Month: January 2019

Update to: The Fed’s words…

I was just made aware that the Federal Reserve has changed its press conference schedule from the every other meeting ( or 4) to now there will be one after every meeting for 2019. (e.g., now there’ll be 8) And if that changes my thoughts in any way. Here’s my response:

No. As a matter of fact I believe it will bring even more volatility for these two reasons:

First: That means every meeting has to now be considered “live,” where an additional interest rate increase may be possible. Everyone will think this means that there’s now opportunity for the Fed to pause. That may be true, but that also means if the data (data the Fed focuses on) continues to be good, then the Fed can also accelerate. Doesn’t mean they will, but that does mean it’s a possability and will have to be factored in, regardless.

Second: This now means the Fed has twice as many opportunities to say, or not say the wrong thing, at the wrong time, which now doubles the possibility for increased volatility at every meeting.

As I stated earlier – it may not matter what the Fed says as to halting the already accumulating carnage. However, what they can say is the wrong thing (as well as not say if the “markets” are looking for it) at the wrong time something that can exacerbate any further market mayhem.

After-all, if everything was going along as swimmingly as they have been stating it has, i.e., “We got this!” Then why the need to increase the pressers at all? Think about it.

As always, we shall see.

© 2019 Mark St.Cyr


The Fed’s Words Are Now Meaningless

As we begin the new year there were many developments of note that will mark where we’re all going from here. One was: the current volatility happening across all markets. The other: the Powell, Yellen and Bernanke conversation in Atalanta. Hint: The latter is responsible for the former.

If one watched this exchange between former and current Fed. Chair it wasn’t hard to construe that the term “independence” implies far more than just the political implications. It also appears to stand as independence of consequences via their actions. i.e., what they’ll unleash via monetary policy has consequences for everyone else – not them. In other words, they are independent via their guaranteed pensions, near guaranteed high speaking fees, fellowships for regulatory capture, celebrity media status and more.

Not a bad gig if you can get appointed, no?

And it is with another “no” I would like to begin, as in Mr. Powell’s terse response to the question of (paraphrasing) “If the President asked you to resign would you?” The answer? “No.”

Both the answer, as well as the manner delivered, gives far more insight to how the Federal Reserve views itself in regards to the nation. i.e., Not only is it above all political reproach, it is also above all political leaders. Here’s why I say this…

Whether you’re a business leader, or a political one, there are some things you know instinctively not to do. i.e., make any statement or suggestion that can be interpreted as antagonistic unless – that’s precisely what you mean to do.

To do otherwise is highly imprudent and opens a door fraught with unsavory consequences. I believe Mr. Powell’s “no” is going to be met with far more words and actions down-the-road than either he, or his predecessors ever believed possible. Never-mind ever considered

That question posed to Mr. Powell should have been met with an emphatic rebuke, and should have been answered with something similar to:

“I am not going to respond to that question. If ever a day should come that the President would formerly ask for such a thing. I could only assume that both he and I would have had many discussions prior concerning what was the best monetary policy for the nation. The Fed is, as you know, an independent body. And to discuss such hypotheticals in the public domain is not just unseemly, but also, improper. So, do you have anther question more appropriate to this discussion?”

Saying something akin to the above fits far more inline with what is known as diplo-speak. i.e., you put one on notice via using another that their public calls are not helping, while setting yourself upon the high-road that you are willing to not disparage them, or their calls in public. All while insinuating the two of them should get together, behind closed doors, and maybe air a few things out.

However, that’s not what came from that stage.

And yes, I am fully aware that it is easy to sit back days later and evaluate after-the-fact, then think and write the above while not under the pressure of lights, cameras and an audience.

Nevertheless, with that said, I am also fully cognizant that a terse “no,” in public, is a diplomatic statement for political war, which is why great care and forethought must be used when delivered in such a setting and involving said participants. If it wasn’t intentional, then it will be interpreted as more evident to a Freudian slip, which can be even more problematic.

This is why people fluent in diplomacy, at all levels of politics, as well as business, are always in high demand. For it only takes one word – at the wrong time – in the wrong setting – to bring everything once considered stable into roiling turmoil.

