Day: December 30, 2018

2018: The Year That Laid The Experts Bare

To say 2018 has been one for the record books would truly fit the description for understatement. As a matter of fact, depending on when you decided to look for confirmation via the so-called “experts” of the day one of two results were possible. The first?

Many a so-called “expert” was paraded across the mainstream business/financial media touting all the reasons known to exist in their heads as to why they were so smart. Where the host would then confirm and inform you why this was true. Even if it was self-evident they were full-of-it.

One network (coughBloombergcough) even stated the reason why people should listen was because of their particular political affiliation.

Or…

It was something akin both guests and hosts trying desperately to cover their derrières with convoluted logic and constructs. And if that didn’t work? They just simply vilified those that dared question it with insults and snark as to protest why their presumptive super-genius powers were being thwarted by some unknown, unknowable dark force. Hint: See CNBC™ for clues.

Of course there have been others (i.e., incidents and networks), but there isn’t enough digital ink to list them all.

Basically, unless one was touting the “bull” case it appeared there wasn’t all that much air-time available for any cogent opposing viewpoint to be expressed. i.e., “Wow, I wish we had more time for you to rebut that 20 minute ‘bull’ diatribe, but it appears we’re out of time for this segment. Maybe we’ll have you back on again? Remember, if your phone doesn’t ring – you’ll know it’s our producer calling. Ta ta!”

In early January we were told by this same crowd that everything was just awesome for 2018. Earnings were going to be great, the economy was poised to further accelerate. Interest rate hikes and balance sheet reduction scheduling was “baked in” as in known knowables’. Trade war? Real War? Nothing-to-see-here war – it’s all good, just buy, buy, buy!

Then in February the “market” got its first real confirmation that the only thing I said the market cared about was actually being implemented as planned. e.g., QT (quantitative tightening)

This was the catalyst (my conjecture) for what we now know as the “February Scare.” This sent the entire “smart-crowd” scrambling looking for as much bullsh#t as they could muster to reassert why BTFD (buying the f’n dip) was not only still the best play – but the only one.

Nowhere was this phenom expressed more than that of what is now in the history books as the mania of manias’: Bitcoin™. Yes, surpassing the “Tulip Mania” of 1636 and the “South Sea Bubble” of the early 1700’s.

Depending on which day and which expert any of the assorted networks decided to parade out rested on what astronomical price the cryptocurrency was assuredly going to finish the year at. All had “tens of thousands” if not “hundreds of thousands” in their estimates. The result?

Let’s just say those terms have more in-line with what many lost as they waited for these “expert” opinions to come to fruition. (on a side note, I went on record in Feb. proposing Bitcoin at $4K year end. But then again, what do I know, for I’m no expert.)

In 2018 we had another record broken. e.g., The hyperinflation of Germany’s Weimar Republic was eclipsed by that transpiring in the socialist utopia known as Venezuela. Here too all the so-called “experts” with Ivy League’d credentials, Nobel Laureates and more (e.g., Krugman, Stiglitz et al.) have been shown all they have prophesied is a total complete and utter sham, along with scam. Period, full stop.

If you think that’s a bit harsh, all I’ll say is just wait till you get your next student loan bill for clues, then see how you feel. Just don’t forget (as they’ll always profess) one of the main tenants as to why things like that could never happen here is because we can print our own currency. Oh wait, so could they. Maybe they just forgot, yes? After all they teach now, it’s not like they actually need to learn anything, right?

Then of course how could one forget the road-to-riches real estate genius being touted across the continents of the U.S. and Canada in places like Toronto, Chicago, San Francisco and others. Then again, maybe if you were suddenly motivated to go out and buy in said areas as a consequence of these seminars you would rather forget.

The only problem I would imagine is that you can’t for the ever increasing tax bills and accompanying carry costs mounting up as these areas now tout double-digit sales declines.

However, not to worry, for I have a sinking suspicion this same cast of “experts” will be along in the not-so-distant future offering another seminar touting something along the lines of “Bankruptcy advice.” Maybe they’ll give discounts to previous seminar ticket buyers. You know, because they’ll need it. Both the discount, along with the advice.

Yet, no discussion would be complete concerning this year that did not contain the complete nonsensical arguments made as the “markets” hit never before seen in human history heights.

If you’ll remember I opened this article giving an example of two possible outcomes one was most assuredly going to encounter when perusing most of the media business/financial networks. To paraphrase:

If we were going up it was because of ___________(fill in meaningless dribble of choice here.) Or…
If we were going down it was because of _____________(fill in meaningless dribble of choice here.)

