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™"

Further Signs Of: It’s All Falling Apart, Right On Schedule

“It’s not easy being green…” -as sung by Kermit the Frog of Sesame Street®

I have repeated (as in sung) the above line to myself, for what feels as many times as Kermit has sung it himself over the last few years. The reason? I have dared question the “It’s different this time” hypothesis in all its manifestations, and against all its defenders. It would have been much easier to do the opposite and just “go along to get along.” But I’m just not built that way.

Notwithstanding, I’ve also built a career based on just that, and been proved more right than not in the end. However, this one, has gone on far longer than people much smarter than I even dared think. But again, no one ever contemplated (let alone believed) central banks would print money ex nihilo to be used to purchase stocks, corporate bonds, government debt, and more and not only get away with it, but be sanctioned and applauded for doing so.

It’s been an adventure in sheer surreality, as well as sheer stupidity, all at the same time. But, as they say, the consequences for doing just that (i.e., QE and all its iterations) are appearing to show in an ever growing list of realities. That is, for those willing to look.

My argument, position, or hypothesis when it comes to not just the tech space, but also “markets” and more has been the following:

“I may currently be wrong, but I’m wrong for the right reasons. And once this monetary experiment of perverting both business fundamentals, as well as monetary ends? Watch how fast all that “wrong” turns right with a vengeance.”

I am here to state: That time is now – and it’s accelerating. And the current rise into historic “market” highs is a warning sign of the trouble brewing beneath – not an all-clear signal as it was in days of old.

Why? Because the rise is based purely on “hopium” and nothing fundamental. Hint: There’s a reason why the Hindenburg and its explosive gas-filled levitation is used for analogous purposes as to describe today’s “markets.”

I’ll use only a few of the latest examples, but they are all that’s needed to anyone who’s paying attention, for on their own they make quite a statement on the forthcoming consequences and calamity that’s continuing to unfold.

Remember when, as in, just this past March, how all the “great financial advisers” were shouting “great advice” to “get rich in real-estate” in Toronto? Here’s what I said in response to that “great opportunity.” To wit:

This is the moment in time where generic, over simplified advice, that sounds so good (and too good) shouted too an adoring crowd  – should be taken as the siren, and clarion call to those who are diligent in preserving their wealth to buckle up, buckle down, and prepare in earnest. For once this show is over? “Over” is going to be something many of those attending these types of seminars are going to pray for – as in “Please make it stop!”

Here’s how that’s currently unfolding as of this month (e.g., August) some 6 months later. To wit:

“Toronto Housing Market Implodes: Prices Plunge Most On Record”

I have a feeling that last line (e.g., “Please make it stop!”) is going to be stated to many a bill collector in the coming future of those who attended, and went out and applied all that “great advice.” And it’s not going to be isolated to Toronto. Why? Because this roadshow for “getting rich prowess” moved onto Chicago, and continuing onto others.

Here’s what happened to real estate after they left Chicago. again, to wit:

“Chicago Population Shrinks Most Of Any U.S. City”

The real issue is not all those would-be-buyers that should be there for all those new “great new deals” are vanishing in droves. No, what is surely a new-found revelation (and I’ll wager wasn’t expressed) of these newly minted “get rich quick attendees”, is just how much, and how fast, all those newly acquired taxes which they are now liable for are both due, and rising!

Yet not too worry, for as I implied, this show is moving onto others, and in particular, coming to California before year-end. Just in time (in my opinion) for the “it’s different this time” apocalypse to unfold there in earnest. For “unfolding” it is…

Remember when questioning the sheer audacity of not only claims for the “ads for eyeballs” value, but the valuations themselves for the companies that were to provide those platforms? (e.g., Unicorns) Well suddenly the “unquestionable” is being questioned – and the answers are leaving many of those past defenders speechless. I’m also of the opinion many and their proclaimed “net worth” is going to meet similar results. i.e., Valued less. Much less.

Recently I penned an article hypothesizing the following…

“What is getting everyone’s attention in “the Valley” is something I’ve been stating for years, only this time, it’s the sheer size of the claim, in one jump, that’s causing consternation within its once undoubting, ever-faithful, cheerleading pews.

Remember: Only in “The Valley” is it reported on, and accepted as an article of faith, along with a straight face; that a VC can turn a few $Million into a $Billion all based upon a standard of accounting equivalent to: “Because that’s what they say it is.”

Try saying that at your local bank if you’re trying to re-fi or buy a house. See how far you get. Yet, in “the Valley?” You may get “that loan” based on that “$Billion” stated on your balance sheet. Which is precisely why I bring this up.”

This was in response to the sudden questioning by many in “The Valley” as to how one unicorn (WeWork™) could leapfrog higher into the #3 position of all current unicorns using a metric for valuation that made even the “The Valley” faithful blush.

Well, it seems that “blush” is now turning into “egg” – and it’s running down not only a lot of faces, but it’s about to run everywhere. For what I’ve been touting for years (and raked over the coals, for just as long) seems to have been not only looked upon in a far more exacting detail, but the findings are truly eye-opening, for that once all-concealing “curtain” has really been thrown open. And what it shows ain’t pretty. To wit:

“Fake Unicorns: Study Finds Average 49% Valuation Overstatement; Over Half Lose “Unicorn” Status When Corrected”

Gornall and Strebulaev obtained the needed valuation and financial structure information on 116 unicorns out of a universe of 200. So this is a sample big enough to make reasonable inferences, particularly given how dramatic the findings are.1 From the abstract:

Using data from legal filings, we show that the average highly-valued venture capital-backed company reports a valuation 49% above its fair value, with common shares overvalued by 59%. In our sample of unicorns – companies with reported valuation above $1 billion – almost one half (53 out of 116) lose their unicorn status when their valuation is recalculated and 13 companies are overvalued by more than 100%.

It’s studies and revelations as the above that can’t be ignored by those paying attention. These are the moments in time where hypothesis for whether something was real – or fake – begin exposing themselves for not only all to see, but where eyes can no longer be averted. i.e., It’s where the magical thinking ends – and the reality of the moment begins.

And “unicorn” is, has, and always been a “story” to be sold to the naive. Just like “get rich quick.” The two go hand-in-hand, both in story belief, as well as ending consequences for those who believed just a little too much, for a little too long.

Why the above is also cautionary in its implications is when it’s paired with something that should be going in the exact opposite direction than where it is. I’m speaking directly to the lifeblood of the “true believers” of everything “The Valley” has now come to represent: Start-ups and their once dreams of IPO riches.

They’re not expanding – they’re literally dying on the IPO vine. All by way of their once all-seeing benefactors – Venture Capital.

Here’s a little to think about via Pitchbook™. To wit:

“PE doubles down on VC-backed startups”

Acquisitions continue to be the most common exit route (for VC-backed companies), but through May, over 20% of 2017 (such) exits have been buyouts by PE firms, a large proportion compared to past years, which have observed that percentage generally hover between 10% and 12%.

