Great Moments In Rorschach Word-Clouding Studies

I make no apology for what I have now coined exercises in “Rorschach Word-Clouding” when it comes to listening to the so-called “smart crowd” (i.e., The Ivory Tower’ed, Ph.D, Think Tank aficionado set) as to what should be inferred when reading, or listening, to anything coming from the Federal Reserve. And now it’s been proven to be just that. i.e., A de facto, ludicrous, exercise of providing “Forward Guidance.”

This was supposedly “the tool” for helping manage expectations for any, if not all, forth coming monetary policy moves. Well “tool” now seems fitting. So much so, it’s now become worse than a joke. And it seems everyone is beginning to see it for what it is. Albeit rather late.

Just to make my argument a little clearer I stated many moons ago that once the Fed. began focusing on, and making R* (Known as R-Star) deeming it as the actual effect of interest rates (i.e., 1%, 2%, 3 potato four) you now had proof (in my opinion) they had lost control. Because turning the argument for what interest rates were being set at, into offering a theoretical number to be the actual, showed they were grasping at straws to show efficacy and judgement.

Again: The defense for their policy rate stance was turned to now imply that the “rate” doesn’t mean what the number is. It means what they say it is, because in actuality – it’s something different. e.g., R*

If you’re thinking “Wait…What?” Or “Did I just read a different version of what is, is?” That’s right, something you can’t do on your mortgage payment or credit cards. i.e, Self-interpret the rate of interest you’re going to be legally liable for in the real world. Only in the Fed’s world can you do that. Even though whatever empirical rate is set by the Fed. is directly responsible via hard math (e.g., Your rate will be Prime + X) and to be paid by you in the real world.

You just can’t make this stuff up. (Unless you’re a central banker, but I digress.)

But that’s what a Ph.D in economics gets you these days, because it’s now all about R*. i.e., The best theoretical obfuscation tool for sidestepping monetary policy’s real world debacles to come out since sliced bread. Also known as “The neutral rate.” Or said differently: Think “R-Star” when you hear the term “Monetary policy is still accommodative.” That’s the moniker (and reasoning) that allows the stating of that line. Regardless of what it may be doing too the economy.

How often do you hear that line? Hint: After every meeting.

Here’s what I said about this last year in the article “R*: The Rock Star Of Central Banking Lunacy” To wit:

Yes R* assumptions for stability and control-ability can turn into WTF* moments of panicked reality in the blink of an eye. All it takes is one (and just one at that) hiccup and the whole theoretical construct comes crashing down along with all those seeming stable lofty values and assumptions when suddenly – no one trusts who’s solvent, if anyone, regardless.

Whether you’re listening to the Fed. or any other central bank today the immediate response along with their working assumptions hinges around the same presumptive arguments that revolved right before the last crisis. i.e., “We have more tools.” “We’ll do whatever it takes.” “Sometimes you just have to believe.” etc., etc.

This is today’s equivalent by both Central bankers, and their gaggle, intoning words of “surety” much like the mortgage brokers, banks, real estate agents, media and more right before the crisis. i.e., “Relax, you can always refinance.”

Now, add to this construct the following as one tries to gain any, let alone, more insight into what the Fed. is doing, or about to. Ready?

Here’s just one take away from Ms. Yellen’s prepared remarks before her testimony today.

In regards to Monetary Policy. To wit:

“As I noted earlier, the economic outlook is always subject to considerable uncertainty, and monetary policy is not on a preset course.FOMC participants will adjust their assessments of the appropriate path for the federal funds rate in response to changes to their economic outlooks and to their judgments of the associated risks as informed by incoming data. In this regard, as we noted in the FOMC statement last month, inflation continues to run below our 2 percent objective and has declined recently; the Committee will be monitoring inflation developments closely in the months ahead.

In evaluating the stance of monetary policy, the FOMC routinely consults monetary policy rules that connect prescriptions for the policy rate with variables associated with our mandated objectives. However, such prescriptions cannot be applied in a mechanical way; their use requires careful judgments about the choice and measurement of the inputs into these rules, as well as the implications of the many considerations these rules do not take into account. I would like to note the discussion of simple monetary policy rules and their role in the Federal Reserve’s policy process that appears in our current Monetary Policy Report.”

Got that? Sorry, trick question, because if you think you do? Welcome to “Rorschach world” is all I’ll say. Actually, never mind what I say, let’s use the words contained within the prepared statement that appeared directly above that quoted text in regards to the “Current Economic Situation and Outlook” Again, ready? To wit:

“Nevertheless, with inflation continuing to run below the Committee’s 2 percent longer-run objective, the FOMC indicated in its June statement that it intends to carefully monitor actual and expected progress toward our symmetric inflation goal.”

And then, this one:

“Of course, considerable uncertainty always attends the economic outlook. There is, for example, uncertainty about when–and how much–inflation will respond to tightening resource utilization.”

When it comes to the “Ivory Tower’ed” set, or next-in-rotation “smart-crowd” aficionado, the above is just a brilliant summation on just where, when, and how the Fed. intends to proceed once they extract what ever wording contained in the above “word-cloud.”

It’s all hogwash and would never be allowed to be given in any C-Suite worth its salt. I’ll illustrate it below with the following hypothetical inserting Ms. Yellen as the CFO:

CEO: “I now call on the CFO to address the board and give an explanation as to why our current state of affairs, as it pertains to our financial soundness, seems to be going awry.”

CFO: (Insert quoted text above replacing only “FOMC” with “finance department”  and “inflation” with “the interest rate being paid on debt being carried by the company as replacements.)

Here’s an example:

CFO: We continued to overpay on our debt because what we believed would happened hasn’t. We thought this was prudent because if what we thought would have happened, did happen, then we would have already been doing what we would have needed to do. But we still believe this will happen, even though the facts show that are assessment has been wrong. But we have faith that maybe we’ll be right in the end, so overpaying and depleting our account balance still appears to make financial sense. We’ll evaluate over the period between our next meeting as long as someone doesn’t throw an unforeseen shock into the mix like calling in one of our notes unexpectedly. For that, we currently don’t know what we’ll do should that occur. But not too worry, because we’ve been assured by our creditors or loan holders we can always “refinance” should things change.

Here’s what you would have heard next after the conclusion of the meeting…

“I would like to present a motion to begin the process of seeking a new CFO to begin at the conclusion of this meeting. Can I Get a second? “Aye!” And with that second all those in favor please signal by saying Aye. “Aye!!!” Those opposed same signal. (Insert crickets here.)

That’s how it works in the real world of business. Why? Because it’s not hypotheticals, ambiguity, and printing presses that you’re playing to help wallpaper over past mistakes. Business – real business – goes out of business if the balance sheet is not correct for the proper reasons or reasoning.

Today, the above only works – until it doesn’t. No matter what the experts “think.” Period.

© 2017 Mark St.Cyr

 

MYTR Update

After what has seemed to be an eternity (actually now going on over a year) I finally received answers to some very specific questions I needed answered, to my satisfaction, before I went any further. And with it, hit the “proceed” button for it to move forward in earnest.

In retrospect I’m very glad I put the brakes on, because there were a few details, although small, which had the potential to be very big issues down the road had they not been handled properly, today. An example would be the difference in setting a course that’s off by 1° degree. It’s fine if you’re only going across town, but cross-country? Never-mind not ending up where you thought, you could end up in another country all together.

