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 "Pragmatic Insights For Today's Business World™"

Absurdity: First Squared, Then Cubed, Then?

Einstein famously mused, doing the same thing over and over again and expecting a different result was the definition of insanity.

When it comes to central bank edicts? The once absurd just gets renamed, reformulated, then re-implemented. Yet, the results are always the same. e.g., failure.

The only question to now be asked (from those still believing in 1+1=2 math) is whether this is just a doubling-down of efforts into the insanity? Or, an exponential progression?

Count me in on the latter.

Back in April of 2016 I wrote an article commenting on the absurd prognostications and proposed lunatic programs into the absurd being proposed by former Chair Ben Bernanke. My basis for it was Mr. Bernanke’s own words and hypothesis. i.e., he appeared to believe what he was saying. And if he did? That I concluded was even more dangerous than what he was proposing to begin with.

As far as I was concerned, he was arguing for why the Fed. should provide a warehouse of matches and lighter-fluid to a proven arsonist (i.e., Congress) as if this would be a good thing, because they would only use it when necessary. And if they proved to be reckless, they could just pull the “matches” away. Sounds perfectly logical when put that way, no?

Hint: When has the Fed been able to unwind as they proposed any free money policy? Sorry, trick question, see: QE1, QE2, QE3, Operation Twist, Re-investment, Quantitative Tightening, “autopilot” or “watching paint dry” for clues.

There’s another one going on now, but it doesn’t have its own moniker – yet. But I’m sure that’ll change soon. For what’s a Fed program without its own moniker, right? Right?

“What is that?” you ask. Great question.

Remember when Operation Twist was enacted, because the Fed wanted (or needed) to target the long-end (maturity) of bonds? Well that so distorted everything that now they’re employing a strategy of allowing the rolling-off of other securities and buying shorter dated.

Just don’t call it a “new program.” At least, not yet.

Let’s just call it “an adjustment” to prior policy for now, shall we? Yeah, that sounds better already, doesn’t it?

Suddenly the commentary along with trial balloons coming out from one Fed official after another appears to fall under the same pretense I assigned to Mr. Bernanke back in 2016. i.e., I don’t think it’s just CYA (cover your derriere) material any longer – I think they really believe what they’re saying!

Fed speakers are now commenting on how they may need to go into the public in some form of Town Hall scenario and “talk to the people.”

Hint: What do you think will be the first reaction when a central banker gets milkshake’d?

Think they won’t?

All I’ll say is: welcome to the political discourse of the day that many (especially the most radical of the populace) believe the Fed is directly responsible for. Think about it.

However, if observation means anything – I don’t think they have. Ivory Towers and political appointment will do that. In other words – they have no idea of what the real world currently thinks of them. And – It – Shows.

Mr. Powell is now arguing that maybe terms or programs relegated (along with what they denote) to such definitions such as “emergency” or “unconventional” should be moved into the “everyday tool box” of goodies. This way they’ll not imply that something should only be used sparingly or with an end. i.e., If you thought Ben could print? You ain’t seen nothing yet, watch!!

Again, all I can say is: more inequality anyone?

So without further ado, here is said article in its entirety. I think it is more relevant today than it was then once you calculate in not just what the Fed has done since, but floating what else they’d like to.

Too me? It’s all become pure, unadulterated – lunacy. Period. Full stop.

Absurdity: When The Con Believes The Con

There are many infamous con games that have been foisted upon the public for millennia. Probably none more enduring than that of Charles Ponzi which bears his name as its moniker. Yet, there’s also been another who was also just as “daring” when it came to finding ways as to extract monetary gains by ill-gotten means: Victor Lustig.

Lustig is best known as “The man who sold the Eiffel Tower.” However, it was one of his other cons that came to mind as I was thinking about the current state of monetary policy we now find ourselves in.

Lustig’s other con was a device he slated would print $100 bills. But it had a problem.

Unbeknown to his mark, this problem was also part of the deception. The problem was (as stated by Lustig) – it could only print 1 bill every 6 hours. The genius was; located within the machine it contained two genuine $100 bills. After that – blanks. You could be long gone, and quite far with that kind of head start back then. Yet, it’s once the con, ruse, or scam is finally exposed one thing is certain: You don’t want to still be around or found.

As with any con game the perpetrator knows it’s all a con. In other words, “Duh!” Yet, if you listen closely to both past as well as present Fed. members you can’t help but notice by way of their current arguments, as well as, proposals for future monetary policy. The one’s who’ve truly bought into “the con” is: themselves!

