Author: Mark St.Cyr

Mark is a globally recognized expert in entrepreneurship, motivation, business, sales and financial markets. He writes from a first hand perspective. His insights can be both cutting edge, or just a cutting through the clutter. Either way they come from first hand knowledge, and experience that is classic Mark. Visit www.MarkStCyr.com "Pragmatic Insights For Today's Business World™"

The Market Signal Everyone Should Heed: When Doves Cry

Regardless of what mainstream business/financial outlet one turns to of late, one meme has returned with a vengeance. Has it been, Buy The F’n dip? (BTFD) How about Hold On for Dear Life? (HODL)

Actually its a bit of a trick question, for as these sayings have really never truly gone away over the last few months, only their zeal for overuse and execution has.

No, what has suddenly reappeared on the scene is the oldest and most underrated signaling one can pay attention to, and it too sports its own acronym.

That saying? CYA aka Cover Your A**. And it is showing up everywhere – if – one wants to truly listen.

The only thing more important than being acutely aware for its emergence, is taking note from precisely where. And it is here, this time, that “where” is a very important signal to not only hear, but make note from where. For the implications to not only the “markets,” but the global economy at large are tremendous.

Yes, “tremendous,” maybe extraordinarily so.

The CYA siren call has been showing up everywhere as of late. So, to pick out which to pay attention to has been clouded by the fact for its reemergence via the next-in-rotation fun-manager cabal, when (suddenly nervously) explaining why the “markets” are currently rising based on “good earnings, and reasonable P/E metrics.”

If one listens carefully, very carefully for that matter, suddenly there is a caveat at the end of nearly every explanation.

Remember back in days-of-yore (like January) when earnings season was told/sold to be “just fantastic!”? Do you remember any caveat? There was, but it was only to the laudatory side,

Tax cuts were going to propel everything to the moon. GDP was now poised to rocket along taking the entire market with it, and on, and on. “Dow 30K here we come!” Then, everything changed.

Was it tax cuts? Nope, they were passed. Was it GDP? Well, the original estimates and readings were a bit, how shall we say, “over zealous,” maybe? (over 5%) But everything was supposedly firing on all cylinders.

Earning so far? So far, everything seems to be just as was called for. i.e., a bit more positive than negative, with about the same in respect to those beating expectations vs missing.

In other words, all according to plan, right? And yet, the “market” not only feels stuck, but what’s worse, (I’ll contend, far worse) feels to be teetering.

This has now (right on cue) caused many earlier talking head bull-market-prognosticators to, out-of-the-blue, add caveats to their musings.

In other words, “everything is rosy, that is, unless the world melts down tomorrow.”

As catch-all as the aforementioned is, it pretty much sums up every call as of late. i.e., Just a few months back there was no need for any caveat, unless it was an add-on portending even more upside nirvana than what being heralded at that moment.

Today? It’s all CYA. e.g., “As we’ve/I’ve said before, this will all end badly” has, once again, suddenly reappeared. (coughCNBCcough)

Although the above is noteworthy, there is another CYA making its way across the financial media. And, it is here, where one should pay the most acute attention to not just the wording, but rather, who that reasoning is coming from. i.e., The once market soothing coos of the Federal Reserve’s noted doves is sounding, more or less, like the call of a shrieking hawk laced with tears. i.e., They seem to be trying their best to align their views and wording with the now Chair Mr. Powell, but seem to be doing so with great personal agony or anguish. Opinion of course, but it’s how I interpret what I hear today, as to what I heard only about a year ago.

Case in point: Fed. Board Gov., Lael Brainard.

In a speech given at the Global Finance Forum in Washington D.C. Ms. Brainard made a few startling remarks to those who’ve regarded (and correctly interpreted, I’ll add) her as one of the most fervent “doves” at the Federal Reserve in regards to policy these past 9 years. Here are a few notables. To wit:

“Sizable fiscal stimulus is likely to reinforce cyclical pressures at a time of above-trend growth and tightening resource utilization. There are few historical episodes of similar pro-cyclical fiscal stimulus to draw upon as we assess the outlook. But in the few cases where resource utilization has been near the levels we may soon be approaching, there have been heightened risks either of inflation, in earlier decades, or of financial imbalances more recently.

Currently, inflation appears to be well-anchored to the upside around our 2 percent target, but there are some signs of financial imbalances. Our scan of financial vulnerabilities suggests elevated risks in two areas: asset valuations and business leverage.”

Here’s another…

“In terms of liquidity, not only do our largest firms now have the right kind and amount of liquidity calibrated to their funding needs and to their likely run risk in stressed conditions, but they also are required to know where it is at all times and to ensure it is positioned or readily accessible where it is most likely to be needed in resolution.”

However, it is here (all opinion, of course) where one can hear the true change in tone, as well as implications, again to wit:

“I support efforts to improve the efficacy of the Volcker rule while preserving its underlying goal of prohibiting banking firms from engaging in speculative activities for which federal deposit insurance and other safeguards were never intended. The interagency regulation implementing the Volcker rule is not the most effective way of achieving its very laudable and important goal. We are exploring ways to streamline and simplify the regulation to reduce costs without weakening the key objectives. We should be able to provide firms and supervisors with greater clarity about what constitutes permissible market-making. We should also identify ways to further tailor the Volcker compliance regime to focus on firms with large trading operations and reduce the compliance burden for small banking entities with limited trading operations.”

My conclusion? Hint: The Bernanke/Yellen Put has been revoked, at least for the time being. Consider this both a warning, as well as notice. i.e., The banks and “markets” will have to deal, on their own, with lower prices and liquidity issues. Only in an outright panic will they re-engage. And where that level resides is currently lower, much lower, than many may assume.