Mr. Powell’s “no” may go down in history as the opening salvo that launched the war that lost the Fed its independence. And no, that’s not hyperbole. Here’s why.

The “markets” have now shown that they were what the few of us have been calling them for these many a year: A Potemkin Village built via a house of cards upon quick sand. And without consistently holding interest rates at the zero bound, along with more iterations of QE (quantitate easing) it all crumbles.

And that is precisely what has happened.

The “balance sheet normalization process” (QT) was supposed to be a non-event. Something akin to running-in-the-background type of policy adjustments.

The entirety of the so-called “smart-crowd” paraded across the entire mainstream business/financial media (along with the Fed itself) implored it (QE) wasn’t the reason why stocks were bid up this high – more of a correlation type phenom as opposed to causation was the thinking and explanation process. The problem?

Hint: have a look at any 401K December statement. That is, if one dares.

Now the only thing that appears will placate the “markets” is that the Fed. publicly state that the balance sheet process is not on “autopilot.” Which Mr. Powell did. Does it matter? I don’t think so.

The problem with the balance sheet process is that it is doing exactly what the Fed said it would – it’s running automatically in the background. Which is precicely where the Fed’s real problem (along with the “markets”) truly lie.

If the Fed stopped the process right now the damage is already done. Unless the Fed suddenly announced that they were reversing, not stopping, but reversing the QT process with another round of QE – where would the money come from to bid up (and sustain) the “markets” again?

Sidelines? Please, don’t make me laugh for that is one of the greatest fallacies ever spewed. It’s a myth, a ruse for conning the ill-informed.

As we sit here today the Federal Reserve will meet at the end of this month. Here’s what you should be acutely aware of:

There is no press conference scheduled. So if you’re waiting to hear the soothing tones of doves – forgetaboutit. The best you’ll probably receive is “no interest rate change.”

Do you think they’ll change the balance sheet schedule with no press conference, along with a jobs report that implies what they’re doing is working and what they’re concerned about (i.e. wage inflation) is showing signs that they need to be even more diligent? Hint: Again, I doubt it.

Which there again lies the real problem, for the balance sheet is now on “autopilot” and in hyper-drive speeding along at $50 Billion per month.

If the Fed stopped at the next meeting Dec. and Jan. would have already taken effect. If they don’t? The “markets” will have to conclude that there would be no change till at least March. And by then that would mean another $100 Billion of reductions had already transpired.

Stopping would be irrelevant – only a complete reversal would have true impact. Stopping would only result in re-fueling headline reading algos into ephemeral knee-jerk responses. Which is precisely what I believe happened at the end of last week. i.e., It’s a respite not a reversal or end.

Again, I’m firmly in the camp of that it no longer matters what they say – only a complete reversal will halt the already trodden ground over the accumulating BTFD (buy the f’n dip) corpses.

Yes, accumulating, For the damage already done is far from over as to its ongoing and lasting psychological affects. Just wait till many open their year -end statements and find to their horror printings in red ink.

And when it comes to what the Fed says about its independence such as how the Chair would respond should the President ask for his resignation? All I’ll say is this:

The Chair is absolutely correct in his assessment of independence. However, when it comes to that independence it would be fair to say there’s a reason why one needs to heed their words not just for the markets interpretation, but also the political.

For it may just be the person that has the last word in this matter is the President, for he may utter a word that strikes fear into the heart of the Fed itself. And that word is: audit.

For it can be easily demonstrated by anyone caring (like a President and administration under fire) to look, and show, that it is blatantly obvious that it is the Fed’s current policy of interest rates and balance sheet reduction that is erasing all the “good work the administration has done with growing the economy and jobs.”

I can hear the administration arguing something along the lines of…

“Well of course the Fed has independence, but with that independence comes even greater responsibility, especially in times like these. That’s why we’re going to begin arguing for greater visibility into exactly what and why the Fed is doing what they’re doing and are calling for legislation to audit them. After all – just look at these markets!”