One may read the above and think “So what?” And it’s a fair point. But when you start adding things together such as the following is where things begin to take on more ominous signaling when applying in context. Again, from another Pitchbook article, to wit:”

“VC investment-to-exit ratio in the US at record high”

Opting to raise more funds rather than prioritizing an exit seems to be an increasingly popular route for startups.

Any idea why that might be? Here’s an “idea” I’ve put forth many times to the howls-and-screams by way of the mainstream business/financial media. Again, from the aforementioned article:

Do you think unicorns crossing the $BILLION dollar valuation mark at a clip of 1 per week currently – in this environment, with what you’ve currently witnessed to those who’ve made it out of the stable, only to have its valuation slaughtered much more in line with a glue factory rather than a land of milk and honey: what would be making the argument (or giving the rationale) for one to invest $Millions when the most recent IPO’s are shedding $Billions a a frightful pace?

Again, as I’ve stated many times prior (again to the howls-and screams) “Why IPO and show everyone you aren’t worth the “unicorn” (i.e., money or value) you claim you are – when you can just remain private and claim whatever you want – and everyone believes it?”

The problem now is everybody’s beginning to not only question, but rather, the “seeing” is now turning the once “faithful” into an ever-growing chorus of non-beleivers. Or said differently “It’s different this time” heretics.

To my eye VC exiting via way of Private Equity firms (and rising!) is not a show of strength, quite the opposite.

I am a firm believer PE deals (and their frequency) are one of the final signs one should be on the lookout for that signals “the end.” In other words, PE deals are notoriously late to the party acquisition makers, taking on massive amounts of debt and more inflating anything, and everything, as to enrich shareholders at the top of the chain – right before it all falls apart in wave after wave of bankruptcies and more.

Again, for I believe it needs repeating: Why would you stay private and cash out for limited dollars when the reason for the investment in the first place was for the unlimited riches in an IPO?

Think about that very carefully and see if your conclusions don’t come to the same. Regardless of what the next-in-rotation fund-manger cabal wants one to “believe.”

Add too all the above what is now an undeniable fact that most, if not all, of the empowering market “Trump-trade” has been stymied into DOA status, if not outright dead and buried, along with: the inevitable debt ceiling showdown which is sure to occur in succession.

The only thing which will make matters worse is, if (and I am of the opinion it is not “if” but when) the Fed. declares at its next meeting it is (once again) raising rates, or worse, announces balance sheet reduction begins in earnest immediately. The only thing which could possibly be worse is if they do both. And that is a very plausible possibility in my opinion.

Personally, I think the odds of such are at about 50/50. The “markets” think those odds are closer to nil. And I don’t mean one or the other, or even both. The “markets” are right now as expressed via volatility trades that none of the above will occur. I believe that to be lunacy. Yet, so far, that’s been the correct way to gamble. But “gamble” it is. Which is why the term “casino” now fits so perfectly. Because these “markets” have little resemblance to what was once thought to be what “investing” once meant.

But hey, I guess there is hope on the horizon, because once that real estate wealth to riches show reaches California? All those living in “shipping containers” or “a wooden box in someones’ living-room” and more waiting for the dream of IPO riches to arrive can move up into the real estate business and cash in big time. That is…

As long as their credit cards aren’t already maxed out. Because “getting rich quick” doesn’t live on charity.

© 2017 Mark St.Cyr

Why Trump Claiming Ownership Of “Markets” May Not Be As Crazy At It Seems

I want to pose something which I know currently flies in the face of what many (and of those many, many I respect immensely) are currently cautioning the President against. i.e., Claiming credit for the current rise and new lifetime highs in the “markets.”

As of this writing the Dow™ is within spitting distance of (once again) topping the previous never-before-seen-in-human-history-all-time-high, setting the new benchmark at 22,000. (By the time I publish it may be a fate accompli)

Many are calling for caution when it comes to the President taking credit implying this seemingly great “win” could end up being nothing more than a “boat anchor” around his reputation should the “markets” falter, turning a once worthy accolade into the proverbial “kiss of death” signaling the scapegoating to begin in earnest.

Not only is there a lot of merit in that argument, I would also agree with it wholeheartedly if not for just one thing. The President himself, and his long history of how he frames both arguments for accolades, as well as eschews (as in publicly lambaste) those who question his perceived accomplishments.

All one has to do is look at his past performances on both TV, and in public, and it’s there. Again, the clues are everywhere, and he’s been doing it for decades. i.e., I believe this is nothing new. It’s only new to the current political mayhem.

Why I bring this up is in respect to one of the President’s most recent tweets. To wit:

I would like to bring your attention to the one thing in which he is absolutely both defining, as well as being correct with. And it is this: “Was 18,000 only 6 months ago on Election Day. Mainstream media seldom mentions!”

At first blush this appears to be a “Well…Duh!” type statement. However, if you think about how one would use the above as to frame that “Duh” observation into a sword-and-shield for defense against the possible torch-and-pitchfork bearing hordes should the “markets” falter? Defining the message, terms, all while taking credit in a believable construct – isn’t as crazy as it first appears. Especially if you can not only evade the “horde”, but possibly redirect their anger away from you – and onto another. i.e., Welcome to Machiavelli 101.

I don’t know if I’m right or wrong. And there’s always the chance he’ll over-reach, or claim credit (even if justified) at the wrong time. Only time will tell as the events unfold. As always, we shall see. Or, as the “tweets” arrive.

I am still of the opinion this “framing” (if that’s what it turns out to be) is being put into the public arena for use as a foil against the Fed. (along with congress) when the effects of their current policy moves begin to exert themselves when the “hopium” trade that has been incessant since the election (precisely what Trump is claiming credit for) evaporates, when it’s self-evident every piece of legislation that propelled the “hopium” trade is understood not just to be DOA, but dead and buried.

I made the case as to why the Scaramucci appointment should give the Fed. concern for it might be covertly signaling exactly how that argument might be framed and used, because of Mr. Scaramucci’s background. Just because he is now been replaced doesn’t change how I still believe Mr. Trump might fight the supposed accusations (e.g., get the blame) should the “markets” begin tumbling. It’ll just now be with different players, but that premise remains.

Just as reminder let me repost the chart I used. To wit:

To reiterate: The past 6 months rise in the “markets” has been on nothing more than a “hopium” trade of what was presumed to be a slam-dunk of Obamacare repeal, meaningful tax relief, and infrastructure spending.

And – for this point needs to be pounded into that discussion: All in direct contrast, and opposition, to the resulting effects that would normally be taking place with the Fed. embarking on a tightening schedule, along with balance sheet reduction, into ever deteriorating data for a supposedly “data dependent” body. i.e., The case can be made the only reason why we’re here is – The Trump Bump. Period.

When it comes to that second line in the President’s tweet: Is he wrong about the “media seldom mentions”? Hint: Think back to all those former “record highs” represented at the top edge of the highlighted box in the above chart. How many times over those two years did the media incessantly state (especially the mainstream media cabal of business/financial “news” shows) “Another Record High!” Now look at the moniker’d “Trump Bump” progression. Nearly every week, if not day, and the reaction? _________ (insert crickets here.)

