The Approaching Silicon Valley Meltdown

To say that we are living through precarious times seems to be an understatement. Whether one lives in the so moniker’d “developed world, emerging, or frontier” there seems to be one constant currently: No one seems to be able to accurately ponder what tomorrow may bring, whether its political, economical, social, or combination there of.

The only thing constant right now is one of two things: Either, further instability is on the horizon. Or, complete and utter chaos is already knocking on the door. (See Kim Jong-un or Robert Mugabe for clues.)

Stability, the once deemed word for progress throughout civilized society now seems, to have devolved to mean, at what point of the instability around them they’re currently coping with. i.e., If you’re currently muddling through economically while dodging being a statistic, as the term goes, that currently means you, or your situation, is currently “stable.”

This now applies to not only people, but business, as well as politics worldwide. If you think I’m exaggerating? Hint: Hollywood. Need I say more?

However, there has been one outlier, for the most part, which seemed to skirt around all the current chaos, relatively unscathed. That would be Silicon Valley and all its ancillary provinces aka “Disruptive Tech.”

So far the coveted group known collectively as “FAANG” (e.g., Facebook™, Apple™, Amazon™, Netflix™, Google™) seems to have held the “barbarians at the gates” known as investors relatively at bay, or “stable” in their positions, if you will. What has been, anything but, is their cohort of IPO brethren that were supposed to have joined them.

“The Valley” seems to fit nicely as a moniker for a now self-recognized nation-state, after-all, if you include the market cap of these and a few others (e.g., Tesla™ and more) their combined valuations rival those of sovereign nations.

For all intents and purposes one could say they’re already developing and embracing their own newly formed currency, aka “Bitcoin™.” All that’s needed would seem is proposing a charter, and recognition.

And that’s why it’s all about to burst, in my opinion. All of it. Why?

Just as there are always clues, it’s in the consistency of further developments, along with weighing any prior, coupling them with the current, then trying to extrapolate whether or not they still stand, or are valid. This is the work most people (especially those paraded across the sycophantic mainstream business/financial media) won’t do. And not doing so for many – as of today – will have ramifications, maybe for a lifetime.

So what’s the “Why?” Of course, it’s only my opinion, but I stand behind it more fervently than ever before. And it is this…

“The Valley” (and its entire ancillary complex aka “the disruptor class”) is on the verge of receiving a wake up call, the likes, that may make the dot-com era look relatively “stable” in hindsight.

To use the political as an analogy, let’s just say, I believe the newly formed “nation-state” of FAANG will have much more in common with the turmoil in Brazil, Spain, Venezuela, and a few others in the coming months as it continues to desperately cling to the mythical Utopia of magical creatures known as unicorns, and cash out riches known as IPO’s. That “Utopia” has already been found to be a Potemkin Village made of spreadsheet papier-mâché analysis and valuation metrics, not worth the digital paper they’re written on.

But what has been far more important over the last few years is this:

Every-time a unicorn has rung its IPO bell – it’s been marched subtly off the so-called “trading floor”, directly to the glue factory door, onto another floor, aka the “killing floor.” Where it and its so-called “lucky” IPO debut investors, along with their wallets, met the same fate.

It’s been a “rinse floor and repeat” proposition going now for nearly 3 years. You know what else happened about 3 years ago? Hint: Quantitative Easing (QE) officially ended. I’ll contend that’s causation, not correlation. A very important distinction and difference, along with what it portends going forward. For as I iterated prior – there are always clues.

Back in April of 2015 as the effects of QE3 had yet to be realized (official end was Oct/Nov 2014) “The Valley” was still in complete euphoric mode. It was during this period I penned the following:

From the article, “Bubble Confirmed: From Sock Puppets To Action Heroes” To wit:

If the stresses now rearing their head within the markets continue I’ll make a prediction.

What you’ll not find more of going forward is VC’s strewn across the skies dawning capes and spandex searching through an ever-expanding universe of start-ups to fund. No. What you’ll find is a lot of the once so-called “wonder companies” that were previously funded desperately seeking additional funding of any type possible. Not to expand, or to buy the next greatest “eye balls for dollars model” to compliment their existing “now desperately seeking eyeballs for dollars” model.

What they’ll be in is a frenzy seeking funding – for their very own survival. Because Non-GAAP “We’re killing it!” earnings reports won’t do the most important thing in a recessionary downturn alongside the reality of no more “free” money.

As of that writing there have been far more tales of unicorn woes than anything else. Hint: Snapchat™, Twilio™, Blue Apron™, just for a few recent examples.

Then of course we have the “stable-mates in waiting” decacorns that were supposedly so ready, so fantastic, so disruptive, so _______(fill in the blank) that when they made their procession down to the IPO “floor” everyone would be dazzled.

Of course I’m speaking to Uber™ and such. How’s that all working out? Hint: The valuation was supposedly cut to around somewhere in the $40’s with Softbank™ supposed interest. Yet, that was before the latest fiasco in London was calculated in, or should I say, out? e.g. “Uber London loses license to operate.”

Hmmm, wonder what it’s worth today? I have a feeling nothing with a 4 handle, or even a 3, but that’s just a feeling. But if it stays private? Sky’s the limit when you’re the one doing the valuation metrics, right? Just ask them.

Remember when Snapchat was about to save the IPO world? (and if you’re one of the “lucky” to get in at the IPO, you have my condolences) This was the company that for all intents and purposes was going to show everyone that dared question the power of “The Valley” and their incessant hold to the “It’s different this time” meme that it was they that were in fact “the chosen.”

And they did just that – and were chosen to join the others in the IPO hall-of-shame with no redemption for both their valuation metrics along with many an investors wallet. You don’t hear about investors wallets anymore,but did you hear how “Billionaire Snapchat CEO Evan Spiegel and supermodel Miranda Kerr are a having a baby“? IPO’ing just-in-time does have its advantages, does it not? Again, if you were one of the debut “fortunate”, again, my condolences.

Yet again, Who’da a thunk such a thing even possible when the entire main stream financial media was in near blissful, rapturous fascination with both the product along with its story?

Hint: From the article, “The Big Snapchat IPO Question: Will Investment Dollars Also Go Poof?” To wit:

In my opinion: This isn’t a good sign if you’re the supposed “David” in “The Valley’s” version of “Goliath” killers. Especially if you’re simultaneously held to be the IPO savior of tech. And there’s only one thing worse than “expectations” not being met, even if it is hopes, or dreamlike infused wishes.

What’s that you ask? Hint: When you state publicly that your business, a business that is looking to garner other people’s money who will someday be looking for a return on that investment read – they may never find that scenario ever possible.

Think I’m kidding? From their S-1 filing, page 19, in bold, italicized text. To wit:

“We have incurred operating losses in the past, expect to incur operating losses in the future, and may never achieve or maintain profitability.”
So, I’m going to ask you a question from a business standpoint: Why in the world would you include such a statement?

Some will argue this was just some boilerplate legal mumbo-jumbo that is constructed and stated in more differing ways than there are ants on the planet, and needs to be included somewhere within the fine print, where all this form of legalese gets inserted to be glossed over. And that would be a fair argument. However, if that’s the reasoning: Why in the world would you make this statement front, center, and unable to miss?