Nowhere has this been on display more than the current public writings and musings of former Fed. Chair Ben Bernanke.

If you read his latest (which I’ve tried but can’t bear that much comedy in one sitting) he lays out what he thinks (or believes) should now take place involving Congress, the Administration, and the Fed. His great idea? Create and “fill” some arbitrary account which only the Fed. or its appointed designates have control of as to “empty” or “fill” as “Congress and Administration” see fit. But here’s the punchline, ready?

“Importantly, the Congress and Administration would have the option to leave the funds unspent. If the funds were not used within a specified time, the Fed would be empowered to withdraw them.” (Insert laugh track here)

Remember, this is coming not only from the former Chair, but also, one who is quite possibly the most emblematic of current thought residing throughout central bank policy makers with an additional caveat: He’s no longer bound by the position where his thoughts need to be guarded as a voting member of such policy lunacy. In other words: he can now speak his mind openly. To which I’ll muse – that’s no laughing matter when you consider how prevalent Keynesian economics now dominate.

The latest from Bernanke exposes just how far down this “rabbit hole” central bankers have gone. So far I’ll contend – its frightful. e.g., They actually believe this subterfuge.

When I’m giving a talk, or engaged in conversation, I often use the term “con game” when describing current monetary policy and its effect on business and more. Often the term “con” at first seems to put people on the defensive as if I’m using hyperbole, or trying to make a point by using over the top styled rhetoric.

The problem is (I’ll explain) it is exactly that. e.g., Many forget “con” stands for confidence in con-game. And now that the $Dollar along with just about every other currency is all fiat based: confidence is the only variable that supports it in a fiat system. Period. And once it’s lost just as with any “con” – it ends with blinding speed and consequences.”

This is the current danger now inherent after years of QE, NIRP, ZIRP, and every other acronym that represents some form or another of central bank intervention within the markets. So adulterated have the markets now become with central bank meddling; describing them without using quotes such as “markets” seems reckless. For these are far from the markets once thought to represent free market capitalism. Today they are “markets” in name only. For just like currencies – they’re no longer backed by anything once considered tangible like gold or actual net profits via 1+1=2 accounting.

At some point printing ad infinitum, as well as, companies reporting (ad infinitum!) losses of Billions in sales and revenue while declaring “We’re killing it!” via Non-GAAP accounting will make even the most ardent supporter of Keynesian thinking question this new reality. The absurdity can only go on for so long, because, to keep up the ruse (just like suckers) more absurdity is needed. We may be reaching that end point after all these years. And the latest clue might be in the absurd recommendations emanating from central bankers themselves. For it’s becoming clearer by the day if one reads Bernanke’s latest: they think this all makes perfect sense. Talk about absurdity.

Let me pose this question: Does anyone for a moment think China would (or will) allow the Federal Reserve along with the U.S. government carte blanche as to create “piggy banks” that can be used to help bolster its position without calling into attention the absurdity of it? Especially as it holds $TRILLIONS of U.S. debt on its own books? Imagine all this while not only the U.S. but the world of central bankers and other governments push, or brow beat Chinese current policies? Or, question their numbers for authenticity? How about Russia? Or Brazil? Or __________(fill in the blank.) Think they’ll all just stand idly by as their economies teeter on the brink of insolvency as the West just prints and points fingers?

If you listen to the musings emanating from many of the central bankers today whether currently holding an active position, or one which has returned to the “private” sector. One would have to construe that they believe exactly that. i.e., Don’t worry – they’ll buy it because that’s what we want them too. And that absurdity is a glaring warning sign from my viewpoint.

This shows just how far down this absurdity “rabbit hole” we’ve gone. And it can be directly contrasted with the con games of old. For it was always a given: for the ruse to work for the benefit of the perpetrator – one must have both the sense as well as alertness to “get outta Dodge” and not to be seen again as the game blows up. Today?

So enamored with the ruse they now fall all over themselves whether on TV, radio, or print, professing what absurdity should take place next to any and all that will listen. Again, even Lustig knew printing money ex nihilo was a con. Yet today, central bankers regard that as: prudent monetary policy. The difference for a contrast in the absurdity?

Before; it landed you a session in jail. Today? It lands you a speaking gig for $250K a session.

© 2016 Mark St.Cyr

Today’s Show Follow-up

Earlier on today’s show I used the theater-of-the-mind as to facilitate what I was currently watching as it pertained to the “markets” before the open. I said I would follow-up with the actual chart and notate what transpired since rather, than the way I have been doing, which was posting said chart before the open and notating later.