Although it puts my scheduling a bit more into arrears, at least it now is able to move forward. So with that we went ahead and registered the following domains: MYTRbroadcast dot com, and dot net.

I know to many it’s about the equivalent of the old skit from the movie “The Jerk” with Steve Martin. But it was an important step on my end, for it means actual progression towards completion is, once again, on in earnest.

On a side note, if you looked at the above reference and didn’t get the implied joke? i.e., You’re not as old as Methuselah as the kids call me. It’s worth watching. If you are one of those “kids” who don’t “get” what a phone book is, or was? Just replace the phonebook and think instead of a newly created Facebook™ page.

Same thing.

Mark

Imagine That – Who’da Thunk It?

Remember when the only thing being serving up was the latest “red-hot IPO” and was all the craze? You know, when it was all “so worth it” because “It’s different this time?” All I’ll say is, “Well, welcome too it.” To wit:

(Chart Source)

As one can clearly see – It is indeed different this time. That is, for those still believing. As of this writing another of the stalwarts of the “You can do it!” unicorn IPO’s to save the world, Snap™ aka Snapchat™ has now joined Blue Apron™ and served up a closing price below that “so worth it” debut. Or said differently – everyone’s now in the same boat, as in – losing money.

Yet, if you would like a little more detail for how things go when suddenly what never mattered before like “profits” or “prudent use of precious resources such as investor dollars.” Look no further than – Da, Da, Da, Daaaaa……Tesla™, and again, to wit:

(Chart Source)

And then of course there’s none other than that other “high-flying big-spender”, as in one with the ability and gusto to spend money on projects that are just sure to bring in Billions, upon Billions of users and their wallets. e.g., Mark Zuckerberg.

Remember Oculus Rift™? You know, where spending $3 BILLION was just “the right thing to do” given as a reason by Silicon Valley aficionados everywhere, as long as it wasn’t their money? Well, here’s something from Reuters™ to shed a little light onto that subject – no head set required. To wit:

“Oculus, the virtual reality company owned by Facebook Inc, is temporarily cutting the price of its hardware, as the industry tries to figure out why the technology for immersive games and stories has not taken off among consumers.”

Sure does seem to be getting a lot more different’er by the day, no? Funny how that happens when there’s no more “play money” being printed out of thin air and made available from the Fed., yes?

And last but not least, (since this is based in a bit of a rant vibe, and I’m in a mood.) The other day I was speaking with a group when I was questioned (more like an insinuation in the form of a rhetorical question) about the authenticity behind my “Remember When…” post. The tone (and what I deemed more like snark) revolved around, “I noticed the date of your example was 2015, that’s a long time ago for an example, nothing since?” Let’s just say 20 years ago I would have handled the situation a little bit differently.

I decided it was better for everyone involved for me to keep my composure as I rattled off a few other examples far more recent, and far larger. (like the biggest story to hit the media in decades.) But when I returned home I thought there must be others (and I know you’re far more well-mannered, and much better looking) whom may also be inquisitive since it was a 2015 reference. And it’s a fair point.

So In that light I thought what better example to use than one everyone knows, not just those within the financial/business spectrum as to demonstrate something I have been stating for years, e.g., “You never know just where my writings will appear.” And, for those who may not know – is one of the main resources used and referenced by all of media, globally. To wit:

But what do I know.

© 2017 Mark St.Cyr

The Fed. Minutes aka Adventures In Navel Gazing

This past Wednesday the Federal Reserve released the minutes of its prior deliberation in June. There was a time when looking deep into what words were used, for what reason, and in what context, had the semblance that maybe, just maybe, there was an edge to be found in what the participants might actually be signaling without actually signaling. i.e., Leaving clues for the industrious investment sleuth to find without directly stating it.

But that was then, and this is now. And as Bob Dylan elegantly stated years ago, “You don’t need a weatherman to know which way the wind blows.”

That now holds true for Fed. watching sleuths, because the more I listened to the next-in-rotation economist on either radio or television tout their “insights” about what the Fed. meant by this, that, and the other thing contained within the minutes – the harder it was to keep my lunch.

It was an absolute real-time example of what I now call, ” a word-cloud Rorschach test.” i.e., As long as you use any of the words or phrases contained within the release – you can make stuff up all day long (or at least to fill a segment) about what it means. Here’s a news alert: It means nothing. Period. End of story, or segment.

If one wants to see just how relevant “forward guidance”, or “reading between the lines” of any so-called communique or reporting of what possible “words for profiting” might be contained within. Look no further than one who at one time was considered “The Fed. Whisperer”, Jon Hilsenrath of the WSJ™.

For years reading or listening to what Mr. Hilsenrath had to say on Fed. insinuations, or possible policy innuendo was like reading crib sheets produced from a fly on the wall that would make any spy agency jealous. Many times it bordered as if he no longer needed the fly and could just read their minds, because of the curious timing of his subsequent releases in respect to official embargoed time frames. Nevertheless, more often than not, far more was garnered reading or listening to his take on what really might be forthcoming, rather than trying to decipher the Rorschach inspired press-releases.

But then something changed. That change? Hint: Donald J. Trump.

In August of last year it was none other than Mr. Hilsenrath himself that took to the pages of the Wall Street Journal slamming the Fed. for it enabling the rise of Mr. Trump via its monetary policies. So informative was this sudden, and what appeared to everyone (well, those actually paying attention) as a “biting the hand that feeds you” moment, it prompted this observation from ZeroHedge™. To wit:

“For years we have argued that the main reasons for rising social anger, populist sentiment, and general disillusion with the US economy boils down to one thing: the Federal Reserve, which as we have argued since 2009, has approached the crisis aftermath in a wrong way, generated unprecedented wealth inequality through its monetary policy favoring a tiny fraction of the population – those invested in risk assets – and instead of reflating another debt bubble, should have allowed the system to undergo a debt purge and start afresh.

For this we have been branded perpetual conspiracy theorists and permabears.

Moments ago, none other than the WSJ’s Fed “whisperer”, Jon Hilsenrath admitted these allegations have been correct in an article titled “Years of Fed Missteps Fueled Disillusion With the Economy and Washington”, and which as the WSJ notes “helps explain one of the US’s most unpredictable, populist political years.”

In other words, it is the Fed’s policies that have led to the current failed economic regime (as noted again yesterday by Citi’s Matt King and today by former Fed governor Kevin Warsh), and which are responsible for the rise of such candidates as Donald Trump. Which, incidentally, is also something we have predicted over the years would happen. As such we are delighted that one of the most popular establishment Fed watchers now agrees with our assessment.”

Now with the above for a little context let’s move onto what we heard emanating from the so-called “experts of everything that is the Fed. and economics” on television, print, and radio following the release of the minutes. i.e., The next-in-rotation Ph.D crowd.

I’m going to sum up the basic premise that was used via the word-cloud generated. Ready?

“Well there were participants that questioned this, that, and the other thing. This implies that the Fed. is really concerned and may not be as aggressive for this, or that reason. I expect the Fed. will watch very carefully the financial conditions based on this, or that, and tread carefully, blah, blah, blah.”

