Month: June 2018

An MYTR All Access Exclusive

This is just a sample of one of the exclusive features, or presentations that will be coming soon under the MYTR banner and subscription. It is a raw, unfiltered video presentation that goes into a little more detail of the “markets” as to where we are, where we may be going, and what it may mean too you, or your business.

It’s recorded in the manner of, let’s say, we’re sitting, talking after a meal, having a beverage and you asked me for my thumbnail-sketch opinion of what I’m currently seeing through my prism or acumen.

It is a bit over 40 minutes in length, so when you have a few free minutes grab yourself a coffee, soda, or libation of choice and I’ll briefly explain my interpretations like we were sitting across from each other.

© 2018 Mark St.Cyr

 

Revisiting The Past For Future Insights

I thought in-light of the last few days “market” reaction to what’s playing out globally, as far as trade and more, that I would revisit a prior example and show the whats-and-hows it may be signaling, both for some pragmatic insight, as well as what it may be signaling in a broader context. So, here we go…

As you remember I began annotating a chart a few weeks back of the Russell 2000™. The reason for this was that, I believed, I saw something intrinsic within the developing formation that could be signaling possible issues ahead. Then, as time rolled on, the pattern seemed  to negate (i.e., signaling cause for worry was possibly unfounded) what it seemed to signal prior. But as time rolled on I continued to follow it, and again viewed what I believed were the same initial signals, only now, transforming into an even larger pattern.

Then, and once again, this followed the same course as above but, just like the prior, it seemed to have morphed into another. The difference this time was all the “markers” if you will, seemed to be all in the same places causing me to infer that odds of the original signaling may still be intact, just the time or “worry point” for caution had moved.

It would appear it is doing just that, and below I’ll illustrate. Here was the prior observance. To wit:

Here’s what is transpiring as of this writing, before the “markets” open here in the U.S. today, again, to wit:

(Source)

As you can plainly see with the “markets” most recent downdraft, as far as any “signaling” may be concerned, there is none. At least via a technical view in a larger time frame.

The reason this is important to understand for those who don’t fully grasp the whole “technical thing” is this, as I said prior: Until there is a clear break either up and out – or down and out, of the top or bottom of that channel – the chances of the market ping-ponging in-between, while still rising, has the most favored odds.

But (and it’s a very big but) the reason why the above (e.g., Mean Reversion Channel) is so important to watch is, because it is this type of pattern progression that many, if not most on Wall Street, and yes, even the HFT algos themselves, actually, especially the algos pay attention to for valid signaling processes. (Think: “Moving average crossovers” to be in this same camp)

So, until that time, as I noted on the above – You’re in “no man’s land.” We all just have to wait and see what happens next.

Now, with that said, for those that remember (and if not here’s the link) when I was making my case I used another example to demonstrate my argument for a colleague who was asking for more in-depth explanation. The example I used was Tesla™. Here’s how that is currently playing out. First, here’s the original take. To wit:

Again. just to reiterate, the reason for the above was to show why “mean reversion channels” are so telling. Because as I pointed out, just like my prior examples of the Russell, Tesla was exuding the same characteristics. i.e., At one point it looked like one pattern developed, then negated it, and so-on-and-so-forth, till it seemed to morph into the above. And as I stated in the Russell example: “Until it breaks either way, you’re in no man’s land.” So what happened next? Good question, let’s see. Again, to wit:

As you can see, precicely from that initial “won’t get fooled again” moment, Tesla remained within its confines and preceded to bounce along, ever so slightly, along the bottom of that pre-drawn channel. i.e., The initial “Oh crap!” moment began to ever-so-slowly morph into a “phew!” But is that it? Let’s see shall we?

The above depicts Tesla as of the close on Monday. In the bigger picture the latest is what many “BTFD” (Buy The F’n Dip) enthusiasts would consider an “opportunity.” Maybe it is, maybe it isn’t. But what the above does show is when very clear patterns begin to emerge within the very few patterns Wall Street considers valid, and maybe more importantly, the algos, it’s probably a very solid and pragmatic signal for others looking for clues to pay attention too, also.

What happens next? As always…

We shall see.

© 2018 Mark St.Cyr

Bitcoin Via Shanghai: A Chartered Course of Peril

You’ll know there’s real danger ahead the moment those in charge vociferously commence to assure everyone, “there is no danger.”