Congress, along with the Fed. (in my opinion) are the ones who should be worrying if this market indeed begins to falter. Unlike the President – I don’t believe they have the argument to stand on that he has. I also believe many are unwittingly claiming credit  for “stopping” things which have far more potential to blow-up in their own faces than they are calculating.

And the most explosive tool at the President’s disposal is one they believe is unassailable. e.g., Their own words.

As always – we shall see. Or, as the “tweets” tell us.

© 2017 Mark St.Cyr

Just When You Think There’s A Method To The Madness

Via The New York Times™. To wit:

“Trump removes Anthony Scaramucci From Communications Director Role”

Now you know why I try my damnedest not to comment on the political.

However, with that said, as a business person you just can’t sit idly by and wait. You have to try and “read the tea leaves” the best one can, and try to interpret what may, or may not, be coming down the pike, and how it might effect your business. It’s part of the “game” as they say.

The issue now facing not only the administration along with congress itself is this point…

If this jostling of positions continues, while at the same time, congress remains both deadlocked on getting any prominent relief for taxes and more passed? Things are going to turn ugly – very fast – and very soon. And I don’t mean political infighting. I’m speaking directly to the business sector.

Congress sitting on their thumbs is one thing – business sitting on its hands is quite another.

© 2017 Mark St.Cyr

The Final Sign Of The Impending Silicon Valley Apocalypse Arrives

Calls on the impending doom for when “the end” will be upon us has been going on as long as the “beginning” itself. In other words – the moment it all started – someone began calling for it all to end. It’s the human condition. You’ll find it everywhere, it’s not solely restricted to the varying religions.

Yet, when it comes to business, there are signs that should be heeded when they appear, that should cause one to sit up, and take notice. Today, one has appeared; and the ramifications of what it portends may indeed mimic what many take as “the sign” that the apocalypse is truly upon us.

This final sign isn’t “a rider on a pale horse” signalling the end of times for humanity. No, but the similarities are quite striking, for the way I would describe this revelation is this: a venture capitalist riding a bloated, sickly unicorn, thus signaling the impending end of “it’s different this times” has surely arrived – once again. And the resulting devastation (once again) Will. Be. Legend.

I have written too many times to list my views when it comes to the entire “Valley” or “tech” mindset, and how it behaves in respect to business fundamentals and more. i.e., Basically, it doesn’t respect business fundamentals at all.

It behaves and acts as if it’s its own religion or cult. i.e., “You gotta believe! And when in doubt? Seek the good-book of Non-GAAP, and have all those misgivings put to rest. For remember the code: Get funded – get listed – get out. Then bathe and repeat. For remember – you are coders! So go forth and code; so that you may reap the rewards that surely await you in the lush green “Benjamin” lined valley known as Wall Street.”

Yes, all tongue-in-cheek, but is it really that far off? For those who think so, let me give you one last example of this “devotion to the Valley model” and you decide. Ready? Today, in Silicon Valley – LinkedIn™ – is still considered a stunning success. (excuse me while I finish laughing)

For those of you that bought into that “success” right before its stock value plummeted; prompting Microsoft™ to buy it (i.e., throwing stock-optioned employees a life savings lifeline) before it fell even further to where competitors may have been able to afford it? “Success” is not the first word that comes to your mind, 401K, or bank balance.

But in “The Valley” world – “remember the code” – is all I’ll say to that.

So back to where I started, and why the above needed to be stated for context, and it is this…

Suddenly, even Silicon Valley itself is beginning to question the once unquestionable. e.g., The valuation of its remaining unicorns.

To my eye, or acumen, this is very similar to that moment where suddenly a boss, a team leader, a company, ________ (fill in the blank) does that one thing, and everyone around them looks at each other and thinks “Wait…What?” Then begins questioning everything prior.

We’ve all been there, or had that moment. Silicon Valley I believe just had its own.

Over the month of July questions are beginning to be asked about not only the rate of unicorns being minted, but also the totaling amount that its current “top ten” stable mates are valued at. Here’s some data as reported via Pitchbook™. To wit:

First: VC backed companies are crossing the $BILLION dollar threshold at a pace of about 1 per week.

However, it was this second point that seems to bringing with it the questioning of where everything may be going, again, to wit:

“WeWork’s latest round, a massive $760 million funding reported earlier this week, has increased the valuation of the co-working space provider by about $4 billion.”

What is getting everyone’s attention in “the Valley” is something I’ve been stating for years, only this time, it’s the sheer size of the claim, in one jump, that’s causing consternation within its once undoubting, ever-faithful, cheerleading pews.

Remember: Only in “The Valley” is it reported on, and accepted as an article of faith, along with a straight face; that a VC can turn a few $Million into a $Billion all based upon a standard of accounting equivalent to: “Because that’s what they say it is.”

Try saying that at your local bank if you’re trying to re-fi or buy a house. See how far you get. Yet, in “the Valley?” You may get “that loan” based on that “$Billion” stated on your balance sheet. Which is precisely why I bring this up.

Again, it isn’t the “accepted” math that was/is in question, (e.g., The alchemic miracle of accounting allowing $millions to now be claimed as $Billions) but rather, it was the size of this jump (e.g., $4 Billion) that the math allowed for, leapfrogging this company into the #3 position of all unicorns with a valuation of now $21BILLION.

Now, suddenly, eye brows are being raised. (To be clear: I’m not taking shots at those reporting these latest stories. I’m talking directly to the entire complex concerning Wall Street, main-stream business/financial media, along with the entire “Valley” apparatus at large.)

The issue in my opinion is – it’s too late. For this “unicorn’s” ability to prance into third place wasn’t ever going to be some sign of salvation for “The Valley” model. It’s quite the opposite. In my opinion: It’s the “fourth” equine maneuvering into position in the ever evolving “tech” apocalypse.

If one wants to draw similarities via the “Four Horsemen” (which I am) Twilio™ was the first sign, Snapchat™ the second, Uber™, its third, and WeWork™, I’ll dare say, just maybe the fourth. And the “scythe” is about to be put forth cutting down far more than just valuations as it unfolds. Look to the ancient scrolls of the dot-com era for clues.

Let me add this one construct as to why I believe the crossing or “investing” by VC’s into the unicorn club is not showing a sign of “strength” or “faith” in the current “tech” sector, but rather, resembles a last-ditch effort of desperation to keep that other article-of-faith alive because if that goes – so too does all their presumed wealth. e.g., Their own statements of net-worth.

Let me propose the following on you, and see what answers you come up with on your own. Ready?

If you had extraordinary gains currently sitting in an index fund (Oh, let’s use NASDAQ™ as a hypothetical shall we?) and you were a VC, or you just decided that’s what you want to now be: Would you not take some gains off the table in that fund, and put a few $million into some start-up that allows you to now declare you’re worth a $Billion or $BILLIONS?

Think about that very carefully, and come to your own conclusions. Never mind what I think.

Now with that as a backdrop let me ask you this…

Do you think unicorns crossing the $BILLION dollar valuation mark at a clip of 1 per week currently – in this environment, with what you’ve currently witnessed to those who’ve made it out of the stable, only to have its valuation slaughtered much more in line with a glue factory rather than a land of milk and honey: what would be making the argument (or giving the rationale) for one to invest $Millions when the most recent IPO’s are shedding $Billions a a frightful pace?