Unless?

When it comes to that “unless” question, there’s only one question I feel answers it. e.g., “Too soon?”

I’ve made a myriad of arguments in articles on basically the same theme over these last few years, and most have fell on deaf ears. Yet, as the “markets” have continually gone higher any coverage for these so-called mythical companies seems to have gone from front-page news to the obituary section, where again, no one wants to read for fear it might be theirs to be read next. Unless they’re having a baby. If then, see above.

Yet, there are glaring signs that should be laid out and parsed for what they may portend in the very near future, coming from what has now been classified as what can only be called the “never gonna let you down” family of all that “The Valley” holds dear. e.g., The FAANG family.

First, there’s Apple. As of now the new phone seems to be a hit. (To be clear, I’m an Apple product fan and user) However, what seems more than troubling is that the entire Apple mystique seems to be not only unraveling, but falling into atrophy.

Differing product rollouts (think wireless ear buds for one), software upgrades that are actually downgrades (as in features once favored by power-users suddenly vanish in their entirety) missed or delayed shipping dates, sufficient product inventories and/or availability., and on, and on. And yet? The CEO, Tim Cook, the once heralded operations aficionado seems to have plenty of time allocated concerning political statements be at the ready for consumption, rather, than all of the Apple products still in limbo. (Think Mac Pro® for another)

There’s just something not right with that entire situation, and I believe there will be backlash to be paid in the coming future. If so. the ripple effects are going to be well felt. However, when it comes to Apple – they run a business that generates net profits, massive at that. If there is any seismic activity in “The Valley”, Apple might not only fair the best, but actually benefit from it. But that’s for another article.

Then there’s Facebook and Google, the ultimate “ads for eyeballs” representatives. Currently their numbers seem to be “hitting it out of the park” as is portrayed ad nauseam via any next-in-rotation fund manager. However, as I’ve opined far too many times to count, I believe that is the result of failing ads-for-eyeballs campaigns concentrating their efforts to the two remaining points, where a return for those ad dollars has even the remotest shot of providing a sale.

If true value and efficiency was the reason for these two entities to receive, now, nearly 2/3rd of all the digital dollars being spent across all of social or digital media. If this were true, it begs the question: Then why are the largest ad buyers in the world for mass marketing products pulling their ads from these venues consistently? Hint: type “ad fraud” into your search engine of choice)

I contend their gains go hand-in-hand at approximately the same rate, as all the competitors lose the equivalent amount.

All one has to do is compare what were supposedly the next “kings” for further “ads for eyeballs” riches losses with these two ever-increasing gains. I content, after this retail season concludes, so to will those gains. And that alone will change everything, and I do mean just that – everything – for these two current FAANG rulers.

Then there’s of course Amazon, Netflix, (and how can one leave out) Tesla. Here’s where one question will become paramount when, or if, things become slippery. That question is: Where’s the money? aka Net profits.

Every time there seems to be a questioning of valuation in any of these companies one thing is for certain: Future Hype makes it appearance, again, and again, and again, and again. Tesla has now made it an art-form. Need proof? Fair enough, to wit:

As Tesla wrangles with production failures and more, suddenly the stock appears vulnerable – then just like magic (or clockwork to be precise, but there’s a mix of both for sure) Mr. Musk dons a stage and venue and rolls out the “next big thing.” This time, its “Semi-trucks, and a new “Roadster.

All sounds just fantastic, right? Well, it is, what’s even more fantastic will be how Tesla finds the time to do any of it as its current state of affairs in delivering already claimed vehicle production falls further, and further, and further behind schedule. Which begs the question: Does this P.T. Barnum effect begin to wear thin on already promised riches that aren’t showing up? The share price seems to be showing the “effect” is no longer the catalyst to unseen black-sky territory as it once was.

As I stated in the article, “Future-Hype Arrives Right On Cue… Again” To wit:

…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?

Now its electric semi trucks, and for Amazon, it’s now about taking over the government procurement supply chain. What’s next rocket ships to Mars? Wait, I’m sorry, I already forgot, that was last cycle. It’s getting harder to keep up.

Silicon Valley and its now representative, amalgamation of companies collectively known as FAANG currently seem invincible to the warnings signs building up all around them. Much like in the early stages of the dot-com era where upending calls for caution were met unheeded, or just-plain-out dismissed with a vengeance.

But that’s the funning thing about reality, especially when the pendulum reaches the final height of its swing. For once it does, it comes back the other way – with a vengeance.

The issue this time is this: On the upstroke was where “cartoon superheroes” and “it’s different this time” magical thinking with childish abandonment was not only rewarded, but seemingly reined supreme. Until…

Hint: The main course on the table this week thought the same, until.

Oh yeah… And meaningful Tax Reform will be passed before year end.

© 2017 Mark St.Cyr

Are We Here Or There, Yet?

Back on October 17th I began openly pointing out what I deemed “warning signs” that were signaling trouble (and by trouble I meant “big trouble”) may be on the horizon for the “markets.” In those observations I used a few charts, patterns, and commentary to describe that if my inkling was correct, than we could/should expect to see certain signals confirming it.

It was only a day later the first made its presence known. Since that point the “market” (once again) seemed to shrug off that signal and propelled higher over the resulting weeks. But a funny thing has happened, more than once, over these ensuing weeks that seems to have added weight to the original “signal”, rather than its usual dismal for relevance. To wit:

(Chart Source)

The above chart is of the S&P™ as of today at approximately 11:30AM ET using 4hr intervals. What the above chart represents is that since I first made that initial observation, where the first signal occurred (e.g., the first arrow) the “market” has revisited this precise area now three times.

There’s a lot to infer from the above, but too my eye, along with what is currently taking place in regards to the competing tax bills making their way through both chambers, the repercussions for any misgivings similar to what happened with the healthcare debacle are multiplied exponentially. The reason?

The proposed tax bill, and its ultimate passage, is that single “hair” that is holding the “Sword of Damocles” aloft.

Yet, there’s a catch, for it is not truly all about just “passing it.” At least, not as far as the “market” and business leaders are concerned that is.

Passing it is the secondary attribute. What’s in, or not in it, is what’s important. And the more the talking heads on Capital Hill keep talking – the more it sounds like there’s a lot of things not in there that should be, and even more that shouldn’t – that are.

This has the potential, in my opinion, for a very knee-jerk reaction, with very detrimental consequences, should what’s both in, as well as what’s not becomes known. Here’s what I said about this about a week ago, again, to wit:

From the article: “The Possible Trifecta That Demands Attention”

Then there’s the third, and it is here where everything can go awry: The release of what is, and what is not, in the so-called “Tax Cutting Bill.”

If, and I don’t say this lightly, if the proposed cuts are seen, or show, they’re nothing more than specious talking points? This entire rally since the November election lows is at risk. And by “risk” I mean of falling apart in ways similar to falling off a cliff.