The one who has the last word in this matter may not be the one many think or believe. Especially those that believe they are absolved from such.

© 2019 Mark St.Cyr

Addendum:

I was just made aware that the Federal Reserve has changed its press conference schedule from the every other meeting ( or 4) to now there will be one after every meeting for 2019. (e.g., now there’ll be 8) And if that changes my thoughts in any way. Here’s my response:

No. As a matter of fact I believe it will bring even more volatility for these two reasons:

First: That means every meeting has to now be considered “live,” where an additional interest rate increase may be possible. Everyone will think this means that there’s now opportunity for the Fed to pause. That may be true, but that also means if the data (data the Fed focuses on) continues to be good, then the Fed can also accelerate. Doesn’t mean they will, but that does mean it’s a possability and will have to be factored in, regardless.

Second: This now means the Fed has twice as many opportunities to say, or not say the wrong thing, at the wrong time, which now doubles the possibility for increased volatility at every meeting.

As I stated earlier – it may not matter what the Fed says as to halting the already accumulating carnage. However, what they can say is the wrong thing (as well as not say if the “markets” are looking for it) at the wrong time something that can exacerbate any further market mayhem.

After-all, if everything was going along as swimmingly as they have been stating it has, i.e., “We got this!” Then why the need to increase the pressers at all? Think about it.

As always, we shall see.

Some Things Bear Repeating

I rarely repost prior articles, but in the spotlight that has suddenly befallen on Apple™ it appears one of my prior articles is suddenly spiking our traffic. So it’s in that context I felt it was worthy of reposting for those who are new, along with others that may not have read it prior. Remember, this was in September when arguing anything resembling such was seen as “doesn’t get tech” or “doesn’t understand markets.” Their go-to defense? “Just look at their numbers and stock price!” I’ll let you dear reader be the judge on how prescient or not my arguments were. Below is the aforementioned article. To wit:

Has Apple Become Sony?

On my show the other day I was voicing my recent escapades into frustration that appear to be happening far more often than any other time I can remember. The problem with this “escapade” is the reason for it. e.g., my interactions (and needs) with my current Apple™ products.

Let’s get this out-of-the-way as usual: I am and have been, for quite some time, what many might call an “Apple fan-boy.” My first business computer back in the day was an Apple IIc®. Like most, I toggled back and forth over the years between PC based platforms (i.e., Windows® based) and Apple devices via one product or another. Then, over this past decade, I completely replaced all prior PC based items with Apple. e.g., computers, software,  iPad®, iPod®, you name it. The reasoning behind it was simple: everything seemed to work intuitively, seamlessly and across all the varying devices.

But that was then – and this is now – and my latest “escapades” have decisively proven out that the word “intuitive” has been jettisoned right alongside with all the other no longer “supported” software or devices. As for “innovation?” All I can say to that is what product are you looking at, e.g., Apple devices or, Apple the stock?

If your answer is “Apple the stock?” Then take solace that “Cook and Crew” has you covered, for even the once heralded technophobic investor known as Warren Buffett is buying. Buying the stock that is, right along with Apple’s massive ongoing share repurchase program of its own.

This is what appears to be Apple’s primary focus today. The problem with it is – once the stock value story is over – so too may Apple’s dream days of basking in the Wall Street floodlights. And that day may be far closer than anyone believes. But then again, the new digs to bask in that afterglow may be far more useful than the place for innovation that seemed to be the narrative that preceded it.

Or, said differently: what better place to reflect and bask on the laurels of Jobs, but in the building he also envisioned and began.

Again, I’m not just piling on to the ever-growing negative commentary after Apple’s latest event. (on a side note, how many even noticed they had one? I know I only realized after-the-fact, and that in-itself surprised me.) But “ever-growing” is a relevant term.

As I iterated in the beginning of the article this all came to bear as I was having what may have been my single most frustrating day with my Apple products than ever before.

One of the first things I must note for illustrative purposes is that I upgraded all my current Apple computers (yes, multiple) just last year. The problem?