The above is my take combining a few old maxim with similar meanings. i.e., “You’ll know a politician is lying when their lips are moving,” “You’ll know there’s a problem when the government says, ‘there is no problem,'” or “when early adopters are telling/selling everyone, ‘it’s not too late to get in,’ is probably when you should be getting out,'” et cetera.

The above is relevant to keep in mind for this reason:

The Shanghai Composite Index™(SCI) of late, much like Bitcoin, has been exuding similar reactions by its defenders, i.e., China’s politburo and media class, and/or early adoption gurus and HODLs. The main difference is this:

One wipes out the fairytale fantasy that anyone with a “miner” can create wealth and currency ex nihilo in their mom’s basement then, buy a McMansion with a garage full of Lambo’s and retire.

The other: wipes out the very real fairytale where central bank intervention creating actual currency ex nihilo, allowing for it to be endlessly “mined” (i.e. rehypothecation) to finance construction projects, businesses, stocks, ________(fill in the blank) that would make Charles Ponzi blush, has the potential to bring down an entire house-of-cards and fantasy central banks have created globally – along with wiping out much of everyone’s “booked” retirement or net worth. i.e., those that only take their clues from the “gurus” and/or mainstream business financial media. aka, “Sheeple.”

That’s a pretty big statement, so let me explain my reasoning…

Bitcoin, regardless of whether one believed all the hype or not, performed an amazingly brief, yet meaningful live exercise in what happens when, for lack of better words – the thrill is gone.

Early adopters push and praise why it can only go higher, early investors with large “wallets” join the chorus and jump in looking for a free-ride to quick bucks, then “gurus” begin telling/selling how the average can now make millions, easy-peasy, if they’ll just “buy a ticket” to enable them a seat on this bandwagon.

Then – it all falls apart – where everyone is now stuck, Holding-On-for-Dear-Life as an out-of-control, careening bandwagon heads relentlessly down the ravine. That is, everyone except the band, for they, more than likely, sold the passengers their own personal “ticket,” at a “bargain,” of course.

This experiment with Bitcoin is instructional for this reason: It was allowed to react via price fluctuations, both up and down, with no central bank intervention as to adulterate the signaling transpiring within. i.e., whether one agrees with its premise for disruption or not, doesn’t matter. It has behaved more inline with how many assume a market is supposed to behave rather, than the adulterated-central bank-pervision of capital “markets” we are now enduring.

With that said, what’s now beginning to finally transpire is this: the more central banks take their foot-off-the-pedal – the more the “markets” are slowly exuding behaviors, more in line, with reality based market moves.

And nowhere is this phenom more prominent – than in both the currency market, along with what is known as, the emerging markets. And it is here, much like when Bitcoin began to show signs that, “the thrill is gone,” so too is this happening in these most volatile markets. (Think, Brazil for just one)

Again, the problem here is, “thrill” begins morphing into another matter entirely, for the consequences go from affecting only a small group such as Bitcoin – to wreaking havoc across entire global markets via contagion fears. i.e., when “thrilling” transforms – to frightening.

This is what I believe the SCI appears to be signaling. And if I’m correct? The inferred insinuations are just that, frightening, no hyperbole intended.

Let me demonstrate the case I’m laying out using what “The Valley” likes to call a “picture.” To wit:

(Source)

From a technical perspective both of the above are showing a very troubling potential. i.e., Much lower prices ahead.

The reason why these two markets matter for example purposes is this: Once their respective “peaks” had been traversed – the ride down has been far more “frightening” to those getting in on the down-slope, hoping for a sudden “chair-lift” to magically appear and propel them to ever higher peaks.

But when that “lift” never appears, or appears  to then suddenly break, leaving many just stranded with no way off? They do just like they do in real life: calculate just how much it may or will hurt – then – they jump.

If you look at the above chart, with that in mind, what you are beginning to see, in my opinion, is that “jump” moment playing out.

So why is the above relevant you may be asking? Fair question, and it is precisely whose “picture” the above represents. Again, to wit:

As you can see the one on the left is Bitcoin at the time of this writing, the other is the SCI via the same.

Bitcoin’s bars/candles are representing daily intervals, the SCI’s are weekly. Yet, both are alluding to similar conclusions. i.e., much lower prices ahead, along with both quickly and soon – possibly very quickly and even sooner.