Again, think about it very carefully. What would you do? And why would you put that money at risk? Hint: The accounting alchemy of the Unicorn-verse.

And that brings me right back as to why I believe this latest “bump” in valuation and funding has caught even the once unquestioning faithful off-guard. And it’s this…

If you are a VC, or early holder in the likes of Uber™, or Theranos™, or Snap™ et al. And your personal holdings, or “valuation” seems to be taking a hit in the eyes of, Oh, I don’t know, let’s say: Your bank or brokerage account? And maybe you just so happen to have taken loans, or were awarded special financing deals that were only available per all that reported net worth “value.” How would you make up for that discrepancy?

Hint: Like the legend of turning water into wine  – one appears to still be able (but it’s losing it’s once unquestionable status) to turn $Millions into $Billions via the unicorn legend, at a pace of about 1 per week.

But when you go for a quadrupling? That’s a 4-horse one should never have tried to ride, even in front of the faithful. Because even the “faithful” know or have heard of the prior apocalypse of legend. e.g., The dot-com era.

It’s all right there in the ancient scrolls. I think it even states: “And one of the riders was a sock puppet…” But that’s just from memory. But, we’re always told “it’s different this time”, right?

Well, it surely appears as such, for remember when using “The Four Horsemen” was evangelized as a good thing – until suddenly – they weren’t? For those who like to read the ancient scrolls of the dot-com era. Here’s a sample.

And for those who think making it out of the unicorn stables, and then running their valuations up at a full gallop past all those non-beleivers to the unqustionable land of $100’s of Billions in market cap affords some form of absolution from reprisal? Here’s a reminder, as well as warning. To wit:

But I’m told by the “faithful” Facebook™ and Twitter™ are different. As I always say…

We shall see.

© 2017 Mark St.Cyr

Did The Complex Answer Just Arrive Via Twitter?

Earlier during the week I wrote an article titled: “Simple Question With Complex Implications.”

In it I argued there was one simple question concerning the entire “ads for eyeballs” complex. That question was this…

“If there’s demand for something, and it’s effectual: Why are prices falling?

Advertising is not something that follows the “commodity” pricing model. Worthless advertising does, but not effectual.”

That was in direct response to the 300% comparative loss of value per click on Google™ from the same time the year prior. e.g., -7% in 2016 to -23% today. Yes, that’s a loss of triple the amount just a year prior. But the total number “clicked” actually rose over 50% boosting the total revenue higher.

I used the “300%” figure to bring attention to that discrepancy for a reason, because most people I spoke with glossed right over that point and only heard (or read) “revenue increase.” The issue with doing that is – if you don’t understand the how, and why that make up the numbers, it’s easy to fool yourself ( or allow yourself to be fooled) into believing it represents one thing, when it actually, could mean quite another.

If you think I’m only trying to play “fast and loose” with the numbers myself, I would like to have you think of it this way using the following…

If the report was an increase of net profits from 7% to 23%. Do you think the next-in-rotation fund manager cadre would say “That’s a 16 percentage point increase in net profits!” Or, do you think you would hear something along the lines of: “That’s triple the amount expected! My friends that’s a three-fold increase or, if you will, some 300% gain in profit per click from the year prior. There’s no stopping this money train, get aboard now!!!”

See my point? i.e., 7 X 3 = 21, that’s “triple”, and/or “300%” is also another way of expressing triple. When it comes to marketing – it’s all about how you want to spin it without outright lying. That’s why you need to know what, and why, certain expressions are being used. Especially when it comes to anything concerning Wall Street, for it’s also – what you don’t hear – that should also cause you to look closer. And it’s exactly for that reason I used it myself. Because it caused the reaction I hoped it did when I said it. i.e. “Wait…What?”

With that said, here’s why knowing what the “numbers” being reported may, or may not, represent is paramount as I stated in the article. To wit:

“So here’s why this is important: It is currently an accepted meme that both Google, as well as Facebook, are garnering most of the mobile ad dollars via the game of attrition. In other words, as advertisers pull their ads or campaigns from differing venues that have shown to be ineffectual, they are either moving some of those dollars there, or back to older venues such as TV or radio. And in some cases neither, in an effort to stop the hemorrhaging of throwing anything everywhere with little to nothing to show for it – except big ad bills.”

Because now we move on to both yesterday after the close of the “markets” report by Facebook™, and today’s before the opening bell reporting of Twitter™, and see if any of what I argued using the Google construct fits.

I went out for my usual daily run yesterday afternoon as Facebook reported. When I returned I was besieged by notes and calls from friends and colleagues asking me (more like ribbing me) about what I thought of the “amazing beat!” And if I wanted to “rethink” my position when it comes to social-media (and Facebook in particular) with such obviously “crushing it” type numbers.

My answer as usual was “No.” However, I did have to agree the report was impressive no matter how one looked at it currently. And that’s the key word “currently.” Because after I began looking deeper into it, and once Twitter announced this morning? My original “no” went to “11” as in “H#ll no!” Here’s why…

This morning Twitter delivered disastrous numbers for anyone still “believing” in the dream of Jack Dorsey’s turnaround strategy and execution. (Imagine that, I wonder who could have seen that coming?)

Yet, what caught my eye were two things I have been arguing for quite some time in response to ad revenue for Twitter rising going into the end of the year. (e.g. Q2 – Q4 2016.) The most common explanation was that Twitter was getting better and revenues were going the right way because of better execution and more. I doubted that reasoning entirely, in fact, I said on numerous occasions:

“I believe all this buying in social is a consolidation process where advertisers are going to concentrate and throw everything they’ve got in one last pitched effort going into the holiday shopping season.”

Guess what? Not only have ad revenues reversed since the holidays – they’ve now undercut YoY comparison by some 14%. But that’s not all – their actual user base in the U.S. has now begun to shrink. That’s not a good sign for the entire social complex in my opinion. Let alone, for any “turnaround” hopes.

So if we weigh the above with what Facebook reported is there anything to extrapolate? I believe there is, and it comes from Recode™. To wit:

“Facebook has been warning investors for the past year that its revenue growth would slow “meaningfully” in 2017 because it has finally run out of places to put ads in News Feed.

So far, that slowdown hasn’t really happened. At least not meaningfully, though year-over-year revenue growth has declined each of the past four quarters.”

Yes, you read that correctly, YoY revenue growth has actually declined, and declined sequentially. That’s a metric that’s going in the wrong direction when what’s seen as “all the competition” is collapsing simultaneously. At least when it comes to their share of the “ad pie” that is.

Now piggyback the above with what I’ve iterated ad nauseam e.g., “I argue we’re currently in a consolidation process, which is exactly what I would expect if we are indeed in the latter stages – before it all falls apart.”

I am of the opinion Twitter’s latest report, along with Google’s are proving that argument out. Not to mention the IPO disaster still unfolding.