The only difference between what I just typed, and what was dispensed by this crowd, was a greater use of $10 words. The meaning is the same. Or said differently: An exercise in Rorschach Word-Clouding. i.e., Means anything you want – including delusion.

I have said since the December meeting of 2016 after watching Ms. Yellen’s follow-up news conference that the Fed. was not only about to raise again, and soon, but would raise far more aggressively, regardless of any financial conditions. I posited that argument around the idea that it was in direct opposition of the election results.

Once again, the Ivory Towered economists raved “That’s crazy!” only they used more of those $10 words. Today? It’s so blatantly obvious it’s getting harder and harder for those trying not to admit it to continue that the ensuing arguments against, along with the rationale, now borders on incoherent drivel. Expensive wording or not.

In other words – the excuses of why the Fed. is raising, at the rate it is, while also throwing the balance sheet into the mix against the current data for a self-identified and staunch defender of the idea that they are “data dependent”, is making anyone trying to hold that monetary line look more foolish by the day.

And that leads me right into another axiom which fits this situation possibly better than any time prior. i.e., “If you have nothing good to say, don’t say anything at all.”

Here is where omission (in my opinion) screams for attention to those truly looking for clues. Once again, I’m using Mr, Hilsenrath. To wit:

As per Mr. Hilsenrath’s bio on the Wall Street Journal’s website:

“Jon Eric Hilsenrath is the chief economics correspondent for The Wall Street Journal and is based in Washington. He is responsible for covering the Federal Reserve. In cooperation with reporters in the economics and other bureaus, he also covers major developments in the U.S. and global economies for all print and on-line editions of The Wall Street Journal and contributes to WSJ.com’s Real Time Economics site.”

Now with the above for context here’s his most recent article archive lineup from late 2016 thru today:

From October 2016 thru December 2016. e.g., 3 months: There are seven Federal Reserve based articles. The skew going by the headlines, via my eye, are that they are of the more dove inclined arguments than hawkish. I suggest you don’t take my words for it and view them for yourself, and make your own conclusions.

Now – from January 2017 until today, as of this writing (all the while remembering this is now a seven month stretch as compared to three prior) the total number of Fed. articles?: One.

What is the tone or reasoning of that article? Well, it is in January, and in relation to Davos. A story that one might say (for the financial/business media et al) is covered in one way or another, no matter what, just to make sure any and all “receipts” can get reimbursed by H.R. or the I.R.S.

In other words – it’s the biggest junket of the business/financial media bar none and get’s covered regardless, although his headline is Fed. specific. So counting it as a “Fed.” specific article is appropriate.

I don’t know if Mr. Hilsenrath was there or not, and it really doesn’t matter. What I’m trying to make clear is there is no way this event doesn’t get press one way or another. Especially by someone in Mr. Hilsenrath’s position. Why is this point so informative you may be asking? Fair question, so once again, re-read the above bio, particularly the line, “He is responsible for covering the Federal Reserve.”

Now do you notice anything in his article archives now? Hint: Not a single Fed. article since, now going on seven months. And if one wants to try to read deeper, here’s another way one can view things: If you want to exclude the “one” article based on its “must be reported on status – regardless by who.” e.g., Davos. It would be fair to say the total over the last 7 months goes from one – to zero. As in Zip, zero, nada.

Again, as of today, there is the one referenced article, and two others which revolve around other topics, not The Federal Reserve.

I can’t make this point more strongly:

During what is now quite arguably the most important shift in both policy and timing in the history of the greatest monetary experiment conducted via the Federal Reserve, with the hiking of rates into increasingly deteriorating data, while subsequently launching the most troubling bugaboo that Wall Street fears more than a bench warrant (e.g., balance sheet reversal.) And there is not one, again, not one single article opined by what many deem as “The Fed. whisperer?” Not one (again if excluding the Davos piece) now nearly 7 months in? And per his bio: “He is responsible for covering the Federal Reserve.”

Are you beginning to see my point?

Here’s my take away – If you think “participants raised concerns” trumps ” participants voting record?” You must have a Ph.D. Because only this crowd seems more caught up in “mights” rather than “deeds.” Deeds as in – every once deemed dove voted affirmative to raise, and begin reducing the balance sheet not only this year, but possibly as soon as September if not earlier.

Now what in the world could have made such a metamorphosis happen? Any guesses? Hint: Donald J. _____.

Forget reading between the lines. If you take Mr. Dylan’s affirmation to heart and use it properly – you’ll know everything you’ll need to know not by reading, but from noticing there are no lines to read from what has been the most well-connected “weatherman” or Fed. writer over the last decade.

Gives a whole new interpretation for insight into “what goes unsaid” rather than what is, doesn’t it?

No ink blot required.

© 2017 Mark St.Cyr

Remember When…

There are times (and I’m inclined to say they’ll be many more) when you need to mark the record to show that maybe what you were espousing at the time, that was in direct contrast to both noted “celebrities”, as well as the so-called “experts” of the day, was correct after all, along with the potential for disastrous consequences to those who blindly followed giving no thought to those potential consequences.

Over the years, as many of you know, that started years back with the ever-growing archive (sample) of FTWSIJDGIGT (for those who say I just don’t get it…get this!)

This was my version of trying to intelligently explain why “I told you so” without the “nah, nah, nah, nah, nah” implication. I just wanted to show the evidence and, as always, let the reader decide.

But then, there are those which stand out and truly need addressing, because the damage that is now being wreaked, and the resulting legacy that is sure to follow, is why I began doing what I do in the first place. i.e., Trying to propose pragmatic sane insights.

This is one of those times.

Entering the public speaking area as to espouse insights of any type whether it be sales, motivation, business, et cetera is hard enough on its own. (it’s been documented showing; the fear of death as #2, and public speaking as #1.) However, years ago I entered the fray and have been railing against what I saw, and continue to see, as pure, unadulterated, bullsh*t being hurled from stages and platforms everywhere.

Let’s just say – it hasn’t won me any friends within the industry. But that’s perfectly fine with me, and actually, is a badge of honor I’m glad to sport.

I am also well cognizant of the irony when I call out many in the financial media as “giving snake oil salesman a bad name” that I could easily be lumped into the “Look who’s calling the kettle black!” It’s a fair gut reaction to those who don’t understand, or have not read or heard of me. I’m comfortable enough in my own skin to understand it. After all, the industry has done it too itself. And if you want to play in or around that sandbox? You’re going to get some sand kicked in your teeth rightly, wrongly, or mistakenly. It comes with the territory.

Then, there comes those times when you find yourself in direct opposition with someone you’ve admired over the years. In this case I’m referring to Tony Robbins.

I like Tony and still do, but just too be clear: I have never met Tony personally. I’m speaking in general terms. However, as of late I have found myself in direct opposition of his latest endeavor in giving financial advice. I have written about this on several occasions starting in 2014 such as “Why Tony Robbins Is Asking The Wrong Questions”, and a follow-up a year later.

At the time I received a lot of push back, most of it bordered on the insinuation variety such as “Who the F___ are you too comment?!” I understood it from a “celebrity” type appraisal, because it is fair to say (and accurate I’ll add) Tony is a motivational speaking icon with global name recognition. And has been for decades. He has earned the right of benefit-of-the-doubt from his followers and supporters. But as I iterated, I’m not talking about “getting motivated.” I’m talking about getting motivated of the financial kind. And this is where I posed my arguments.