I purchased, then upgraded via 2012 models. The reasoning? You can no longer upgrade Apple products. i.e., if you outgrow what ever you purchased at the time – you have to now buy, once again, an entirely new model.

The issue with this is, for many circumstances and users, many a 2012 model once upgraded to its max potential is less than 1/2 the cost, if not more so, than its newer equivalent.

That’s not being “cheap” or frugal per se, that’s just using plain common sense.

Apple under Cook’s tenure has now turned the once coined “Apple tax” into a means of outright extortion. And it’s pissing off many a person like myself.

I know music producers that were once avid Apple users (million unit selling producers, not basement types) that are absolutely furious and no longer use Apple hardware such as the one heralded Mac Pro® (aka “Trashcan Mac”) because of both the price, the inability to upgrade it, and – it is still the same model offered in 2013.

Again – a 2013 non-upgradeable post purchase piece of hardware at 2018 prices! (e.g., $6 – $7K if you max its hardware which is almost a prerequisite if you’re doing serious work and can’t afford the chance of needing that little “extra” once you’re well into certain projects.)

Their remedy? What’s now known as “The Hackintosh.” i.e., a PC based hardware platform that can run Apple software.

The issue with this current workaround which one knows ticks Apple off, as it should, is one that should be used internally as warning within Apple, not just some “gnat” that needs to be squashed. Or said differently…

How is it that one can purchase off the shelf hardware equivalents, if not better, or more robust than currently offered by Apple, and build, at home, with simple do-it-yourself skills something almost as reliable as a current Apple product? And, in some cases, for less than half the price?

Shouldn’t something of this nature push a company that was purposely designed to be “cutting edge” to use its resources to do the same, if not surpass what is currently available rather, than spending time and resources in finding ways to not allow its software to run on them?

Apple today appears to be mimicking the music industry’s way of dealing with issues rather, than the way Jobs showed the industry how to make music a better experience, while making more money.

And, let’s not forget – it was in that way of thinking that propelled Apple to have the resources which it capitalized on and helped propel it to where it is now.

Speaking of music: hows your experience with the newly updated iTunes®? Here’s mine: What a freakin’ joke.

This is supposed to be the place to interact and purchase all your latest and greatest Apple experiences of music and more. I personally can no longer tell if I’m looking at an Apple interface – or an old Yahoo™ page, along with about the same intuitiveness for interaction.

I’ll just give you one example: Try creating a playlist to use on your iPod. If you don’t create a new one everyday so that this “new” process becomes engrained enough to dispel the previous – it is not only cumbersome – it’s beyond stupid. e.g., to create a new playlist, you no longer just drag and drop – you now have to open a new window – to drag and drop. And, finding where that “action” is when you’ve been doing and using the same easy (and intuitive) feature and process for years, has been akin to a new adventure or exercise in “Finding Waldo®,” every – single – time. And this was part of the revamp and upgrade!

“But wait…” as they say on late night television, “…there’s more!” The issue here is – much more.

In 2014 I penned an article titled, “Did Apple Just Become Microsoft?” At the time this was quite the controversial statement in both business and finance. So much so that even Market Watch™ picked up on it in an article by Shawn Langlois in his “Call of the day” section. To wit:

And with the potential move to buy Beats, Apple could very well take the final step in its (d)evolution into Microsoft. That’s pretty much how Mark St. Cyr sees it. Of course, he’s not the only one piling on such a purchase. Music critic Bob Lefsetz calls Tim Cook a clueless operations guy. But St. Cyr takes it a step forward by comparing Apple to the lumbering software giant. In a “complete and utter cave-in to Wall Street,” Apple’s latest report wasn’t consumer-products based; rather, it was designed to play Wall Street’s game, he says.

“Dividends, debt, splits, and more,” he said. “I don’t think the iPhone has added as many new features at once as the new features released in Apple the stock.” That’s how Microsoft does it, said St. Cyr as he waxed on about the Apple you knew is no longer. “I hope I’m wrong, but the actions are beginning to not only speak for themselves — they’re screaming.”