With the healthcare fiasco still fresh in many a mind. If the supposed “tax cutting” resembles anything of the sort as was unveiled during the healthcare debate? All I can say is: look out for what “it’s different this time” can mean in reverse.

Just a reminder of where we are today, as to where we were last November when all of this was supposedly, “A done deal!”

As always…

We shall see.

© 2017 Mark St.Cyr

A Discussion On ‘Seeing Over Horizons’

I was in a meeting the other day made up of C-suite business leaders when I asked the group if there were any further questions. Suddenly, one of them turned to me and asked the following. To wit:

“You said there are times when you’re trying to explain what you’re seeing over the horizon, that you can’t take for granted whether or not they truly understand the viewpoint, because too them, you yourself can appear to be over the horizon. Can you give an example of what you mean by that?”

It was a fair question and thought I’d share it, because the reaction to my answer was both overwhelmingly responsive, as well as brought forth provoking thoughts to their own observations or biases for future business concerns. Here’s a summation on how I replied…

“Everyone is looking out over the horizon, as they say. And in using that metaphor, if you think about it, if you were to travel to that horizon and look out, there would of course then be another horizon. My job, or at least how I see it, is to give, or explain to others, what I see from that further vantage point.

That “view” if you will, is nothing more than my amalgamated viewpoint based upon all my prior acumen in business and life. This, again, using it as a metaphor, usually allows me to venture out both first, and further than most. So, if I see, or surmise something that warrants attention or concern, there’s usually going to be some form of lag time till it gets to where most may finally get a first glimpse. The reasoning being, of course, is I’ve already been over, or to the first horizon.

Yet, also inherent in these observations is that the lag time, if you will, sets up the perfect situation as to discount any, and for some, all warnings. This is just as important to point out as the observation itself. One can disagree with whatever I may or may not propose or surmise, but making sure their doing so for the right reasons is key.

Just like the warning for a potential hurricane brewing in the open ocean. Whether or not it hits landfall with the expected strength or not is immaterial. Knowing it was there, along with its potential is the key, which is where the real question lies and that question is this: Would one rather have a knowing and possibly adjust their plans or actions accordingly, then not have it make landfall? Or, would one rather go about oblivious? The ‘oblivious’ person appears the smarter every time – until the one day they’re blindsided.

Business is much the same, that’s why honing this skill, for lack of a better term, is paramount for those serious about it.

To be clear: It’s the ability (of course as a metaphor) to see over the first horizon onto the second, and make plans accordingly, as to act, move, or stay put is where the real competitive advantage is made. This is the process that delivers ‘First Mover Advantage’ status and all the competitive benefits that come with it.

Many think it’s just plain luck. It’s not. Sometimes things work, sometimes they don’t. However, the conscious decision to place oneself or business directly in the probable path to be at the right place, or the right time, with the right solution, is not luck – its prudent business at the highest level of the game.

Yet, let me reiterate: Inherent in these observations is that lag time. And it is here that sets up the perfect situation as to discount any, and for some, all warnings. It’s how people never see the next big crash, or the next big “thing” as to capitalize on it.

Some think it’s all about the stock market, but it’s not. This applies to markets and businesses such as how “Sony™ never saw the iPod®, or how Motorola™ never saw the iPhone®. The list goes on and on.

Remember, these two examples I use are for the reasoning that the afore-mentioned were not just the dominant players, but for all intents and purposes, created the product categories to begin with. Then, lost not only market share – but total brand and product relevancy – and never regained it.

Today, when it comes to the financial markets, I hear all the time about how the “experts” are predicting this, that, and the other thing, and how this will happen, and that won’t happen, and on, and on. All fair points, if – you don’t remember any of the above I just referenced and apply its lessons to what may play out in likewise manners.

Let me give you another example only I’ll use myself in this one: Back in 2008/09 I was part of a handful, and I mean that literally, that warned that the markets had not only been captured, but were being manipulated by what was then called a conspiracy theorist argument. That argument was that there was some type of hidden-hand coming into the markets and rescuing it every time there was any meaningful sell off. The moniker applied to this was called ‘The Plunge Protection Team.’

This was met with calls from academics, economists, policy makers, fund managers, et al across the media complex as sheer lunacy. Calls of ‘tin-foil-wearing nut jobs’ and more were applied to us. Yet now? It’s all viewed as some form of ‘prudent monetary policy.’

This has completely adulterated the business funding sector providing protection for failing companies while their competitors who should be easily finding funding to overtake them go without. aka Crony-capitalism.

Understanding this one dynamic would have allowed one either to make, or not, certain moves in certain directions either taking additional risks, or avoiding them, because no matter how well they might perform, their funding may not allow them to compete with their competitor who is allowed to remain in business, holding on to their market share bleeding it dry, only for the fact, that their stock symbol has a bull’s-eye deemed worthy by a central bank.

Many businesses are only now understanding this point, because its become so blatant. But I’ve been warning about it and its effects for now going on a decade. We’re all still wondering how, or when this all ends, but I believe to my core it’s the ones that at least understand what’s taking place that have the best chance of not only surviving any market upheaval, but rather, thriving in it.

So then a follow-up question was made, and it was this: “Can you give another example?” Of course, I did. Here’s my answer…

“Currently we are celebrating the 10th anniversary of what we now see as the most revolutionary product of generations: The iPhone®. It’s now ubiquitous in daily life for many, and all ages. It’s seems we’re doing more, and, more, and more with it every day.

However, what if I said to you to contemplate the following: In 10 years from today the smart phone, and the way it’s used currently, may/will be looked upon, or frowned upon, if you will, the same way that smoking and drinking alcohol of the 1950’s is viewed via today’s prism?

Watch any old movie or television program of the ’50’s and so forth. Or, you can use the current Mad Men series on AMC™ as a benchmark. People smoked and drank at their desks. Television hosts and guests openly smoked both on camera, as well as off. For many drinking alcohol or smoking cigarettes, regardless of where one was, was as normal as having a soda today, whatever the time of day.

The smart phone of today is the embodiment of both, in my view. Its usage for distraction and more is getting to the point of where laws are being either enacted or called for. Think texting while driving as just one.

I think this will accelerate from this point on in a very short time from here, because of the things we’re finding out about it as we go along. It’s probably the most habit-forming, time-wasting, attention distraction device we’ve come up with in a century. It’ll probably be said it also promotes tooth decay or some such idiocy to push the narrative for curbing its usage.

I can see ‘age restrictions’ of all types whether for the device itself or content available. Use in classrooms, boardrooms, meetings, and more I can see being socially outlawed in the very near future. Already it’s becoming common to see a sign stating ‘NO CELLPHONE USE ALLOWED’ in certain venues. I am of the opinion this is going to accelerate, not maintain current levels. Which begets the next questions, if this has any validity:

How would your business be impacted – if – that were to be true? What preemptive positioning could you take before hand? What resources would you put or commit into the initial stages? How much commitment would be legitimate? At what point, or what signaling, would warrant an escalation of resources? Or, at what point should the entire notion be jettisoned? And so on, and so on.

And, now since I just brought this notion forward: can you see the possibility of it?