So where do we go from here? Well, nobody really knows. However, here lies the issue today – and is this:

What happens to Facebook the moment advertisers no longer consolidate, and just decide to just stop throwing money into what is increasingly appearing to be nothing more than some black-hole or drain, with little to no results to show for it – except the bill?

After all, it was only one reporting quarter ago that the CFO of Facebook himself stated as to warn he expected a “meaningfully” slowdown in ad growth “particularly pronounced as we get into the second half of 2017.”

Was this quarter just the result of being the final of last-ditch efforts to throw the remaining ad budget against the “wall” and see if anything sticks? And if it is?

See Google, Twitter, and all the others current price action “pictures” for clues.

© 2017 Mark St.Cyr

A Follow up On The Scaramucci Appointment

I was asked by a colleague the other day if I still held firm to my thesis when it comes to Mr. Scaramucci, along with the Fed. which I laid out on Sunday in light of what was reported on Tuesday via The Wall Street Journal™ that Mr. Trump, “likes” Ms. Yellen and, “thinks she’s done a good job”, has “a lot of respect for her”, and would consider reappointing her saying, “She is in the running, absolutely.”

My answer was yes, and here’s why…

Although the optics of the above statements seem to not coincide with my original thesis at first blush. If we look at it a little deeper, or differently, there may be more too this than what a casual observation may not catch. One of those is this…

Is it not funny how coincidentally Mr. Trump just so happens to be parading around with Mr. Cohn in front of the press as the Federal Reserve convenes its latest meeting? And how about his answers? Sure he lavished praise on Ms. Yellen at this moment, but if you think that can’t change faster than a New York Minute? See U.S. Atty. General Jeff Sessions current presidential endorsement for clues.

What was also quoted is the following which directly followed all the above praising. To wit:

” I’d like to see rates stay low. She’s historically been a low-interest-rate person.”

And it is those two sentences which are the money quotes (in my opinion) to the entire article. For what Ms. Yellen, along with the entire Fed. apparatus is now embarking on, is anathema to what the president would like to see. And, one could easily assert – expects to continue.

Problem is – It ain’t.

I would suggest that the walking of Mr. Cohn in-front of the press during a Fed. meeting, all while having the niceties for the current Chair at the ready, while also having by his side an immediate (as implied) replacement should he desire – was a shot across the bow, if you will, to the Fed. that he is ready to make changes, and, immediately if he deems it. For he has “others” he’s also currently looking over for a potential Fed. position.

He made sure that was also known. Of course one could say “But of course there are others!” However, if one wants to be cynical or extrapolate deeper – maybe it’s not just to replace the Chair in isolation. There are other vacancies at the Fed.

What I infer about what “others”  possibly could also be to my ears? He may be openly implying: he’s not only actively thinking about it, rather, he’s also thinking about precisely who, and he’s doing that – right now. i.e., Skullduggery 101 – veiled threats for others to take note of. Because words and optics in the political power world matter. There is no “coincidence.”

I could be totally off base, and of course, this is all conjecture on my part (as was my original article.) But there are times the only way to see over the horizon – is to step forward onto the horizon yourself and see if things change so much as to give one pause. To my eye – they have not.

Doesn’t mean I’m right, just means there are things at play, and maybe falling into place, that signal one should continue to pay very close attention for any further developing clues. Because just when you think it’s smooth sailing and not a cloud in the sky. Suddenly…

You’re in the storm of your life fighting for survival.

Just ask Mr. Sessions.

© 2017 Mark St.Cyr

Simple Question With Complex Implications

On Monday after the “markets” closed Alphabet™ (aka Google™) reported earnings that were impressive for any company in this current environment, beating both on the top, as well as the bottom line.

And yet there was that fly-in-the-ointment as they say, that seemed to make the report not as “terrific” as one would think at first blush. The “fly” is the current: cost per click.

For those not that familiar with the term, this is basically how the “eyeballs for ad” model gets paid. Or said differently – this is what advertisers pay to the company when you click on their link. Pretty simple model, but it is the model of the entire internet as most now know it. Without it, the internet, as well as the companies that serve it up as it is currently known collapses. Yes, it’s that important, and with that importance comes a very simple question…

If there’s demand for something, and it’s effectual: Why are prices falling?

Advertising is not something that follows the “commodity” pricing model. Worthless advertising does, but not effectual.

If you can provide hard numbers that are both empirical and guaranteed, with some form of accuracy? Advertisers will pay up. Period. No advertiser or sector group is going to allow effectual ads to be had by their competitor if it’s proven to be effective. Sorry, it just doesn’t work that way.

So here’s why this is important: It is currently an accepted meme that both Google, as well as Facebook, are garnering most of the mobile ad dollars via the game of attrition. In other words, as advertisers pull their ads or campaigns from differing venues that have shown to be ineffectual, they are either moving some of those dollars there, or back to older venues such as TV or radio. And in some cases neither, in an effort to stop the hemorrhaging of throwing anything everywhere with little to nothing to show for it – except big ad bills.

Looking at the reported results for Google ad clicks they surged 52% in Q2, but yet, the cost (or what Google charges advertisers) dropped 23%. To put that into perspective: That is more than triple, or a 300% increase in value lost compared to the exact same time frame one year ago. (e.g., -7% to now -23%) To wit:

(Source noted above)

And yet – “clicking” surged 52% this last quarter. This just doesn’t make any sense with what is currently revolving within the economy, and especially when large-scale advertisers are not only threatening to pull ads because of their ineffective results, but are also doing it based on lack of transparency for how and why their ads (which they are the ones paying for) are being clicked on to begin with.

(Just as a reminder: the raison d’être for this entire complex was their knowing every data point with near, if not empirical, certainty. Just don’t ask, or expect, to see those details, especially if you’re the one paying. But I digress.)

I’ve made my opinion quite clear of this entire complex far too many times than needs to be listed. But just to be clear to those who may be reading for the first time: I am of the opinion we have now entered the latter stage before this whole “ads for eyeballs” complex comes crashing down in similar fashion to the dot-com era.

Yes, I am stating that a 52% INCREASE in “clicks” should be taken as a warning sign when put into proper context or reasoning, not what is now being touted by the cadre of next-in-rotation fund managers or “Valley” aficionados as “Great news! They’re killing it!! Buy, and buy more!!!”

Personally, I believe just the opposite, and the way I’m interpreting the numbers (along with my prior acumen in advertising) hardens my resolve for that stance, not weaken it.

Again, the entire complex of “ads for eyeballs” is already falling apart and the signs are everywhere. Hint: Remember when unicorns were the mythical beast to riches via the “ads for eyeballs” model? So what does it say when a once touted unicorn (Rocket Fuel™) that sells those very ads falls from the sky so hard it’s about to be acquired by another in hopes this deal might itself return it to profitability? e.g., Sizemek™ acquires it for $145 million. in 2013 Rocket Fuel IPO’d at $29 – it’s being acquired for $2.60. And I didn’t mention that the acquirer itself was just purchased a year ago for a little less than half its prior year value. (e.g., $74 million down from $150 million) Oh, and hows Snapchat™, Blue Apron™, and others doing? Too soon?