Let’s make a clear point because it needs to be addressed before moving on. This is not bragging, or poo-pooing anything that Tony has said or written on the subject. This needs to be made clear for those well within the “Who the F___ are you?” encampment. Again, I understand the “why.” So I’ll make it here:

I have just as many, if not considerably more published financial insights across the web on major news sites, blogs, et al than Tony. And to demonstrate this I’m using just one of what many in that encampment deem a credible source. To wit:

When Tony talks about what Warren Buffett is doing, or what Warren told him one should do when he released his book “Money: Master The Game” (2014 Simon & Schuster™) that’s quite a selling point when trying to sell one’s book. I know I would do it, and it’s a very big badge of honor to have. However, with that said let me give you a “selling point” I could easily use and would be entitled. Ready?

When Warren Buffett’s favorite indicator showed it time to unload stocks, and buy bonds. One of the most widely read financial market resources known as Market Watch™ wrote an article in their Critical Intelligence report for insights before the market opened for the day, and used my insight or observation to help validate that premise. Not Tony’s, not Suzy’s, not Pitbull’s or the thousands of others you see on television or throughout the mainstream financial business/financial media et al, who are easily and clearly at the disposal of such a publication. To wit:

(Screenshot source listed above)

So to those who say “Who the F___ are you?” I’ll let you fill in your own blank.

I only use the above because most people, especially those who only take a cursory approach to business and finance, have heard of Market Watch. And being seen there, or have been quoted or referenced there adds weight for them. However, as I’ve said many times prior and still do: having my insights or opinions displayed on ZeroHedge™ has been my personal badge of honor bar none.

Now onto why all the above was important for perspective. And it is this which was just posted at Bloomberg™. To wit:

“Toronto Home Sales Drop Most In Eight Years”

“Home sales in Canada’s largest city slid 37 percent to 7,974in June from the prior year, the third straight month of declines and the largest drop since January 2009, the Toronto Real Estate Board said in a statement Thursday. Deals for single-family homes fell 45 percent in the period. Meanwhile, average prices for all housing types rose just 6.3 percent to C$793,915 ($612,000) the smallest annual increase since January 2015. Owners flooded the market with properties, with listings up 16 percent to 19,614.”

Why is this relevant? Fair point. From my article, “They’re Baaack! And Why You Should Be Worried – Very Worried” just this past March. 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!”

But just like late night television where infomercials for financial and motivational advice are thrown across the screen with more “bonus offers” than a centipede has feet: But wait! There’s more!!” The problem is, I’m sorry to say, much more of the worse variety.

To put the above situation into perspective, along with what will surly be mounting losses by many attending this and seminars like it is this bit of ironic coincidence. Ready?

Shortly after the above real estate roadshow and all its “insights” moved on from Toronto. It went directly to what can only be one of the worst places other than a place that was considered “at the top” of a market with only one way to go. Can you guess where that might be? Hint: Chicago, Illinois. Need a little help understanding the insinuation? Fair point, here are a few of just the latest examples over the course of the last few weeks. To wit:

“From Horrific To Catastrophic” Court Ruling Sends Illinois Into Financial Abyss”

“Illinois Tax Rate Soars 32% After Senate Overrides Governor Veto”

“Welcome To The Third World: Illinois Death Watch”

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

The only thing that could add insult to injury as the above is surely now inflicting – is for the same group to switch from “wealth and real estate advice” to suddenly flip and use the accumulated email and credit card list to send out calls to attend a “new and improved” seminar on real estate – and financial bankruptcy filings.

I’ll garner to say that the ticket pricing for that one may come at a substantial discount.

But what do I know.

© 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!)

Over the years I’ve made note of how right before any earnings season begins in earnest, near without fail, suddenly they’ll appear to be a barrage of announcements that sound utterly “fantastic” (Tesla™ turned this into an art-form) yet, appear to be nothing more when all is said and done than some form of “headline” read that serves up the algorithmic, HFT, search and destroy programs to gorge themselves upon the poor souls daring to leave standing orders. Rinse, repeat.

Now with that said I was thoroughly amused and not disappointed when I read the following, especially when it also entailed another point I had just recently made, and in far more spectacular fashion for demonstrative purposes than even I could of imagined. One could say, “It’s a two-fer!” (Let me make clear before I move on – this is not “a shot” at the author, what I’m speaking directly too is the announcement by Facebook itself, this is just a reporting on that story.) To wit:

“Facebook’s Solar Powered Drone Has Successful Test Flight: Potential Internet Access To Billions”

Sounds totally fantastic, yes? I would even garner Elon Musk and Jeff Bezos nodded in approval. But let me throw this into the mix, and is a point I made just the other day, again, to wit:

Business 101 was reduced to: Get an idea, Get funded, Get listed, Get out, rinse repeat. And if you didn’t “get out?” Then the only metric that mattered is “eyeballs for ads.” i.e., Spend (or lose) $100mm per quarter is perfectly acceptable, and even encouraged, as long as you can show 102 million eyeballs came for free. Why? “It’s different this time.”

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 algo’s 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.”

It would seem (once again) Zuck and crew are again finding the time to spend who knows how much. This time it’s all in an effort to bring the internet to people who’ve probably never even seen it. It’s a great bit of charity work for sure, and honorable, but it is charity from a business perspective. Why?

Hint: How much disposable income does one think will be available to spend from people whom in 2017 haven’t access to the internet? Or better yet, forget “disposable” how much income in total?

Can we say without being raked over hot coals the obvious? As in – they’re probably poor, if not very poor? But hey – we’re talking “billions” here, right? That makes it all “so worth it” to spend more of Wall Street’s, or 401K holders money on it, right?

I mean, I guess, Facebook has all this free-time available (along with Mark’s apparent upcoming office seeking political tour) since the prior spending of $Billions upon $Billions of investor money is now shown to be thrown down a rat-hole with no foreseeable investment return forthcoming in the near future. (Think Oculus Rift™, WhatsApp™, and more.) Because, obviously, one would imagine from a business perspective that would (or should) be a main priority before any and all other undertakings, correct?

But hey, maybe there’s a bright side.

This appears to have only cost $10’s or maybe only $100’s of Millions.

Consider it a bargain.

© 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.

Moving Through The Progression Of Ridicule To Beyond

(Some light reading with a take away in view of the holiday, for as we all know, all too well: Business never sleeps. Have a great 4th of July Independence Day celebration for those in the U.S., while also remembering why we have it to begin with. -Mark)

As many of you well know when it comes to spelling I’m the first to admit my challenges. When it comes to punctuation? Let’s just say “challenged” may be putting it politely. However, with that said, I have now published well over a million words in nearly 1000 long form articles. This is the equivalent of writing and publishing approximately 35 hardcover business books in less than 10 years.

Of those more than 1/2 have either run, re-run, referenced, or my name used in some of the biggest stories in tech, finance, buy-outs, and a few more, across the globe, and yes, in some of the premier foreign news outlets also.

My blog is routinely still visited on average by at least 10 differing countries daily. The total is now well over 175. As of this writing that has not changed, in other words, if it were a fluke it would have shown itself to be such over the years. By definition – it has proved itself to be just the opposite.

It’s both fair too say, as well as accurate: more often than not, at any time, someone, somewhere, around the globe, is reading my writings or insights in one form or another.