No one knows, today. But being on a careful watch for further clues may put your business in the position to capture or jettison markets in a favorable manner, rather than, suddenly waking up and finding all that great bargaining your people did to clinch the production terms to bring down the cost per unit by a few cents, now means you’re sitting on two warehouses full of the latest version of Walkman’s® as the iPod debuts, because you never saw the potential for upheaval coming. Or worse, payed no attention too it.

One response was:

“I just can’t see that happening, yet, I can see where that could be possible. After-all, no one thought cigarettes would ever be turned into the nasty habit in the publics eye that they are now. And alcohol? Same thing. Even 10 years ago, it wasn’t viewed as it is even today.

I get it now. Doesn’t mean you have certainty, but if you were on the watch for it, as you say, yeah, I can see how one could set oneself up to be in the right business, or get out of the business, at possibly the right time.”

That last line was what the entire example was meant to express. When I heard it, I knew, we were now all on the same page.

© 2017 Mark St.Cyr

The Tax Cut And Jobs Act aka The Third Act Of Betrayal

Whether you own a business, run one, or are an aspirant to one day have the pleasure and responsibility of entering this strata, one thing is assured: Your true understanding, along with outright bewilderment of just how much time, effort, and money you’ll devote to both taxes and regulatory adherence, along with the burdensome costs of all its complexity, was/is never fully understood until you finally, for lack of a better term, you become “The Boss.”

Yet, once you do? The immediate avalanche of an ever-increasing, never-ceasing, onslaught and landslide of regulatory paperwork and bills remind you just how burdensome, as well as costly, it all is just to keep the doors open. Never-mind trying to grow.

This example is applicable from the solo-practitioner, all the way up to the global conglomerate. The only difference is in size and scale, for the net effects are the same.

It doesn’t matter what side of the political aisle you stand, and this isn’t a rant about one political party or the other. This is about business, and the promises made to it under the guise of “Elect us, we’ll get it done!”, pure and simple.

The current party in power, along with a president, ran on a platform of bringing that relief, and here’s the key: with immediacy as the default. Had the results last November ended in reverse with Ms.”What Happened” winning via running on the same platform? My current ire would be the exact same. Period.

I’ve said this before, and I’ll say it again, I never expected the president (actually, any, for clarification) to be a tax policy, or regulatory wonk. He is, for lack of a better term, the embodiment and the mouth piece to not only initiate the overarching idea, but also, to both sell the idea, as well as keep selling it.

Congress is where the minutia takes place. But (and it’s a very big but) this is where that minutia is supposed to not only support the directives, but also match it, in scope and scale. This latest tax plan does anything but, while making a complete mockery out of the entire business agenda.

We are currently hearing about “corporate rate cuts” and more. All sounds great. But if you look at the details of how this is supposedly going to get enacted, one has to wonder – if they’ll have to pay double, to get half. For as the details of what’s hidden within, as what’s not, continue to roll out, it’s now beginning to make the repeal debacle of Obamacare look downright masterful.

We keep hearing about how this, or that, has to be paid for. (i.e., estimated $1.5 Trillion) The arguments have merit. However, where were these arguments and their suddenly righteous stoic defenders when a budget was treated as something of an archaic idea over the last 8 years, all while adding some $10 Trillion with nothing more than a passing glance? (i.e., A doubling of the entire burden since the founding, in only 8 years.)

The only thing more offensive to this sudden self-righteousness of debt considerations are the ways being proposed as to pay for these so-called “cuts.” As always, they appear more and more like sleight of hand than anything proposed. Again, it’s a mockery to anyone who can add 2+2 and come up with the correct answer. (i.e., it’s 4 by the way in case you graduated after 2008)

Say what you want about needing to meet arcane rules (e.g., “Byrd rule”) in this body of congress, against the other. It may have made some form of sense in the beginning of the entire process after the election back in November. But now? This stinks to high-heaven similar to listening to a Facebook™ “by-golly-gee-whiz” apology tour for not being able to decipher the data for who paid or didn’t, for what advertising, when their raison d’être is to be the, and most, proficient at it in the world!

Now, suddenly, a “tax plan” has to be rethought, retooled, and resold because “by golly gee whiz” it’s not like they knew what might be needed, of let’s say, a year ago. You know, just like when they were going to repeal and replace Obamacare on day one – then they won – now it can’t be done. But they’ll just keep on trying by-golly. After all: It’s a very hard process getting things done when suddenly those pesky voters who voted you in actually want what they voted in enacted.

It’s beyond repugnant what we’re now hearing as “excuses.” We first heard it in responses to regulatory reforms, then healthcare, now its taxes. Three times a charm I guess, right?

The President has made some reforms on his own via executive action. Some have been quite needed, however, executive action is the worst way to run a nation. Businesses can not, nor will not hire, expand, or even look to stay in business if the rules can change at any moment via the stroke of a pen.

Without the surety of the rule of law, enacted through the understood legislation process, building in permanency – things are going to go from bad to worse, and quickly. “Hopium” only lasts so long. And the “hope” that was promised is now deflating faster than one from a lead balloon.

The entire run up aka “The Trump Trade” since the November election has been fueled by nothing more than hope. Yet, that hope, at that time, had a sense of not only surety, but also immediacy. Again, after all, now all three branches were controlled by the one party that ran on the idea: Give us the power – and we’ll give it back to you.

So far that’s been true, it’s just now those “voters” are being asked to bend over as to receive it. I’ll just say his: That’s not what the business community had in mind.

The GOP had pleaded for years “Give us the power, we’ll get it done.” And now they have it – and they’ve done everything in their power to throw monkey-wrenches, sand, and more into the gears. The only thing worse has been their utter refusal to actually put anything meaningful on the president’s desk to sign whether it was regulatory, healthcare, or tax related.

This president has been almost begging for anything, and I mean just that, anything. And not only has the GOP not delivered squat, but in actuality they’ve done just that, put it in a little brown paper bag, and left it on the doorsteps of the WH. Then rang the proverbial “bell” on national TV with fanfare and more. It’s been a stink bomb from the moment it was introduced, and the smell grows stronger by the day, appallingly so.

As always, there’s no need to just take my word for it. As I explained in a previous article, the double-dealing, Three-card Monte tactics that are being applied to this entire process came even more to light when one of the more in-the-loop tax advisors Steve Moore of the Heritage Foundation™ found himself out-of-the-loop after just meeting with congressional members, as they explained what was supposed to be in the bill.

Now, we have another: Steve Forbes. Regardless of what you think of him, or his views. What he is, is, much like Mr. Moore: an insider.

Yes, he has his political leanings, and has even run for office. However, with that said, he is an unapologetic business advocate. He is also one who leans, more often than not, as one who’ll give the benefit of the doubt to the GOP, especially when cutting taxes of any type are involved. And what does he think of this current tax plan? Hint:

“Steve Forbes destroys the GOP tax plan — and explains how Republicans ‘betrayed’ Trump”

Sometimes is not just the message, but who’s saying it, that matters just as much.

© 2017 Mark St.Cyr

There’s Now Just One Question Remaining

There’s now only one question remaining, but it’s now the most important question to both ask, as well as, honestly answer. However, before you try to answer, I would like to point out three now known facts that were, at one time, the catalysts for why this question could be ignored. Ready?