No one knows what will happen, or not. But to think this isn’t a waiting game that demands one’s full attention is folly at best, and moronic at worst. But what’s really important is how those that believe they have direct influence over such matters react, or not.

With Bitcoin you had the equivalent of the “governing bodies pipe organs” take to the airwaves and conferences to profess that any and all down ticks have been the manna-from-heaven you’ve been waiting for as to now afford you the chance to “grab your ticket” onto this bandwagon of untold riches to come. Think John McAfee, Tim Draper, Tom Lee et al., forget the “gurus,” i.e., James Altucher and others, they appeared to have already bailed.)

The problem is, in spite of all this – it keeps falling.

With the SCI there’s not too much of a difference. The only thing is, that it truly is the governing bodies, e.g., the politburo, that is coming out to defend against any inferences of instability.

The issue with doing just that, is this: every other government and central banker (whether credible or not) is professing that the time to raise rates and intervene less, is precisely now, while in the midst of a global recovery. China – is now needing (or at least appearing) to be doing the exact opposite. i.e., Needing to intervene even more while professing everything is just hunky-dory with an announcement before this evening’s (morning in Asia) market open, that their central bank will cut the Required Reserve Ratio for some banks beginning in July – just two months following a similar action.

Hint: That’s not something one does to show strength rather, it implies weakness. And that should be sending off alarm bells everywhere. However, if one listens carefully – the silence is deafening.

As I stated last Sunday, the market to watch for those looking for clues, is Asia, in-particular China, which opens at around 9:00pm ET. (Barring any unforeseen holiday!) And that remains even more true this Sunday, than it was last.

The announcement of the RRR cut, coupled with the markets ongoing price action, has many a tell-tale sign that something is amiss. Whether, or how this all plays out is still anyone’s guess. But that doesn’t exempt those looking for clues from not pay attention to this occurring development, for the stakes for immediate contagion effects are enormously high.

But if there is one prediction that does have a fair shot off being correct, I feel, it is this one:

I predict a plethora of “slightly used miners” to be increasingly prevalent on both Craig’s List™ and/or Ebay™. And soon, as in very.

© 2018 Mark St.Cyr

Addendum To: Charting Possible Courses

I received a call from a colleague who is not of the “technical analysis” set. He, like most in business, have only a very limited understanding when it comes to looking at market charts. i.e., They only understand UP or Down.

As I have said since the beginning of this blog (and partly the reasoning for it) in today’s world of interconnected markets of all types – not understanding them, in at least a very familiar way with how they interact – is no longer an option for today’s business person. It’s now a requisite and has nothing to do with “investing” per se. It’s about understanding what may, or may not, put your business at risk, or help it grow. 401K type enthusiasm is for others.

So with that said, the question they asked was, “Could I show what I meant when it comes to that ‘False positive’ thingy and the ‘no man’s land’ warning in another example?” For they weren’t quite getting it. I said sure, and started to peruse a few ticker symbols, scanning for something quick to use, and I found one. It’s Tesla™.

For brevity’s sake, I’m not going to go into the minutia of differing time frames and patterns. The example itself should show precisely what I mean. To wit:

(Source)

The above, is again, a “Mean Reversion Channel.”

Tesla’s stock has been on an absolute tear off its most recent larger pull back. The news regarding Tesla, one would think, would warrant people to either sell, or at least pause in taking it toward its all-time-highs. Auto pilot crashes, investigations, spontaneous ignition, deaths, and more have done absolutely nothing in regards to stopping its upward progression. At just about every instance where it seemed that the “party may be over” signaled – the stock seemed to just gather even more momentum to head upwards.

Today, as I am writing, this stock has fallen by some 6% since the “markets” opening. That type of drop is nothing to sneeze at, especially if you are someone who bought into it on let’s say, Friday.

As you can see I have annotated the above chart, the time intervals represented by the bars/candles are hourly, the same as I used for the Russell earlier.

Today’s price action looks quite dramatic compared to any recent pull backs, and in previous smaller technical patterns and observations it would warrant possible impending turmoil. However, just like the Russel from my earlier post, the smaller patterns have been negated and what seems to have emerged is a much larger pattern which allows for quite the price moves – yet – doesn’t resolve to warn for more down or up. The “ping-pong” effect in the “No man’s land” area between the upper and lower is in effect. i.e., You just have to wait and see a clear break first ether way before any further action is warranted.