As I said, in 2014, that was a very controversial call. How has that “controversial call” worked out these years later? Great question, and let’s use the same venue for its relevancy, shall we? For as Rod Stewart once crooned, if “Every picture tells a story, don’t it?” Then the following screenshot should tell one all they need to know in this current saga.

From an article in June of this year, again, to wit:

(Source)

Are you beginning to see the reasoning behind my current consternation?

As I alluded to in the beginning this entire frustration theme was borne when I was smack dab in the middle of a project, when suddenly, I found what I had thought (or believed) I could do easily – turned into one of the most frustrating adventures I could remember.

Rather than go into details about it, let me begin to bring what happened in stark relation to what Apple is now offering and the abject tone deafness, as well as alarmingly lack of innovation for the foreseeable future.

One of my issues was due to something which, once again, was a feature I believed was either still available or, at the least, would be easily remedied. To my utter bewilderment not only was this process not intuitive – it was if I was working still using a Windows Vista® platform. It was mind-boggling frustrating.

But as frustrating as it was is pale in comparison when I later gained my composure and viewed the highlights of the new releases coming via the recent Apple event.

To my amazement and complete disbelief, there was virtually nothing for Mac’s. New Mac Pro? Nope 2018-19 looks to be offering the same 2013 model. New products? Yes, new operating system or reboot. Issue? Just how many features will power users like myself lose, once again, as the product seems to get dumbed down ever further?

Want to see a demonstration into said absolute tone deafness? Here’s a quote via Apple’s Lisa Jackson as reported by BI™. To wit:

“…Apple’s Lisa Jackson said at Wednesday’s event: “Because [iPhones] last longer, you can keep using them. And keeping using them is the best thing for the planet.”

Here’s the issue I, as an avid Apple user and consumer, have with that statement:

During my escapade noted above I grabbed my older iPad (which I haven’t upgraded because, it still works for my purposes yet, my wife has the latest and greatest) when to my surprise as I ventured to the Apple Store® to research a possible fix using my current model – I was not allowed to even enter because, I now needed at least iOS® version 10 or better to even enter the store.

No, not that I could only look at the current offerings and just drool over them because, they wouldn’t work on my current model. No – you can not enter – be gone you now worthless past revenue pawn. Only 10’s or better enter here!” That was the impression for an Apple user with a house full of Apple devices is now treated.

Here’s what I have to say about the now “locked door” and the way I found it to be locked:

“Are – you – f’n  – kidding – me?”

It was during this time I was absolutely running around like a chicken with its head cut off trying to come up with solutions to a problem I deemed should not be happening in the first place on my Apple’s. Then – Apple serves me the equivalent of locking the front door of its store while I can see everyone inside perusing and more, and not only won’t open the door, but pulls down the shade in my face so I can’t see in to begin with.

So how does that type of “new” experience for someone like myself square up with Ms. Jackson’s idea of: they last longer so you can use them longer?

Hint: I immediately began looking at Window’s based platforms once again.

The reasoning was simple: This kind of frustration was why I jettisoned PC’s and switched over to Apple to begin with. But now? If this is how using Apple computers and software is now going to be and devolve? I might as well get this kind of frustration and only pay half the price – if not even less.

I’m not the only one who’s noticed that under Cook’s tutelage customer “innovation” has been replaced with Wall Street diligence. Here’s a recent observation (and summation) from Seth Godin via his blog. To wit:

“Apple became the first company to be worth a trillion dollars. They did that by spending five years single-mindedly focusing on doing profitable work. They’ve consistently pushed themselves toward high margin luxury goods and avoided just about everything else. Belying their first two decades, when they focused on breakthrough work that was difficult and perhaps important, nothing they’ve done recently has been either. Tim Cook made a promise to the shareholders and he kept it.”

I’ll just add, he’s kept it so well, as I stated earlier, even Warren Buffett is now a believer and a buyer. That alone should be all one needs to know in helping to understand where the Apple under Cook has deviated with the Apple of Jobs.

But with that deviation comes a very high, and too some, crippling price tag.