As always, one should read the entirety of the prepared text and conclude for themselves. However, with that said, I can only assume that it was painful for Ms. Brainard to set forth such “hawkish” tones. After-all, she has been one of the most consistent “doves” in regards to anything Fed. related and its willingness to intervene at even the most innocuous of market turmoil. i.e., Even if it was to just suggest (aka Jawboning across the media) that the Fed. was standing at-the-ready.

Ms. Brainard, in no uncertain terms, lays out point-after-point that the Banks have the ammunition within their own quivers to deal with any “market” uncertainty. And if that “uncertainty” also equals market losses? The Fed. is now viewing that as welcome “froth extraction.”

That alone must have sent shivers down many a bankers spine, which brings us back to today, and the question, what does it all mean for the “markets” going forward?

No one truly knows for sure, but there are clues to be added to all the above, and they are these…

Now that the N. Korea situation seems to have been resolved to the positive, shouldn’t all the “risk premium” that came off from the “all-time-highs” be not only retraced, but more akin to “Dow 30K here we come?” You know, since that was one of the main drivers said to be the reason for any sell off in the first place.

How about if you now add into that the “Syria” or “Russia” showdown which has all but been negated? Shouldn’t that now, at the least, add more fuel to propel higher with immediacy?

And what about all the above added with earnings coming in as projected? Surely, that would also conclude that the “markets” should rocket higher and faster than a Saturn V, right?

Remember, the Federal Reserve along with all the so-called “smart-crowd” now appear in-line with the same thoughts of the economy, as in, everything’s on solid footing, earnings are coming in as prophesied, employment is at all-time record highs, real-estate is up, “markets” are still hovering at near all-time highs, I mean, what’s not too like, right?

Well, there is one thing, and it is bringing many a “dove” along with “market bulls” to tears. That thing?

Quantitive Tightening (QT) along with rate hikes are going to go on, unabated, for the near future. That’s the signal, the only signal I’ll maintain, that matters.

That is – until the “hawks,” “markets,” and politicians begin crying “Uncle.” Which may not be that far off, over-the-horizon, should these “markets” not rebound from here, with immediacy.

Yet make no mistake, the Federal Reserve has now covered its own bases. i.e., CYA speeches and more is also akin to another acronym: YBW (you’ve been warned)

© 2018 Mark St.Cyr

F.T.W.S.I.J.D.G.I.G.T.

(For those who say I just don’t get it, get this.)

The more things change, the more things stay the same.

It wasn’t all that long ago, no matter what the “hot topic” at-hand may have been, the moment I said anything contradictory to the media or investing narrative of that day, I would be besieged with calls of not knowing anything, just trying to be contrarian, for the sake of being a contrarian, and on and on. And, of course there were always those that could never be repeated in polite company, for they would make a Marine blush.

This all comes with the territory. i.e., If you want to play on the world stage and express an opinion, any opinion, there will be those that take issue with it. Even if they don’t know what they themselves are talking about. Trust me, happens far more often than even I ever thought possible, which brings me to the reason for this article.

As those who’ve been with me for a while know these FTWSIJDGIGT articles came into being to address many of these type of arguments years back, and since took on a life of their own. And it’s here, that this one, in particular, demonstrates why. Case in point:

Over the weekend I penned an article implying that the last 10 years of investing prowess learned under central banking largesse, has all been flipped on its head, resembling going from ease of buying-the-f’n-dips (BTFD) to now resemble the crypto-space and their mantra known as hold-on-for-dear-life (HODL).

The implication of this, I asserted, was if this is what you understand to be (e.g., HODL) “insightful, pragmatic advice?” Maybe you’re not as “informed” as you think you are. The only thing worse may be putting it into actual practice.

Well this sent some people into an absolute tizzy!

Whether or not one agrees with my assertions, doesn’t matter. People are grown adults and can decide what is relevant to them and take away what they want. However, if one has/is practicing BTFD or HODL type strategies, with the only reasoning for doing so is that it’s worked in the past, therefore, it will/must work going forward? I only have one comment to make: Best of luck with that.

So, with the above for context, it wasn’t long before I received a note from a colleague asking for my thoughts given that people like Tim Draper were also joining Mr. Lee and now calling for Bitcoin™ to go parabolic. However, Mr. Draper’s call is different from Tom Lee’s, where Lee is calling for $25K before year end, Mr. Draper is touting it should be $250K in four years. Quite the call to be up Tom Lee by 10X, but there you have it. And it’s making people, once again, appear to look at Bitcoin and the others as Homer Simpson thinks about doughnuts.

And it was here that I realized just how short, along with how little memory anyone retains, if the implication for “quick riches” can be implored. i.e., “Don’t question the Snake Oil salesman, after all, it says right there on the label, “New and Improved!” so it must be different this time.

Think I’m making this stuff up? Fair point, as always, you be the judge.

As many of you know I was one of the first on the global stage (and for quite some time, one of the only) to publicly question the entire “unicorn” and “it’s different this time” meme when it came to Silicon Valley, V.C.’s, et al. And one of those that I openly railed against was Theranos™.

At the time, Theranos was the and I mean just that –the– wonder company and darling of the business/financial press. It seemed to be the stuff legends and dreams were made of: A $Billion dollar unicorn, woman founded, woman led, revolutionary product, female Steve Jobs, and on, and on.

Then: It all blew up and was exposed as the fraud that it was – and with it – the once fawning mainstream financial/business press scattered away from these revelations like cockroaches under flood lamps. Suddenly, the subject of Theranos appeared more tainted than the results they were claiming as “revolutionary.”

So enlightening was this moment (for those that wanted to see that is) that I wrote an article titled, “Theranos: Unicorn Valley’s Madoff Moment.” And made my case why.

But then a funny thing happened along the way as the whole Theranos debacle imploded further as claims of fraud and more began unfolding. i.e., The more revelations that came forward (like lawsuits, decertifications, FDA investigations, and more) showing the entire Theranos story to be nothing more than a fraud.