That’s not too shabby when I put it like that, is it?

It’s even better when I can prove not only it being true, but also know I’m not blowing smoke up my own, never-mind others. For as it’s been said, “For if a man thinketh himself to be something when he is nothing, he deceiveth himself.” Once I fully understood the true meaning behind that small parable (I’m not pushing religion, I’m implying finding inner wisdom) clarity in many areas appeared and I’ve been able to stay both clear, as well as ahead, in many areas others are still bogged down in. Too me – they’ve been doing nothing more than chasing their tail. Some background:

When I first started writing I had no idea where it would go, especially given my clear disadvantages when it came to practicing the actual craft. As those who’ve been with me from the start know my “big break” happened when one of my own business heroes, Seth Godin decided to launch near the beginning of the decade something entirely new on the web in the form of a business magazine called “UpMarket.” I was always a fan of Seth’s work and his “pick yourself” mantra, so, I did just that, sent a sample – and was picked.

Suddenly there I was with my business insights right next to Seth’s. It was a surreal experience is all I’ll say.

Let me also add this, because it’s something that needs to be understood, for far too many always want to think, “Sure, that worked for them, It’ll never work for me.” Here’s a real example why that thinking is nonsense. Case in point:

Think of all the people who follow Seth, especially the amount of authors and business people (targeted audiences it could be assumed) who also write that must have jumped at the chance to the same open call as I did. And yet, I got picked.

Again: It would have never happened had I not bought into his original mantra of “picking yourself” first. How many of you pick yourself first as to not try? Think about it.

But once one picks oneself? That’s the easy part and is now over. For as Seth has also iterated: Now, you must do the work – even when no one’s watching. I’ll just add – especially when no one’s watching. Why? Because, this is where problems begin to manifest such as when too many resort to what I and others have called “vanity press” aka Social Media for validation.

I must make clear: I have never stated, nor would I, that social media is worthless. Far from it. However, what I am on the record stating is this: You can fall prey very easily into believing you’re actually creating any impact other than racking up “likes” that are worth nothing more than standing in front of a mirror and saying “I like myself” as many times. Yes, it may make you feel good at the moment, but what have you truly accomplished? Truly think about it, don’t let that point be lost. Yes, it’s that important.

I’ve also given speeches, written, and more expressing (to the horror of many) when I’m asked a question such as “How many hits does your website get?” I reply “I don’t know, nor do I care.”

That’s when the room goes silent.

If someone has brought me into a closed meeting and I say it? That’s when not only the room goes silent, but the party that brought me begins to visibly sweat, or just goes blank.

But why make such a statement? After all, isn’t it all about “hits?” Well, yes, and no. Let me explain:

As I’ve repeated more times than grains of sand: It’s not “hits” that should be counted as the metric. But more importantly: As for any hit – what should be the metric you measure? To put it another way and for you to answer, ask yourself the following, never mind what I think. Ready?

Which is more important from a business perspective: 10,000 hits a month and not 1 sale made? Or: 1 single solitary hit over the course of a month. But resulted in a sale producing a net profit that’s accepted as legal tender for deposit at the bank?

The same can be said using other metrics. Case in point:

Personally, I don’t use or have any social media accounts, and yet, at any time depending on the news site, story, or reference, I have documented backup (not pie-in-the-sky, smoke-and-mirrors) where I have reached (and is a recurring metric) well over 5 to 10 million individual followers on Twitter™ alone. Not cumulatively, but on one single story within a day or so of publishing. As an example here’s just one from 2014, and at the time was a very big story. To wit:

 

 

 

 

 

 

 

 

 

(Story screenshot source, Twitter™ screenshot source)

Consider all the potential financial experts that were available, quotable, and even salivating at the chance to have their insights included in what was one of the biggest tech stories and buy-outs at the time. And, in what’s considered a widely read financial resource throughout the media. There I am along side none other than Bob Lefsetz.

To reiterate about the entire “hit” idea. That “hit” equals 1. So, if someone wants to compare (or throw in my face is more like it) their “I had 100,000 hits on my site last week and you only had 1 for the entire month, so that proves you just don’t get it, because 100,000 is 99,999 more than your 1 – and that was a week compared to your month!”

Fair point, but as I would (and do) reply, “What’s the value of my 1 compared to your 100,000? Would you like to break it down further using the example above for comparison? There are other just ‘1’s’ if you don’t like this one. I’ll let you decide.”

The usual reply? (insert crickets here)

I use the above not for any preference or significance of one news outlet over an other, far from it. (and this has not been the only time or outlet with similar metrics) Why I am using the above is for is this: It’s an easily verifiable example where it shows in no uncertain terms – that this outlet alone – is followed by some 3+Million, and that doesn’t include the ancillary followers of this news site which in-turn resend it to their followers, and so on, and so on.

I hope you’re seeing my point. And for those of you wondering was this story actually tweeted because they don’t do the same for all of them? Yes, it was.

I needed to make the above point for two sets of people. First, those who are chasing their tails and don’t realize that’s precisely what they are doing. And second: For those (usually whom recently attended some workshop or speech given by some so-called “guru”) who like to criticize me or my social-media strategy. Personally, I think I’m doing just fine, thanks. “How you doing?” But I digress

And just let me say this before I go on any further:

To all the news sites, blogs, and more who have found my work or insights worth their time to read, and/or reference, yes, even those who’ve throughly disagreed and used me as a foil for their arguments over the years. Thank you. And I mean that with the utmost sincerity. Again, thank you.

So now (I guess again) what does all the above have to do with the title you may be asking. Well, it’s this:

For years I have also been a staunch advocate of imploring people to not just take what they see in the so-called “papers of record” as some form of gospel. I also state: “Even if it’s me!”

Many times I’ve had run-ins where some have tried to invalidate my ideas, insights, or premises by using the fact that I’ve never been published where they believe is the only measurement or “stamp of approval” that matters (e.g., NY Times™, Economist™, et al) as some type of sword or pike.

Personally I’ve always welcomed the challenge and point out the fact that I’m actually proud not to be there, because I feel what they’ve been pumping out as so-called “insights” about the economy, finance, business, and more has given garbage a bad name. It’s been mostly nothing but pure tripe. (My apologies to tripe.)

Now with that said let me explain how and why the above came into play.

All this (and more) came up in a discussion the other day when I needed to review a previous offering for metrics. It was there I came across a mistake in that earlier project that left me both laughing, as well as wondering, if it was the reason it never seemed to gain traction. Here’s what I found:

 

Back around 2010-11, I began a series called “Thinking Aloud” that was a trial run in short audio form of how I was seeing things at the time. As you can see I was already railing against the “it’s different this time” arguments far before nearly anyone else.

When I was reading (just this past week) I noticed (as I highlighted) I must have typed “poignant” when I clearly meant “pointed.” (Is this the cause for “doom and gloom” references? Appears logical both for the moniker, as well as why it may not have done as well as I hoped. “Inquiring minds want to know!” But I digress.)