Just a thought (because thinking is precisely what seems absent when it comes to anything tech) the reason for all these “increases” that result in needing to “decrease” the asking price might have to do with something like the following. To wit:

“A Russian Went Inside A Chinese Click-Farm: This Is What He Found”

That’s a story that involves a Russian that should really be making headlines everywhere. But then again, that would be bad for the “clicking for profits” business, wouldn’t it? Let alone – the next-in-rotation fund-manger business.

An entire complex revolves around the answer to that simple question. But I feel the answer is already known – just no one yet will dare admit it.

© 2017 Mark St.Cyr

Why The Scaramucci Appointment Should Scare The Fed

Since the Great Financial Crisis of 2008 there has been one consortium responsible for the current valuation of the stock market: Central bankers, and in-particular the Federal Reserve.

So adulterated have these once enviable capital formation repositories become that the term – markets – now has to be used in the following manner: “markets.” For what they now represent is further away from reality of anything resembling true price discovery, than Alpha Centauri is to Earth. i.e., The distance is near unimaginable.

The true problem with all of this over these years has been the central banking cabal itself, and its sheer indignant stance or responses when anyone dared question the efficacy of their interventionist policies. Even though, as history shows, it has been central bankers themselves that have been the ones most thoroughly blindsided by the resulting chaos that developed in regards to their prior policies, which by-the-way were enacted in response as to “fix” prior errors. Think: Great Depression, Dot-Com Crash, Housing Crash, et cetera.

The real problem of today is that we’re now in an era where it appears by all objective reasoning that central bankers have moved from “guardians of the money supply” to: an unelected cabal instituting what they believe national governance or policy should be via the printing press as either a blatant incentive, or bludgeoning weapon.

As I’ve iterated before: at no time has more authority been handed over to an unelected body that has the power to control not only the economy, but who gets what, and how much, since the days of yore reserved only for Kings and Queens via their blood lines. Today’s “bloodline” seems eerily similar. i.e., Ivory Towers and Ivy Leagues.

However, there now seems to be something on the horizon that I feel the Federal Reserve is once again going to be blindsided by, for its coming from an area (and I’ll dare say adversary) from which the Fed. has never truly had to play, let alone, defend itself against. That “area” is the Oval Office.

I am of the opinion the appointment of Anthony Scaramucci as White House Communications Director communicates much more than most realize, let alone understand. Here’s why…

There’s a lot here and far too much to try to cover in a single article, so pardon me for being general in terms, but for this discussion general is all I believe one needs to understand and possibly connect-the-dots as to where things may be going.

First: let’s tackle the big brouhaha about Mr. Trump claiming responsibility for the current market highs. If one peruses the media it’s hard to not see any article implying “He now owns it – and he’s going to regret it!” Personally, I believe that’s short-sighted because in actuality; it is at these heights for only one reason: “The Trump Bump Hopium Trade.” i.e., What was believed as a near slam dunk (e.g., GOP now controlling all three houses) for getting not only Obamacare repealed, but tax cuts, regulation relief, and more.

The rise since the election has been in spite of not only current Fed. actions into continuing abysmal data, but also, in rejecting the impending effects of that very same data. In other words: There is absolutely no other reason for the “markets” to be where they are currently except in response to the “Trump Bump of Hopium.” Below is a chart showing exactly that “bump”, along with another detail which needs to be remembered. To wit:

(Chart Source)

As one can see on the above chart I highlighted (shown in the square) what the “markets” response was to the reality QE was no longer. i.e., Direct QE that is, for the roll-over or reinvestment process behind the scenes QE remained in full force, and then some. Supplying all the necessary “dry powder” for their preferred entities to buy any – and all – dips.

Again, for this point needs to be asserted: the markets have not only continued to rise, but have mirrored the prior accent when QE was in full effect, all while the Fed. has embarked on a tightening schedule unseen since the crisis along with putting into its “forward guidance statements” that it is not only going to reduce the balance sheet, but has given a schedule where that process should be construed to possibly begin at any day, releasing the biggest bugaboo fear of Wall Street, bar none.

And the “markets” have so far resisted (actually gambled) putting more faith into the “hopium” trade than the Fed’s resulting actions.

But that was then, and this is now, and things have changed markedly. And it is the appointment of Mr. Scaramucci which I believe signals far more of that “change” then most suspect – especially – The Federal Reserve.

A lot of the so-called “smart crowd” are assessing the change in the Trump administration as some form of chaos, or proof that its falling into disarray. I believe that observation to be naive and ill-informed. Why? As I made the case early when the President was first assuming the role and people were reporting their consternation on why he was doing this, and not doing that. From the article, “Why Is The Media Perplexed? Because This Is What Business Looks Like – And They Don’t Get It”

“People forget that he’s a billionaire or successful businessman today for one reason, and one reason only: He is a proven turnaround specialist.

That point gets lost on a lot of people. They forget he has been not only “on the cliffs edge.” He’s also been over it. Most don’t recall, or never heard about the exchange he revealed in one of his books between him and his daughter when he spotted a homeless person and he pointed out as to make an instructive lesson to her (paraphrasing): “See that homeless person over there? He’s worth a $Billion dollars more than I am right now.”

He wasn’t being coy – he was telling the truth. People forget just much financial trouble he was in during that period. It was a turnaround worthy for entry into the business textbooks. Personally, I’ve taken cues from it over the years.”

Why the above is instructive is this: He (or his administration, if you will) is precisely six months into it. And what has he got to show for it? Nothing, except for the actions he could do alone. (e.g., executive action) And this is where people who’ve not only been over the edge, but who’ve fought back and survived show, along with further prove, their mettle is far more resilient than most.

All the so-called “help” that was supposedly at the waiting (e.g., the House, Senate, and more) has given nothing but lip-service to previously agreed upon legislative actions. e.g., Passed repeal of Obamacare dozens of times when it was sure to be vetoed. But now where it would be signed? All they can agree upon is to now disagree, with their prior agreements.

Let me be clear: I am not endorsing nor reprimanding one political side or the other. What I am doing is trying to point out what is the current reality and meaning for it, along with how it may affect not just business, but the entire global economy going forward. And how one might use these observations to either buttress, or at the least get one to think about what might be coming down the pike – before the hooves begin racing down the alley.

Again, whether or not one agrees with the President one thing is above reproach, as I stated prior: He’s not only been to “the edge” – he’s been over it, and clawed his way back to the top. Steve Jobs did the same, as have others. (I’ve been there albeit at a different level) And it is here where things not only from a business perspective change, but also in others, in ways most have no understanding.

It is from that viewpoint I have now deduced that Mr. Trump has now fully, and with intention, removed any and all gloves – and is about to not only come out swinging further, and harder. He might land blows others never dreamed forthcoming. Especially with the Fed.

The Scaramucci appointment particularly piqued my interest in its timing for two reasons. First: This is very typical in a turn-around situation if you’re at a 6 month point. i.e., evaluate prior assumptions and actions for efficacy, and jettison any and all that proved to be ineffectual – with immediacy and certainty.