Jobs always exuded the aura that producing great products that people will pay up for, producing considerable net profit margins, should be the key focus – not the stock price. For if you did the former the latter would take care of itself.

Cook on the other hand seems to have done the latter, and if you live by the share price – you’ll perish by it also.

Back in October of last year I penned another article, again, asking some very pointed questions about Apple, in-particular about Mr. Cook, titled, “Are Tim Cook’s Days As CEO Numbered?”

This article made its way, once again, across the media. The difference this time was that not only did it make its way across almost all of the largest sites (i.e., it landed on the front page of the Drudge Report™ for just one) as we stand here today, we also have a bit of history to see if what I stated then may not have been as “crazy” as some first stated. But rather, is more in-line with what I like to explain as “Sometimes I have to remember where I’m standing is over the horizon to many, let alone, what I’m seeing from that standpoint.”

Should these “markets” suddenly come under extreme pressure borne out of some sudden upheaval currently under watch or, out-of-the-blue, the share price of the “priced for perfection” group of stocks currently known as “The FAANG’s” could find themselves in a place both they, as well as many a-current mainstream business/financial pundit never thought possible. i.e., Calls for CEO change to mitigate (in theory) any stock market carnage. Or, further and unrelenting carnage.

As I started off with the title of this article, I referenced Sony™, the reasoning was simple: The Microsoft comparison appears to have been met in far greater detail that I first thought. So why the Sony? Here’s that reasoning…

For those that remember right before the crash of the dot-com era, Sony was “the” and I do mean “the” brand name product that people seemed willing to pay up for with reckless abandonment. All it seemed they did during the late 80’s and 90’s was release newer versions of the same old thing. (Remember when “Trinitron®” was a thing?)

Now we have Apple offering new and improved name branding, and what do we get? “XR” and “XS” The problem here? It’s not XS meaning excess or, something seemingly intuitive. No XS is pronounced “Ten -ess” and XR is “Ten-are.”

Great branding, huh?

Oh yeah, and in what seems to be typical Apple fashion (pun not intended) once again, a new “coming soon” Apple device is missing in action. e.g. wireless Airpower© charger. Jobs was a fervent defender of what is called by many as “shipping.” i.e., actually delivering a product out the door and into a customers hand.

Now it seems it’s more like, Take a number and wait, then, wait some more.

And to put that “tone-deaf” statement I included earlier made by Ms. Jackson for even more comparison of what seems to be an absolute real-time example of what I’ve contended over the years about much in Silicon Valley? i.e., rarified air turned into exhaust fumes. Here’s the quote one more time. to wit:

“…Apple’s Lisa Jackson said at Wednesday’s event: “Because [iPhones] last longer, you can keep using them. And keeping using them is the best thing for the planet.”

So now, compare the above to what was not mentioned. Again, quoting from the aforementioned BI article. To wit:

“— Fans of other Apple products got hit with some bad news, and none of it was mentioned during the event. Apple quietly discontinued several devices Wednesday, including the iPhone 6s, the iPhone X, and the iPhone SE. The iPhone SE and the iPhone 6s were two of our favorite iPhone models and incredible values in their own right. The iPhone SE was notably the last iPhone with a 4-inch screen; those with smaller hands must now embrace Apple’s larger screens or look elsewhere, maybe even for a used iPhone SE.”

Are you beginning to realize why myself and others are beginning to become a little bit further over the edge of perturbed than we used to be?

I mean, are you now supposed to gamble away $thousands upon $thousands on the now going on 6-year-old Mac Pro  with maxed out 2013 specs, that’s not only an un-improvable or non-upgradeable hardware model meaning, that’s the best it’ll ever be, unless they release something newer tomorrow for you buy it all over again? That is, if they ever make a replacement for it to begin with, or worse, discontinue it all together. Or the worst of all worlds which they seem to be doing more of lately: Announce a newer and greater version – then – either delay or never deliver it to begin with. (Hint: see current Mac Pro for clues.)

