I ask only this: How’s all that propaganda on having a part-time CEO working out for any of you “investors?”

If you think metrics for Twitter go up from here? I have some wonderful oceanfront property in Kentucky that can be yours. Just “Trust me.”

Already you’re seeing some high-profile users and others banishing their accounts. You think they’ll be the only ones?

And this (again, all in my opinion) is only the beginning of what I believe will turn into an “apocalypse” for social media as a whole. For if you thought with this meteoric rise in the “markets” off the latest “lock-limit-down” bounce portends great things for “the Valley?” I would also like you to ponder a few other revelations I’ve been warning about that seemed to have been missed (or blind eye turned) by most of the financial press.

Remember when it was all about “2016 was the year of the rebirth of the IPO?” How’s that all been working out? You know, since the Twilio™ IPO to save the IPO world has happened. Here’s a “picture” as they like to say in “the Valley.” To wit:

Twilio as of Friday's close.
Twilio as of Friday’s close.

Remind you of anyone? Hint: As I posted last month to “cat calls” everywhere, to wit:

Left is Twitter, on right is Twilio, in about the same time period after IPO.

And for those whom may not have noticed (but those who are “investors” I know you are painfully aware) or, are one of those only concerned with headlines touted across the main-stream business/financial press. Twilio was up something like 20% from the lows this week. Sounds great!

Unless – you understand that up 20% only brings you “up” to still being down over 20% from when I posted that chart less than 30 days ago. Never-mind from those highs less than 60 days ago. (That’s Ouch territory)

But at least it stopped where it ended on the day it IPO’d. right? So, things aren’t that bad, right? Right?

But not too worry, 2017 is gonna fix all this. Why? Snapchat™ is going to file for its IPO.

What? You haven’t heard? How can this be? How can one of the most anticipated IPO’s along with a market that’s at all-time-record-highs not be teaming with unbridled “unicorn” exuberance? It’s been many (if not all) a Silicon Valley’s unicorn raison d’être. i.e., To announce to the world its arrival of “it’s different this time” in-your-face metrics as to be worth $Billions, upon $Billions of market cap.

Sorry, just not this time. This time it’s “confidential.”  Why would this be one might presume? Nobody knows but for the players themselves. Yet, with that said, I know what it screams to those looking from the outside: There wasn’t any confidence there were going to be takers. i.e., buyers. (Much like the fear of how markets react after it’s announced “X looked at the books and decided, Thanks, but no thanks!)

Doesn’t that just signal “it’s different this time” in more ways than one? Hint: You bet it does.

But you know what the real “secret” is?

It screams caution for anyone just chomping-at-the-bit to get-in on another of these “social darlings” prancing out of the unicorn stables into the public arena. An arena which is beginning to look more like a “glue factory” with every passing day.

Yes, 2017 sure will be one to watch. For if Twitter and Twilio are anything resembling clues?

Your “chat” or “picture” might not be the only thing that vanishes into the ether, never to be seen again. But not too worry, after all: “It’s different this time.”

Just ask FB.

© 2016 Mark St.Cyr

Why You Should Always Consider The Source

I couldn’t help but laugh when a friend brought to my attention a news story (Fake News Sites!) originating from my “home town” area. e.g. Merrimack College in North Andover Massachusetts.

For the record: I both know of the college, as well as lived in the town for many years. As some of you might know I grew up in the neighboring city of Lawrence, and also lived in Andover. So it was too my amusement when I read the contents of the story that I had connection in a few ways. First:

In the story an Assistant Professor of Communications at the college decided it was imperative for the sake of main-stream media punch-drinkers everywhere to provide a list of “Fake” news outlets. You know – because she must assume that the people or students in her circles are too stupid as to know the difference. Or else why the warning, correct?

One of those “fake news” sites she listed was ZeroHedge™. A news site which I have been privileged and grateful to have had my ideas expressed by. I guess that makes me a “fake” by association. Well, if it does, I couldn’t be happier, or more proud to wear her scarlet badge. I’ll display it as a badge of honor from this day going forth.

However, with that said, let me make my own little statement to this “fake news” story. I ask you dear reader (as I always have) to consider the source (even when it’s me) of whether or not something makes sense to you, or not, and do further research on your own, as to formulate whatever conclusion you desire as it may pertain to your own circumstances.

Here’s one from me:

When I was growing up I decided I didn’t want to go to college. One of the reasons? My only choice at the time would have been to enroll at Merrimack. Why did I have such reservations? Well, as I said previous, I also lived in Andover. Why would that matter you ask? Easy:

In Andover where I lived, our house bordered the grounds of another school. That school is known as Phillips Academy (PA.) What does this have to do with Merrimack you ask?