The issue here is a lesson for anyone who wants to draw from it like I/we did. There are 3 very real, pragmatic insights that apply to most businesses. And they are these:

  1. Using a spell checker many times will allow for different choices, you must make sure you choose properly, because you never know what spelling error you may have made unless you look at what is being corrected, and why. I can not tell you how many times over the years similar has happened to me. I’ve gotten better, but still it happens.
  2. When you read silently your mind has a way of giving you the correct word you believe, or anticipate should be there. You may re-read the same sentence multiple times and never see it while in the moment of writing or immediate proofing. e.g., as you’re writing it or reviewing freshly after. Sometimes time is needed to clear the mind. So have lunch, take a break, go work out, or do something other, then re-read. You’ll be amazed of what you may now see and find.
  3. Handing it off to others for proofreading doesn’t always work. The above is proof of that, for it was read by others and missed entirely then, and too this day.
  4. Bonus Tip: Using a template as to save time and furrow out repetitive text and more is where you must check, double-check, and maybe triple check via an outside source for surety that no mistakes are present. Again, the above is proof of that, because it was used as a template for multiple postings – and no one here ever caught it until today, some 6 years later, and only by chance.

Which brings me to – the punch line.

For those who may not be aware “The Gray Lady” aka NY Times is in complete disarray when it comes to its staff. In-particular its copy editors, reporters, and others. It’s been reported the NYT wants to cut its staff of copy-editors substantially. (i.e., something akin to half) The key word is “wants” as in has not yet happened. Whether it does is to be seen, but there lies the rub. Why? Fair question, so I’ll explain with the following. To wit:

“New York Times Forced To Retract Longstanding Lie About Russian Hacking”

Or, said differently: One of the main voices railing about “fake news” and accusing others (such as yours truly) has actually now had to recant one of the more pervasive McCarthy-esque stories and insinuations ever to be perpetrated in media, because: It was a fake story. All while the so-called “editors” who are argued to be upset because if they are let go the “quality” will diminish, were still employed at the time as to make sure fact-checking, professional and ethical standards, and more were supposedly being held.

I’m sorry, but you just can’t make the irony of it all up.

Yet, just like late-night TV: “But wait! There’s more!!” For just the other day this happened. To wit:

“New York Times says crime occurred in ‘downtown Arkansas’ -promptly gets mercilessly mocked”

So I’ll let you be the judge and jury as you ask yourself this question:

Does the standard and product offering improve at the NYT with the letting go of said personnel? Or, falter?

Think about that carefully, while contemplating the “why” even more vigorously.

And for those who’ve scorned me over the years (e.g., The Punctuation Police, and Grammar Gestapo) with the calling for me to “get a copy-editor!” I’m sorry too say, No, I’m not hiring. Even though it would appear the cost of such is about to decrease, for it’s now been demonstrated (as in “black and white” literally) hiring a copy-editor, editor in general, or even writer for that matter, from some “paper of record” hasn’t any semblance of improving my own offering, because as they say in open court, “Let the record show…” My standards for copy-editing already appear to meet the standards set or used at the NYT.

But, what’s far more important is this: My on-the-record insights are already held to a much higher standard. After all, I’m not the one retracting what should have been clearly seen by “the paper of record” as fake news all while pointing their fingers (and printing presses) at people like myself stating we’re the “fake.”

I’ll end here with this last thought:

Don’t take my word for it. Just read the NYT and judge for yourself remembering this axiom from Gandhi:

“First they ignore you, then they laugh at you, then they fight you, then you win.”

I seem to have entered the latter part of that phrase. And so can you.

Happy Independence Day!

© 2017 Mark St.Cyr

Welcome To The Dark Side Of “It’s Different This Time”

There has not been a mantra that’s emulated a teenagers go-to excuse of “Because!” for both tactical effect, as well as childish reasoning than the term “it’s different this time.” And for nearly the last 10 years that phrase has meant something entirely different to two distinct groups.

The issue at hand is that one side (i.e., “The Valley”, Wall St., and its sycophantic chorus of enablers throughout the financial/business media) is going to suddenly become aware that this once reliable sword against any and all reasoning not only had an ominous double entendre like quality, but also a double-edged-sword. And the cleaving of reputations, along with investment dollars and sense has only just begun.

So what about the other side you may be wondering since I said there were two? Fair point, and it is this:

The other-side as we’ll now call them (where you can place me if you wish) also understood that, yes, it was different this time, but not in the way that the prior believed. And that is the key. e.g., Believed.

The prior truly believed and embraced that it was different this time. In other words, fundamentals of any sort whether they be tried and true business metrics, paying customers, profits, net profits, __________(fill in the blank) were suddenly immaterial for measuring a business for what its valuation could, would, or should be.

Business 101 was reduced to: Get an idea, Get funded, Get listed, Get out, rinse repeat. And if you didn’t “get out?” Then the only metric that mattered is “eyeballs for ads.” i.e., Spend (or lose) $100mm per quarter is perfectly acceptable, and even encouraged, as long as you can show 102 million eyeballs came for free. Why? “It’s different this time.”

This is what business, valuations, metrics, and fundamentals had now become, and again here’s the key – they believed – would remain forever more.

The others understood (and argued) that yes, it was indeed different, but not for any of the reasonings or defensive arguments put forth by the prior. It was different but for only one key distinction: it was only made possible via central banks (the Fed. in-particular) pumping $TRILLIONS into the markets via one channel or another.

And here’s where “belief” comes into play that works against the farcical belief that it was – different.

Once the Fed. and others began withdrawing or halting their “free money” programs, the first to suffer the consequences would be the true believers, disciples, and evangelists of the “it’s different this time” paradigm. And guess what? That is precisely what has, is, and will continue to happen. Why? I’ll just use the abbreviation, IDTT.

When the Fed. seemed ready, and all too eager to continue printing, anything and everything seemed not just possible in “The Valley” but also for much of tech in general, especially for anything deemed disruptive. Fundamental business metrics be damned.

Losing $Billions quarterly? Have no fear; raise a few $Million and declare you’re worth $Billions. And if you’re truly daring: Raise $100’s of millions and declare you’re worth $10’s of Billions! e.g., The more you’re losing means, the more you’re winning! Why? IDTT!

But as I alluded to earlier – then comes the dark-side of the new “religion.” For you can’t have the good without the bad, right?

To illustrate this I can’t help but be reminded of a scene that comes near the end of the movie “Constantine” (2005 Village Road Show™) starring Keanu Reeves. (a personal favorite I’ll add)

The scene takes place between the Devil (Peter Stormare) and Gabriel (Tilda Swinton) where Gabriel who had been stirring up quite the mischief on Earth tries to muster his angelic powers to smite the Devil only to find – IDTT – when suddenly nothing happens; and the Devil rebukes the entire affair with one simple, but foreboding phrase, “Looks like somebody doesn’t have your back anymore.” And with it renders Gabriel to now live according to the effects of the mortal world.

The entire “It’s different this time” complex along with its evangelists, and true believers just had a very similar revelation or experience. For the Fed. has now declared in no uncertain terms – they too – no longer have someone’s back. And the IDTT resulting effects can no longer be contained behind the closed doors, or closed minds with any IDTT prayers for salvation.

Where’s the proof for such a claim? Fair enough, to wit:

 

(Chart Source) The above are: Twitter™, Twilio™, Snap™, Blue Apron™)

I initially used the prior three back in March in the article, “Silicon Valley: From Rarified Air To Exhaust Fumes” to demonstrate how the IDTT model has reacted since it became apparent it was – different this time. i.e., Once the Fed. and other central banks remove their largess in any way? “Looks like somebody doesn’t have your back anymore.” Seems appropriate, no?