  1. The Federal Reserve has now officially begun The Balance Sheet reduction process.
  2. Obamacare or healthcare reform legislation is officially DOA.
  3. Tax Reform is now officially DOA
  4. Bonus point fact: The Debt Ceiling debate/debacle is now, once again, about 30 days away.

Now that you have the above for context, let’s add a picture to help fill in any voids, if you will. To wit:

(Chart Source)

So what’s the question you ask? Fair enough, it is this…

If you’ve been a BTFD (buy the f’n dip) disciple all these years, as said by the great Harry Callahan

…”you’ve got to ask yourself one question: Do I feel lucky?”

How you answer is going to make a lasting impression from this point going forward. Of that, I am sure.

© 2017 Mark St.Cyr

Tax Bill: Russian Roulette Republican Style

Regardless of what side of the political aisle one sits there is one thing that is indisputable: Since the November presidential election, one year ago, the “markets” have been on a one-way rocket ride into black-sky territory. Never before have they been so high, which also implies, that never before have they had so much room to fall.

What is now becoming more apparent, by the day, is the political party which could reap the rewards should they coalesce around enacting legislation to help not only bolster it, but foster it for years to come, appears to be on some form of political death wish.

The real issue is this: With every lucky “click” that passes (think: no immediate market reaction to the healthcare debacle for one) – it is the establishment (aka Republican RINO or Party-elders) that appear hell-bent on further loading another round into the chamber, all out of sight from their own so-called brethren. Only to then pass it directly into their hands with both a smile and a nod.

It’s moved beyond reproach where it’s a pure, unadulterated disgrace, as well as dangerous game to play with the “markets.”

As I stated earlier, since the election, the “markets” have been on a one way rocket ride. This has manifest in the face of the Fed. raising rates, reinvestment (aka roll-over) discontinuation, implementation of balance sheer reduction, ongoing threat of WWIII, terrorist attacks, mass shootings, and more, much more.

And yet – the “markets” have not only been resilient, it would seem they have reached some form of band where the term geosynchronous orbit is more inline than “all time highs.” i.e., These “markets” now seem impervious to what’s happening on the ground from which they were launched.

But gravity has a way of humbling those that mock it, does it not?

The fuel for these “markets” to reach this altitude has been what many of us have coined as, “The Hopium Trade.” (THT) and not what every so-called “smart crowd” proclaim. i.e., “Good data, good earnings.”

THT has been the main propellant to which the entire business complex (from the solo-practitioner and small business owner, to the global conglomerate) has attached its own hopium-wagon. Healthcare reform, tax reform, spending reform, ________(fill in the blank reform) had been the promise. And what’s being delivered is absolutely anathema to what had been sold.

And the so-called “Tax Cuts And Jobs Act” of today is just the latest refute from any prior alluded promises.

In what can only be described as repugnant, it has been learned that not only was the top rate kept at 39.6%, but the coup de grâce to any remaining integrity, was that the republican party, via its own hand, inserted and tried to keep secret, that it created an even higher tax bracket within the code of 45.6%. Now known as a “stealth tax” or “bubble tax.”

The insult to injury that taxes anyone with a modicum of common sense is this: If this is both contained and was withheld from the public eye reminiscent of the latest JFK files release. WTF else is not only in there, but not in there, that they’re not telling anyone?

This is the same, as I alluded in my headline, of not just playing a deadly game, but increasing the odds for catastrophe by adding an additional round after every lucky squeeze via one’s own hand! The only thing worse (which is precisely what has happened) is in doing so – you now hand the additionally armed weapon to your brethren with not only a smile, but fanfare that this will help their “tax headaches” to go away, “Just trust us.” Again, it’s beyond reproach.

Remember, this is not the result or byproduct of some negotiation that was hammered out between two political sides. e.g., Left – Right, Rep. – Dem., et cetera. No, this is was included and inserted via the republicans solely! And (and this point can not be made too forcefully) was intentionally hidden.

If there was any doubt that this was anything other than an intentional omission, I offer the following via Danny Vinik of Politico™. To wit:

It hasn’t been advertised by Republicans, who have described their plan as maintaining the current top tax rate of 39.6 percent. And it goes against decades of GOP orthodoxy that raising taxes on the rich discourages work and reduces economic growth. Reached by phone, Steve Moore, a tax expert at The Heritage Foundation, said the surcharge was news to him. “I was just in a briefing with the White House on this,” he said. “They didn’t mention that. It seems kind of bizarre to me.”

Whether or not one agrees with the policy or not, along with the views of Mr. Moore, is immaterial. What is irrefutable is that GOP officials intentionally did not bring up the issue with even one of its more in-the-know and well-connected voices.

This is omission with fraudulent intent, in my opinion. It also borders on, scratch that, actually is – utter stupidity.

Too think (let alone believe) something such as this would not have exponentially negative consequences can only be answered via the prism of sheer arrogance. It’s absolutely disgusting, as well as disturbing.

The issue at hand is that every understands (at least those who apply critical thinking) the president is not a policy wonk. He’s not going to be able to cite tax law and more, with all its idiosyncratic possibilities and effects. However, what he is, or represents – is – the reason and fuel for the “markets” current trajectory. He is, for lack of a better term: the embodiment and representative of the idea, or the mouth piece for it. i.e, Tax reform, regulatory reform, healthcare reform et cetera.

The party (or chambers if you will) are where the minutia is supposedly hammered out to fit the vision of what is called for. What we’re seeing delivered via that process is anything but. And, in actuality, is more akin to double-dealing, back-handed, shady dealings for self-enrichment within an echo chamber. It’s all going to backfire miserably in my view, and soon.

To be clear: this isn’t an endorsement for either party or candidate. This is about how business has to view the political landscape and prepare accordingly, whether it be a democrat or republican that put the proposed legislation forth.

When he (the president) campaigned, as did the entire party, the repeal of Obamacare was supposed to be taken to mean just that, tax cuts, again, were meant to be just that, along with regulatory reform, and more.

But now? Now, we have come to realize (as well as to terms) any, and all of it, has meant anything but that.

Only via the president himself taking executive action to eliminate or repeal certain provisions has there been any resolution on the edges. A process that, once again, allows for it all to annulled, and again, reinstated via the stroke of a pen.

Businesses can not, nor will not, make plans or commit resources to Capex or hirings based on regulatory or tax codes that have no permanency in their implementation. We may have seen some initial front-running by some, but that will end faster than it began once it’s deemed they’ve been politically duped, once again. Period.

Whether or not one agrees with the President, one thing is abundantly clear:

Every time he has openly pulled-the-political-trigger to possibly end this game of russian-roulette via the “markets.” With every lucky squeeze (think: the ongoing healthcare debacle and more, and the “markets” non-reaction too it) it’s been his own party, the party which now controls both houses, with a president willing to sign just about anything, that’s delivered nothing except for a now ever apparent, ever-the-dangerous, now fully loaded political weapon.