So with that said, here it is. To wit:

(Chart Source)

As you can see (if you listened to today’s show) the above correlation to what I thought may happen in respect to what type of pattern I believed was forming seems to be playing out in both a text book form, and in another text book form, resolved to end the day in ambivalent land. i.e., it’s still anyone’s guess where to from here.

However, with that said, at least you now have something to watch for as I described and either way has implications that most have no clue, which of course I’ll expand on further in tomorrow’s show. (see what I did there?)

As always, we shall see. But see – and soon – that is a certainty.

© 2019 Mark St.Cyr

Silicon Valley’s Future Growth, P/E Multiple Hopes Are Now Pure Fantasy Fact

Over the last decade the rise of what has been called “Big Tech” and in particular the “Silicon Valley model of all that makes absolutely no business sense” seemed unassailable, till now.

Cash burning unicorns, deca-corns and IPO’s facilitation of public companies with valuations of $10’s of Billions that couldn’t buy a candy bar unless they borrowed for that also, has suddenly reached that moment in time where the fantasy narrative is falling on deaf ears. Not to mention tightening wallets.

In other words the “Crying Towels” I argued for have not only arrived, but they’ve been flying off the shelves like hotcakes. As hot of an investment thesis as that was going on 5 years ago. It would seem the demand that’s been steadily increasing since 2017 has only started and is about to be ratcheted up to 11. Why? Hint: impending anti-trust investigations.

Can you say, Uh Oh?

If you think the Uber™ IPO debacle (remember when this was once touted as some impending religious event for the IPO faithful?) and subsequent price action has been vomit worthy? Just wait until the idea of P/E ratios of the fantastical meet the cold hard dawn of anti-trust legislation. The reasoning is simple:

All ideas of growing into those future P/E models is now made null and void until, at the least, deliberations are finalized and court decisions/verdicts rendered. Think Amazon™, Facebook™, Twitter™, Netflix™, Apple™, Google™, __________________(fill in your own here) as possible examples.

Google, (or Alphabet™) as of this moment, is not only in the cross-hairs of the U.S. authorities, but has already been held accountable for its accused anti-trust violations by the E.U.

I believe this E.U. fining is just the beginning for continuing extractions of anti-trust fines/penalties with its $9 Billion (and counting since 2017) judgements on Google alone. Do you think Facebook isn’t next in line? Then___________?

Think about this very carefully, whether you agree with the decisions or not.

As impactful as the above might be, some will say, “Well, that’s in the future not now, so it doesn’t matter until it happens.” To that I will say: Ah, not so fast mon ami.

Remember: valuations paid yesterday and today are priced on future earnings assumptions. Change or alter the growth story of future profits and you alter the price people are willing to buy, hold or sell at – today.

To reiterate: Where’s the growth to propel the growth assumptions already priced into these stocks if the growth is either (a) fined away destroying any and all profit assumptions. Or (b) can’t continue to do business there because of “a.”

Or said differently: whatever valuation that was presumed on growth, whether laughable or not, is now meaningless and needs to be set lower. And in most cases this means much lower. And for those in the “laughable growth” metric business? (Hint: Amazon, Netflix et al. ) Let’s just say “lower for longer” seems to fit.

This increasing regulatory initiative will not be an isolated instance with just a handful of the current or so-called “obvious” tech behemoths. It’s going to encompass far many more. And as I implied: it’s just getting started.

The entirety of social itself is going to awake to a far different world once DoJ (Department of Justice) turns its resources away form the Mueller probe and begins to focus like a laser-beam on exactly how, why or if free speech, of any type, protected under the Constitution has been systematically, intentionally or otherwise hindered.

The argument for absolution such as “these are private companies and can do what they want” becomes a fool’s argument when it is regurgitated as if it resides in a vacuum. Free of any and all other laws that dictate fair and equal business practices for legal and protected commerce.

This was the same type of argument used to absolve businesses (and more) from adhering to any civil rights arguments and judgements. Hint: it didn’t hold up then (as it shouldn’t have) and it won’t hold up now.

To be clear: I have used the above argument (i.e., private companies…) myself and believe in it. However, what has happened today is that many have forgotten the second part of the above, which is: as long as it doesn’t violate any laws.

And laws, we do have a plenty, as the old saying goes.

To give an example I use what I call the “No shoes, no shirt, no service rule.”

A business can decide to not allow patrons on their premises if they are not wearing shoes or shirts, because of the implications or ramifications that can happen for either injury or sanitation concerns.

What can’t be done: is refuse patrons from entry or service while there is a clearly visible barefoot and half-naked party going on in the back under the guise of “those are friends.”