I’ll only end with this: If you are one that bought on Friday?

I would suggest you watch very carefully.

© 2018 Mark St.Cyr

Charting Possible Courses

As we await the “markets” opening in the U.S. here on Tuesday I wanted to update something I’ve been watching and notating over the last few weeks. e.g., A chart of the Russell 2000™ and what it may be portending via technical analysis. Here was the latest incarnation. To wit:

As I explained at that time what appeared to be playing out was what was called an ending diagonal, but as time went by every-time it appeared to be signaling that it may resolve in the manner it is best known for (i.e., odds favor a break in the opposite direction) the signals were, more often than not, proving out to be false positives. Then, when taking a further step back, the same pattern appeared to  forming – only on a much larger scale, which was the genesis and analysis for the above chart as I explained then.

Over the ensuing days this pattern looked as if it may resolve much like the original observation yet, this too has been completely negated as the index has pushed higher, and higher. i.e., Once the bottom drawn line crosses the top marking an “X” or “cross” any price action beyond negates the the observation or pattern entirely, i.e., something else is at play.

Now in the world of technical analysis patterns are subjective and many initial observations can be completely negated. i.e, time frame matters, where early indications can tend to play out giving more falls positives than their worth. Remember, true technical analysis is understanding you’re only playing with odds and probabilities via a visual representation of what buyers and sellers have done during a point in time. There is no “Holy Grail.”

However, with that said, one of the things most overlook when using this method of looking at “markets” is that: being wrong maybe, just being early. And one of the key signs of this are when differing patterns emerge yet, seem to show the same conclusion. I believe we may have such an instance playing out here in real=time. Here’s why, again, to wit:

(Source)

What the above chart represents is the same index (e.g., Russell 2000) using the same time intervals via the bars/candles as the earlier one directly above it. This is as of Monday’s close.

As one can see the original signal I was calling attention to see if it was playing out was a “throw-over.” The “markets” did just that yet, the price action just continued along the same path, again, negating the original observation. But when looking at it again what I noticed is that the original pattern has now seemed to morph into what is known as a “Mean Reversion Channel.”

Doesn’t matter if you are up to speed on technical analysis terminology and/or jargon. I am. And here’s what the above can possibly mean, and how to watch to see if it’s providing any pragmatic clues.

This type of pattern is very well used and respected, even by people who think the whole “technical thing” is nothing more than voodoo type analysis. (It’s not and the arguments made against are completely invalid, moronic, and feeble, but that’s for another article)

What this pattern also shows is what I implied earlier about how one pattern may be negated, but another one evolves showing the same possible results. For if you look at where the two lower boxes I’ve drawn appear, they are at the same levels respectively as the prior observations. Yet, there is a change and it’s an important one.

As you can see I’ve now drawn another box inside this channel called “no man’s land.” The reason why I named it this is because, for as long as the price of this index remains in this box? It’s all just noise. i.e., The market will probably go up as far, and as much, as it goes down, ping-ponging somewhere in the middle.

Not until you have a clear break below the bottom line, or back above the top line, will there be any indication of what may portend for the “markets.” But make no mistake, it’s in watching for a break to the downside that one should be paying attention to. Because if it does, then many are going to find themselves in a complete unfamiliar situation.

As always, we shall see.

© 2018 Mark St.Cyr

Well That Was Awkward

So there I was last night watching the Asian markets as I advised others in my latest article.

One after another opened in the red (e.g., down). Japan? Check. Korea? Check, and so on as I awaited the Chinese markets.

More often than not, I watch (more like just have on as I read) by having the television tuned in-to CNBC™, but with the sound off, glancing up occasionally to see if any interesting guest or market movements are posted at the bottom or side of the screen as it rotates through the various ones, with last night being no exception.

As the early evening wore on I noticed the U.S. market futures were continually posted as “unchanged.” I knew the U.S. was open so I toggled over to Bloomberg™ and sure enough the futures were posting showing the selling pressure. So, I flipped it back to CNBC (I prefer their Asia coverage) and thought no more about it. Then, when China should have come on-line I watched more intently, and watched, and watched, and watched. Nothing.

