Downer: Market’s Post-Fed, Pre-Facebook Blahs

If my brain is still functioning (a matter of some dispute, I’ll admit) we should have Facebook earnings out after the close today.  Not always, but often enough, when a company announces a new way to raise revenue a week or three before earnings, there is a reason. 

Might be an unspoken message like “If we come out with earnings that aren’t all that spectacular, remember, we are well on our way to putting in new systems and software that will make more money for us – so don’t you worry about anything – we got you covered and we’re still a great investment.”

I don’t care much about Facebook, quite candidly, because I don’t see the point of “social media” – other than it is a HUMONGOUS waste of time, it is almost like a self-reporting system to police (and probably political) authorities, and for sure HR departments.  If you want to know anything about Ures truly, there is this website but here it’s me who get the money (both cents from ads) rather than sending you off to a third-party site to be exploited by someone else – and, as we have explained previously, where a company’s audience can be “held hostage” unless you play fees to talk to your own people.  I’ll do my own audience exploiting, thanks.

Like I said, in the cold light of analysis like this, farming out “customer interaction” to a third party “social” outfit is like asking to be taken hostage…but is is what?  (Hint: Everything is a business model.)

One of these days, someone besides me is going to figure all this out, but in the meantime, I have been marvelously amused watching the comparison between the Social Media ETF which, if I read the comparison chart versus the S&P from over here, would have been up 46% versus 80% for that old, boring, S&P 500.

So that’s one axe hanging over the market:  social media being “found out” as a business model.  So now I’m off watching to see if the introduction of a new class of stock by Facebook will change anything. 

I will leave it to your superior intellect to discern my real feelings and outlook.  But when the NY Times headlines that “Facebook Plans New Stock Class to Solidify Mark Zuckerberg’s Control,” I find myself asking “Where is the value to the shareholder – and do I want to invest in MZ or his business model?”

I know:  Don’t throw rocks at giants, particularly ones that own a huge group of timewasting people as their advocates.

Still, there is this pile of “rules” that I’ve pulled together from investing for about half a century and one of them is to look at every headline that rolls by and ask one simple, stupid question.

Does this make sense for the customers or shareholders?”  Is all about ME a business model I should invest in?

Again, you go discern your own answer.  I am just whelmed (not OVERwhelmed) by social media because I believe it has diluted the relationships between companies (and even bloggers) and their customers and readers.  At least in my view – which, considering I am 6 hours from eye surgery, isn’t all that good, if truth be told.

And this gets us to the other part of the headline – the politeness shown by the markets to the Federal Reserve.  Again, bah humbug.

I explained to Peoplenomics.com subscribers earlier something that most people don’t think about.  The day of the Fed decision doesn’t matter so much as the day after because this morning the impact of the decision will really ripple through the markets.

You go read the Fed comments from the FOMC meeting, but to me they might just have well have put things into more simplified English.  Something like:

:The economy still sucks and it’s so bad out there, we can’t raise rates from these miserable levels – and in case you don’t read economic history, rates are now down to about one half of what they were in the middle of the Great Depression and into the darkest days of America in World War II.”

Yes, some damn fools actually read their history and learn something from it.

image

Of course, we need to lay out a series of asterisks.  One is that the table above is the Fed Discount Rate for the St. Louis Fed (data series DISCNTD8 if you don’t trust me) and that’s different than the Fed Target Rate which is a rather recent (made up_fictional nonspecific) invention.  Some would argue target rates relates to the ECB nontraditional rate moves as has been suggested in some papers, as globalism is entraining.

Except when the Bank of Japan overnight failed to raise rates or spew enough happy-talk, the JA market kicked  down 3.6% and Europe is trying to shake it off this morning, but at the outset things are down over one percent in the major markets when I looked.  And there’s the asterisk about my “looking skills” today…

All in all, this is why I went short recently (last week) and why I think we are on the verge of a decline which could, over the next couple of weeks, knock off 50% or more of the rally since the February bottom, but don’t hold it against me if I’m wrong.  I have real money on the table however, and it wouldn’t be there is the market had punched through overhead resistance.

So a slightly lower low than February might be the real agenda in the next couple of months, but like the Alcoholics Anonymous people say “Cinch by the Inch, hard by  the yard” some of the best advice in life and it applies to trading and relationships, as well.

Maybe Americans are so medicated against Depression by drugs like Prozac that we can’t see Depression when it’s really here.  I expect, sooner or later, we will have to address the national rehab problem, but for this morning, it should be just a hundred (or two_) points lower as a temporary downer.