The courts have ruled over, and over again this type of “commerce” is unacceptable and will either fine it, shut it down, or both.

This is where social is in very, very, very (did I say very?) big trouble. For as much as it wants to say “it’s just a platform” – the more it’s been caught with its engineering fingers in the algo-jar to prove the contrary.

The moment you step in to “filter” you have opened the door to legal ramifications on par to what is known as – being a publisher, not just a platform. And publishers have quite the bar to hurdle as to continually prove and remain clear of court ordered fines for reporting misinformation and more.

In other words: free speech violations come with a hefty cost and price tag called fines. And this is not isolated to just content – political advertising, in all its variations, are the most protected.

Mess with how one applies the availability, rate charges or anything else, not to mention any form of shadow banning, and the entire weight of the judicial system under any administration is an inevitability. Hint: I believe that too is now here.

And here’s another: what about collusion?

No, not that one, the other one that has been rampant across much of the tech space and is not some well kept secret.

As a matter of fact, it’s been heralded by many in “The Valley” as their latest and greatest tool for altering things they don’t like, you know, like other constitutionally protected rights. And they’re not alone…

As recently as February in 2018 CNBC™ anchor Andrew Ross Sorkin penned an article for the NYT™ laying out how banks could control gun sales if Washington won’t. (and many wonder why I say CNBC has been a joke ever since…) And since then many of the “Big Tech” names that are unrecognizable to many have been following this script.

Some have pressured banks and credit card companies flooding their social feeds with anti-this or anti-that screeds as to pressure them from doing business. Sadly, some have taken this baiting.

But there may be a problem even greater than the original threats in their social feeds. e.g., anti-trust.

You now have organizations like Salesforce™ CEO Mark Benioff touting that his company will no longer allow the sale of firearms on his platform. The reason? It’s political – he doesn’t like it.

It’s a fair point, but the issue here is: is he (or others at the firm) pressuring other vendors or users who may be connected in other ways, even remotely, from doing business on his platform because their political views don’t align with his?

If so? There’s a problem there.

And the problem for Salesforce (aside from its abysmal profits) is that the DoJ just might want to take a look at how Mr. Benioff’s political views are being administered to lawfully protected commerce. The same may be said for many a credit card company and others.

What’s been going on across all “tech” and “Silicon Valley” as of late is going to come under fire of which there might be repercussions so overwhelming, so vast, and so punitive, many of today’s most outspoken Valley-types may find themselves (and their company) on the wrong end of a growing list of subpoenas.

Don’t think someone (or someones) at the DoJ isn’t just chomping-at-the-bit to see either way. As a matter of prudence, I would be counting on it. Hint: don’t confuse the DoJ with the SEC (Securities and Exchange Commission) that would be like confusing the local cops with Seal Team Six.

The E.U. is already enforcing $Billions of fines – and they’re just getting started. The U.S. is only now just starting to look and act aggressively, and what’s not in “Big Tech’s” favor is they (DoJ) now seem to have the time available.

If there’s one thing for sure that’s a precursor to imply just what any future earnings projections may be, it is this: Possible investigations.

“Crying Towels” anyone?

© 2019 Mark St.Cyr

Not To Scare The Children, But…

As I type this the markets are beginning to roil in many different areas across the globe. The latest tariffs announced last night for Mexico seems to have caught everyone by surprise, especially for those thinking their month end positioning was fairly stable. Hint: it’s not – and that’s a very big problem if it becomes a self-fulfilling negative feedback loop.

So in that light let me put up what I see as a possible path for these “markets” if there isn’t some sort of “deal” or emergency action via the Fed et al. To wit:

(Chart Source)

The above is the S&P 500™ futures as of this writing represented via weekly bars/candles. I have notated areas and projections that I feel speak for themselves.

Will this happen? No one knows, however, if many of the reasons for caution I have been calling for and warning about progress, than this is a very plausible scenario. Again, plausible, possible, probable, __________(fill in your own here) because no one knows. And if they say they do? Don’t walk, but run – and fast.

The real implications of the above are for the reasons I’ve been warning about for what now seems like forever. i.e., How different of a business world are we in should the above play out as hypothesized?

For some it will be devastating. For others, like those of you that have taken my calls for caution and have been preparing, this is where the next round of true opportunities will be born.

As always, we shall see.