It wasn’t till about 10:00pm ET I started questioning if I messed up on the time difference not being in sync, for Asia doesn’t follow the daylight savings time adjustment of back and forth we do in the U.S. Or, was CNBC’s market tickers not showing the price movement like its U.S. tickers were. So, I decided to turn the volume up and see if I could figure out what was going on. Which I did, much to my surprise.

About 15 minutes into the next program I heard one of the hosts say something along the following lines, “It would be interesting to see how China would be reacting, but their markets are closed today in observance of a local holiday.”

Wait…what? was my response with a few expletives thrown in for color.

I did not know that China’s market was celebrating a holiday. As a matter of fact, I was rather surprised that they would announce their plans for reaction to the tariffs on Friday, then go into an extended weekend with their markets closed having to the react to what may be taking place, rather than preemptively setting or reacting to any initial fallout, if any, within their own markets first.

That, from a tactical viewpoint of intent may speak volumes or, may mean nothing at all. But it is another point of drama for this evolving soap-opera, that’s for sure.

As for my calls on watching the Asian (in-particular China) closely – all of it still stands. The only difference now is to see how their markets react when they finally open this week, for their shortened session could exacerbate an already skittish market as we are seeing this AM.

And for those who really want to know how I reacted when I found out that China was on holiday, when I thought for sure they were open? Hint: Think Ralphie from “A Christmas Story” (1983 MGM/UA Entertainment Co.) when he rushes into the bathroom after receiving his secret decoder to unravel the hidden messages contained within the “Little Orphan Annie” program, only to find he’s been had. The only difference in my case?

“An expletive holiday?!”

© 2018 Mark St.Cyr

Must Watch Sunday TV: As The Tariffs Turn

As the festivities of Father’s Day wrap up here in the U.S. like many celebrations, this too may conclude with a display of fireworks. The issue at hand is this: If there are – they’ll be on the other-side of the globe. However, their initial reverberations may become visible through the power of live (aka appointment) television.

For those that may not have ever watched these shows or programing, the most accessible network coverage will be broadcast via Bloomberg™ and CNBC™ via their Asia desks. i.e., anyone with cable access should be able to locate it on their service. So, for those looking for clues, yet only follow “markets” in some form of perfunctory manner – this is one live session of television you may need to watch.

In my opinion, this Sunday, in-particular, is a must-see-event. For this is where we’ll get the first glimpses as to exactly what may, or may not be coming our way via the “markets.” And yes, again, I feel it’s that important, no hyperbole intended.

The reason why I state the above is that China and the U.S. have formally announced and outlined their agreement to disagree and impose tariffs on one another. The opening salvos? $50 Billion respectively. If we stick with the soap opera theme, this is the equivalent of the two main stars suddenly realizing that the whole affair has been a sham, and it’s now who can hire the best lawyers – and screw the other out of more than half.

Sure, it makes great television. But when its real life? It’s far messier, full of even more innuendo, real and idle threats, along with being fought full of unforeseen backfiring consequences. The difference in those consequences is also paramount, for more often than not they’ll effect those viewing far more than those in the starring roles.

Up until now the bickering back and forth between other nations in respect to earlier negotiated deals has truly taken on the appearance of a soap-opera in progress. NAFTA, along with E.U. agreements/disagreements being bandied about at the latest G-7 (or G-6+1 which makes my point about the whole soap-opera drama analogy even more fitting, but I digress)) has been like watching this season’s drama build up of the supporting cast, waiting for when the two “stars” are finally going to engage.

On Friday – you had just that.

Whether one agrees or not, is no longer the issue. What now has to take precedent is what happens next – and be prepared as best one can for either an insulating stance for one’s business well-being, or a profiting one. There might even be a way for both, but that will only be for those watching, paying attention, and being nimble and decisive in their execution. Everything may/will be in flux. Repeat: everything.

However, just like fictional dramas, there is always more to the characters back-story that needs to be assessed when trying to figure out where the next move may come from, because just when you think the “obvious thing” should happen next? The writers throw in a twist that leaves everyone second-guessing. The writers of these trade tariffs are no different. As I’ve stated before: Tariffs are designed to be highly punitive. They’re not to “make nice” as some may think. They also fall into the Mike Tyson realm of reality. e.g., “Everyone’s got a plan – till they get punched in the face.”

Tariffs are precisely that when it comes to the “sport” of trade. But make no mistake: Trade – is a take no prisoners blood sport with real losers and winners, where economic survival is the prize. Sometimes – there is no second place finisher. Think about it.