GDP’ing

Hot off the press release:

Real gross domestic product — the value of the goods and services produced by the nation’s economy less the value of the goods and services used up in production, adjusted for price changes — increased at an annual rate of 0.5 percent in the first quarter of 2016, according to the “advance” estimate released by the Bureau of Economic Analysis.

In the fourth quarter, real GDP increased 1.4 percent. The Bureau emphasized that the first-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency (see the box on page 3 and “Comparisons of Revisions to GDP” on page 4).

The “second” estimate for the first quarter, based on more complete data, will be released on May 27, 2016. The increase in real GDP in the first quarter reflected positive contributions from personal consumption expenditures (PCE), residential fixed investment, and state and local government spending that were partly offset by negative contributions from nonresidential fixed investment, private inventory investment, exports, and federal government spending. Imports, which are a subtraction in the calculation of GDP, increased.

The deceleration in real GDP in the first quarter reflected a larger decrease in nonresidential fixed investment, a deceleration in PCE, a downturn in federal government spending, an upturn in imports, and larger decreases in private inventory investment and in exports that were partly offset by an upturn in state and local government spending and an acceleration in residential fixed investment.

Skip the mumbo jumbo:  The Fed is printing money at 8% and the GDP is going up at one half of one percent.  Look up the word Apogee.

Know why gold and silver are alive?

Trump’s Foreign Affairs Speech

I watched the whole thing Tuesday and liked it very much.  Strength, not weakness, and very much anti-globalism.  And Pro Jobs and anti corporate tax exploiters.

The NY Times has a recap over here, but one of the organizers is panning it.

Which no doubt figures into why the corporate media is panning it, including one of the organizers.  But that was likely more knee-jerk reaction to Trumps hinting that he would clean out the nest of Neocons in the State Department, which have handed America a spectacular series of failures, and which is still firmly ensconced.

Despite the naysayers, CBS is reporting in Commentary: Yes, Donald Trump can beat Hillary Clinton.

Ted and Carly’s Not Yet Excellent Adventure

Trying to look legit:  Cruz Picks Nation’s Most Aggressive Champion of Offshoring as Vice President.

Thanks, but no thanks, Ted.  But I’m sure the GOP insiders and corporatists will love it…specially when that mean, nasty old Trump wants to bring jobs back to America and punish offshoring…

If at Second You Don’t Succeed…

North Korea rushes to re-test intermediate missile, fails again: South Korea

They seem to be “out to launch” when comes to being rocketeers.

Comments

Downer: Market’s Post-Fed, Pre-Facebook Blahs — 15 Comments

  1. I understand the downsides of Facebook, but I wouldn’t find out half the stuff I know without seeing posts about interesting things from my FB friends. And while I don’t have to take it as face value right away, it spurs me to do further investigation. I even hear about bad weather events and earthquakes on FB before the news.

    • And by interesting things, I am talking about news events, not what someone’s boyfriend did last night.

  2. I don’t care much about Facebook, quite candidly, because I don’t see the point of “social media” – other than it is a HUMONGOUS waste of time, it is almost like a self-reporting system to police (and probably political) authorities, and for sure HR departments.

    As an economic blog you could care – as an observer – for the following reasons:

    1) The money in America for 1 person to make sure does seem to be tied to entertaining others. Making posts to the ‘social media’ is a demonstrated path to ‘being discovered’ and the payout rate VS the lottery on 1st blush seems better. The ‘solo’ path of making an honest pile of bucks by making something physically tangible is a far harder path to wealth due to regulations and now robots.

    2) People like Jordan Harbenger over at The Art of Charm discusses the use of social media to advance one’s life.

    3) As you’ve spent time in advertising you know what a ‘waste of time’ that is with 80% of advertising being ineffective and 2% conversion rates being considered good. Why dump $2000 into a billboard or $2100 for radio or more than $0 into a newspaper or whatever when you can opt for $0 and be a ‘sharecropper’ on Facebook? Facebook has over 70% of the eyeballs….twitter around 20%.

    People like Paul Asadoorian have built a brand around themselves by “being social”. (and when you look at his Google+ page he left Tenable in Feb and last posted in 2014) He’s went from being publicly drunk and ranting to seemingly the upper 10% of income.

  3. I hate any social media! Regarding Sander’s success at it,imho,he has been in the gov’t for a long time,as a somewhat outsider,but for an unknown to come this far,so well,it amazes me! He’s always been outspoken,but never listened to.Some of his ideas are great,but would never pass.And if I hear another gop member try to resurrect Reagan I’ll puke! Did the world forget Iran-contra as fast as he did?

  4. How about the girl at work who won’t answer the damn phone because she’s either texting someone or other, or she’s checking her FB page, and sharing with the girl next to her what it says and having a good laugh. Social media has been yet one more tool to degrade what gets accomplished in a day’s time by one individual.

