Central Bankers Are Turning Corporations Into Worse Versions of The Post Office or DMV

(New Feature Currently In Beta Form: Audio Version Of Article)

Regardless of the many hard working people within these establishments, one theme is a constant known to all. And yes, even to those working within: innovation, diligence to customer service, meritocracy, sustainable business models and more are absent at best, dead-and-buried at worst.

The primary reason for this is simple: They’re business model relies on never-ending bailouts and/or government mandated protection from competition to stay in business. Without it, who knows what would take its place. However, via this model? We’ll surely never know. And that’s the problem.

The above is not suppose to be a problem for corporations in an unadulterated capitalistic marketplace. However, this is precisely what is and it’s getting worse with every passing Federal Reserve or other central bank iteration of quantitative easing (QE).

In a truly free flowing capitalistic model and economy (which we used to have but no more) unprofitable entities, poor customer service and innovative laggards either sold themselves to their competitors that did it all better or, went out of business entirely.

Today? They just buy back their stock at low to nil interest rates rewarding the entire Board and C-Suite (and then some) with bonuses, stock options.

For some it even allowed the ability to claim ignorance when it found a fully manned, yet empty second corporate jet shadowed his around the globe as he hobnobbed, seemingly more focused on his own image as a corporate titan rather, than what he’s doing to the image and shareholders of the company. Hint: He claimed years of ignorance of the plane. Do you think he was that ignorant of his “parachute?” Politicians everywhere probably looked on in awe over that one, but I digress.

As of this writing the “markets” (yes, the once bastion of capitalism for the allowing of capital formation to create great companies to provide great things now needs quote marks for accurate definition) are at record levels. And how have we got here?

Improving GDP growth? Nope. Signed trade deal? Again, nope. Expanding earnings? New and increasing buyers in the markets? Highest retail sales? Nope, nope and nope. We are here via one mechanism and one mechanism only: Money printing facilitated via the central banks and especially, as of late, the Federal Reserve. Period.

As the markets sit at these nosebleed levels the Federal Reserve is now set to have pumped by year end well over $300 Billion ($300,000,000,000.00 that’s almost 1/3 of a Trillion and this is only the start) and they are still trying to figure out if this will even be enough.

What they have figured out and agreed upon is the inane argument that if they don’t call it QE, it’s not. Even though this is more money printed and made available ex nihilo in so little time in the history of mankind. And yes, it even dwarfs anything during the entirety of the financial crisis. Think about that.

The truly grotesque issue the above brings into the marketplace is that companies that should be penalized or rewarded via the self-perpetuated evaluating and price affirming market auction facilitated through a neutral positioned market facilitating entity known as “Exchanges” is now anything but.

Today these are now nothing more than facilitators, accommodating only those that will pay the highest fee for privileged information as to front run any and all orders.

Today market advantage is no longer an art of insight and acumen made up by humans. No, today, it’s about microwaves vs light-speed, line of sight, abstract calculations executed via bots to mimic human emotional buying, which connection or portal you’re plugged into, et cetera.

Or, better yet, who can fool the regulators into submission for agreeing that today’s “market making” isn’t really what used to be known as “spoofing.” Hint: The regulators seem to no longer know, which is just the way this increasingly perverted “marketplace” not only likes it, but profits by it. Literally.

What this has allowed is the gaming for reduced expectations (While carefully managed and massaged during said quarter.) then via buybacks at little to no interest rates used to buyback shares, reducing the overall float to where a headline of “EPS Beat!” sends the headline reading, algorithmic trading bots into a buying frenzy. Even though the underlying metrics that were “beat” were actually worse, sometimes much worse, than prior YoY comparisons.

Apple™ today is the undisputed king of this. Is it any idea as to why innovation, product releases and more have been either long in the tooth, lackluster or barely “innovative” at all? Yet, the stock keeps rising. Week after week, after week.

It has now been calculated that under Tim Cook’s tutelage with his near immediate 180º reversal of Jobs adamant stance on buy backs and more. The most “innovative” thing he will be remembered for since Jobs passing is to, so far, repurchase a third of its shares. Remember, that’s since 2013 or just six years.