© 2019 Mark St.Cyr

Another Update to The W.A.W.N. Update

For those following my prognostications (e.g., where are we now updates) over the last few weeks. Here is the latest as of this writing, because I feel it’s material. To wit:

(Chart Source)

As one can see we are now below the line that puts what I deemed “everything on the table” now on said table. A place that just a few months ago was said to be “crazy talk.” And yet, here we are.

To see the chronology you can start by clicking (here)

And, as always, we shall see.

© 2019 Mark St.Cyr

On This Memorial Day

As we get ready for summer we begin with the kick off celebration of Memorial Day.

In our race to ready the grill, chill the libations and hit the water, let’s not forget the reason for this celebratory kick off to summer. It’s made possible for us because brave men and women, on our behalf, stand in harm’s way so that we can relax in peace.

Let us never forget. Ever.

I rarely talk about private matters. However, I think it’s only fitting no matter how old we get to still reflect on loved ones or friends who’ve gone past like ships in the night.

Marine Lance Corporal – James A. St.Cyr E/3 Born 2/08/47
KIA – Quang Nam 3/26/66
Vietnam Memorial Wall – Panel 06E – Line 052
(My Uncle aka “Uncle Jimmy.” To this day still missed terribly by all.)

As long as we’re alive – we should never forget. Whether it’s someone you know personally, of your own family, or even someone you’ve never met. We must always remember what it is to be an American regardless or race, creed, gender, immigrant, or nation born, because: someone – somewhere – stands ready to give their life – so we may continue with ours.

Thank you to all that have served, or continue to serve. This American wishes all of you the best.


From Cash-Burn to Future-Hype: It’s Different This Time

As we celebrate the official kick-off for summer with barbeques and libations, all while remembering, honoring and giving thanks to those that made it all possible here in the U.S. There is another group of fallen “heroes” that were once at the forefront of every battle, armed with a superpower that would make an Infinity Glove® envious.

That power was the “It’s different this time!” chant-of-the-charlatans. Where any and all rational arguments for 1+1=2 math or, business ethics was sacrificed at the alter of a top line growth narrative, while reciting from the “gospels” of Tech such as: “P/E ratios of the Absurd,” “Net Profits are for Dummies,” “You’re Not Lying if You’re Never Caught” and last, but certainly not least, “Who Cares Who gets Screwed As long as I’ve Got Mine, Cha-ching!!!”

The truly funny thing about the above – is that it worked. The word “worked,” as in past tense, is where the now unfunny is rapidly becoming manifest.

I coined the term “future-hype” a while back to help encapsulate another phenom, where it seemed every-time a Silicon Valley darling found itself in trouble via a sell-off in its share prices, there would magically appear some new revelation how ___________(fill in your ticker symbol of choice here) was to transform the universe in the not so distant future, assuring one riches beyond compare.

The funny thing is that every time the “future” got closer? A new revelation appeared to fulfill what the other did.

You think I mean “did not?” As in the future thingy never materialized, so that means it was a flop. Oh, by no means did I mean such. Here’s what it did…

It did precisely what was intended. i.e., gave the narrative hope back to the next in rotation fund manager cabal true believers to sell tell their clients why they needed to (a) hold on for dear life or (b) buy more. And if lucky (c) Do both, proving that the word “sell” was, once again, banished to obscurity successfully.

Here’s how I posed it back in 2017. To wit:

What this term means is what I describe as the now near comical press releases, CEO jawboning, or anything similar that takes place right before earnings (usually a week or so, give or take) either from “The Valley” or tech space in general.

Usually what you’ll read, see, or hear (and echoed jubilantly by some next-in-rotation fund manager) is some grandiose announcement of some super-duper, sounds really awesome, coming attraction that has the potential to not only change everything, but also, to fill investor coffers with riches beyond the imagination.

All one needs to do, as to engage and embrace in this vision, is to use their own imagination, then buy into the “dream” with real legal tender, literally. Because, without those investor dollars continuing to pour in? The “dream” as they say – will be lost. Along with any earlier proceeds. Rinse, repeat.

Future-Hype Arrives Right On Cue…Again

What I was speaking directly to in that article was the latest revelation from the once lauded and seemingly unquestionable, Elon Musk. The issue then, or future-hype scenario as I like to now call it, is that people (as in, investors et al.) were, and once again, questioning the soundness of their “investment” as we’ll say.

And with that, just like clock work, another “in the future” moment appeared – to the surprise of all – that his Boring Company™ received verbal approval to build in NYC that would connect in Philadelphia, Baltimore and D.C.

The issue?

“This is news to City Hall.” “also, if you’re stopping by City Hall, please bring a copy of your proposal. That would help.”

Public rebuttal via N.Y.C.’s mayoral press secretary.