What’s so telling of the above is the progression of time it now takes to show the fallacy of the IDTT model and belief. For the last chart of the above (far right) shows Blue Apron’s inability to not only hold any semblance of “so worth it” valuation, it couldn’t even stay above its IPO debut of $10 that was dramatically cut back from a $15 – $17 range, where it closed well below its offering some 13 trading hours later.

Yes, that’s hours, not days, not weeks, months, or years. That’s why the above chart is so telling. Those bars on the far right chart above represent 15 minute intervals. You think IDTT? Hint: You better believe it is.

All I heard across much of the main stream business/financial media when it came to the now ill-fated IPO debut of Blue Apron were phrases such as “bad business model” or “bad metrics.” They were bandied about with so much consistency I couldn’t help but marvel when only months prior such heresy talk was euphemistically met with IDTT arguments for the likes of Snapchat. (Remember all the video reports of everyone on “news” desks and reporters augmenting their photo looking ridiculous prior to the IPO to show how “cool” or “so worth it” this was?)

But if you’re still one of the “true believers” and think this all just some IPO hiccup in the road to 401K salvation where the next one will more than make up for any losers? I’ll just share with you something which I said would also appear that the entire IDTT complex stated could or would never happen. From the article “Is This Uber’s Theranos Moment” To wit:

“The revising of valuations and more came when suddenly everyone no-longer could justify the valuations based on “it’s different this time” arguments.
That argument works fine when the Fed’s QE program is in full effect and works like some magical cloak to hide the naked fallacy that a company with less than $100 Million in revenues is worth some $9 BILLION because the VC’s invested say it is. (I can’t help myself from laughing as I typed that, it’s so far beyond ludicrous.)

But once the term “law suits” and more get thrown across a unicorns saddle? Let’s just say – viewpoints, and valuation metrics begin to change, and change quickly.”

Today’s proof for such? Fair point, here’s something from none other than the Harvard Business Review™ and again, to wit:

“Uber Can’t Be Fixed – It’s Time for Regulators to Shut It Down”

When you do nothing but defend an argument against any and all business reasoning or sense, using nothing more than “Because!” or “It’s different this time” type arguments, along with the other coveted types of “disruptor” styled defenses as to just label or group critics into some form of conspiratorial, tin-foil-wearing, gloom-and doom, Chicken Little’s, nay-sayers? It works fine, until IDTT comes face-to-face with the prospects of:

“Looks like somebody doesn’t have your back anymore.”

Welcome to the dark side – aka – reality.

© 2017 Mark St.Cyr

If The Fed Doesn’t Want To Appear Political Then Stop Acting As Such

Every time the idea is raised that the Federal Reserve seems to be acting, or basing policy decisions with some form of political bent, immediately the insinuation is either brushed off as ludicrous, or better yet, even conspiratorial. If the question is dared to be asked, or insinuated directly at any official during a public forum? More often than not the stuttering and stammering as to explain away any such notion becomes a real-time expression of just what was meant when applying the old adage, “doth protest too much.”

However, today, it appears no matter how curtly it’s deflected – the actions appear for more indisputable. Here’s a little history:

On December 14, 2016 the Federal Reserve raised interest rates for the first time since Dec. 2015. So as to save you the inquiry, yes, that was the only time during all of 2015 as well as 2016. These were the only two hikes since 2006. Yes, that’s nearly 11 years ago.

During the period of 2015-16, whenever a Fed. official was asked about conditions, or projections, getting a straight answer was just as futile as getting the same answer from one member to another. Again, it appeared this was just another real-time display of old examples such as, “good cop – bad cop” with some “I can no-longer recall precisely what I said I saw yesterday” eye-witnesses thrown in when asked about prior remarks. i.e., Think, Rorschach test.

This is when it become patently obvious one could no longer take wording, or implied messaging into account and must move to the more obvious using, once again, another maxim. e.g., Forget what they say – watch what they do.

Of course, that doesn’t mean to never take into account what is said. Using it properly simply means to put far more weight into past actions over any words-of-promise for tomorrow. Andrew Carnegie was a big believer of it and used it extensively, as do I.

This was the reasoning why before the December meeting of 2016 I opined that Nov. the Fed. may in fact not raise rates as many were concluding. Here’s what I stated. To wit:

“Everyone (and I do mean everyone) is flatly convinced the Fed. will raise rates this December. Personally, I’m not so convinced, while I’ll also add I’m more in the “will not” camp today than I was previous. i.e., I’m at about 80/20% plus today favoring they won’t. And here’s why….

At this last slated meeting and resolution the Fed., once again, chose inaction for action, keeping interest rates unchanged. Yet, we are told (by both the Fed. and their “watchers/pundits”) that the Fed. is “ready to move” and that “this December it’s really a go!” and more.

Fair enough, but if that is true: Then how does supposedly “encouraging” and “improving” data that swayed one of the more birds-of-a-feather doves (Boston Fed. president Eric Rosengren) to cast a dissenting vote in the previous meeting just 60 days later to change his stance? (e.g., back to should not raise from should)

Again, to make this point more clear: All when in less than 30 days – they are said – to really, really, really just going to “do it” this time?

It doesn’t make a lick of sense for any coherent communication based strategy, as well as projected policy stance. Period. Unless – that’s precisely (and I’ve argued exactly that) what you want. i.e., Never-ending obfuscation, and confusion. All wrapped in incoherent, nonsensical policy mumbo-jumbo”

To make clear: this was in November where both the “data” for a supposedly “data dependent” Fed. had not only rolled over, but so too had the “markets” and were, once again, threatening to break through prior support levels that were only negated when one Fed. official after another took any media available sending out soothing dovish tones to reassure the “markets” they had their finger poised above the “control-p” button should the need arise.

Couple the flip via Mr. Rosengren, along with Ms. Yellen’s “high pressure” speech in October, along with others such as Ms. Brainard’s consistent dovish stance and arguments, and last, but certainly not least; the believed inevitable surety that Ms. Clinton would emerge victorious in Nov. One could clearly see how The Fed. was setting itself up as to not “rock-the-boat”, regardless of any flip-flops or hawkish statements prior. i.e., The action for taking no action seemed to be the play at hand.

After all, as the Chair herself implied only 30 days prior (paraphrasing): “The harmful effects from the financial crisis were still within the economy, and the only way to possibly break their hold was to let inflation run hotter while keeping in place an accommodative monetary policy.” It had all the attributes for the setting up the reasoning for doing just that. If not, then why even make it? Especially by the Chair herself.

Then – Ms. Clinton lost. And suddenly all doves, dovish statements, dovish reasoning, and more were gone. Now, it’s an unflinching-flock of Hawks-Are-Us. All data prior? Hint:” What data?” The only data one needs to see is the vote tally for raising rates, and running off the balance sheet. i.e., A consensus of “Yes!” is an understatement.

And that brings us to today and the implied “normalization” path the Fed. is employing currently. For this is where the, “If you say you’re not one thing, then why are you doing things that demonstrate the exact opposite?” fits in.