There were those, in the face of the overwhelming evidence (like admitting the machines didn’t work as stated) that came out in defense of Theranos, claiming, it was all “a witch hunt.” Example?

Theranos early investor: Tim Draper.

During a subsequent interview via one of the highly touted mainstream financial/business media outlets, I found it to be so revealing (as well as appalling) for not only his assertions of defense, but in addition, the obvious lack of any push back via the interviewer. So much so I was left slack-jawed. I found both to be so startling, that I penned another article just a bit later titled, “Silicon Valley Snake Oil”

The reason for it was simple. Which was worse?: The claims that there was nothing wrong when nearly everyone knew it be a sham? Or, the lack of push back via what many regard as “the mainstream business/financial media?”

I’ve asserted – both were of the same caliber. e.g, Both were just as deplorable as the other. Period.

Yet, with what we now know, since then, what makes the above even more telling is Mr. Draper continued on (i.e., Openly declaring there was nothing wrong with Theranos) for quite a long time further. Even upping his calls to “witch hunt” as time passed and further revelations became public.

Here’s a screenshot of the top four hits via a quick Google™ search using the criteria depicted in the search bar. To wit:

(Source)

As one can see, the dates of the stated articles progressed well into January of 2017. Again, this is well after the FDA had begun its dismantling of the company’s claims. Which brings us to today.

What is Mr. Draper pushing today? Hint: Bitcoin. Prediction? “$250K in 4 years.”

How’s Theranos working out?

Last month’s latest: “Theranos CEO Holmes and former president Balwani charged with massive fraud”

Last week’s latest: “Theranos lays off most of its remaining workforce: WSJ”

Well, I guess we now have our answer as to why there’s suddenly a whole lot of time available for Mr. Draper to push Bitcoin, right?

Here’s another screenshot via a generic Google search. Again, to wit:

(Source)

Once again, the mainstream business/financial media has another “fable” to push. And seems to have found just the man to help push it.

Just as his last “fable” readies itself for possible jail time.

However, if you think there’s nothing too any of the above, and think I’m just trying to draw corollaries or conclusions where none are. As always, I’ll just leave you with today’s latest news and let you decide for yourself as you always should. To wit:

“NY AG Launches Probe Of 13 Major Crypto Exchanges (Incl. Coinbase, Gemini)”

All coincidence, I’m sure.

© 2018 Mark St.Cyr

Footnote: These “FTWSIJDGIGT” articles came into being when many of the topics I had opined on over the years were being openly criticized for “having no clue”. Yet, over the years these insights came back around showing maybe I knew a little bit more than some were giving me credit for. It was my way of tongue-in-cheek as to not use the old “I told you so” analogy. I’m saying this purely for the benefit of those who may be new or reading here for the first time (and there are a great many of you and thank you too all). I never wanted or want to seem like I’m doing the “Nah, nah, nah, nah, nah” type of response to my detractors. I’d rather let the chips fall – good or bad – and let readers decide the credibility of either side. Occasionally however, there are, and have been times they do need to be pointed out which is why these now have taken on a life of their own. (i.e., something of significance per se that may have a direct impact on one’s business etc., etc.) And readers, colleagues, and others have requested their continuance.

It Only Took 10 Weeks To Disavow 10 Years Of Investing Prowess

Let’s start off with a rhetorical question: What does investing in today’s “markets” have in common with cryptocurrencies?

Answer: Hope, and a lot of bullsh*t parading as “expertise.”

Now I know this will make many in the crypto-arena upset, however, that’s pretty much inline with what I stated about the entire “unicorn” phenom back when it was also unpopular to say, but I’ll let the results speak for themselves. e.g., How’s that whole Uber™ thing working out? Sorry, too soon?

The reason why I make the assertion that these “markets” have far more in common with cryptos, is the fact, that their valuations rise and fall on only one thing: Innuendo parading as possible hope. Hint: If one thought “hope” wasn’t a strategy, just think of how flawed the aforementioned is. Truly think about it, for its absolute crazy-town the more one tries to wrap their head around just how far down the rabbit hole we’ve gone. Even Alice would be amazed.

Have you heard of the investing genius now known as “HODL?” (hold on for dear life) Those that were fortunate enough (whether by genius or dumb luck) to invest in the crypto-arena back when buying a pizza took the equivalent of multiple whole Bitcoins™, watched “pizza money” turn into serious valuations worth tens of thousands. For some, it was $Millions and then some.

For those that invested later? Let’s just say watching $20K turn into $5-and-change-K  does not instill confidence for HODL. And for those that did invest earlier? HODL has now morphed into a game of: “Do I get out here? Or, wait for another bounce? And what if there isn’t one?”

These “bounces” that have materialized over the last few weeks in the crypto-arena have been nothing more that innuendos parading as hope. Headlines, analysis and more try to parse why “cryptos are back,” because of some out-of-the-blue bounce, or rise. Yet, every-time they rise – they’ve fallen back, usually lower. So much for all that “insight,” correct?

Yet, you’re told not too worry, just HODL.

Again, that may sound like prudent advise if you invested when it was “pizza money.” But if you’re one of the “lucky” ones that got in on the advice of the perusing “retirement gurus” post $20K? You have my condolences.

On a side note, one of the “gurus” of crypto is predicting Bitcoin to be around $25K by the end of year. Hint: If you were in at the top when they were predicting Bitcoin to the moon? That would get you to around break even. Just pay no attention to the near 75% downdraft. After-all, it’s up nearly 25% since those lows! How can you argue with that type of investing prowess, right? Right?

Again, every time, as of late, where cryptos have bounced favorably (only to once again resolve lower) has been the result of some form of specious narrative building to give credence that the rise is “for real, this time!”