As brazing and stunning as the aforementioned is, the funny little thing as I said prior is: that it worked. All you need to do is look at a chart of Tesla-the-stock and you can see how it happened time, and time, and time again. Hint: need I remind you of this one alone? e.g., “funding secured.”

However, as I’ve also alluded, this happens everywhere across the entire tech space, whether it’s for start-ups or well established behemoths such as Facebook™ or Amazon™. i.e., the moment there’s a bit of news that could effect _______(insert ticker symbol of choice here) The future-hype scenarios appear. Another hint: “flying drones.”

And – once again – just as before, it seems Facebook wants back in on the action with none other than the mother of all future-hype canards: It’s planning (remember, I don’t call it future-hype for nothing) to launch a cryptocurrency named “GlobalCoin” with hopes for 2020.

Why now? Is it because the crypto “winter” is now officially dead as proclaimed by Tom Lee? Well, maybe that’s part of it. But I think that is secondary as to help fuel the narrative rather, than the reason for why.

“What’s the why?” you ask. Great question. Ponder this latest revelation right before the holiday weekend. To wit:

Facebook Inc. said it removed 2.2 billion fake accounts in the first quarter, a record that shows how the company is battling an avalanche of bad actors trying to undermine the authenticity of the world’s largest social network.

Facebook Removes a Record 2.2 Billion Fake Accounts (Bloomberg,com)

So, let me get this straight, they reported in Q1 they removed a number of accounts equivalent to the entirety of current users – because – they were deemed “fake.” e.g., 2.2 billion fake, as compared to 2.4 billion real.

Got that?

So, with that, let me ask you this: Why now, and why a sudden shift to roll out crypto-for-the-future when I thought the future was all about ads-for-eyeballs?

Hint: It’s different this time. i.e., No one’s buying (literally) the old narratives any longer. And by the looks of things, they might even be doing the once unconscionable: Sell.

The other tell-tale sign that may give a bit more credence to the argument that it truly is different this time, is this:

I’ll pose it using a quote from the prior referenced Bloomberg piece and ask you to do the calculating for yourself, ready? To wit:

“The vast majority are removed within minutes of being created, the company said, so they’re not counted in Facebook’s closely watched monthly and daily active user metrics.”

Now I’ll ask: Do you remember this one? Again, to wit:

“Facebook’s records also show that the impact of its miscalculation was much more severe than reported,” marketers allege in court papers filed in August, but only unsealed on Tuesday. “The average viewership metrics were not inflated by only 60%-80%; they were inflated by some 150 to 900%.”

The legal battle, which dates to 2016, stems from revelations that Facebook misreported two metrics related to its video ads. Two years ago, when the news first emerged, it was reported that Facebook inflated the average time spent viewing ad clips by 60% to 80%. The company has said its mistaken calculations did not affect billing.

Facebook Inflated Video Metrics By Up To 900%, Marketers Claim

Here’s my take: It’s different this time in the rationale that everyone’s starting to question everything. And that is not bullish for tech rather, it’s the kindling for the stock market equivalent of shouting “fire” in a crowded theater. i.e. Get out now, at any price, before this whole thing goes up in flames!

And for those of you are are thinking that’s hyperbole. Let me end with this last addition for your consideration.

Remember when anything “hyper-loop” was met with fawning and higher stock prices? Judge for yourself using the latest from none other than Mr. Musk and his own future-hype projections. To wit:

In regards to the once original idea of something like, sleds in a tunnel, it seems it’s now morphed into something that looks quite more like a glass bus on wheels (in a tunnel?) than anything else. Also, the only futuristic part of it appears to be in just how much glass it’s made from – not what it actually does.

Don’t take my word for it, here’s what the SFBART (San Francisco Bay Area Transit) said about it. (actually, more like trolled) Again, to wit:

We carry 28,000 people per hour through our Transbay Tube under the bay because of the capacity of a train. That’s nearly twice as much as cars over the bay. Why wouldn’t you prioritize something that carries far more (and safely with automatic train control) over cars?

via SFBART public Twitter™ account

Ah yes, it does seem that the once “it’s different this time” moniker that protected the tech sector, and Silicon Valley in general, with its once unquestionable superpowers has since been rendered to memorial status, where the only thing that’ll remain are the tales of Headless Unicorns and Electric Rocket-ship dreams in perpetuity.

Unlike the money that may vanish for all-time immemorial.