Or said differently, Apple has already purchased 1/3, in cash, one of the most valuable tech corporations the world has ever known. e.g., itself.

At the current rate and history as a guide for doing so: Tim Cook will singlehandedly bring Apple to the point of a private company (a self perpetuated LBO) owning nearly every last share within the next ten years or so. All with a backdrop of slashed revenue guidance and reduced metrics.

The issue here is that Apple is at least a company that still makes profits. However as far as innovative? All I’ll ask is this: Are the new products (those that have actually been released) setting the bar higher as it used to? Or, is it in many ways just catching up?

If you looked at the stock value for guidance, you would be terribly misinformed as to what the correct answer was.

You have others such as HP™, IBM™, GE™ and far too many more to list which over the years are now nothing more than a shell of what they used to represent. Why? Easy…

Rather than innovate – the buy backs keep everything afloat rewarding the top while the lower 2/3rds of the company wonder and worry why they seem to be continually feeling like their stuck in the mud. Just like a post office employee in a cargo van during rain, sleet and snow week.

As far as the DMV analogy. You would do much better trying to garner information for help at the local DMV than trying to gain any “customer service” at most tech spaces today.

Try getting a human on the line at Amazon™, Facebook™, Google™, Twitter™, ____________(fill in your choice here).

As a matter of fact, try getting a response of almost any type whether it’s email or otherwise. Hint: When you don’t get any reply back? You know it’s them.

And yet, just like many others, the “market” has done nothing more than reward them month after month, after month.

Want to compete with one of them? Sorry – they’ll crush you out of existence. Why?

They have the coveted stock market bullseye called “included in an index.” As long as they remain, the largess of central banks will be used to proliferate within these vehicles as to ensure they remain as strong as the index. Because regardless if no one buys – the index must for weighting purposes. That is – until it can’t. Then it’ll just drop and refill it with another in kind. Rinse repeat.

It took 10 years for the fallacy of today’s current IPO debacle to be brought to light, then crash and burn. But not without burning through $Billions upon $Billions of Mom and Pop 401Ks and IRAs as these now publicly traded companies are spiraling into investor purgatory.

The problem today is if we have to wait another ten years form here?

Getting a job in the once considered “high flying tech space” is going to be nothing more than the equivalent of today’s Post Office or DMV. And there will be little if any comparable benefits going forward for those putting in “their time.” Why?

Because those are always the first things jettisoned rather than any possible quarterly miss. Well, not always the first. Sometimes…

It’s the employees first.

© 2019 Mark St.Cyr

Look What We Found From 2004

As we were searching through one of Mark’s computers looking for some files we stumbled upon what you see below. As some of you know a while back one of Mark’s computers crashed and needed to be replaced along with restoring the backups. During that process many files were moved into weird places and we went looking for them out of necessity. As we were searching we came across the first of two which this one is now 15 years old!

We asked Mark what this was and in his usual manner remarked “Oh, yeah, forgot about that.”

The reason why this is striking is at the time Mark was doing this it was barely even considered a viable concept or idea. Today it’s the new normal.

In 2004 the idea of doing an in-studio professional three camera shoot of a radio styled program for broadcast over the air and cable was basically unheard of other than one or two high profiled hosts (Don Imus was one) being simulcast on MSNBC which at the time had what may called “an audience of none.”

That’s not a dig against Imus (Mark is and has been a very big fan) it was just the situation for cable channels at that time. Steve Balmer then CEO of Microsoft lamented many times on just how hard it was to gain an audience and It wasn’t until late 2005 with the signing of Keith Olbermann then later with Tucker Carlson (2006) and a few others did these cable channels become prominent talk venues.

Below is a teaser Mark was getting ready to use for pitching his idea to producers and other executives back in 2004. Again 2004! Mark says it could actually be late 2003 but 2004 is safer because he knows it was about a year before he retired and moved south subsequently shelving the idea.