Again, not only does the establishment appear to be not working honestly with the administration. But, secretly, continually adding subsequent round after round into any remaining politically open chamber. Then smiles, and kindly hands it back, all on live TV!

This newest revelation proves out that allegory. It’s now beyond repugnant.

It does not matter what side of the political aisle one sits, for this is not about politics per se, this is about business. And it is that assemblage of the entire business complex of the United States that is the life blood of this nation, its people, and its finances.

Regardless who is in office currently, or whom is controlling all branches: these business entities that are so desperately needing relief from much of this socialist, crony-capitalism, with overtones of communistic intrusion, had great hope that maybe, just maybe, relief was on the horizon. It’s been a roll-of-the-dice to start with. That was assumed, or knew, going in.

Again, they/we all knew, or assumed, the “dice” were always loaded. What has been appalling is that the republican party itself, the party that ran on a platform that got it elected to begin with, has not only switched the dice, but replaced the “game” entirely with something far more dangerous, where now there’s a “fully loaded” political weapon pointed directly at the “markets” head.

How the “markets” respond from here is anyones’ guess. Yet, it’s not that hard to assume it ain’t gonna be pretty now that they know the game has not only been switched from a game of chance, but rather, to one where it’s known too all that the final empty chamber has not only been revealed…

But reloaded.

© 2017 Mark St.Cyr

A Possible Trifecta That Demands Attention

Today, being Thursday, is probably one of the most important days one needs to pay attention to, whether you own a business, run one, or you’re employed under your own version of the entrepreneurial mindset. e.g. What I coined “The Business of I.” For this may be unlike many times prior for its potential ramifications to roil “markets”, hence releasing shock waves throughout the entire business complex.

Yes, I feel today is shaping up for just that – no hyperbole intended. Doesn’t mean it will, but the potential for it is extremely high, in my opinion.

I use the above “trifecta” reference, because I feel there are three specific finish-line-crossings, if you will, that are setting up for a complete change of what everyone believes, or thinks, about the current state of the “markets.”

If, or when the “roses” are presented at the conclusion, if I’m correct, the scent of roses are not going to hide the rotting stench of just how dead and bloated these “markets” truly are. (Cue: STP’s – Dead and Bloated – here)

The first of the trifecta happened yesterday after the close of the “markets” with Facebook™ (FB) reporting earnings. To the casual observer, and next-in-rotation fund manager, as usual, “They hit it out of the park.” In fairness there were “beats” everywhere. Although, I will contend, if you look closer and use the lens of “are these numbers the result (e.g. benefactor) of a last gasp consolidation throughout the entire social media complex”, still applies. Yet, that’s not where the real action, if you will, currently is.

What suddenly appears to be becoming far more obvious to many is something I asked almost a year ago. e.g., The ‘Real’ Question: What’s Facebook’s True Valuation Without “Fake”? To wit:

“There are two hot topics post the U.S. presidential election. One is “fake news”, the other is Facebook™ (FB), and its involvement in it.

The accusations and the defenses against have been all over the board. Both figuratively, as well as literally.

Management from Mark Zuckerberg on down have been professing when it came to anything “fake” it wasn’t of their doing. And gee-whiz-by-golly they’re going to do whatever it takes to make sure anything “fake” never sees the “like” of day again.

Sounds great, in theory. But there’s a very real fact that must now be considered…

If “fake” news was so wide-spread, and so devoured on FB that it had the ability to not only influence, but rather, to overturn political norms and ruin the election of what everyone in media on down believed; that this election was merely a formality on paper because, it was clear to all of them, Mrs. Clinton would win not just walking away, but running?

That would mean FB now has to alienate (i.e., by now not delivering “news” these people wanted to see) millions, upon millions, upon millions of now current users. What does that imply to their now “real” (ooopsy, again!) metrics going forward?
If the above hypothetical has the ability to be true (and from a business perspective it sure has) the very fact that FB will now openly censor, mark, tag, possibly defame (whether intentionally or not), and more articles of news, or anything else shared on its platform. Two questions have to be asked:

First: How many FB customers decide they don’t need or want a “mommy” deciding what they can, or can not, read or share? Second: How fast does that process begin, and by how many?

No matter what side of the political fence you’re on matters. The only thing that matters is what all this means from a business perspective to FB’s bottom line. For as much as everyone likes “free”, without Wall Street (or the Swiss Central Bank) buying? FB moves to AOL™ status quicker than you can say “You’ve got mail®.”

The immediate reaction to their earnings was the typical moon-shot higher, then suddenly, it reversed with FB closing in the red, or down, in after hours trading. So far, in the pre-market, that selling has remained. What happens next is anyone’s guess. But this is where, “its different this time” might show its hand a little differently. Here’s why, again, to wit:

“We’re investing so much in security that it will impact our profitability. Protecting our community is more important than maximizing our profits.”

That quote is from Mark Zuckerberg during the report. Congress, or others, just might think that line of corporate “oh gee golly whiz” contrition drivel sounds just fantastic. However, you know who doesn’t want to hear that “profitability” is less important than anything else? Hint: Wall Street. How much further, or longer, the so-called “profit taking” continues today is something to keep an eye on. Let’s now get onto the second.

It’s already been released that the President will name Jerome Powell to succeed Janet Yellen as Chair of the Fed. Until it’s made with an official statement, it’s still unresolved. However, once the official statement is made (expected at any time today) the place to watch is the $Dollar and all its correlations and pairing (e.g., USD/EUR et al) watching for any signs of stress that may affect sectors that are closely correlated. (Think shipping, and trading partners and such.) This is where the real action may take place over the coming days, weeks, and months.

Then there’s the third, and it is here where everything can go awry: The release of what is, and what is not, in the so-called “Tax Cutting Bill.”

If, and I don’t say this lightly, if the proposed cuts are seen, or show, they’re nothing more than specious talking points? This entire rally since the November election lows is at risk. And by “risk” I mean of falling apart in ways similar to falling off a cliff.

With the healthcare fiasco still fresh in many a mind. If the supposed “tax cutting” resembles anything of the sort as was unveiled during the healthcare debate? All I can say is: look out for what “it’s different this time” can mean in reverse.

There is one last “finish line cross” to watch, for those on the lookout to see if some rendition or possible “fourth horse of the financial apocalypse” is to be seen on the horizon. And that comes after today’s market close when Apple™ reports.

If the reaction to whatever the report is negative? That would cause concerns, because that would fill the criteria of what’s known in horse-betting parlance as a “Superfecta.” And if that takes place? All I can say about the “markets” going forward from here would be this is:

All bets are off.

© 2017 Mark St.Cyr

Remember When IPO’s Were A Thing?

Have you noticed the near financial/business media blackout when it comes to anything like IPO’s and their spawning stable-mates known as “Unicorns?”

Remember when debuting an IPO was met with such media fanfare it allowed for the viewing public to fawn, or feel really insignificant (more like loser) for not being one of the “beautiful people” paraded across magazine covers, screens, or conference stages?

So alluring was the “next IPO celebrity” made out to be it probably made Hollywood’s PR machine envious. Hint: Remember SnapChat™ CEO Evan Spiegel’s many cover-shots including L’Uomo Vogue™, GQ™, and others? Here’s another hint: “sex symbol.”