If one listens to that day’s “expert” paraded out across the mainstream financial/business media (see above link for proof) one would be hard pressed to find anything truly insightful in their reasoning. In other words, it’s all bullsh*t parading as “insight.” If you want some real insight into the health of the crypto arena, may I suggest the following:

Have you noticed that the once heralded “retirement guru of cryptos” advertisement for his “crypto retirement insights”  that filled ones news feed repeatedly have suddenly  vanished even more rapidly than the latest multi-$thousand valuation downdraft in cryptos? I know, just coincidence, right?

Which brings right up to today’s “investing prowess” of the last decade when it comes to the “markets.” i.e., HODL is now the new BTFD when it comes to these “markets.”

Why? Easy, February happened, and nothing has been the same since. Well, one thing has. i.e., Next-in-rotation fund managers, economists, so-called “smart-crowd” et al. now sound like their crypto brethren when it comes remaining invested in this now turbulent (as measured via the near decade prior) market.

Now what your being told/sold is, “earnings are said to be good, employment is full, multiples are reasonable.” And as for the Fed? “Completely under-control, all priced in, steady as she goes.” Which has now been translated to mean: “I wouldn’t be adding here, but I wouldn’t be selling.” Hence, todays next-in-rotation fund-mangers version of cryptos HODL.

Every-time there’s been a “bounce” it’s been heralded as some sort of reasoning that “Well, earnings are projected to come in at blah, blah, blah.”

However, when the market has suddenly (once again) dropped 200, 400, and yes, even a 1000 point drop which recalibrated the historical record for the most, repeat, the most e-va – single point drop in the history of the markets, the reaction, along with reasoning was? “Bueller?”

The reason for the “Bueller” reference is simple: They were just as much of a deer-in-the-headlights as were the myriad of investors who suddenly woke to find that BTFD (buying the f’n dip) had more in common with HODL than they ever dreamed possible.

Suddenly investing in the “markets,” along with the advice for it, morphed into something akin of a weird science joke of investing alchemy. i.e., You were promised a shower scene with Kelly Lebrock, and you’re getting it, just its Kelly of today, not the 80’s fame. (No disrespect intended, but it is a distinction with a vey big difference, I’m sure even Ms. Lebrock would concede as a fair point.)

The issue now is this: What happens when the remaining hold outs finally come to terms with the realization that both BTFD investing prowess, along with HODL genius, are not only similar, but about as insightful, pragmatic, and prudent as asking a street vagrant what they think of current real-estate valuations – then handing them your wallet.

I have a feeling that answer is more at hand than many believe. For if cryptos have shown us one thing over the last 10 weeks it is this…

Since the Federal Reserve proved that not only had quantitative tightening commenced, but appears to be on complete auto-pilot, BTFD and HODL is quickly becoming the most dreaded acronyms of investing genius.

And it’s only been about 10 weeks. Imagine what the next 10 may bring.

© 2018 Mark St.Cyr

It’s As Simple As This

If there’s been one question I’ve been asked more than any other over the last 48 hours, it is this: “Does the current buying or stabilization in Facebook™ share price signal that the worst is behind them?”

My answer: “Absolutely not, and I feel is immaterial in relation to what Mark is both saying and being asked before congress.” Here’s why…

Currently, the only think that matters to the “markets” is that Mark doesn’t say something entirely crazy, or that something akin of his face falling off and revealing that he is indeed an android that everyone across the media spectrum has associated his demeanor and responses to. Obfuscation, Gee-golly-whiz, We’ll do better, and more type responses are totally within the confines of chalking it up as a win for the moment, as far as the “markets” are currently concerned.

What is frontmost and in direct sight for the “markets” is the only thing that truly matters. i.e., To be positioned, or have exposure for their April 25th earnings report.

That is it.

As long as Mark doesn’t do, or say something so egregious that impels congress to have him led out in iron chains – it’s a win for the “markets” at this moment. Again, and that’s all that matters. i.e., This moment before earnings.

Everything else will be dealt with the moment after the release, and earnings call. Only then will you see the result of what the “markets” have interpreted for the likes of Facebook and others of its ilk going forward. Hint: I think personally the “likes” are not going to be forthcoming after the call, but that’s just me.

All this outcry and revelation about Facebook’s business practices and more do not (at least in theory) effect its latest earnings report. Remember, Facebook was riding a valuation with a share price closing in on $200. The distance between where it is now (in the $160’s as I type this) and where it was before all these revelations is just the type of set up for the all too typical short squeeze play that the HFT’s love to feast on. And the prospects of Facebook having an upside surprise during the last quarter are at the least a 50/50 proposition. So looking at the price action steadily rising off of its most recent low as we head towards earnings, in my opinion, is not a vote of confidence by any means, just a positioning play into earnings. Nothing more.

Again, where the real tell will be for Facebook going forward (and all of them I might add) is what happens directly following the April 25 earnings call. That’s when you’ll get your real first glimpse of just how tainted the entire “ads for eyeballs” model along with its purveyors are. For as I have said from the beginning:

The moment Facebook’s earnings are brought under any light that shows any type of slowing, for whatever the reasoning, coupled with its current share price that’s for all intents and purposes “priced for perfection” on the assumption that there is only growth going forward? It’s over. Period.

Just like it was for AOL™.

And for those who like to use the argument of “Yeah, but they still have 2 Billion users!” Remember this…

No one had more users than AOL at the time, nor Yahoo™, and how did all that work out?

Think about it.

© 2018 Mark St.Cyr

 

It’s Not China’s Increasing Trade Balance – It’s The Decreasing Of The Fed’s Balance Sheet

If you’re taking your clues for business information via the mainstream business/financial media, it would not be hard to assume there would be some confusion in your outlook for the future. On the one hand all but 60 or so days prior, one would be hard pressed to find a reason that the markets should come under any turbulence. Earnings were said to be great, job creation was also going along splendidly and predictably. Amazon™ was to consume any and all other businesses leaving a wake of destruction in its path, therefore, this was all great news for stocks! After all, what was good for Amazon’s share price was good for the world. Well, that’s if you only take your measurements via the next-in-rotation fund-manager cabal, that is.