On Sunday evening around 9:00pm ET the Asian markets will be fully engaged once China’s markets open and the tape begins to roll. The evolving plot course that needs to be paid attention too are 1) The Shanghai Composite Index (SCI). And 2) The Hang Seng. The reasoning is simple.

Both of these indexes have been moving from a technical perspective into dangerous territory. As I’ve stated before the Shanghai is holding above (barely) the 3000 level. If this level gets breached, and with any real follow-through, it could trigger a wider sell off.

The other reason is, just like the SCI, the Hang Seng is now in a very similar position, only here it is 30,000 respectively. Should both the SCI along with the Hang Seng break downward in unison with any substantial follow through, it’s going to make for a very interesting start in the U.S. on Monday to say the least.

What many don’t quite get (and I say this directly to most of the Ph.D’d economic professorial cabal and show hosts that paraded this set out to lecture us plebs how genius the Fed. has been, and how “smart” they are in naval-gazing analyzing the moves, but I digress again) is China may be in a far more inferior negotiating position than the U.S. i.e., If the “markets” fall apart directly after China announces – the blame becomes China’s.

You may agree or disagree, but that’s how it’ll be played by the administration should the Chinese markets begin to falter overnight sending even a hint of contagion fears across the ponds. But the capital markets are not China’s only problem in the overnight session. There’s another. e.g., The Hong Kong Dollar (HKD).

The HKD is the currency to watch when it comes to China’s property bubble and its increasing use for even further speculation.

This currency of late has been falling below key metrics (e.g., its lower boundary) of its peg to the U.S. $Dollar and has been doing so for much longer than what is seen as “normal.” The issue here is that this peg is heavily influenced via the Federal Reserve’s interest rate policy. And with the Fed. raising again this week, along with changing key verbage (insinuating far more of a hawkish posture) and now making every meeting a possible “live” event meaning a hike possible at every further scheduled meeting (i.e., more than expected) with the advent of adding a press conference after every one going forward may exacerbate this situation to a point of having the Chinese politburo having its own “Sorcerer’s Apprentice moment” as soon as Sunday night (Monday morning Asia time).

Here’s what Austrian economist (one of the very few I hold in high regard) and China watcher Andy Xie recently wrote about this possible impending dilemma. To wit:

“The Hong Kong Monetary Authority has been buying up Hong Kong dollars to stop it from falling below the lower boundary of its pegged range to the US dollar. But why has it been allowed to fall to the lower boundary and stay there so long? That’s not how a peg is supposed to work. It should try to hug the US dollar interest rate as close as possible.

By deviating from the US interest rate by so much and for so long, Hong Kong is setting itself up for an interest rate shock.”

And now here we are with fully engaging tariffs, interest rake hikes, and a week ending Quad-Witching on Friday’s close that masked any interpretations of the Fed’s new policy directives along with tariff announcements. The mainstream business/financial media’s so-called “smart crowd” tried to profess that the calmness was all due to the Fed’s “genius.” I vehemently beg to differ.

Hint: It was all due to the HFT algos’ stop hunting and price pegging antics for quad witching.

The real show begins tonight for any real clues, so as they like to say in TV land…

“Please, stay tuned!”

© 2018 Mark St.Cyr

Imagine That, Who’d a Thunk It?

I just returned home and I saw a note in my inbox from a friend telling me that Susan Holmes and her former COO were just indicted this evening by a federal grand jury on charges of fraud. e.g., nine counts of wire fraud and two counts of conspiracy.

The reason why this is meaningful too me, in ways many may not fully appreciate, is because it was nearly two years ago to the day I wrote the following article with the headline: “Theranos: Unicorn Valley’s Madoff Moment”

That article and headline caused quite the stir in The Valley aficionado set, resulting in quite the cat-calls directed squarely at yours truly. The headline and what it conveyed at the time was seen as blasphemy, but what really seemed to get under the skin of this crowd was when I dared say the following. To wit:

“Theranos™, in my opinion, has many of the same overtones for what transpired during, as well as, in the aftermath of the Madoff scandal. And the residual implications are not only yet to be seen. The consequences that are about to reverberate are going to bring forth reckonings many believed would never come. At least that is – before they could IPO, cash out and avoid it themselves. But if 2016 is any clue? Avoiding might no longer be an option.