© 2019 Mark St.Cyr

An On-The-Record Call For Bitcoin

Over the past few weeks there has been a plethora of sudden “confident calls” that the now deemed “winter” for Bitcoin™ or, crytos in general is now over, and they can get back to selling the ideas (literally) that the riches everyone lost prior are about to be made whole – and then some.

Make that “A lot some!” when listening to most of the arguments given.

That may be true and, of course, may not. As always we’re going to have to wait and see just what transpires.

I have been of the camp (and still remain) that the sudden interest in the space, once again, is via the result of a sudden panic from China and others to move their money as quickly as possible before the authorities lash everything down.

I have also argued that there has probably been some rolling for some of the recently scammed acquired IPO profits into Bitcoin or others that has helped move the needle of this seemingly left-for-dead phenom only a couple of months prior.

The issue that will help show the argument for one side or the other more conclusively (i.e., “the winter is over” or “it’s just a blip or ephemeral type move regardless of size”) should become more clear very soon, as in, where the entire space goes from here.

And since I seemed to had been the only one that correctly assumed or predicted on-the-record where it would end up last time e.g., around $4K. I thought it was only fair to “throw my hat into the ring” as they say, once again, since it appears all the others are feeling more confident to visit the open air and declare their now confident stance rather, than remain in the deep bunkers where their faces have been more prominent on milk cartons than the mainstream business/financial media shows.

So with that all said here is mine. To wit:

(Chart Source)

The above is a daily chart of Bitcoin as of this writing. As one can see I have given the “winter is over” argument quite a bit more leeway than my “it’s a blip…” argument. However, if for some reason the price suddenly jumps up and goes into the upper area, I would be hesitant to call “it’s a decided moment.” The reasoning is simple:

Everything via the trade war and global markets are now in flux and a panic situation can make things appear or, seem to be something they are not.

So with that said the above helps give clues to which argument may have more weight, because if for some reason it suddenly spikes higher into that upper zone and then falls back to re-enter that shaded channel area? The argument becomes more settled to the potential for much lower lows rather, than much higher highs.

On the other hand:

If it gets up there and stays there, and then breaks even higher? Then the potential that “winter is over” begins to make more sense.

As I always say: we shall see.

But at least I’ve put my argument out there and on the record for those who want to know.

© 2019 Mark St.Cyr

The Existential Clue That Signals It’s Over For Tech: “The stock is cheap!”

…when tech stocks get demonstrably cheap, often times, they’re on their way to zero.

Bill Fleckenstein via interview with Jim Grant on Real Vision™

What makes a stock, any stock, a “value” today? Hint: rhymes with, central bank.

So, with that said, is it fair to say that if the central banks of the world suddenly pulled all their current intervention from the capital markets, there would be an immediate repricing of everything with a ticker symbol?

Let’s take it a step further, but we’ll make it a bit easier to comprehend or digest its implications.

Using only one central bank e.g., The Federal Reserve. When they decided to alter their monetary policies, what happened to the entirety of stocks? Again, hint, rhymes with: plummeted.

Was it one stock? One sector? One geographic market? No hint needed, you already know the answer. e.g., No, everything went down, in unison.

So using the question I posed above, there appears to be an impasse to whether or not any true “value” can be calculated, correct?

After all, if the value question of any subsequent ticker symbol can be calculated effectively, then why does it appear to be at the mercy (and in actuality react) to the dictates of a cabal of policy wonks that have demonstrated time and time again, they have no idea of what they are doing except to engage the “print” button?

Remember, the “moves” I’m speaking to directly are not trifle. They are moves that have taken entire sectors, in unison, down some 20%, with some so-called “fairly valued, fairly priced” individual names down even further.

Again, in unison and not in years, but weeks, months, and for some – days. (See your own 2018 year-end statements for clues of validity.)

Since the now infamous “Sunday call from Cabo” where the Treasury Secretary called the U.S. major bank CEO’s interrupting his in-progress vacation to discuss liquidity levels on Dec. 23rd. The “markets” have not only recovered, but with the additional jawboning, then the subsequent implementation of the Fed going into full “pause” mode, they actually managed to recover recording another “never before seen in human history all time high!”

Albeit the move has been more incremental than anything else, it’s the time frame where this move really shined. So much so, that the mainstream business/financial media cadre of next-in-rotation fund-manger and associated Ivy League’s so-called “smart crowd” cabal are knocking over their own mothers to get in front of the the closest camera, microphone or keyboard to profess, “At this pace, it’s Dow 365,000 by year end!”

Over dramatic, but you get the point.