Yet, that was way back in October of 2015. You know, before the next-in-rotation IPO to save the IPO world was to hit the “markets.” Then it did. How’s it all going since then? Hint: When was the last time you read about Snapchat in general, never-mind its “bares all” centerfold CEO? Hint: ________________(insert crickets here.)

Here’s the real reason, and I’ll use what “The Valley” likes to call “pictures.” To wit:

(Chart Source)

The above represents Snap Inc. via a daily chart since its IPO debut. Over the past few days I’ve noticed the growing chorus of “Snap is now up double digits from its lows! Is this a sign things have turned?” Then some next-in-rotation fund manager, or next-in-rotation technology aficionado is queued up to start making that “This is where it all turns around” argument of the ridiculous.

It’s all pure malarkey. Here’s why…

Snap reports earnings next week. What we’re currently seeing (all my opinion, of course) is just the pre-earnings release positioning. i.e., Ladies and gentlemen, place your bets, Red or Black?

What you should also notice and compare to what you “hear” is those “double-digit gains” are the results of the stock bouncing after plummeting, as well as still remaining, below its original IPO price. i.e., Those lucky enough to get in before everyone else are still underwater. (e.g., $17 was the IPO) And those whom got to “get in” after? All I’ll say is, “You have my condolences.”

Yet, that’s not what you’ll read, hear, or watch across the media spectrum of business and finance. No, just like lollipops and sugar candy: Unicorns are just as magical, sweet, and alluring as the name implies, and would never rot your teeth. What it does to your investment portfolio – is another matter entirely. I hear mum’s the word on that topic.

Now, if you think I’m picking on Snapchat as if it were now some poor defenseless entity in the school play-yard. Let me stop here and help you remember something you might have missed. Because from what I can tell – unless I bring it up – it seems to have been relinquished to the, “Don’t bring that up again unless there’s something good to say” section. Ready? Again, to wit:

“Roku IPO Is Year’s Best for Tech Stock Debut With 68% Jump”

Then of course, there’s this…

“Roku CEO Says IPO Is Natural Evolution of Business”

Sounds just fantastic, right? I mean “68% Jump.” That’s double-digit double digits, right? This must be a hit! Actually, I guess it is, for here’s another headline, to wit:

“Roku IPO a hit with investors”

This was all just a few weeks ago, I mean with such endorsement that IPO should be screaming higher, right? Especially with the tech sector (or NASDAQ™) indexes at all time highs, again, right, I mean, correct?

Fair argument, only thing left is to check it out, agree? Again, to wit:

The only thing I can gather that may be of little condolences to some is this:

At least those that bought in at the $14 offering are still above water.

If that’s any consolation, again, you have my condolences.

Then again, maybe what’s needed to help arbitrage away any IPO risk is to do something via those newfangled  ICO’s to help make up, or hedge against losses. After-all I hear they are all the rage across the media today. Just ask them! Please!

IPO’s are so 2016. ICO’s are where the real mythical money is made today. Again, just ask the main stream financial media. I’m sure they’re talking about it right now with some next-in-rotation tech aficionados’ spewing advice on how you “must get in, and get in now!” Of course you’ll also hear (but you have to listen very carefully) the now pre-requisite disclaimer of – “Of course this may or will end badly.”

Too bad they weren’t saying that during the IPO boom. Oh well I guess, it’s not like it’s their money at risk, it’s only yours. So onward and upward.

Right?

© 2017 Mark St.Cyr

The Market’s Conundrum: Batten Down The Hatches Or Rig For Smooth Sailing?

When it comes to the “markets” today, one outcome has been near guaranteed: Make any statement that implies even the most rudimentary, or elemental call for caution – and the “markets” are near guaranteed to vault ever higher.

This has been playing out not only for years, but the inherent state of calmness, along with its incessant push higher, is not only at never before seen in human history heights. But the calmness, and steady sailing inferred via those market waters to this destination is also – the calmest ever traveled in its history.

The issue with all of the above is that the term “markets” now require parenthesis or quotation marks. i.e., These aren’t your parents markets.

However, nobody wants to hear it, especially the main stream financial/business media et al. The higher it goes – the higher the hyperbole of why it should. The arguments for it have bordered on both convoluted assumptions, to just plain making stuff up to fit the narrative. It’s now gone far beyond reasoned, or reasonable assumptions, and moved into what can only be deemed as bat-sh_t-crazy status.

The arguments I’ve heard, more often than not, via the myriad of next-in-rotation fund managers trumpeting these latest moves fall into the latter camp. The issue at hand, in my opinion, is this: Everyone, and I do mean just that – everyone – seems to be regurgitating the same. i.e., Unemployment is at statistical full, Earnings are all beating and better than expected, blah, blah, blah, etc., etc., etc.

These arguments or evidentiary facts as portrayed via the many government reporting agencies, alongside with their ancillary brethren of sentiment indicators, coupled with the managed reduction of expectations for earnings reporting, are all skewed to appear prima facie “fantastic.”

The issue is, they are more specious than anything resembling a true indicator of economic health or activity. i.e., If you still believe that we are currently at “statistical full employment” with over 95+ million unemployed? I have some wonderful oceanfront property in Kentucky you can have for cheap. Yet, that’s just one example.

As I said prior, “No one wants to hear.” However, as one of my favorite comedians Joan Rivers used to say: “Can we talk?”

It doesn’t matter what the “markets” do from here in relation to what I may, or may not, correctly infer. What is important is whether or not you dear reader truly understand and not underestimate precisely where you, your business, and more are in relationship to it. Because I am going to make this statement, and I’m going to make it forthrightly:

If your working assumptions are coming from what you’re reading, hearing, or watching via the main stream financial media? I’m sorry, but you haven’t a clue. Again, sorry.

What’s transpiring currently that far too many don’t understand is this: Many are mimicking nothing more than the mindset and actions of an amateur casino patron who by happenstance placed a bet at a perceived “hot table” and immediately won. Then, without taking any of the table, let their bets ride, and ride, and ride, and ride continuing to roll those “profits” back into the next bet as the onlookers (financial media) scream and shout in unison how great of a “player” they are.

So far the “winning” has not only continued far longer than anyone dared believe, but the chips are stacking higher, and higher. The only thing rising as high – is one’s ego, for they’ve now become convinced they’re a casino and betting “aficionado”, as opposed to being the recipient of making a “lucky bet” when they first entered.

This is the analogy that fits most 401K holders today. i.e., Things like odds or such now mean nothing, as a matter of fact: the more you try to impart caution citing odds (or anything that refutes the status quo) – the less they want to hear you. The roar of the crowd and the height of their chips proves they now know everything there is to know.

And so far – that’s worked like a charm. But therein lies the rub. For just like gamblers who think their “roll” will never end. When it does. The results are never pretty.

Over the past week I had offered up some observations as it pertained to charts and my interpretations of them. One of the assumptions I mused was that the markets could be playing out what is known technically, as a “blow off top.”