In “The Valley” the last 7 or 8 years has seen a morphing of true business fundamentals into a place of pure financially adulterated fantasy.

Here is where the story changed from “Something built that customers love and will pay for,” into “Build something that can give the allusion VC’s want to see and hear so they can pay for the right to then sell that illusion to Wall Street and we all get rich.” True business metrics or morals be damned. (for a reminder about morals just enter “Secret” into your search engine of choice.)”

This was reacted to across the mainstream business/financial media, as well as the Valley proper, as if I just insulted someone’s mother. The backlash was palpable. (See Tim Draper for clues)

And now, nearly two years to the day, it’s official – she’s now officially charged.

One has to remember, up and almost until the day it all finally came crashing down, the mainstream business/financial media was still fawning over her and her company. (ZH has a great list at the bottom of their article)

As bad as Ms. Holmes appears to now be, the issue I feel no one is truly understanding is this: In my opinion – she’s not a “sociopathic tendencies” outlier. She’s just one of the visible symptoms permeating through the entire unicorn cabal. And if we ever do get a downdraft? It will be the equivalent of throwing on the light switch to suddenly realize – there was far more than just the one you originally caught.

© 2018 Mark St.Cyr

Take It As You Will

I’m going to make this one point, because if you were to rely purely on (and the vast majority does just this) the mainstream business/financial media complex you would think the ATT™ – Time Warner™ merger has no significant relevance. And since they seem either clueless about it, or don’t want to bring forth any negative vibes, I will. (To be fair Steve Case was on CNBC™ talking about just this, but that’s about it.)

Hint: The AOL™ – Time Warner merger signaled we were at the top of the previous bubble. i.e., It was all down hill from there, literally, and more akin to making a Black-Diamond ski trail look more like the Bunny Slopes. Let’s just say, since I’m in an analogy type of mood, many a novice suddenly found themselves on paths even the “experts” feared to tread.

Mega mergers of any type usually signal a top. The reason being is to keep the growth story going when there may be no longer any true growth, such as business revenues from expanding customer base. So, the only play left – is to buy it. But who buy’s whom is the key point. For size and scale matters when looking for clues, and this one does, in my opinion. As I have said before, repeatedly:

“You’ll know things are reaching a peak when the sclerotic, is once again, consuming the stunted.”

And here we are. What happens next, is anyone’s guess. After all…

It’s different this time, right?

© 2018 Mark St.Cyr

A Relevant Blast From The Past…

I had an interesting conversation with a colleague yesterday and the topic was my latest article. And just for the record, this was via his questioning, not me just blithering on, although there are times I can do just that. But I digress.

What the discussion revolved around was, were there any other “big changes” that I thought, or felt were coming forth, that either fell on deaf-ears, as the saying goes, yet seem to be coming to fruition today. And that’s when the discussion went into a myriad of differing topics and scenarios we bandied back-and-forth.

However, there was one topic that seemed to dominate during the latter and that was how – and what – the internet as we now perceive it will change. And how those changes will affect businesses.

My main retort? “Subscription services will be the new “luxury.”

I went on: “Using platforms or devices because they are ‘free’ will be seen as low-budget or low-rent type status in the coming future. An example of this would be: Today it’s the iPhone® or an Apple™ product that shows you can afford to be in the luxury segment. Tomorrow it’ll be something like your email, search engines, and some form of social component which will be provided and hosted via walled gardens. Much like using Apple products or services today are orientated. Let me give you an example…

Think Apple in the very near future offering the ability to both search, (This maybe a derivative of Bing™) email, offer a social component whether they buy an existing one, or just purchase one in a fire sale in the coming future (Think Snapchat™ et al.) and offer exclusive access to this platform that offers no ads, no tracking, no data sharing, and complete exclusivity – but you have to pay to belong.

The social component will more-or-less be the obvious branded, visible luxury marker. Think of a Twitter™ like feature only under say an Apple brand. Same goes for something akin to Facebook™, and so on.”