However, with this as a backdrop I would like you to revisit Mr. Fleckenstein’s observation which I started off with. The reasoning is this:

Why didn’t all the so-called “most coveted and highly valued tech stocks”(think FAANG eg. Apple™, Google™, Amazon™, Netflix™, Facebook™, etc.) recover to new highs, or at minimum, their once prior highs in unison?

Did they recover? Sure, but not as did the indexes.

This should be your first clue that something is no longer as it once was when valuing anything with a ticker symbol.

Or said differently:

When it comes to what was once seen as a “value,” it should now be looked through the prism so overly used this past decade but now represents the antithesis of what it first did. e.g., It’s different this time.

I was watching one of the television financial shows the other day when one of the hosts remarked that they were going to buy Apple, because, it was “cheap.”

Fair point if you use the metric they were, basing it upon the $215 of only the week prior to then sitting at $185 respectively. And yet…

Which is the real metric to base that value at? i.e., $185 is cheap relative to $215, so it must be a steal as compared to its prior $233 just a few months prior, right?

But then again, with all things being equal, how in the world was it ever “valued” in the $140’s in between?

See what I mean?

Google is in a similar quandary for those trying to figure out what this term “value” really represents in dollars and sense. And no, that’s not a typo.

Google reported falling metrics which should be raising concern to anyone that understands business in its latest earnings report. The stock “tanked” and so far has not only not recovered its prior highs has since, steadily, been going lower. The recommendations?

Based on the above, the “analyst” community, along with the next-in-rotation fund-manager set, have raised their outlook to the stock price not only recovering, but setting new all time highs. Imagine that, who’da thunk it?

So again, I ask: where does one calculate the “value?” From the prior highs? Or, the falling metrics?

My advice? Throw a dart, it would appear there’s really not that much difference between the two, is there not?

It would appear that the largest tech names are entering (if not already there) within the most hated window for investing in general. And that is: “the value trap.” aka dead-money.

This is when, based on all things being equal, the stock price of a company appears “cheap” compared to either its former valuation or, its metrics in relationship to others, whether it be P/E multiples, etc, etc., etc.

And it’s here the stock price, barely, if ever, moves up or down. It just sits there, forever. Hence the term “dead-money.”

But the term “value” will be used to describe this phenom over and over again, ad nauseam as to try and sell the narrative (and pocket a commission) that “it’s different this time” for ____________(insert ticker symbol of choice here) compared to other so-called “value traps.” Hint: “trap” is your first clue to what happens to the preponderance of said “value” stocks.

However, that’s if you’re one of the lucky ones. Why do I say “lucky” you ask? Great question. So, in that light, I’ll submit the following for you to decide. To wit:

From my article: “Existential Autopilot?”

On April 25th I posited the above and summarized that, from a purely technical view, there would be a moment in time coming for Tesla that could, as the title implied, be the beginning of an existential crisis. “What has transpired since?” you ask? Again, great question and again, to wit:

(Chart Source)

So with the above for context, where would you place the “value” price on owning the above? Because if you compare it to its prior prints from IPO to today, it would seem it is sitting squarely in the middle.

Yet, which end is it that constructs said “middle?” And is that the right one to use? Or is it higher, lower, or right where it is that makes it a “value?”

My intuition? Let’s just say I’m sticking with the dart analogy I used previously. But if that doesn’t sit well with you, maybe you should base it on the leaked email, only days ago, just after Tesla raised additional funding, that its current cash-burn rate – only gives them 10 more months to achieve breakeven. i.e., infer existential implications however one decides to.

And as far as “analyst” or any remaining Wall Street next-in-rotation fund-manager credibility is concerned? Here’s another “existential moment” for your consideration when it comes to whether or not I’m too hard on these people and that they really do have your best fiduciary interests at heart.

From the days-of-yore May 4, 2019. To wit:

“Tesla could go even higher than our $4000 price target,” says fund manager Cathie Wood on CNBC™.

Existential moments for value, tech and investing advice, in deed.

© 2019 Mark St.Cyr

Another ‘Where Are We Now’ Update

For those that have been following my observations and commentary over these weeks, I present the “where we are now” picture below. To wit:

(Chart Source)

The above is a chart of the S&P 500™ futures as I type this. I have pared it down showing just the most pertinent facts/observations from my perspective. All levels, lines, bar/candle time frames and others are the same, just a more simplified view with a few annotations.

As you can clearly see the running hypothesis I’ve been articulating these many weeks appears to be playing out as argued, where we have now reached what I would deem – a critical juncture. It is notated on said chart.

For those wanting to see all prior you can start by going here.

As always, we shall see.

© 2019 Mark St.Cyr