Well, when you live in Andover (especially around “the Academy”) you learn a few things. First: PA is a prep school for not only the wealthy, but for the very wealthy. If you want a sample I’ll just use one of its alumni: John F. Kennedy. You can draw your own conclusions from there.

So what does this school have to do with the former? Well, the running joke among many from that area goes like this: Why is Merrimack College’s proximity to PA seen as a benefit to students attending and parents paying (and paying exorbitantly!) for prep? Because when students decide to slack-off too much or are about to fail – all a parent has to do is drive them just a few miles away and say – Fine: then this is where you’ll go after.

Grades increase with near immediacy. No private “tutoring” needed.

If there’s one thing I do hope for when it comes to this assistant professor, as well as all the other academics which might be following her advise, it is this:

You had better hope all those claims of “solvency” and “markets are just fine” and “The Fed. has your back” are really as they say they are in the main-stream media outlets they reverence so much.

For their pensions, as well as employment depends on it.

Oh yeah: That, and the student loan industry. Where I would imagine they’ll have a hard time recouping any future payments with what it probably costs to obtain a degree in communications and what it pays on the open market. That is – if you can find a job that “pays” in that field at all.

Or, like most – they could just stay in school and read the “approved” academic publications.

Which appears to be the growing fad.

© 2016 Mark St.Cyr

As The World Awaits The Real Giant Meteor: The Fed.

I was asked for my thoughts on this meteoric rise taking place in the “markets.” Here was my response. Infer from it what you will, for as I keep saying (and truly believe) nobody really knows, and I mean just that: nobody. To wit:

Question: “What’s your view of the markets as they currently stand today?”

Me: There are two issues that keep nagging at me. First:

Is the rally a direct result (based on policy implications and such) of the election and the winner? Or, is this rally something else, based entirely on something far different, which no one is interpreting correctly? i.e., The root for the causation isn’t what everyone believes it to be. It only appears that way.

And if so – what could that “something” be?

The second is:

If it is something other? What (if any) reversal or damage could portend if it’s realized all the assumptions (e.g., for the rally) were wrong? Remember: it’s a pendulum’s backswing which can have far more devastating issues than its original, because much like the eye of a hurricane – everyone believes the worst has past. Then….

So, as to address the “first:”

It’s quite possible the resulting knee-jerk sell off as the election results came across were the “markets” set direction of where it believed the markets, as well as economy were heading. Let’s not forget, the president-elect’s stated policies and banter were not seen (or at least viewed) by Wall Street as “friendly.” That’s not conjecture, that’s public knowledge. So why the rally? And we’re not talking just some rally, but a rally from lock-limit-down to never before seen in human history highs rally. Why?

And here’s where the second part might answer the first:

What if the rally was based (as I’ve argued previously) that the “market” interpreted a Trump victory not for what his policies will do, or be (for his policies can’t be enacted until at least January 2017.) Rather, what the Federal Reserve and their implied policy statements and enactments won’t be, or do? e.g. Raise rates this December.

If I’m correct in that assumption (and I feel the odds of just that are in my favor) then what we’re currently witnessing is a front-loaded, front-running of both the December meeting, and an anticipation to run them (the “markets”) even higher into year-end. Giving Wall Street (and it’s HFT cabal) not just one, but two bites at the caramelized apples. And if you think that’s off base? Think of it through this prism:

Do you believe Janet Yellen is now going to become “Super Hawk” and rally her subordinates into a raising of rates when A: In her last meeting there were fewer dissenters than the previous? Or, B: Wants to paint a “bullseye” on not only herself, but the Fed. as an institution should things go awry resembling anything such as 2008?

And let’s not forget there is also a C: China (remember them?) with its currency currently in total free-fall, and is hitting levels that have the word “record” affixed to those moves near daily.

As I said earlier – what happens next is anyone’s guess.

Including the Fed.

© 2016 Mark St.Cyr

The Concession Speech aka Meet The New Clinton Inc.

No matter what side of the political aisle you stand, one thing is certain: The resulting outcome; on so many levels, as well as metrics; is one for the ages. The political fallout and its ever-increasing shaking of political norms and assumptions have now been cast into the trash bins of political history and forecasting, with some of those “dumpsters” being set ablaze.

Where things go from here is anyone’s guess. All one can do is watch, anticipate, and act accordingly. That’s what being in business is all about.