Remember – the “ads for eyeballs” model would be eliminated – and – the less people who use or subscribe to it, the better. Why? Exclusivity and social peer impressing. Think: “Oh, you use Facebook, Twitter, Google, _______?(fill in the blank) Yeah, I use _________(fill in the blank) that’s why I didn’t see your _______(fill in the blank). Sorry.” The same will go to where one get’s their information. Think: “Oh, you read that on Wikipedia™. Yeah, I don’t use that, I belong to ____________(Fill in subscriber based content provider) so that’s probably why your information differs from mine. I would suggest you need to research a bit more elsewhere before you finalize your conclusions on the matter.” Implying, and rightly so, their information may be no more legitimate than hearsay, which is not what serious people of means do.

As we discussed the merits and other possibilities I asked the following to see how he reacted: “Have you noticed how many content providers are now going whole-hog into the subscription model? And I’m not talking about small sites, I’m talking about sites like Business Insider™, and now Bloomberg™ just to name a few. Think this is just a few one offs via the big boys as they say? Let me add this:

You know my feelings about most IPO’s (for those who don’t, I believe most to be a complete and utter sham, see Domo Technologies™ for further clues ) However, with that said, do you know what one of the fastest growing tech IPO’s that has a real chance at actually being profitable in the very near future business is based on? Hint: This type of business model or service provider was seen as not only dead and buried, but when brought up in polite conversation was seen as something of “not getting tech” along with the current dominance of “ads for eyeballs model. i.e., Facebook et al.

That model? Subscriptions. e.g., Zuora™.”

(Just to be clear: I don’t know this company, or anything else, I’m using them only for example purposes relevant to my topic, nothing more.)

Now some may say (and it’s a fair knee-jerk reaction) that what I’m currently doing is trying to front-run something that is now becoming apparent. Again, it is a fair point for my conversation with my colleague also ventured down this line of questioning. For he’s a very pragmatic person himself and he just doesn’t take what I’m saying as “gospel” just because I’m saying it either. (Actually I feel he’s far smarter than me, but that’s my little secret, and I’m sticking too it, just sayin’.)

The reason why I bring up this point is for when I told him that I addressed precisely this subject and what I saw forthcoming years ago when everyone else saw it as folly his initial reaction was, “Really?” And I couldn’t tell if it was that “really” that implies surprise, or that “really” that implies “sure you did.”

So as to make sure, I said to him I’d find and forward him one of the articles, followed with explaining (once again to make the point) my “over the horizon” analogy. For those unfamiliar with this analogy it’s this: “Sometimes I need to remember as to make sure I’m making my points understood. That when I’m trying to explain what I see over-the-horizon, from where I’m standing. From their perspective, where I’m standing may be over their horizon.”

So on that note I thought I’d post a link to the article I sent him.

The date was: January 18, 2014 Titled, “The Next Segment Of Luxury: Subscription Everything”

With the debate of Net Neutrality now settled into law (as in the ability to charge for higher speeds or access et cetera) my article from over four years ago seems far more relevant today than when I first made it. And as has been more often-than-not the case – this was seen at the time as “not getting tech” via most of “The Valley” aficionado set.

Here’s an excerpt from that aforementioned article. To wit:

“Just one example of how deep and far-reaching the implications of all this goes is this: Why would any advertiser spend a penny of Facebook® or the like for an ad, when one can pay and have sole dominion via a search or subscription model?

Would you rather have full access to a free Wikipedia® if your child has a sudden ailment because it’s free with your service to Google? Or, would you pay to have let’s say Bing® as a paid subscription service if it comes with unlimited access to something like “www.Ask A Real Doctor” because only real doctors are allowed to post or approve text on the site?

Take away the theory that ads will supply the revenue of these platforms by allowing those very advertisers to move funds into what could possibly be the greatest bang for the buck customer interaction or engagement since the start of the web as we now know it, and $1 million dollar valuations seems too much for many of today’s Wall Street darlings let alone $40, $100, $200 Billion, and more.

The term “walled gardens” once attributed with distaste to companies such as Apple® and others might be just as brand centric and sought after as the very devices themselves. The world as we now know it could really change in ways unforeseen in shape and scope as smartphones and tablets themselves revolutionized everything digital. I think the implications are that great. I’m not trying to be hyperbolic. I truly believe the implications are staggering. Whether they turn out to be true is another matter.”

As always, doesn’t mean that I’m going to found correct in the end. No one knows for sure. However, what I will say which I know to be factual is this…

No one contemplated (or at least dared say it publicly) this is where we might be heading in the future.

And here we are.

© 2018 Mark St.Cyr