    Like everything else, it seems humans are largely unable to set limits for themselves and live within reasonable boundaries. Instead it’s pretty much balls to the wall until we puke, and then we get back up and do it again. This is literal as well as metaphoric.

    Yes, social media is meant to reach as many people as possible with the same message, hence advertisements, tweets, fwd all in email. In that respect it has done an admirable job.

    I think if you can’t look a person in the eye when you’re talking to them you should at least try to call, if it’s all that important. Otherwise it’s pretty much just blather into the ether trying to convince as many of the people too lazy to search out a conversation on their own that yours is important, and that your opinion on this particular topic is correct.

    Life is a bit too short to argue about a topic that matters not one whit in the grand scheme of things.

  5. And just how does Trump plan to “force” Carrier to come back to the US? Can you say freedom?

  6. I suggest you all take note of a comment made by Tim Cook, president of Apple, in their quarterly conference call. He said that their decline in sales was caused by world macro economic conditions.

    This means that incomes worldwide are on the decline, to the point that their market is declining in size.

    The rule in the electronics world is, if you can afford Apple, you buy Apple.

    People over 50 need not opine on this until they have consulted their grandkids. Or, if your real disposable income has increased more than 10% in the last five years.

    • The rule in the electronics world is, if you can afford Apple, you buy Apple.

      Where is THIS “rule” from? Apple ][ Forever, The Newton, Red Box, Apple /// and a few others would be examples of why one should think twice about “this rule”.

      • Agreed. That rule isn’t a rule at all. I’ve been using computers and staying close to tech advancements for the last quarter century, and have never purchased an Apple product or used one much. They makes the config/settings too difficult to get at/discern. Open source is far preferable to “locked down” Apple/Macintosh nonsense, IMHO.

    • I am over 50, and have never owned an Apple product, but I like your proviso of income change, as a rhetorical question.

      I have seen both sides of that, but have chosen to not be sucked into that stream of wealth-adverse spending.

      The other day I heard a woman remark about how surprised she was that her combined income was so much, where did it all go ? Week vacation out of the country, always recent iphone, monthly package for that for husband too, Netflix, satellite, nice boots. hmmm . . . not certain hun.

      Conspicuous consumption has been the demise of America’s middle-class as much as any other economic factor.

      • I have used apple products in the past,and to be honest,I LOVED it!But to be honest,it was in 89,on a MacII,and there was still DOS 5 or 6,so no contest.My issue at the time was that there was no software,or affordable software for it,so I never bought one

  7. George, re your disparagement of social media. The Sanders campaign wouldn’t have gotten as far as it has without it. The range of alternative news and sites creates a sense of belonging that has disappeared with the traditional (corp controlled) mass media. Yes it can be a huge time suck, but it has political and media consequences that a Yuge.

    • You have to humor George, he is actually a foreigner in the electronic culture of the country he lives in. He is also not a very social person. In all the years I have followed him, he never mentions going to the county fair or a school graduation. So social media is way out of his realm.

      • “You have to humor George, he is actually a foreigner in the electronic culture of the country he lives in. ”

        Yes.. the website(s) is good evidence of that. G knows how to use his computers to get at information, but is def a foreigner/outsider.. better informed in tech than others his age, though.

        Outsiders’ perspectives can be valuable, too.

    • It’s true that Sanders would’ve Berned-out some time ago, were it not for farcebook. It is also true that fb is an agglomeration site for “alternative news” ranging principally from neomarxist backwards to anarchist, and for hundreds of millions of bored, ignorant people of all intelligence levels.

      fb only feeds news sources which range from 1-4 on the “freedom line” (i.e. Marxist to leftist) and then, only if they tow the corporate line.

      The typical fb “post-er” or “like-er” is much more likely to post opinion content from HuffPost or Coz than Independence or AynRand, and then foist it off as “news” or “accurate.” In the old BBS and chatroom days (when online time was valuable and we paid by the minute), the posts were known as trolls or bait, the posters were known as trolls, and both were summarily ignored… Now, not so much.

      Because of this, fb and the other social sites, in addition to being the worst time sinks outside of the tv-zone, are the biggest sources of misinformation, disinformation, gossip, and propaganda in the history of the planet. It is an arena from which people, regardless of their intelligence level, are unlikely to lessen their ignorance.

      Social sites do give many people a sense of “community” or of “belonging,” but at a price. At my age and experience level, I’m not willing to sacrifice my search for accurate truth or ability to reason, for a sense of belonging. I’m sure-as-hell not willing to give Mark Zuckerberg, or anyone else, any more of my personal, potentially-marketable information than I have to, to conduct business in this modern world…