Prior to these 60 days? Well, let’s think back a bit shall we? The threat of all out nuclear Armageddon? Don’t worry, “just buy the dip,” think of it as “creative destruction” on a massive scale. Obviously a good-for-stocks type scenario.

Plain old kinetic war? You know, like those that happen first around carrier battle groups as they pass within spitting distance of contested borders? Fuggetaboutit! Just buy, buy, buy, then buy some more.

Brexit? Schmexit! Who cares, Draghi’s there to “Do whatever it takes,” even if he has to lie about the process. European bank concerns? LIBOR blow outs? Real estate concerns? No, no, and hell no! Who cares, have you seen the gains in the FAANG stocks? They’re just fantastic! And on, and on. That is, till now.

Now, suddenly, it’s gone from Russia, Russia, Russia as the bogeyman of the hour, to China, China, China! The prior, with all its murmurings of innuendo for war of some type, was seen as inconsequential to anything stock related. And as for the latter? Even carrier battle groups (three in actuality) sent in a thumbing-our-nose styled provocation directly in China’s direction was seen as “no big deal for stocks.”

In actuality many of us openly joked that these “markets” had become so laughable that all-out thermonuclear war would be just the thing to rocket us even higher. Why? Because bad news had become good, so catastrophic therefore should now be fantastic!

In the old days (i.e., just a decade prior) even the mere thought or possibility (i.e. war of any form) would send the markets barreling downward. Now, it was as if it was the only thing to send them higher. Crazy-town doesn’t even begin to address just how far we’ve gone down the road once seen as “Just-nuts-ville.” Now, we call it “home.”

The real issue today (if one wants to be intellectually honest) that has these “markets” completely spooked is not the calls for adjustments to prior trade deals. Far from it. The real issue that is currently taking place that every so-called “smart-crowd” talking-head will not address, nor even mention for fear that in so doing exposes them as the intellectually dishonest cabal they are – is the one, and only one, constant that fits squarely for both causation and correlation comparisons. e.g., The now, ongoing process of shrinking the Fed’s balance sheet, aka Quantitative Tightening (QT). And it’s only just begun.

Think this is far too general of an observation? Fair point, then as the Riddler of Batman® fame would put it: “Riddle me this…”

“When does something not matter only when it does? And when does something matter, only when it shouldn’t?”

Answer: When does QE turn to QT?

You see, when the Fed. was printing and rolling over asset purchases we were told this process was not the reason for the “markets” assent. No, good earnings, good jobs reports, and on and on were the real reasons. And if you questioned it? You were maligned and denigrated across the spectrum. As a matter of fact, so important was the conviction in the Federal Reserve’s commitment to the assumed “Put” that in all of 2017 there was only one, yes, only one trading day in all of last year with all its turmoil and global headlines where the “markets” faltered 400 points in a single day. And subsequently this was erased in mere hours in a fashion reminiscent of the Servpro™ tag line, “Like it never even happened.”

But then January rolled around, and with it, so too did something else. Only this time it was the sound of a door swinging. i.e., Ms. Yellen exited stage left from the Eccles Building. Yet, what was interesting was what went along with her. i.e., The pretense that the Balance Sheet run-off wouldn’t disrupt the “markets.” Hint: Largest point drop in markets history.

Let’s see, Ms. Yellen says “See ya!” along with the “markets” get their first glimpse that in deed the balance sheet reduction had begun. And what was the result?

Re-read “largest point drop in history.” And the point swings have also suddenly reappeared. Over a dozen +400 and counting. And it’s only April 8. Funny how that all seems to line up, is it not. “Just coincidence” is what I hear, if there’s anything said in reference at all. Yet, if you listen carefully, the deafening silence screams everything one needs to know. i.e., It’s all been nothing more than a hustle, pure and simple. Even Snake Oil Salesman of old would be impressed.

Below is the above scenario using what Silicon Valley refers to as “pictures.” To wit:

Here’s the “market” reacting to all the uncertainty of 2017 with its geo-political crisis, debt crisis, budget crisis, Russia crisis, N. Korea, government shutdown fears, impeachment fears, tax reform fears, thermonuclear war fears, _________(fill in the blank) crisis of choice. The result? Forget what I think, it only matters what you think, but here’s the “picture” to describe it all. Pretty picture-perfect, is it not? Again, the headwinds that were 2017 were far from inconsequential or relenting.

(Source)

Now let’s see how the markets have behaved just these last 60 days or so since Ms. Yellen exited, along with the pretense (aka hope) QT was probably still just a working theory. And for those who are suddenly shocked, that’s correct, it’s only been approximately 60 days since Ms. Yellen said her farewell and the “market” was greeted by a new “Hello” in the realization that the Balance Sheet had indeed been allowed to contract. Once again, I’ll let the “picture” do the talking. Again, to wit:

So let the mainstream business/financial media outlets parse and spin in a manner that would make a washing machine envious. It’s all convoluted bunk in a flagrant attempt to hide both their complacency in following the blatantly distorted fairytale narrative for why these “markets” have been rising going on a near decade, along with trying to protect their so-called “smart crowd” guests that glam for the camera and microphone making a Kardashian envious for tenacity. It’s all falling apart, and not because of any “trade deal” or other proposed reason. It’s all coming apart because the only story that mattered to the “markets” is itself unraveling. And that is…

“It’s different this time.” Until Jerome blinks.

© 2018 Mark St.Cyr

What’ll Be Zuckerberg’s Most Problematic Question From The Senate Hearings

As has been reported Mark Zuckerberg will appear in front of a joint Senate panel on Tuesday of next week. The ratings for this live show may be one for the records when it comes to Gov-TV. Everyone, and I do mean just that – everyone – wants to know what they’ve been exposed to, or relieved of, when it comes to their data via Facebook™ et al. The stakes could not be higher for both Mark Zuckerberg and his company, but also the entire tech apparatus as it is currently known today. It will be one for the history books, that’s for sure.