So it’s through this prism (for it’s what I do) as I watched Mrs. Clinton’s concession speech I couldn’t help but marvel at what I believed to be watching. For if I’m correct, what transpired at that presser was more inline with a business turnaround, or business crisis PR announcement event (think Tylenol® or even Wells Fargo™ for base-case relevance) rather than just your typical political concession speech.

Yes, the proper words for the “political” aspect were present. Yet, there was also something far more “present” that was absolutely striking too my eye. Albeit, it’s all conjecture on my part.

However, with that said, it’s my prior acumen in the field known as “turn-around specialist” that made things jump out, striking me as being so obvious, I couldn’t help but wonder incessantly was there truly any “there, there” of what I was calculating?

Again, through my business prism, it had all the characteristics of what many a company might do (or even what I myself might advise) when it finds itself knee-deep in either a business ending circumstance (think a profitable drug maker that just learns a cure has been found for its only product) or, one that suddenly finds its product/brand facing extinction via a new technology (think landline phones vs cell phones.) That’s what stuck me as I watched. And it hasn’t left me since.

The reason why I’m sharing this is in direct response to the reaction when I first made these observations, in real-time to a colleague as we were both watching the presser (i.e., I said “This looks more like a business PR rollout than a concession speech.”) Where he then stated, “Wait…What?” As I explained his face first went slack-jawed, then responded “Holy cr-p! I didn’t notice it that way, but now? I can’t see it being anything but.”

Whether or not I’m correct, I haven’t a clue. Yet, it would seem as to what I’ve heard, or read over the past few days via the main-stream venues of record – nobody (and I do mean nobody) has even questioned the glaring oddities I observed, let alone tried to put any reasoning together and ask, “Hmmmm, I wonder why…?”

So let’s dig in as they say and you can decide for yourself. However, if I am correct? What everyone thinks, and is taking at first blush as a purely “political” event? Where the defeated party or candidate rides slowly off into the sunset? May suddenly come to realize over the ensuing months and years was more akin to a new “political business rollout” presser. With far-reaching implications. Implications I’ll contend, that could affect everyone. Whether one agrees with them, or not.

First – the symbolic: Did you notice the color purple? I bet you did, and how could you not? And it’s for that reason I couldn’t help but start to think: Why? For it’s not like they were there to party like it was 1999, were they?

I’ve heard and read a few observations to the effect of: “Both her and Bill chose to wear purple to show unity and blah, blah, blah.” Well, that may be so, but I don’t think so. At least, not in the vein suggested.

I believe that overwhelming presence of purple was to subliminally push, or to stress, the new color of standard/banner for either a new political party, or, at the least, a new political movement to rally under. And it borders on branding genius if I’m correct in that assumption as I’ll try to explain. (Remember: I’m coming at this from the business side, not the political.)

Why purple? Well, there are two distinct reasons. First – purple is commonly acquainted with the mixing of red and blue i.e.,the blending of the traditional color standards of boys and girls, men and women, Democrats and Republicans and so on. So as to its prominence during that presser? It carries an immediate “hook” if you will, as to be used by others in solidarity for what may seem as all the “right” reasons.

It also has another feature ever the more subtle, yet present nonetheless: It’s associated with royalty of yesteryear, not because it “represented the people,” but because purple was the most expensive color to produce, only afforded by royalty.

The adornment of purple still sends to this day a subliminal message of “royalty” or “upper-classed elite.” And both Mrs., as well as Mr. Clinton’s display of it was not subtle. It was made (as seen by my eye) to be unavoidable. Why do I say this? Easy:

In all of the political situations where Mrs. Clinton was to be on a stage where millions upon millions of viewers were going to tune in expressly to watch, or be photographed by countless organizations (think any of the three televised debates) her attire was impeccable. Sure, some joke about the “pantsuit” thing, however, what you can’t joke about is the people responsible (and I would imagine Mrs. Clinton herself) charged with the task as to present her in the best light possible spared no expense as to make sure her outfits were as classy, reserved, and presidential as one could appear. I would extend that to the former president as well.

That is – until her concession speech. Again: Why?

That color purple, along with its tailoring, was not only overpowering (just look to Bill’s tie for clues) Mrs. Clinton’s outfit looked anything but the designer suit we’ve come accustomed to her wearing. Her attire looked more like something that was made for a one time Prince event she may have attended that was rummaged from the back of her closet or donation bin.

Just to clarify: I’m not trying to poke jabs at Mrs. Clinton’s outfit here for sport. What I am trying to do is rationalize why such a choice was made that was clearly uncharacteristic – unless – there was a very intentional meaning meant (for effect) behind it. Which I believe there was. And here’s why:

I believe the real reason why everyone had to wait till the next day for Mrs. Clinton’s concession speech was not because she was too tired, or as some have speculated “health reasons.” No. I’m of the opinion this was always Mrs. Clinton’s plan-B. But as the election drew on, both her and her surrogates (along with the entire main-stream media) thought it was a done deal and broomed it thinking there was no reason to have it at the ready.