Sony seemed to follow this same “marketing” gimmickry back during the 90’s. Maybe there was a reason for it. Let’s see if there’s any correlation we can conclude if we look back at an old “picture” of Sony’s share prices and compare them to Apple’s of today, shall we?

Once again, let’s view them as we hum that ole Rod Steward song, once again. To wit:

(Source)

On the left is Sony’s share prices represented via a Monthly bar/candle chart. On the right is Apple’s using the same.

So what’s the point of the two? Easy, as you can see looking at the lower portion, or X-axis, Sony’s share prices and “could do no wrong product cycle marketing” took place directly into the bubble now known as the “dot-com era.” Apple’s is much the same, only it is directly related (my conjecture) into the bubble known or coined as “the central bankers’ bubble.”

The problem with bubbles of any sort? Here’s another hint, again, to wit:

The best its (Sony share prices) been able to do since that prior “bubble” is get back to where it was when an even greater bubble that burst in 2007/08 now known as the “Great Financial Crash.” Again, all during what a few like myself point to as an even greater bubble now known as “Central Bank Fueled Mania.”

What does one think will happen to both Apple the stock, as well as a CEO that has made his name on that story should this “market” suddenly falter?

As always, no one knows, but if past is prologue, maybe the Sony comparison isn’t as far fetched as some may think at first blush.

Sometimes there are others that come to mind and make you think twice for comparisons. And then some, come from the most unlikely of sources. Here’s an example:

You know somethings doomed or, at least should be giving you clues that one should take heed, when the marketing and branding department puts forth a name or moniker for your product that will cause the need for everyone to endlessly correct everyone away from intuitively pronouncing from what they believe or, think it is.

To think the “ten-ess” issue wasn’t observed or noticed at the C-suite levels, but yet, allowed or reasoned off as “a good idea” tells me all I personally need to know. Case in point:

Does anyone besides myself remember, Ben Affleck or, Jenifer Lopez visible frustration where in nearly every interview they had to correct either the interviewer or, someone else, that their movie title was pronounced, “Gee-lee” rather than the intuitive Gigli or “jiggly.”

The result?  Let’s just say, now some 15 years later, a response of “What movie?” says all that needs to said.

I have a feeling XS pronounced as “Ten-ess” will join this pantheon of other innovation classics, right along with New Coke® and Betamax®.

But only time will tell. That, or a sudden “market” panic.

© 2018 Mark St.Cyr

My How Fast Things Change

In the span of just a few weeks one of the most celebrated CEO’s of the current era has gone from what can only be described as Hero – to Zero.

As I type this Apple™ the once celebrated $Trillion market cap phenom has lost nearly 40% of its value. Rounding out the sheer size of this loss is somewhere in the range of $400 Billion. Again, that’s lost as in “poof!” It’s gone.

As I articulated on my show today if one reads the letter that Mr. Cook sent out to describe the reasons for why Apple will miss its prior guidance, one can’t help but be dumbstruck at just how lame the defensive blame shifting truly is. The most glaring is the “It’s China, China, China!” rationale.

All I can say is “China, really? China surprised you?”

Let’s remember that Apple has told-and-sold the idea that no one knew the China consumer market as intimately as them. Again, let’s remember, it was Jim Cramer’s now famous “note from Tim Cook” back in 2015 that was supposedly used as the impetus for shaking off questions about China’s economy when the “markets” were in absolute turmoil.

As was told-and-sold back then the idea went something along the lines of “no one knows what’s happening on the ground in China more than Apple.”

Yet, now – suddenly – Mr. Cook was blindsided by things he stated took place in the second half of 2018. I’m sorry, but isn’t Nov. part of the end of the second half? Was there any warning during that earnings call? Hint: rhymes with D’oh!

This is just one item, for there are many more when viewed through any business acumen above running a lemonade stand. Actually there are so many they’re quite disconcerting.

However, it’s no longer just me asking these questions. Now – suddenly – everyone else seems to be questioning Mr. Cook. It’s funny how a sudden additional 10% free-fall in a stock will focus the mind into asking once unthinkable questions, is it not?