I also mused that I found it interesting that looking at the NASDAQ 100™ in comparison to the other main indexes one could infer that it looked a little weaker as compared to the others, which I inferred as an even further sign that caution should be the default mindset. Then Amazon™, Alphabet™ (aka Google), and Twitter™ reported.

And with that, any and all calls for “caution” seemed to be met with a “market-middle-finger” as their respective stocks and relative indexes rocketed back into black-sky territory once again.

However, I feel this latest “rocket ride” isn’t a showing of strength as was portrayed across the financial echo chamber. But rather, nothing more than one last gasping short squeeze that will be short-lived. Here’s why…

Everyone was talking about how Twitter is now going to show all the nay-sayers wrong using their latest earnings beat as de facto proof. The problem with that is this: They beat earnings, but how they beat is, once again, the real question.

Case in point: Revenue exceeded expectations. e.g., $590 Million. However, revenue fell by 4% for the third straight quarter. And, ad revenue fell ever further, by some 8%. And yet, their DAU (daily active users) are said to have increased 14% YoY, the fourth consecutive quarter of double-digit increases.

The machines (along with the next-in-rotation fund manager cabal) ran with it.

But wait, just for a little more context: U.S. revenue (you know, the largest consumer market in the world to sell eyeballs to) decreased 11% YoY this Qtr. as compared to a 7% decline comparison the Qtr prior. e.g., It’s going in the wrong direction!

Here’s the problem with all the above…

Double digit increases in active users four quarters running: and revenue is down for almost just as many quarters concurrently? I thought “more eyeballs” meant more money (aka revenue) for both Twitter and its advertisers? Is this what “it’s different this time” now means? e.g., “Fewer ads, and even less revenue = more money?”

In my opinion: It’s no longer bordering, it’s now all well past the point of farcical.

But Google beat, as did Amazon. Yet, here we are again with those nagging questions such as “Did Amazon make money?” Along with: “Is Google just the final recipient in the ever shrinking ad revenue (or click baiting) business models?” It would seem Amazon, once again, had the headline earnings beat supplied by its web service, not its retail operation. (i.e., What else is new.)

And Google? Was its revenue beat helped, as I’ve stated ad nauseam, as the recipient of an underway consolidation away from all the other platforms (Hint: like Twitter and such) and just a last gasp at throwing at the “digital wall” what little remaining speculative digital ad-dollars remain?

It’s an open question with onerous consequences. (Especially if Google will now have to pay Apple™ even more for many of those clicks. e.g., Traffic acquisition costs aka TAC.)

And then comes this week with even more fan-fare too come, as in: We have both Apple, as well as Facebook™ to report. What the reporting will be from either is anyones guess, but guessing they will. As for myself? I have no idea. We’ll all just have to wait and see.

But that’s far from the only thing we’re going to get reported.

On Monday you have the political where not only could indictments be forth coming, but for whom and why is going to be all the rage and rhetoric.

Then, you’ll have the status of the so-called “tax cuts” making their way through the process that so far has more secrets being withheld from public scrutiny than the remaining JFK files. That, and how with the revelations of supposed forth coming indictments (or lack of others) and the unity it’ll now spread across capitol hill for members of both parties to work together to afford tax relief for the American people will be fascinating to see. Don’t you think?

On top of that, we’re suppose to learn who the President will appoint to head the Federal Reserve, and how the global currencies will react to it. (Hint: This is where the real action to watch for clues will be, in my opinion.)

Oh, yeah: Then China’s “markets” come back to play, after being on political vacation while they consolidated their Premier’s power, remember? All while mandating during this period (you know, as we were smooth sailing) any, and all “bad news” reporting had to wait till this week to be known. Either that, or heads would roll. Literally. (cough, Hang Seng Index, cough)

Did I mention we sent another (this being the third) carrier strike group to the Korean peninsula? You know, to play war games because it’s just big kids playing with big toys, right? Nothing to see here, I guess.

And just so I didn’t leave anything out: N. Korea’s population is currently practicing mass-evacuation drills as I type this.

Maybe the only true answer to my above headline is that coined by the famed, philosophical sage, Alfred E. Neuman

“What…Me Worry?”

© 2017 Mark St.Cyr

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

(For those who say I just don’t get it…get this!)

A few weeks back I dared pen the question: “Are Tim Cook’s Days As CEO Numbered?”

In that article I made following points. To wit:

“Should this take place with Apple’s continuous lack of innovations, dumbing down of existing products (see any forum of Apple power users) and continuing focus on both Tim Cook, his political stances, along with his pushing the involvement of Apple the company, its employees, and coffers into the political fray, simultaneously against a backdrop of uninspiring (think Pencil®), clichéd (think: any Apple presentation), openly mocked, (think: when demos were conducted on stage via Microsoft employees) laughed at, (think: CNET™ live coverage of any event) as well as live product demos gone wrong, (think: face recognition) displays on the world stage. This is a string of “hits” no one any wants, especially current share holders.

Should the stock now falter, along with any iPhone rumblings confirming sales numbers will look like what the latest roll out last month foretold? Watch how fast things not only change from the narrative of “great stewardship,” but calls for management change begin to bubble to the surface in unison.”

This made quite the media buzz and rounds, along with some business/financial outlets possibly needing to have defibrillators on set, and at the ready, for any next-in-rotation fund manager that may be asked for their thoughts on the matter.

This was a question for the “faithful” that was never to be asked in private, let alone, in full public view. After all – this is the world’s most coveted and valuable company, or was. To imply anything less than full-on devotion to both the product, the stock, along with its CEO has been met, and scorned, as financial blasphemy. And, any and all deniers were argued to meet the same fate as those resembling the inquisition of centuries past.

Then, I dared ask the unspeakable. Then – this happened yesterday, again, to wit:

Here’s where I’m going to ask you to answer the obvious “elephant in the room” question. Ready?

What CEO would mention or address questions of any sort about prepping his successors during what is publicly being viewed and reported on as a less than lackluster (and that’s being kind) rollout of its flagship product, along with, the week before an earnings report?

Bueller?

Stuff like this doesn’t “just happen.” Especially at this level. Unless, someone (or group of somebody’s) have asked behind the scenes the “what if” questions, where “trial balloons” needed (or recommended) to be floated in public, as to see what may be the response of such a momentous move at one of the largest market capitalized corporation, ever.

Here’s the tricky part of this: Is this, what I see as a “trial balloon”, being floated with the knowledge that if the earnings report is uninspiring, that the stage is set, and public, for the outright questioning of Mr. Cook’s leadership?

Or: If the adverse effects of such a headline is seen immediately in the stock via the HFT cabal and reacted to in a negative fashion – would a “fantastic earning beat” be just the salve (and rescue) to cover over any wounding that may have resulted?

These are the types of questions any Board would want answered if the question was being openly contemplated. Doesn’t mean that it is. But the timing, along with a few other pieces of circumstantial evidence such as the above, sure brings attention to it for anyone trying to pay attention.

Yet, here’s what I do know: No one dared contemplate the above, let alone ask it.

Until I did.

© 2017 Mark St.Cyr

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