Yet, it was the second where things begin to make more sense for not just its timing, but as well as the who, what, or why’s, because it happen to coincide with near immediacy of another release. That release? Via BI™ Pedro Nicolaci de Costa “A Federal Reserve committee executed a brutal takedown of Trump’s budget” To wit:

“Despite signs of strength and growth in aggregated data, there is persistent and perhaps even worsening anger among Americans living in marginalized communities across rural, suburban, and urban regions about their economic position,” the CAC said.

Unlike the Fed, which prefers to stay away from politics and has largely skirted discussion about the impact of Donald Trump’s economic policies, the central bank’s community council did not shy away from taking issue with the president’s proposals.

“While capital markets have shown continuing signs of strength, recent budget proposals and executive actions by the new administration, if enacted, would severely constrain capital flow into low- and moderate-income communities,” the Fed’s community council said.

If there was ever any question that the Federal Reserve has inserted itself into the political strata it is now laid bare via their own words.

Reading just Mr. Nicolaci de Costa’s breakdown of it is well worth the read. Did you know “climate change, health care, affordable housing, immigration” and more are now a focus of the Federal Reserve? So much so has its own committee to put forth its findings?

It’s been around for two years and was created as some form of PR vehicle to counter criticism. But suddenly, now it wants to be heard as to offer it. And the topics are of the political. Funny how that happens, no?

Here’s where I believe the Fed. has now overstepped so much so – it’s putting light where it once wanted to do things in the dark. And the Trump administration, especially Mr. Trump himself, not only knows it, but can see it coming a mile away. i.e., The Fed. is now openly waging “war” for control, and inserting itself into, and against the White House via monetary policy as to cripple it – if not worse. All while using arguments and reasoning reserved for political strata.

Or said differently: The Fed., an unelected consortium of policy wonks has now openly declared what it deems “politically important” and is good for the electorate or global community, thus influencing (a given extrapolation) and conducting monetary policy for those desired political outcomes.

Don’t take my word for it. Read the reporting and report for yourself, and come to your own conclusion. It’s actually breathtaking in its scope once you do.

As I stated in the headline the appointment of Mr. Scaramucci should give pause for the Fed inasmuch as when backstopped against the President’s own latest rebuttal of congress itself the other day.

Mr. Trump in no uncertain terms lambasted his own party in a manner not seen in generations. i.e., He put the blame squarely and empirically on them in no uncertain terms, with no place to reason away his assertions. e.g., (paraphrasing) “Where’s the legislation you passed when it was sure to be vetoed which you ran on, and promised to pass, should you and I win? I have my pen in hand, where is it?!”

These are the types of in your face rebuttals that come from people who no longer care about how something looks to others, or if feelings are going to be spared. This is now all about results. A fundamental “turnaround” process and distinction. (Think Jobs when he wasn’t getting the desired results from his subordinates, or was being openly questioned via Wall Street. It’s not that dissimilar.)

This is critical because if there is no “Obamacare” repeal, something which was supposedly a given – tax cuts and more are not just DOA, but possibly dead and buried. And these are the reasons for the “Trump Bump.” Period.

Add to this the forthcoming debt ceiling debacle that is sure to take place, along with all the negative press that will come pouring out from every mainstream media outlet, coupled with the ever-increasing resonating effects that the Fed. has not just raised the costs of borrowing on the nation at a faster rate than they ever signaled ( so much for all the forward guidance) but rather, into increasingly deteriorating data far worse (both in cycle timing, as well as for a supposed “data dependent” body) than the many times prior (such as 2011, 12, 13) when they sat on their hands as the “markets” overtook the prior highs of the original crisis exacerbating an already evident growing bubble.

The issue for the Fed. is not that this “blame” or “spotlight” will be regarded to just some “tin-foil hat wearing, conspiratorial crowd” as they’ve been referred to by the Ph.D set. No, the reason why Mr. Scaramucci should ring alarm-bells for this set is because he, unlike most of his predecessors, will be able to frame and articulate that very same argument squarely, forcefully, an unabashedly directly onto the Fed’s shoulders in a manner and extreme I believe they’ve never encountered. And it will leave them literally dumbfounded on how to react or respond.

I am also of the opinion any, if not all, blame for any ensuing faltering, or heaven forbid, any true correction in the near term will be thrust so directly and vehemently at the Fed. their reputation in the public eye will quickly go from some form of “saviors of the economy” they like to believe of themselves – directly to where the masses begin to look as to where to bring the torches and pitchforks.

Again, I am of the opinion this new iteration of the White House communication staff and players are not only willing, but capable of doing just that. And not by using lame constructs and reasoning like those of the Ivory Towered set. No: the most effective, as well as volatile ammunition that will be used will be the Fed’s own prior words and reasoning.

It will be their own words, actions, and more that will be regurgitated as to come back and “bite” them. i.e., One example is Ms. Yellen’s own “high pressure economy” argument just this past October vs her policy stance and actions to date.

A lot of people have mocked the idea that Mr. Trump has unwittingly taken claim of the current rise in the “markets” as to be an anchor around his presidency, let alone, neck. However, if looked upon objectively – it might be the singular weapon he can use to show against all odds – the “markets” since November rallied for one reason, and one reason only: what his presidency was believed to be bringing to the table as in repeals and tax reform.

All in spite of Fed. actions to the contrary.

And now with the GOP falling short of what was expected and the president willing to call them out for it in no uncertain terms? I surmise the only ones whom think they’re not next is the Fed. I also believe they’ll not need to wait too long for it to begin in earnest. After all – it’s not like Mr. Scaramucci doesn’t know these arguments for himself.

And here is an important observation: He’s not there because of any “love affair” or “political payback” for loyalty. Far from it.

In actuality they’ve (Mr. Scaramucci and the President) been adversaries via Mr. Trump’s vanquished opponents. And yet – there he is now. There’s a reason for it. I’m of the viewpoint it’s because of Mr. Trump’s now unmistakable pivot to taking the gloves off entirely. And I have a feeling it’s the Fed. that has now entered into these newly acquired crosshairs.

American’s love a fighter, especially one who seems to have their interest at heart. What far too many believe is that these latest impasses are hurting Mr. Trump politically. Far be it. The harder he fights – the stronger his base will not only get, but grow.

This is anathema to what the political class understands. And with Mr. Trump coming out swinging as he did in that latest press conference, along with his latest barrage of tweets bring back to light obvious one-sided dealings for political, if not legal hypocrisy. One should take these as not just clues, but rather obvious manifestations as to leave little to no doubt how things are going to be handled going forward.

And once again I feel the Fed. is about to be blindsided in a way they never dreamed imaginable. e.g., From the real Bully Pulpit.

© 2017 Mark St.Cyr

Future-Hype Arrives Right On Cue – Again

Not long back I made mention of a phenom which I’ve come to label as: future-hype. 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.

I made mention of this phenom a few weeks back when I pointed out what I see as the latest incarnation of this absurdity. e.g. Facebook™ internet providing solar drone. To wit:

Why is the above relevant? Fair point, and it is this: It sure is a nice thing to be able to bring access of the internet to – BILLIONS!