Yet, when it proved it was Plan-B, or B-gone entirely? (and I believe the Clinton’s always to have a Plan-B for they have proven to be second to none in political brinksmanship) There was a mad-scramble on to both find an outfit (for optics) and ready the speech as best they could. Reasoning; the moment for implementation of that plan was that concession speech, and not a moment later, if any form of salvage was possible. Hence: “Go home, and we’ll see you all tomorrow!”

Suddenly what has come to be known as “Clinton Inc.” was finding itself going out-of-business. Whether you agree or not is up to you. However, with the revelations of Wikileaks and more, we now have some idea of why both Mr. and Mrs. Clinton were able to acquire such vast wealth, so quickly: It was through their foundations and all the attributes associated with it via their political connections.

Forget about any calls regarding impropriety or whether there are legal issues or not for the moment. And the reason why I say it is this: Even if everything was found to be legal (and that’s for others to decide, not me) the premise of there being a “Clinton Inc.” still stands, which is why I want/need to clarify that. Or said differently: Why people, companies, or countries would donate, or pay the Clinton’s $millions in speaking fees and/or donations going forward ended with Mrs. Clinton’s election loss. e.g., Ending the main funding reason (or product feature if you will) of “Clinton Inc.”

Effectively both her, as well as Bill are now on the outside of the political spectrum looking in. This is, for lack of a better term, the antithesis of their former main “product feature.” And with that comes a very, very, very (did I say very?) reduced speaking fee schedule, along with a sudden drought of once readily provided pleasantries. (i.e., free use of private jets, etc.)

This is a position the Clinton’s have never been in since entering the political fray, which has been nearly their entire lives.

Trust me, there are only a few things worse than a speaker who has lost their “star power” to command fees. One: is a Hollywood actor who has been type cast. Or two: a once powerful politician that lost what was viewed as a “slam-dunk” election. Nobody, and I do mean no-body once afforded the “goodies” at those levels ever becomes comfortable with the realization of “they’re gone,” along with the loss of social status where the old joke, “When the phone doesn’t ring – I know it’s them.” becomes your daily routine. The Clinton’s were looking at being the recipients of all of them.

A total makeover, or total reboot, is usually the only thing that may help. And I believe what we watched on Wednesday was just that: a total reboot, re-branding, and relaunching of the new (and improved?) “Clinton Inc.” But there’s an inherent problem with this new business model and plan if I’m correct. And it is this:

It will be all about division – not “unity.” For that’s where the money is in politics currently. Whether one likes to hear it – or not.

Currently there is a backlash against not only the president-elect, but more importantly – there is an outright civil war taking place within the Democrat Party apparatus. Both from within, as well as those which identify (and/or vote) with it.

And what would be the easiest group of disaffected people to start building, and more importantly fund-raising for?

Why the new (again, all speculative on my part) inclusive “Unity Party” of course, under the new color standard and banner of purple, shredding the iconic “blue” and leaving the “old guard” in its wake. And it just so happens (funny, no?) there’s a matriarch-in-waiting who just so happens to run/own a well founded political organization which can collect their “funds” and fight for their cause of “unity” because, after all, she won the popular vote and was “denied.” So, “She feels your pain!”

Are you beginning to see how this is setting up?

During her speech Mrs. Clinton stated not once – but twice – two very important declarations which were either intentionally not called out by the media in general, or worse, nobody even understands them.

And what were these declarations you ask? Hint: “In a representative democracy such as ours….”

Do you see the problem? For it explains in total why you have people screaming, setting fires, causing mayhem, and more believing they have some form of right to be violently angry because (they believe) something was stolen or denied them.

The problem? (for those that truly don’t understand) We are a representative republic. Not – “a representative democracy.”

This (in my opinion) was a deliberate statement trying to push forth a new political agenda (and the new “main product”) as to demagogue the electoral college. Again – that wouldn’t be about gathering unity – that would be all about further division.

And in so doing – if – it was for the sole purpose as to enrich, or ingratiate oneself for either monetary gain, or the keeping of one’s political/social status afloat? That’s a very dangerous game. Very, very dangerous indeed. Both for the purveyors, as well as the consumers of such drivel. Let alone the country as a whole.