So, with that said, I would like to offer up for your listening attention what I feel will be the, and by that I mean just that – the – question and responses to be on high alert for, because this is where you’ll understand just how far Mr. Zuckerberg has fallen in the eyes of his once coveted cohorts. i.e., The politicians and/or party he used to view as allies. For if this line of questioning emanates from those he (and also Ms. “Lean In” who has suddenly leaned out from all public view) once seemingly allowed full access to scrape and use whatever they wanted to their heart’s content? This is when he himself will find the true meaning of: It’s different this time.

Here’s the question…

Committee Member: “Mr Zuckerberg, why is it that suddenly you found the need only months before some of these revelations first began became public to not only increase your stated goal of selling your shares, but as these revelations have increased in both size and scale, so too has your selling of your shares? So much so, that over the last few months you have sold more shares (some may use the term dumped) than anyone else, at any company, in all of Wall Street!”

The response will not matter, although I’m quite secure in the feeling it’ll be another rendition, or that days version of “Oh gee golly whiz,…”

Again, all that is needed to tell you where everything is going from there will be once that question, or something very similar is put forth. For if it is? (as I fully believe it will) You, me, Wall Street et al. along with Mr. Zuckerberg will no doubt know – in that moment – not only are things different this time, but rather, it’s officially over and not coming back. Period.

© 2018 Mark St.Cyr

The Moment You Know, You Know, You Know

There comes those moments in life, where the truth of a situation, can no-longer be denied to yourself. e.g., It’s the moment you know, you know, you know.

Happens in personal life situations, business, politics, religious, everywhere. Sometimes it appears out-of-the-blue, in a flash of insight that suddenly throws everything you once held as “certain” into complete shambles. And it can not be undone, for as David Bowie genuinely inflected in one of his last great songs “Where Are We Now?” It’s the moment you know, you know, you know.

The reason why I bring this up is to make a point on something I had said prior that many in the so-called “smart-crowd” took offense to. What I’m referring to is my article last December, where I made reference to Facebook™ (FB) and their newest release at the time called “Messenger Kids” as social-media’s Joe Camel® moment. As always this was met with the usual derision of “just doesn’t get tech” type of knee-jerk responses. But, dare I say, “it’s different this time.” And it’s a difference, with a very big distinction. Case in point:

Now that you (as well as most of the politicians) are now fully coming to terms with exactly what FB and its ilk have been doing with all your data. Does it not now make the idea of selling (all conjecture on my part) all that new data brought forth by children across their platform all the more insidious? I don’t know about you, but I would think selling the data created by prepubescent children (actually age 6+ which from my view, is even worse) along with their viewing habits and profiles must have not entered into that equation, correct? After all, then why create an entire space just for them, ad free? Unless…

Here’s just a bit from my article for context where I made exactly these points. To wit:

“But just like “big tobacco” executives of the past, big social media exec’s like those employed by Zuck and Crew are more than willing to tell you, like this response to a question from Wired™:

“It’s important to remember that Messenger Kids does not have ads and we don’t use the data for advertising. This provision about sharing information with vendors from the privacy policy is for things like providing infrastructure to deliver messages.”

Well, if that’s the case – then why offer any service designed for 6 year olds in the first place? After all, when Buzz Feed News™ asked Messenger® head, David Marcus, if this was a cynical attempt to get kids hooked on social media, the response was:

“The goal is not to get kids onto Facebook,” he said. “There’s really no other reason for us to do this than to actually enable kids to communicate with their parents and vice versa, and kids to communicate with their friends within a safe zone that’s controlled by the parents.”

Call me skeptical, but the last time I heard something similar, it was CEO’s saying something to the effect that they believed “cigarettes were not addictive.” After all, I hear all Mark Zuckerberg wants to do is “connect people.”

I have a feeling the next “connection” coming towards everything social will be via settlements directly into government/lawyer coffers. After-all – when it comes to anything about “saving the children” the government loves a blustery, righteous indignation, feel-good campaign made possible via someone elses wallet. And social media has one, very large wallet to affix a bullseye on.”

And here we are. For if you don’t think politicians are thinking along that entire same line, you truly need to think back to the entire Joe Camel® incident and what happened to “Big Tobacco.” For there is one thing that “Big Social” has that “Big Tobacco” had until the politicians decided it was time they had their fair share of both. And that was their bottom-line via fines, (BIG! fines) regulations, and more.

The writing is all there, one only needs to read it. No FB account required.

© 2018 Mark St.Cyr

 

As Goes Facebook So Goes An Entire Fallacy

Regardless of where one stands on the entire social media complex, one thing is certain: “it’s different this time” – is over.

The dirty little secret contained within that mantra that’s been used ad nauseam over these ensuing years, is there are many who built their careers, fortunes, or guru status based upon just that. i.e., “It’s different this time.”

The problem now coming to light is, well, yes it was, just not for anything they were espousing. And that’s now a very big problem for the entire social-media complex, along with tech in general. i.e., Wall Street’s now going to be asking its own very old but never-changing question in times like these. i.e., “Where’s the money?”

Social was supposed to deliver advertisers the-edge-of-all-edges. Again, it was told/sold as to deliver matches of enthusiastic eyeballs, supplied with a wallet filled with credit-cards (hopefully not already maxed out) to purchase their wares via carefully targeted ads.” How could they miss,” was the clarion call. After all, they were talking about billions, upon billions of eyeballs.

Well, they did deliver the “eyeballs” part. The only issue is that many, if not all were teenagers with no jobs, nor wallets.

To top it off, many of those that should be of precisely the “golden age” for advertisers (18-35 thereabout) were just like those of the younger cohort. i.e., no job, no wallet, no career, just school, and debt, lots of it.