(Remember that “eye-balls for ads” model is the key, and this offers up the main course for the headline reading algos’ to feast upon. But, back to the headline.)

That’s just “FANTASTIC!” right? I mean all the ads for fresh eye-balls that have not only never had the opportunity to have a Facebook account, but never had access to the internet, and probably never even hear of it! Oh, the money they’ll spend and the profits to be made.

Did you just have a “Wait…What?” moment there? I hope you did. If not read that last line again only slower and let it sink in. I’ll come back in a moment.

Did it hit you? For those not sure of where I’m going re-read my earlier quote above, particularly the line: “Spend (or lose) $100mm per quarter is perfectly acceptable, and even encouraged, as long as you can show 102 million eyeballs came for free.”

In that article I cavalierly made the comment that Elon Musk and Jeff Bezos would nod their head in approval. For this has become so blatantly obvious to anyone paying attention, it’s now downright comical.

Why? As I’ve been stating for years – It’s all about how to play the headline reading, algorithmic, front running, HFT, trading bots.  Hint: Remember how every time it seemed Amazon™ stock valuation was questioned there was suddenly barrage of “news” about drone deliveries? All coincidence I’m sure. After all it’s not like it worked for the Fed, right?

Yet, if you want to possibly buttress the idea that maybe there’s a little more to all this “coincidence” than meets the eye or press release. Today we have no finer example for one to ponder than Mr. Musk himself in what can only be deemed as one of the most blatant examples of what I’ve coined “future-hype.” Via his Twitter™ feed. To wit:

“Just received verbal govt approval for The Boring Company to build an underground NY-Phil-Balt-DC Hyperloop. NY-DC in 29 mins.

If you want this to happen fast, please let your local & federal elected representatives know. Makes a big difference if they hear from you.

City center to city center in each case, with up to a dozen or more entry/exit elevators in each city”

Sounds “fantastic!”, right? Sure does, only one problem. This is all “news” to those whom one would construe are the “approvers.” Again, to wit:

Via New York City’s mayoral press secretary Eric Philips:

“This is news to City Hall.”

“also, if you’re stopping by City Hall, please bring a copy of the proposal. That would help.”

Via USATODAY™ reporter Nathan Bomey:

“I just talked to the New York MTA about this. Press aide is so flabbergasted that they’re asking me to spell Elon Musk’s name for them.”

Can you say, “It’s different this time?” Or, does one need to be shown a “picture” as the Silicon Valley aficionados likes to call them, for why this seemingly brazen, over the top claim, needed to be stated in the first place? Fair enough. Once again, to wit:

(Chart Source)

Suddenly everything about the “future” is getting questioned. Especially when it comes to all that future P/E payoff in riches. Or. said differently: “If it sounds too good to be true, maybe it is.” But we shall see, after-all…

Earnings are just around the corner.

© 2017 Mark St.Cyr

How To Solve The Healthcare Conundrum

Over the last decade there’s been no other subject more debated and central to people’s lives, than the current healthcare debacle making its way through the economy. Since the inception of what is colloquially known as Obamacare, the entire complex that was once the envy of the world seems to now be circling around the edge of some giant sinkhole before it renders itself to the forces of gravity, and finally descends into the abyss, taking everything with it in some horrifying sucking sound.

If you try to garner any information on how to solve this current debacle (and people like to gloss over this very point) from any of the so-called “smart crowd.” All one gets are mumbo-jumbo filled constructs about why the issue is so difficult to fix and more. It’s moved beyond resembling any sense of intellectual type arguing. Now – it’s pure emotional screaming, crying, and incoherent mumblings making kinder garden look scholarly in comparison. It’s beyond pathetic. Yes – on both sides.

I don’t get into politics and I’ve always stated: “You should not know which side of the political aisle I stand on if I’m making my arguments correctly.” Today is no different, for this isn’t about politics per se – this is about business, especially small business, the life blood of America , its economy, as well as the nations main employer. And the current draconian measures being thrust upon them gets little to no attention via the main stream press is not only appalling – it’s damn near criminal.

Why? Because it’s killing not only them, but with them goes, as it destroys, the areas of the economy that most people get their first leg up into the economy. This is where people looking for decent work, or chances to prove themselves, or maybe try to put back together, or reinvent from a recently shattered past or life: rebuild, relaunch, or reinvent. Sometimes themselves- sometimes the business itself. All for the better.

This is where people go apply for a job face-to-face to an owner looking for a chance as to prove their worth. Or if they can’t find one – invent one. Not send 100’s of applications to H.R. computer screening black-holes that will disqualify an applicant for not dotting some i, or crossing a t, literally.

Think: your local market, retailer, sub shop, distributor, manufacturer et al with about 50 or 100 employees give or take. The Small Business Administration has different criteria as in up to “500 employees” and more, but for this discussion, it’s about what most understand as “small.” It’s these businesses that are the dynamism for most towns.

Without the relief that was expected (and sold) to the entire small business community – it is at risk, even more so, than it already is. That alone should make politicians on both side take notice, but currently it’s like they’re (small business) screaming in a vacuum. And no one seems to care. Not the politicians, and certainly not the Chamber of Commerce.

Small business used to look to agents such as this for help in having their voices heard. But now? It’s more like lip service, then, “Have you sent in a donation?” It’s now moved beyond pathetic.

So in this vein I’m going to wave my usual fees (and I don’t do that lightly) and will now detail precisely how to fix the entire healthcare question and return it, along with its once lofty reputation, for being the best in the world. To wit:

  1. As has already been suggested: Repeal the current law (Obamacare) in its entirety today, with a two-year delay for full compliance.
  2. Make all politicians, staff, along with all government employees: to have to purchase and acquire insurance plans that are available to the general public. No special provisions, no special carve-outs. If the general public can’t purchase it? Neither can a politician or other government employee. And if for any reason “insurance” or “healthcare” is part of their compensation? A stipend equivalent to, and no more than: the median or average of available plans. No work around, no exceptions. Period.

If those two solitary provisions were met – the entire healthcare/insurance fiasco would be solved at a minimum “on time”, and probably for the first time – ahead of schedule.

Everyone would benefit near immediately (and would be covered regardless of anything prior or existing) the moment the politicians had to pay, and abide, by what their constituents have, especially if full payment was only for “the median.” This would take the “median” or “average” plan standards to stratospheric heights (along with pushing down its costs via the competitive model and market) making today’s “gold” standard look more like fools-gold.

Again: Make that second item in the list above into law? America begins getting back to work far faster, and far healthier, than we have in decades.

The above is worth $Trillions, upon $Trillions of potential GDP gains along with employing many of the millions currently being forced off jobs everywhere just because they are number 50 in the employee roster. And the effects, along with affects, would be felt throughout the nation with near immediacy. All at no charge from me – and more importantly – no charge to the nation.

In fact: The only “charge” will be; what is heard from America’s business sector once the shackles of Obamacare are cast aside. Something they’ve been wanting to scream for years.

© 2017 Mark St.Cyr