(Remember: An electoral college prevents all the things (such as a King/Queen or Political Elite) from retaining or gaining all the power over its citizenry. Without it, using today as the example, if one could win all the votes of just 3 states like California, New York, and Texas. Their population, e.g., their “popular vote,” would dictate whatever they decided for the entire other 47 states and their populace. That’s why we have one (electoral college that is) and other “democracies” don’t. It protects the very things these “we won the popular vote!” worry about, yet don’t understand. But that’s for others far brighter, and more articulate than me to argue.)

So let’s put a little more context around this notion: Do you think a former First Lady, U.S. Senator, Secretary of State, and now former presidential nominee doesn’t know the difference between “representative democracy” and “representative republic?”

Do you think it was a slip-of-the tongue, twice? In one of her most important speeches to the public in her career? Where she’s reading from a teleprompter? Are you in need of buying a bridge located in Brooklyn?

Are you beginning to see why all that purple now makes sense seen via this prism?

Mrs. Clinton along with Bill, Chelsea, and the entire current working apparatus currently involved in the Clinton Foundation can now pivot and mesh right into a “brand new bag.” i.e., The Clinton Foundation For Political Unity. Or something to that effect, attacking the electoral college as “The enemy of democracy!”

Its logo? A purple banner with “Do it for her – Do it for us!” Or, ________(insert you platitude of choice here)

However, what is currently a far more important attribute? To “Clinton Inc.” that is?

An immediate set up, and destination, to handle all those disgruntled “fund raised” dollars that would most assuredly begin to roll in with near immediacy once fully implemented. Along with a place to now reserve bookings (for very high speaking fees I would assume) for what will obviously be its “royal couple.” Oh, yes: and a reason as to “hold onto” any remaining donations left over in the coffers since the election. You know, to put to good use for the sake of “the new movement!”

Gotta pay the bills some how, no?

“Clinton Inc.” (e.g., The foundation and everything else included and/or associated) isn’t just a business; it’s a big business, worth $10’s if not $100’s of millions of dollars annually. And in a business, any business (and politics is a business regardless of one’s feelings) no board, trustee, or other executive would ever just say, “OK, we’re done here, return any and all unused money, and last one out hits the lights!”

No, you either pivot, or announce damage control measures to bide time to figure out what to do next depending on the circumstance. Just closing up shop doesn’t happen. If you want an example of this in real-time for clues? Hint: Theranos™.

Remember: I see the world via a business perspective. And to say there is no such thing as a “Clinton Inc.” is naive at best, or willingly blind at worse. The Clinton’s, regardless of anything else, have made and taken their world and/or brand of political business to levels never dreamed of, let alone actually delivered on in recent history.

Most (if not all) only looked upon Mrs. Clinton’s concession speech from the political standpoint. I did not. And I believe this is why many missed the true reasoning, as well as messaging behind it. I viewed it as something entirely different and that difference is – from a complete business standpoint. It’s just what I do. Whether I’m right or wrong is for the history books to judge.

Again: If you look at all this via a business prism, rather than just a political? What would you expect out of the Foundation or the Clinton’s for that matter? If political pay-to-play (whether found to be legal or not) is now dead, with that direct line of funding (e.g., their “main product feature”) now worthless. How do you keep power and the money coming in?

Hint: Start a new movement with its own unique logo, branding, power structure, messaging, and funding all within your control, and startup takes little more than a flip-of-the-switch because seed funding is more or less already – in the bank. It’s absolutely brilliant from a business perspective.

Shed the colors of the “Blue” of the “Dems” and the “Red” of the “Repubs” into the new purple of “Stronger Together!” Hit up disgruntled Bernie Sanders followers with “We’re just as miffed as you! Donate now to the new cause!” “Why wait for another stolen democratic election! Fight now!! Send your donations to: ___________”

See what I mean? It writes itself. Again, from a business standpoint – it’s stunningly brazen as it is brilliant.

The political, as well as business instinct, along with the timing for execution (we are talking 24hrs here!) is freaking epic, as well as dazzling if I’m correct. Regardless if I agree with it, or not. That’s why it caught my attention the way it did, and still does. From a business standpoint (eschewing all other factors or feelings) it’s a stunning example of prowess on so many levels. Again, from my perspective which is entirely business – it’s jaw-droppingly brilliant.

At this moment the current Democrat Party brand is so soiled or tainted from within, it is far easier (in my opinion) to start a new movement in this climate, rather than try to resurrect, or reestablish the older one. The Republicans have a similar issue, but theirs will need to be done from a different vantage point. i.e., from the inside looking out, rather than the opposite which has different challenges for effectiveness than the other.

Which is precisely the reason all this can also be – so dangerous.