As I stated back in December following the conference supplied by Ms. Yellen. I made the case that if one looked at the posturing, and listened to the rationale given as to explain away why the Fed. appeared to everyone watching to have morphed from dovish to hawkish (the Dot-Plot gave the first clues) her answers had more in common with grasping-at-straws than anything lucid. It was from that moment I made the case that the Fed., regardless of what they say going forward, were going to tighten and had indeed turned into hawks based on the election results.

No one agreed, and I was widely mocked by many in the main stream business/financial media for even implying it. After all, the “data” clearly showed not raising for another year was clearly applicable with past reasoning and actions. At the most was iterated, they may consider,( consider, not actually move) September as a possibility. Balance sheet talk? Forgetaboutit! was the reaction, even from the likes of Mr. Bernanke.

But now – here we are. And the biggest item I believe that’s both unrealized, and unaccounted for by most, and especially “the markets”, along with what I deem a “punctuation point” to the political, is this. To wit:

During all of Ms. Yellen’s chair-ship, along with most of her predecessors, one over arching theme was to not allow even the hint of any unforeseen or even foreseeable turbulence to enter the fray as budget talks or “resolution votes” transpired.

Always the case for “developments” was put foremost in front of any possible disruptive element that may occur during the process. i.e., Don’t make the “markets” more nervous than they already are about debt, debt-ceilings, shutdowns, and more. Let alone illuminating the Fed. in any possible unflattering role via casting a spotlight of “raising borrowing costs” in the middle of it.

And yet today?

The Federal Reserve has raised rates not once, not twice, but three times in under 6 months, and – and it’s the big one – has thrown the biggest of all bugaboos that the “market” fears (e.g., balance sheet reduction) directly into the teeth of one of the most important budget battles coming up this summer in years. Look for the term “shut-down” to re-enter the lexicon in increasing and ever vociferous manner from this point forward.

With the proposed wanting of setting new tax policies, Obamacare reform or repeal, infrastructure spending and more. Along with the ardent political bickering and who knows what more that will take place. The stakes could not be higher of exposing for everyone to see that the Fed. has made a blatant policy error decision with just the raising of rates via its current schedule. Especially should the “markets” begin faltering ever further going in.

This alone should be a real cause for concern for anyone questioning judgment or efficacy of current monetary policy based on current data. Again, that alone, and by itself, warrants the notion that the Fed. is taking a huge risk for backlash should it be proven out as such. i.e.,”Policy error” and “Lost credibility” will also enter the lexicon with the same furor and frequency as the political strife.

But, (and it’s a very big but) throwing balance sheet reduction certainty, with time schedules and amounts, into the that mix?

It turns the idea of “risk” on its head and wreaks of political skullduggery of the worst kind. And will not go unnoticed should the effects of such foolishness manifest.

As I implied at the opening: If the Fed. wants to keep stating it’s not politically motivated.

It should stop doing what can only be concluded as such.

© 2017 Mark St.Cyr

Uber’s ‘Theranos Moment’

There comes that moment where the veiled threats against logic such as the go-to excuse of “it’s different this time” are exposed against the harsh light of reality for all to see with such clarity, “it’s different this time” is precisely the apt statement to show why it was all fallacy to begin with.

Uber™ has just had that moment, and the resulting fallout as I’ve iterated before: Will. Be. Legend.

To think, let alone, believe that the current implosion (and yes, I mean implosion) will be isolated within Uber is as much of a fantasy as was believing: “it’s different this time.” Why? Because: It is precisely that.

I believe (and have written) the remaining unicorns along with entire “tech” or “Valley” model for valuation are now facing what I called, “an extinction event.” Or said differently: The moment Uber is made to state publicly its current valuation going forward? It’ll be the equivalent for both “The Valley” and “unicorn” metric modeling – as was for the dinosaurs. e.g., Stick a fork in it, it’s done.

Now to be fair Theranos™ was/is caught up in what has been deemed as fraud for their product offering, Uber is not. However, why I use the “moment” appraisal is this: Once it was shown that the whole “so worth it” valuation metric was no longer above reproach? The jumping-of-ship for those closest happened so fast even rats took notice.

Ms. Holmes publicly declared any, and all, accusations as false before finally having to recant in the form of pulling, or re-verifying prior testing results. But as she was doing that publicly, quietly many either working for, or involved in management were reported to be heading towards any and all exits. Then, precisely one year ago this week (yes, it’s the anniversary) Forbes™ revised, and declared Ms. Holmes net worth had gone from $4.5 BILLION – To Nothing. And just like that it was over almost as fast as it had began.

So exactly where is the equivocation argument? Good question, and it is this:

The revising of valuations and more came when suddenly everyone no-longer could justify the valuations based on “it’s different this time” arguments.

That argument works fine when the Fed’s QE program is in full effect and works like some magical cloak to hide the naked fallacy that a company with less than $100 Million in revenues is worth some $9 BILLION because the VC’s invested say it is. (I can’t help myself from laughing as I typed that, it’s so far beyond ludicrous.)

But once the term “law suits” and more get thrown across a unicorns saddle? Let’s just say – viewpoints, and valuation metrics begin to change, and change quickly.

Uber is currently valued via all reports at around $68 BILLION dollars. And with that valuation it is currently the #1 unicorn, and most valued startup, and private tech company, in the world. And it’s core product? It’s an app to hail a cab.

Re-read the above line a few times, and let it sink in. Because as I implied earlier – this is where the equivocation moment comes. e.g., When all-hype suddenly meets law suits? All, and I mean just that – all – perspective changes. Especially for those of the unicorn variety.

Theranos, for all that it was going through at that time, one could argue (and some did making snake-oil salesmen look trustworthy) that there was at least some possible future if the law suits turned out to be defendable, or were misplaced. After all, it was about patented machines, diagnosis, and more. Nevertheless – it was over with near immediacy once it was blatantly obvious people once loyal and intimately involved, along with companies using the service publicly began jumping ship.

Suddenly every “news” outlet that once couldn’t get a flattering story out quick enough tripped all over themselves to re-write the now how, and why, for the imminent collapse of the once storied unicorn.

This time – is no different, for the stories have already begun. Again, once the unquestionable becomes questioned? I believe you already know the answer. But if you need reminding  – again – just look to Theranos.

Now, much like Ms. Holmes, the founder and CEO had to quit, or resign, to appease those calling for change. And, much like the previous example – those closest, and who should be the greatest ally for change and stay as to help weather out the storm are also jumping. Sound familiar?

The optics of such a “jump” while in the midst of such a sh*t-storm at Uber, from my perspective, shows only one thing: You know the jig is up, it’s all about managing the fall, and there’s no need to do that in plain view.

If I’m wrong, then why would such a staunch defender of the company and its CEO resign when the negative optics of such a move are clearly visible? Unless? See above.

And just like Theranos – Uber’s valuation has already began slipping.

The real difference here? Remember: Theranos was said to be worth $9 Billion when their fall from grace began. And that was all based upon the idea that they were involved in life changing medical technology. Uber? They are said to be worth $68 BILLION – and they’re an app to hail a cab. Think about that, again.

And lest one forget – Uber burns through, not makes: $BILLIONS. And its “world domination” thesis has already been cleaved when it gave up on China. And that realization alone has yet to be priced in, or out, one might say. Add to that just some of the above and “cleave” might be an understatement for future valuation adjustments going forward.

Just ask Ms. Holmes.

© 2017 Mark St.Cyr