The only insult to injury (for advertisers that is) was that both of these demographics despised, deplored, reviled, spurned, (no hyperbole intended) any intrusion such as an “ad” into their streams. And when it came to the demographic sets above? (i.e. 35+) Two fold whammy.

First: Those that were accustomed to ads had a built-in ignore feature honed via years of late night ads and commercial television in general. As for the rest? Advertisers, for the most part, don’t really care.

But that’s not to say social didn’t have something to offer. For it did. i.e., All their users on-line personal data. Years of it. But wait…there’s more! as they say on late night TV, Not just theirs, but their friends, their friends friends, their family members, their family members friends, and on and on. Years and years of it. Cross-referenced via other mediums, sliced, diced, you name it. Macro, micro, doesn’t matter. Heck, “You want fries with that?” You’d got fries also. Simple as that.

This data was valuable, and in so many different ways, to so many outfits: even if you didn’t post ads or use these platforms, this rich data was far rich or juicy to go without. You had to buy it. For data profiles as rich as some of the reported types that have now come to bear would de facto leave too much of a possible edge out there for your competitors to possibly use and profit by, and you not have at your disposal also. And with that there was an inherent self-energizing market that could not be ignored.

Although that is precisely what happened via the mainstream business/financial media. i.e., They ignored exactly what these platforms were actually selling.

Trust me, they knew, they just turned the ultimate blind-eye to it all. For it just didn’t fit the narrative. In other words, headlines like: “Silicon Valley Trep creates platform that connects users around the world and makes $Billions for himself in the process.” makes for much better news stories than: “Silicon Valley harvests and sells all its users data online to the highest bidder, to the tune of $Billions, making themselves filthy rich. All at the cost, and naivety, of their users privacy.” If you think I’m off base? I’ll just remind you of SnapChat’s CEO press coverage and let you make up your own mind.

For a time this all worked like magic, for it was. With the wholesale adoption and implementation of Quantitative Easing (QE) back in 2010 came another form of implementation and adoption for magical thinking. i.e., The “Unicorn for IPO riches” As long as there was QE – there was magic.

Then QE ended, and with it so to went they. The real issue here for all of this was, that if the world of unicorn riches and IPO dreams was now defunct? That meant only one thing.

Facebook would be the last bastion to make (or keep) all those “magical riches” alive. But more importantly: Safe. Hint (paraphrasing the line from Van Halen’s “And the cradle will rock“) “Have you seen Facebook’s stock?” (Cue, Eddie)

Think about it, when was the last time you heard about an IPO? Did you know Dropbox™ had one about a week ago? If you only glanced the headlines during that week, maybe. But as soon as the price fell below the IPO debut? let’s just say – they fell from the headlines and bylines also. To be fair, they have recovered marginally, but there’s no more fanfare for days and weeks on end, any more. “Decacorns?” I’ll just ask “Hows that Uber™ thing working out?” Sorry, too soon? And I won’t even mention Snap™, well, sorry there too.

But Facebook has been the last bastion, as well as last man standing, for the entire “it’s different this time” mentality. After all, if you took your cues from the Silicon Valley aficionado set, coupled with the next-in-rotation fund-manager cabal, peppered with some illustrative “insight” displayed via many of the financial shows, the obvious group-think consensus was, FB, for all intents and purposes, was the obvious winner take all of the social media paradigm.

Or said differently, they tried (and continue) to sweep-under-the-rug all their prior “insights” which resulted in abysmal failures in a quick slight-of-hand move meaning, it’s not that we were wrong per se, it’s just that there can only be one. i.e., FB is social. Period. After all, “Just look at their stock price!”

On a side note, I tuned into one of the mainstream business/financial channels Thursday just to see what topics and how they were being debated was going to be presented. After tuning in for less than 5 minutes I was hit with the sudden realization of why I can no longer watch, for one of the hosts smirkingly referenced that he did not see any trouble in tech, for it was the only sector that ended with a 2% gain.  That was until the other hosts catching the obvious misinterpretation reminded their colleague that 2% gain was the result of losing 80% of its 10% gain two weeks prior. i.e., “Shut up, you’re making us all look stupid!”

So now here we are, and guess what? Hint: It’s different this time. The only problem is that, this now means, we are going to resolve back into the meme that this one was said to replace. i.e., “Where’s my return of money investment?”

And if you don’t think this question is going to be shouted across conference tables, trading screens, and more in the coming weeks and months, you’re not paying attention. For there are some very tell-tale clues that are emerging (or maybe a better term is not?) that should tell you all you need to know as to read the “tea leaves.” First:

If FB and the entire social complex (think Google™, Twitter™, Snap™ et al.) which sells users data is either (a) No longer willing to sell that data. Or (b) No longer will be allowed to sell all that data. (Think regulation and more) That hits the bottom line in more ways than one. But probably most especially, or more importantly, it completely eviscerates the way the entire “growth story” which cloaked this sector in some form of cloak-of-invincibility type manner, is not just damaged, but more importantly, it compares along the lines of Superman losing his cape. i.e., Nothing flies or looks right from here on out. And if you can make Superman seem not so invincible? Are you seeing my point here?

One would think that if there was any form of vulnerability to FB that the obvious other players would immediately see (i.e., buyers of their stock) would suddenly materialize. Hint: I don’t think you really need one, for they all either continued their slide downward, or at best, vacillated in stuck space.

That happens only when one of two things has occurred. (1) Wall Street has lost faith in the entire sector. Or (2) Reread line 1.

Now the far more important, and in some ways, the only real question now remaining is this:

Is this upheaval confined to the entire “ads for eyeballs” complex collectively known as the “Social media complex?”

Or, is the entire “it’s different this time” ideology and meme that has been unquestioned and embraced with religious zeal, across the entire media and Wall Street landscape in toto now at risk?