Take this pent-up demand (and dollars) that feels betrayed by not only the Democrat Party elite, but also the disaffected Bernie voters, and funnel all that pent-up anger (and don’t forget the $’s) into coffers via a new movement headed by, guess who? Then, channel it incorrectly, or into the wrong venues? And you have a recipe for outright disaster on a scale exponentially worse than anything that has transpired as of late. It’s gasoline, playing with matches, at a bomb storage facility in my opinion.

Already we see people like Michael Moore calling for an uprising. Do you think he’ll also be looking to “raise money” or be looking for “high paid speaking gigs” as one of the “patron saints” to get people “fired up!” in ending the Democrat party and the electoral college under the banner of something with the color purple ablaze on it? Hint: Bet on it.

So why do I propose all these reasonings and express them you may be asking? After all, I’m a business guy, not a political person. Well, it’s for this simple reason:

Being in business requires one to always be on the lookout as to be in the best place possible. And that “looking” for clues of opportunity is a 24/7/365 discipline for anyone that takes business seriously. While on the flip side of that, so too is being acutely aware of possible pitfalls or calamities at the same time.

It’s near impossible to turn it off once you’ve become highly attuned, focused, and painfully honed in that discipline. As I implied earlier: once garnered – it’s a 24/7/365 discipline that permeates your entire worldview in regards to everything. i.e., family, friends, business, politics, religion, etc., etc.

I understand in such a polarized political environment people may read far more into any observation, rather than what the original intent of the observation might portend. I’m not being, nor want any – and let me repeat that as to make it abundantly clear – any confusion as to the appearance or inference that I am making a political statement; calling for; or against; or anything else when it comes to politics.

Remember: I viewed that concession speech via my filters, and business acumen. My observations are of a business viewpoint and how businesses should acclimate within current environments, with an ever watchful eye towards the horizon for further clues of any coming changes. How you view them is entirely your own prerogative.

However there is also another reason, and it also pertains explicitly to businesses everywhere. And it is this:

In 2011 before there was any civil unrest in the U.S. there was Greece, with its political fallout, and its rioting. During that time I wrote an article imploring businesses to take seriously and set up emergency plans to what, or how they would react if such a thing happened here. Once during a speech I was delivering, there were obvious smirks of “stuff like that doesn’t happen here.” Then Occupy Wall St. emerged, and the resulting bedlam that followed.

Many businesses were caught completely flat-footed either needing to close down completely until it passed. Or worse, were closed down because of vandalism, looting, and more.

Over the subsequent years I’ve reposted that article when I felt appropriate as a reminder. I’ve since received far more “Thanks, we’ve never truly analyzed that aspect, in that way, and have taken that advice to heart.” far more than I’ve ever seen a smirk since. For these events haven’t decreased, have they?

And why did I state earlier for caution with this new “Clinton Inc.” and/or what it may portend?

Hint: Welcome to what may be the first of many new “purple” protests.

Have you viewed the landscape where your business is located and planned accordingly (if necessarily so) the possibility of it happening near you? If not – not only are you not paying attention, but worse, you may be not only leaving your business assets in jeopardy, but also your employees, with no understanding of what, or what not to do should circumstances prevail.

And from my perspective, that’s just unacceptable in business today. Period.

© 2016 Mark St.Cyr

Yellen’s Conundrum: Forestall Monetary Mayhem Or Release Political Pandemonium

Regardless of who wins the election, one thing is certain: the vote that takes place in December within the confines of the Eccles Building cast by a dozen un-elected, Ivy Leagued, academic bankers whose combined real world business experience is near nonexistent (less for that read in some wood-paneled library) will decide monetary policy that will have more implications for not only the U.S., but the world as a whole. Effecting not only the global financial markets, but quite possibly, the entire international political stratum as well. And the new President (as well as every other world leader) will have to adjust to that outcome.

November 8th is only the first-act of this very real, “landmine” infested global drama playing out on the world stage. On December 14th the world will truly witness just how much power has really been transferred to this unelected cohort.

And when that final curtain is both lifted, then lowered? The calls coming forth from the “audience” might not be what these once regarded “maestros” ever dreamed possible.

Yes, at first it might appear the “audience” is standing, and cheering. However, upon further scrutiny, one might find, it may not be in ovation. Rather, for something else entirely.

This is the true economic/political risk coming, and it’s in December regardless of any spin to the contrary by the main-stream financial/business outlets, be it from their gaggle of Ivory Towered academics, Think Tank dwellers, or next in rotation fund managers.

And if you think this is all hyperbole? Explain why the markets have been deflating (albeit subtle – but nonetheless) in ways that once again allows the term “record” attached to them? And remember: we’re only in the “dress rehearsal” stages.