In other words: it was all meaningless dribble.

Much like the entire crypto case I argued right at the beginning of the year that once the “markets” had to conclude that the balance sheet normalization process was not only being implemented, but was going to be allowed to run via its announced schedule, that the “markets” would react violently. And they did.

The “February Scare” marked that prediction. For that was the “markets” first concrete look via the resulting lag effect in reporting.

The “markets” languished and even threatened on more than one occasion to break those lows until in-and-around May there was chatter via Fed officials, along with its gaggle of Fed watchers expressing how IOER (interest on excess reserves) was going to contain the normalization process. i.e., slow, minimize or halt it all together. Using the then latest Fed communiqué as its Rosetta Stone. (“expressing” as in running over their own mothers as to get in front of a camera, microphone or keyboard.)

Then the bull-run resumed and we were, once again, off to those never before seen highs. That is till October where the “markets” were, once again, faced with a quandary: The balance sheet normalization process was shown to be not only running on schedule, but no Fed. official was touting anything other than not only “steady as she goes” but steady and into light speed she will go.

And here’s the key – not by a consensus vote, but rather – unanimous.

Since that moment the “market” has been in an utter tail spin. But it was only dwarfed by what may go down (again, my conjecture) as the most ill-timed, tone-deaf decree made by a CEO of the most valuable company in the world by market cap and first to hit a $Trillion than that made by Apple’s Tim Cook when he declared Apple™ would no longer report its sales via units sold of its iPhone®.

The result has been nothing less than historic.

Apple’s share price along with the entire “market” (because of its sheer size in relation) has plummeted wiping out $Trillions in mere weeks. The longest Bull market in history, along with its highest valuation ever, has been reduced to Bear Market status in mere weeks. Think about that.

Apple alone has lost over $300 Billion in market cap (depending on what day you look) while Mr. Cook’s nearly $300 billion in share buy-backs and dividends seems to have gone up in just as much smoke.

Mr. Cook has gone from Celebrity CEO to a CEO withing spitting distance of whether or not he’ll still have a job in 2019 should the shares fall any further.

Again, ponder that point alone for some further context of just where we are. Can you say “it’s different this time?”

IPO’s such as those being discussed by the likes of Uber™, Airbnb™ and others will be lucky to survive in 2019 let alone ever get to IPO nirvana should this rout continue. (as I’ve said since they started)

The last of the IPO venture capital saviors (i.e., SoftBank™, Tencent™, Sovereign Wealth Funds et al.) themselves are watching their own share prices getting pummeled. It may not be long when they themselves will need to raise capital by selling any and all “future bets” just to survive.

Then there’s Amazon™. How much more losses in market cap will Wall Street endure before calls of “break it up to unlock share holder value” is the call of the day, as opposed to what company they were going to buy next? Hint: Down $700 per share is not something Wall Street tends to accept lightly. Actually, accept at all.

Then there’s the entire social media space where “boy geniuses” has been reduced to just boys with about half their “manhood” (as in share prices) missing. And the indignity may just be getting started. Hint: See Facebook or for that matter, Snap™ for further clues. Though I warn you – they’re X-Rated from an investment viewpoint.

However, if there is ever such a thing as history may not repeat, but it sure does rhyme, then the poster-child award for such goes to the one and only Jim Cramer of CNBC fame where just this past Thursday he stated…

“I need the Fed to shut up. I don’t trust the Fed at all. I don’t trust Jay Powell at all. Jay said everything that caused a tremendous selloff. You have got to start recognizing how powerful his words are.”

I find it quite amusing to once again see Mr. Cramer trying to wiggle his way around the fact that what is happening has been precisely what he has argued throughout the entire year was a non issue. After all. All of this, repeat: all – of – this has been known and was decreed to happen as laid out via the then Chair, Janet Yellen.

There is nothing new here. Mr. Powell is doing everything, to the letter, that was laid out at the beginning of the year.

The only difference is that no one believed they would actually do it.

The issue is now that they did – the consequences are playing out just as people like myself said they would. Not yesterday, but way back in February where people like Mr. Cramer and others were discounting views such as mine as “these people know nothing!”

But then again, I’m not on TV for history to judge like this blast from the past: Jon Stewart to Cramer

So now with 2018 closing in the rear view mirror there is one last historical item that has also been thoroughly laid bare. “What’s that” you may ask? Good question and it is this:

Any remaining credibility or value implied in watching, listening or reading anything from these so-called “experts.”

©2018 Mark St.Cyr