Here’s just a sample of what is already out there across many of the financial news outlets. I highlighted the relevant points. To wit:

(Source)

Why the above? It’s in direct response to Mr. Cook’s argument that “pricing” may have been a problem. Yeah, I’m not making that up. People may have been turned off from buying the new phones because they were maybe a bit expensive. That was a real reason given in Mr. Cook’s letter. But wait, there’s more! as they say in TV land. Again, to wit:

(Source)

Why the above? Easy, just read the highlighted. It says all one needs to know why Mr. Cook is in a very deep trouble. i.e., credibility is shattered.

Think the credibility issue is an overstatement? Then let me offer the following and you decide. Once again, to wit:

(Source)

To reiterate, the above is what I found in last few minutes of the trading day today as I’m typing this. Again, if this is the first wave then all I’ll say is things are going to get very ugly indeed for Mr. Cook if the stock continues to fall any further, for as I’ve warned the age of the Celebrity CEO – is over. This current debacle in Apple is proving that statement in-spades.

And for those that think I’m just piling on, let me add one last “picture” as they say in Silicon Valley that when I first showed it – the entirety of the business/financial media called it “crazy talk.”

From my article back in Nov. “The Question That Stunned The Global News” To wit:

Here’s the updated or sticking with the “picture” analogy – unretouched version. Again, to wit:

Suddenly all my “crazy talk” doesn’t appear all that crazy. But then again…

What do I know.

© 2019 Mark St.Cyr

Something To Be Aware of…

Suddenly there seems to be some very unsettling actions taking place in what is known as the “General Collateral Repo Rate Market.” This market is one segment every business needs to both know and understand, whether you’re a solo-practitioner or, CEO of a global concern. The reasoning is this is where businesses of all types secure funding for their operational transactions.

This market is very liquid, or at least has been, when it comes to the transaction processes. However, in the final days of 2018 on Friday the market suddenly spiked in a one day record move, bringing the overnight rate to its highest since 2001.

However, this move was being explained away by many as a “one day, year end, balancing the book” type phenom. Then, it did it again as in – today.

That’s not something that is suppose to happen unless there’s something wrong. What that “wrong” may be is anyone’s guess. And guessing much of the “experts” are doing just that, for, again, this was only suppose to be a one-off-thing possible on the last day of the trading year.

And now here it is again – on the first. (here’s a link to a ZH article breaking it down in more detail if you wish)

Here’s my two-cents for why this phenom requires one to pay very close attention…

It could be the subtle clue to show you just how fragile and how quickly everything can go awry.

For those wondering exactly what the GC Repo-Rate market is, you can find a succinct explanation via Investopedia™here. Below is a screenshot I took from said source and underlined what I believe may give a clue for this sudden spike. To wit:

The reason why I make this point is that there are some key identifiers that should not be taken lightly in the above and could hold (again, could) significant underlying clues, which are: These have been traded and accepted as – all worth the same in response to one from the other. i.e., all the “apples” in any given basket were assumed unbruised and insect free.

However, now with there being no longer any implied “Fed Put” or other central bank insurance and a “market” that has touched bear market status in mere weeks of all time highs, it may just be the so-called “banks” or “middle-men” no-longer trust what’s in these tranches without first knowing precisely what are in them, along with precisely what they may – or may no longer be worth at first blush.

Does it mean I’m right? I have no clue yet, in that light, I’ll only point to the last time I made such an observation was when I argued that when a company sends product across the oceans with the absence of a letter of credit, it wasn’t something to demonstrate how secure vendors feel in shipping their products and getting paid as so many argued, but rather, might be a sign of desperation.

The result? China’s entire commodity complex fell apart just months later.

As always, we shall see. But for those looking for clues to stay ahead, or at least try and keep up with the daily business and market gyrations?

This is something to watch ever the more carefully.

© 2018 Mark St.Cyr

Today’s MYTR Broadcast

Dear listener, we experienced a bug during the post production that has the effect of making Mark’s voice sound a bit distant. Mark believed the effect wasn’t that overwhelming to delay the release but wanted us to note it. It has since been rectified. Thanks!