So let’s put this into a little context as to think-through what we all might be in-store for, not only here in the U.S., but globally as well.

When it comes to trying to discern, or figure out, what the intent of the Fed. is today based on what they have, or have not said as of late? You’d be better off making up your own answers based on what temperature your morning coffee was served at. For it seems Fed. members are pretty much doing the same, and all from different pots.

Currently we hear “hawkish” tones coming from this Fed. speaker, or that. Then, we’ll hear the Chair, Ms. Yellen not only throw cold water on such, but make “dovish” statements that make even a real dove blush. (need I remind you of The Fed. buying stocks “Is a good thing to think about”)

Everyone (and I do mean everyone) is flatly convinced the Fed. will raise rates this December. Personally, I’m not so convinced, while I’ll also add I’m more in the “will not” camp today than I was previous. i.e., I’m at about 80/20% plus today favoring they won’t. And here’s why….

At this last slated meeting and resolution the Fed., once again, chose inaction for action, keeping interest rates unchanged. Yet, we are told (by both the Fed. and their “watchers/pundits”) that the Fed. is “ready to move” and that “this December it’s really a go!” and more.

Fair enough, but if that is true: Than how does supposedly “encouraging” and “improving” data that swayed one of the more birds-of-a-feather doves (Boston Fed. president Eric Rosengren) to cast a dissenting vote in the previous meeting just 60 days later to change his stance? (e.g., back to should not raise from should)

Again, to make this point more clear: All when in less than 30 days – they are said – to really, really, really just going to “do it” this time?

It doesn’t make a lick of sense for any coherent communication based strategy, as well as projected policy stance. Period. Unless – that’s precisely (and I’ve argued exactly that) what you want. i.e., Never-ending obfuscation, and confusion. All wrapped in incoherent, nonsensical policy mumbo-jumbo.

However, that all ends in December, where the “rubber” as they say, will hit the road. Only this time there’s a fork in that road. And just which road they’ll travel, taking everyone along with them for the ride, is the only real question at hand.

Either one harbors serious consequences. Neither one will be smoothed, or paved with well intentions. It will be riddled with a series of never-ending ruts filled with calamities many felt were behind us. And some, depending on severity, might make the road impassable both for forward progress, as well as backtracking. These are perilous times. And I’m sorry for sounding hyperbolic, but it is – what it is.

Currently the “markets” are setting up for the possible raising of interest rates. And the “set-up” for that possible outcome: Is to sell.

Pundits will scream (and they are) it’s all because of this candidate, or that candidate’s possible win. Sure, there’s some of that. However, I’m more convinced that’s far less of the reason than the Fed. raising rates. As I implied earlier – I believe this is the “dress rehearsal” for a more sustained move in the very near future. Whether made entirely by the Fed. itself, or exacerbated by others (“others” being other governments and/or central banks) as a consequence of it.

For if the “markets” react in a sustained sell-off after the election, regardless of who wins: How will the Fed. suddenly find “the courage” to raise rates in the teeth of what could amount to a sizable sell off?

Again, regardless of which candidate is elected: The markets are going to continue to react as if the Fed. will raise in December. And that reaction will be more in line with “Get the h-ll out of Dodge!” before the meeting than it will “Let’s wait around and see, first.”

So if that were to take place: Can you see The Fed. raising during this?

Combine this with an election result of Mr. Trump. If he were to be elected, with what he has stated as his regard for not only the Fed. itself, but for its policies: The anger, angst, and accusations that will be made from the “bully pulpit” along with the pent-up anger of the citizenry that elected him will in no doubt hit the Fed. (and it’s participants) in ways never dreamed of. The demonization, and class warfare that will be argued will turn central bankers from financial “maestros” into monetary “pariahs” near overnight.

Think that through no matter what you may think of his chances. This is something central bankers have never dealt with in recent memory.

The Fed. (and quite possibly central bankers everywhere) could suddenly find themselves no longer in the “hallowed halls” of the Ivory Towers in the eyes of the public. But instead: suddenly looked upon as meddling financiers that need to be abolished from public life.

And make no mistake about it: this is what truly concerns, as well as keeps bankers up at night. i.e., Making sure their own hides remain protected, and will be invited to the same conferences, and cocktail parties with the reverence they’ve now become all too familiar with.

With all that said: A Clinton win doesn’t make it any the more easy, hence the reason for the conundrum….

If the “markets” do in fact continue their slide after the election, and pick up any steam whether it be in reaction to the upcoming rate rise domestically, or worse, is precipitated via an outright upheaval in markets reacting globally (think China as in a capital outflow dam burst for example) a raising during this period would be disastrous.