If it’s the latter? There should be clues there also. And I’ll just point to both Tesla™ and Amazon™ for your contemplating pleasure.

But there is one question that has been answered long ago but has been absolutely ignored via the entirety of the mainstream business/financial media. And that is this…

If “social” and FB had so much more room to run, as was professed ad nauseam. The why has Mark, along with all his top brass, been unloading shares (in vast quantities) for months?

I’ll just bet it’s because Mark didn’t want any of those sellers to feel alone, and just wanted to make the loving gesture that he would be right in there selling along with them. After all, he’s only concerned about, “your feelings and connection.” Right?

© 2018 Mark St.Cyr

Verbose Free Business Advice and Insight

I was asked the other day for my perspective on the current Facebook™/social-media complex in general, and what I felt it all portended, both the short, as well as long-term. Here’s my reply:

To understand the severity for precisely where Facebook currently finds itself has precedent using the following real examples for comparing.

First: Does Facebook’s current PR (public relations) gambit align with the Tylenol® scandal of the 1980’s? Or, does it align with the “Big Tobacco” scandal that erupted during the late 1990’s?

The first (e.g., Tylenol) is now a text-book example of what a company should do when it finds itself in the middle of a crisis, where management, at all levels, are aligned with its customers values, as well as safety or trust in its product. The bottom-line per se, is considered second in relation to the first.

The latter (e.g., Tobacco) example is when management, at all levels, are aligned solely on preserving the bottom-line equation, and subjects its customers to the latter, or secondary position, to the first.

It would take mental gymnastics that would make a circus contortionist blush to enter Facebook’s current management responses, in any kind, to the first example. Yet, it’s as if they are reading, as well as using the exact playbook employed by “Big Tobacco” during the fiasco.

Management’s (e.g., FB) from the CEO on down has given one PR disaster statement after another, both in tone and delivery. Not to mention as well the current leaking of “whistleblower” type revelations contradicting almost every response.

Therefore the conclusion that’s easy to see morphing in the very near future is that, much like was handed down during the “Big Tobacco” era, i.e., Regulation, fines, and more. FB and the entirety of the social-media complex in general, is over as it was once known. Doesn’t mean they’re going away anytime soon, but just take a look at how smoking in general is perceived (and treated) today vs just a decade ago. Hence, lies the most obvious conclusion of possible outcomes.

© 2018 Mark St.Cyr

Just To Make A Point

From my Sunday article. To wit:

And the biggest excuse that matters in all of this, is what I alluded to in the headline. i.e., This latest excuse coming from Zuck & Crew, about their handling of data, is just the excuse many an advertiser needed to stop spending precious ad dollars on FB, if not the entire social media model in general. Why?

Because if it was working as sold? Advertisers wouldn’t be so forth coming, stating they’re now pulling ads away. i.e., If those ad dollars were producing results in-line with their expenditure? Businesses would be very hush-hush, in a much more wait and see mode of operation on what to do next, if anything. That’s a very big tell-tale sign, or clue that should not be overlooked, in my humble opinion.

The only reason a business (generalization, of course) cancels any type of advertising that is working, with great fan-fare, or decry of public outrage, is that in doing so, it is seen as a greater sales tool – than keeping the original ad budget expense.

Or said differently: This is the perfect excuse to soothe jittery boardrooms or executives to no longer spend precious ad dollars on social, and possibly try other avenues or venues. The reasoning is simple:

If there are going to be less content providers via FB’s own censorship, along with a full-blown user revolt? Then, much like IBM found itself in-the-blink-of-a-cursor back in the final go-go days of the dot-com era. People began getting fired for not seeking IBM alternatives rather than just going with the assumed “competitive brand leader.”

And the point? Fair question: From the Wall Street Journal™ this morning, again, to wit:

“Playboy Deactivates Its Facebook Account”

“The recent news about Facebook’s alleged mismanagement of users’ data has solidified our decision to suspend our activity on the platform at this time,” the privately held company said Wednesday.

Playboy said it would deactivate the various Facebook pages it manages. More than 25 million Facebook users have engaged with these accounts, the company said.

A Playboy spokesman said the company has no plans to return to the platform. Facebook Inc. didn’t immediately respond to a request for comment.

To clarify:

“Playboy said it would deactivate the various Facebook pages it manages. More than 25 million Facebook users have engaged with these accounts…”

Neither a company, nor an advertiser would dare jettison any working interaction between “25 million” users – if – there was any beneficial gain in having them. Let alone, any material gain such as a sale that is meaningful to its bottom line.

Playboy™, whether you agree with their business or not, is a business desperate for paying customers as much as, if not more so, than those still reading its content (you know, “for the articles”) looking for whatever. Playboy is the ultimate “eyeballs” purveyor, as well as consumer – and they are willing to jettison 25 million users overnight. Think about that very carefully. For if there was value in those “millions” – do you think Playboy, for all intents and purposes, would just willy-nilly throw them all to the wayside?

The only reason they’d do that is because of one thing, and that is this: “25 million” means jack-squawt if it’s not producing meaningful net profits to the bottom line. Period. Full stop.

And that’s now a very big problem for Facebook’s (and many of the others) bottom line, user growth, user engagement, and on, and on. Not to mention all the next-in-rotation fund-managers, social-media gurus, et al. that sold told you your business had to be there, or was nowhere.

Hint: Their value is the only thing falling quicker than the entire market cap of the social-media space. But there is some consolation.

They’ll have plenty of company. i.e., The room is getting awfully crowded with the ever burgeoning group of discredited: Unicorn gurus, IPO gurus, Cryptocurrency retirement gurus, Automated Investment Service Gurus, Real Estate advice gurus, and on, and on.

Funny how all that “expertise” suddenly vanishes in line with the Federal Reserves Balance Sheet, is it not?

© 2018 Mark St.Cyr