It’s only 2 1/2 minutes in length, a bit out of sync and the colors are a bit off because of incurred degradation during conversions from the original videotape (videotape!) to digital media years ago. Additionally we also needed to change the original soundtrack because the original was the opening of Van Halen’s (Van Halen!) “Poundcake” and the license to continue using it expired.

You now see entire cable channels today (NewsMax is one) along with a plethora of radio hosts with shows (Joe Pags, Howie Carr are some examples) dedicated to this exact format.

But when Mark was vying to make the concept real even the idea of a smartphone was still unheard of. Google was still a relatively new brand and the idea of doing such a thing via the web or streaming was all but a pipe-dream. YouTube wouldn’t be invented for another year (2005) and Google wouldn’t purchase this fledgling startup for another year after that in 2006! The smartphone (iPhone) wouldn’t see its introduction until 2007. Wow!

When we asked “Why didn’t you go back to this earlier once everything changed with all the new technology?”

His response was:

“It wasn’t the direction I wanted to go. I took questions and such but I really didn’t like the subject matter I was dealing with at that time which was politics. Actually I hated it. Then the financial crisis hit in 2007 and ’08 and I focused on financial topics and how it intersected with business. I had too. Like everyone else during that period we were all looking at our televisions and other outlets all muttering the same thing like ‘WTF is going on, does anyone know?!’ Turned out in retrospect my first inclinations were correct as in ‘No, they do not!’ It was both surreal and down right horrifying all at the same time.

I started writing not knowing where it would go but I liked it and found I knew a heck of a lot more than most of those calling themselves ‘experts.’

The difference in all this was my writing allowed me to say it bluntly and it seemed to hit a chord. Now a decade later as they say is not only history but it’s all in the archives. So now I’m able to go back kinda like Jobs did with the iPad after the iPhone to use a similar analogy.

As he said in a interview once if I remember correctly he had the idea for the iPad first but shelved it. Then he did the phone and that opened up the world for the iPad in a more conducive way for him to go back and then bring that out.

What he seemed to me to be saying or what I was inferring was although he could have actually produced and released the iPad first much sooner than the phone and that in and of itself would have been an amazing revelation at that time. Putting it down and then waiting and working on the phone first allowed the iPad to be a much better product upon debut.

That’s very similar to what I was thinking back then. I didn’t know if I would ever go back to it but after the financial crisis and then my writing topics and how it spread finding a global audience. I gave serious thought to pull it back out and forward speaking about topics that are not only not reported on but in fact those that are are misrepresented at best and down right wrong at worst.

But the real deciding factor for me that really started to become the bee in my bonnet was I did not have to do politics. As a matter of fact I could now do it and actually eschew politics from any opinion standpoint and only talk about the what is and how businesses had to deal with it. That’s was when I looked back on the shelf and said I think that can work today. The rest is now unfolding history. We’ll see just how far it goes from here.”

We have another example covering something else we’ll get out over the weekend or next week with similar impact. But for now we hope you get a kick out of it as much as we did.

© 2019 StreetCry Media Partners

‘Headline Risk’ In Real-Time

I just received a note from a colleague with the following message: “Looks like your call for caution via the election results in LA is voided.”

Here’s what I wrote back…

“Can you explain what economic measures caused the ‘markets’ to reassess the possible implications that overshadow China’s poo-pooing any resolution to trade negotiations?”

His response: “No, was there?”

My response: “Trump Says Discussed “Negative Rates” In Unscheduled Monday Meeting With Chair Powell”

“Soon as the headline hit – the ‘market’ rocketed off the lows from a weakening open to new, never before seen in human history highs. Again!

Welcome to ‘Headline risk’ in real-time. The issue now is if it gets ‘poo-pooed’ as I say, by anyone at the Fed – things can change on a dime. Literally.

Just contemplate where we are right now, this time in history: Negative Rates in the U.S. are now not only a ‘discussed’ issue at the highest levels in the United States, but worse (depending on your viewpoint) propels ‘markets’ even higher.

You still think we’re not in a central bank infused bubble? If you do…

I still have that ocean-front property available in KY you can have super cheap.”

© 2019 Mark St.Cyr