Yet, the public outcry (from not only within the U.S. but elsewhere) will bring calls of “manipulation” or worse “idiocy” from every corner of the globe when other nations and central banks are left to have deal with the ramifications and upheavals on their own markets and currencies from a Fed. that quite simply has “cried wolf” far too many times too their own detriment.

Respect, credibility, along with civility will go right out the open window of that Ivory Tower along with the “chamber pot” of failed monetary projections, theories, and more expelled over the years.

The cries and howls of a “politicized Fed.” will be unrelenting. And if they do raise? The screams and cries for their heads replacements will come from those whom always seem first to have their back – unless they’re not doing what they are being told suggested to do instead. If you want proof: Hint, you might want to revisit “Get to work Mr. Chairman” as a refresher.

How will we get a glimpse into which way (or how disrupting) this may, or may not work out, and hopefully be in a position as to either sidestep or prosper? I’m of the opinion, again, regardless of who is elected, is whether or not in the subsequent weeks after the election to be on alert for one of two things happening….

One: Immediately after the election is there a bounce in the “markets” of a sizable measure that isn’t in response to a Fed. official speaking or otherwise, but rather, is objectively attributed as a result of the election? And more importantly; does that bounce hold for the remainder of the month?

If it does not, and is entirely erased before the month ends? I think we will be setting up for a very precipitous decline with an outlier shock-to-the-system angst overhang until the meeting results are made known.

Or, Two: If there is no election bounce, again, regardless of candidate, and we get a continuation of this protracted sell off? I’m of the opinion that out-of-the-blue outlier moves from “if” to when status, and “when” moves to before the Dec. meeting. And if so, I believe all bets are off, and no one knows what happens next. And I mean just that – no one.

With that said, there is one thing as certain as a central banker obfuscations: If the Fed. does in fact choose inaction for action once again? Expect a Santa Claus rally the likes of even ole St. Nick never fathomed.

How high, and how long it lasts – just like snow – will be anyone’s guess. But one thing will be certain….

Winter will be upon us.

© 2016 Mark St.Cyr

Adventures In Stupidity: Business Assumptions

Every once in a while I come across something that just leaves me slack-jawed when it comes to business. Whether it be the reasons pertaining to their sales, or lack of them, casual assumptions as to determine causality vs correlation, right down to hiring what they know to be the wrong person because “they need” to fill a position, or what at times can even be worse: promoting the absolute wrong people, for a critical position based solely on seniority. I could go on – but I don’t believe there’s enough digital ink to finish.

As many of you longtime readers know I post these for the simple purpose as to demonstrate: when it comes to “competing” in the business world, many of you are running around like headless chickens trying to do 10,000 things (or should I say please 10,000 tire kickers?) than pleasing the 1 or ______(fill in the blank) customers that have actually purchased your product or services with the best that you can deliver.

Most of these over the years have been either done too me, or witnessed by me. They are so egregious I use them as real-time exercises in any lecture I might be presenting at the time. Everyone in a room whether it be 1 or hundreds shakes their heads in disbelief.

That shaking suddenly stops and turns into startled gazes when usually I’ll follow with “And many of you in this room are guilty of doing the exact same thing, and you don’t even realize it. And I can prove it without naming or singling out anyone specific.” Then I ask if they want me to proceed which is always in the affirmative. (as long as the names remain hidden that is)

To add too this repertoire of examples I have what can only be one of the most classic “There in the business of predictions (or odds) – and yet – appear not to even understand how the most fundamental business principle of their entire business model even works!” This is stuff you just can’t make up.

So with the afore said I bring to you today’s example (and quite likely one of its top 3 ever!) of “Adventures In Stupidity”

On October 18, 2016 the following blundering business decision was:

Paddy Power Pays Out On Hillary Clinton Victory Bets

Regardless whether or not the initial action proves out correct, one thing can not be denied: An odds maker paid out bets before they needed to when there was even the remotest chance that something could effect that decision. Again: You can’t make this stuff up.

You know why there’s such a thing a 10,000,000,000 or 10,000,000,000,000,000,000,00 to 1 odds?

Because sometimes, as remote as they can be – that 1 happens. Remember; everyone argued for near centuries against the possibility, or the very existence of a black swan – till one day there one was.

But not too worry, the central bankers of the world are convinced there’s no chance of anything happening that they can’t deal with effectively and efficiently. They don’t use odds to calculate their chances – they use Princeton math.

Feel better? I bet it doesn’t.

© 2016 Mark St.Cyr