Google

Google's post Q1 earnings reaction is one of the most blatant examples of nearsightedness I have seen for awile, rivaling the S&P AAA rating of subprime NINJA loan CDS writing monoliness using 120x leverage at the top of the housing market in 2007.

There are many ways this can end badly and only a few it can end well.

Judging from the relative volatility and the extremely wide holdings of this find company with a near cult like following, if price action breaks it will break very hard - and this time there may be fundamental justification for it.

Google's Android is now the undisputed top selling mobile OS in the world, unseating Research in Motion's Blackberry, Apple's iOS and Nokia's Symbian/MeeGo in record time. Being that Android is essentially a front end to Google's cloud services and apps, does this mean that Google now has (or soon will have) more application reach than Microsoft - the world's largest software company? Pretty good performance for a search engine, eh?

In lieu of a credible macroeconomic data reporting infrastructure in America, increasingly more people are forced to resort to secondary trend indicators, most of which have zero economic "credibility" within the mainstream, yet which provide just as good a perspective of what may be happening behind the scenes in this once great country. A good example was a recent Gallup poll, which contrary to all expectations based on a now completley irrelvant and thoroughly discredited ADP number, which led some br(j)okers such as the Barclays Insane Predictions Team to speculate a 580,000 NFP number was in the books, indicated that the jobless situation barely improved in December. Sure enough, this was promptly confirmed by the January 7 NFP number. And so, in looking for a variety of other "off the grid" economic indicators we read a recent report by Nicholas Colas, which proves to us that we are not the only 'nerdy' entity out there increasingly searching for metrics that have some rooting in reality, and not in the FASB-BLS-Census Bureau joint ventured never-never land. And while we recreate the key points from the report, the one item that should be highlighted is that, as we have suspected for a while, the social undertow of fear, skepticism and anger is coming to a boil, as Google queries of the "Buy A Gun" search querry have just hit an all time high. How much of this is due to the recent events from Tucson, AZ is unclear. What is clear is that the trend is most certainly not your friend (unless you are of course the CEO of Smith and Wesson).

Google trading in afterhours is like a ritalin-fueled, amphetamine-infused roller coaster ride. After opening $25 higher, the stock subsequently turned red. And while results were great, the executive shake up which sees Eric Schmidt becoming Chairman and Larry Page CEO is spooking the stock. Perhaps that explains why GOOG has been one of the biggest insider sellers in past months...

As Zero Hedge wrote earlier, following revelations that the DOJ was going through line items of private data, including personal financial information on Twitter, WikiLeaks has demanded that Goldman darling Facebook as well as the firm that "does no evil" Google reveal any subpoenas they may have received, if any. And all signs point to yes: after all why would the DOJ go after just Twitter which is not a repository of any notable private data, unlike the other companies, one of which already has been in much hot water in the past due to its privacy policy, and especially now that Goldman's SPV has full access to who knows what information: courtesy of the brain dead parasitic zombies at the SEC nobody knows just who knows what vis-a-vis Goldman's "private placement." And since a positive answer will most likely not do anything good for the brand reputation of either firm, as it will be spun in the way that these firms not only did not disclose an incursion in user privacy, but only did so following a fluke act by Twitter, and may well be working behind the scenes with who knows who else on providing gobs of private data on a silver platter to whatever is the government's witch hunt organization du jour, then maybe, just maybe, the world's infatuation with MySpace v2 (and Friendster v3) may finally start to wane, explaining why just as there are buyers, no matter how wealthy and sophisticated, in Goldman's latest PR fiasco, so there are sellers, who just happen to be wealthier and more sophisticated.

Its a new day and age where high barrier to entry business models in media simply don't work. The Magic of the Internet eliminates said barriers. It would behoove those in these shops to come to this realization and truly embrace the magic of distributed computing in lieu of trying to force the genie back into the bottle, replete with all of its accompanying magic.

Thought we'd make an evergreen on zero hedge out of this discussion about the future of content with my composer brother Michael Whalen that we published today in The IRA. Happy, safe and prosperous New Year to all. Oh, and to my friends in Japan: "Tora! Tora!,Tora!"

A few days back we asked whether if as part of the now certain Irish austerity package, the imminent rise in the corprate tax rate for offshore companies based in Ireland would result in a crunch in the bottom line for US corporations such as Google. Now that a hike from the prevailing 12.5% rate is inevitable, US companies have launched an offensive to make it clear that only Irish citizens will be subject to the critical austerity measures. The Telegraph reports that "the Irish government has been given a stark warning from some of the biggest American companies in Ireland on the risk of a mass exodus if the country's low corporation tax rate is raised." If companies, which are purely circumventing much higher US corporate tax rates, also have to share the burden, they will simply depart from the already insolvent country, leaving it with even less tax revenues, thus accelerating the toxic loop of greater insolvency coupled with even less revenue. And since the IMF is backed primarily by the US, which is end-domicile to the bulk of the corporations in question, it is obvious that corporations have all the leverage and will most certainly get their wishes, further widening the chasm between the "corporation" and the simple Guiness-drinking, potato chewing peasant. In the brave new world, the pursuit of life, liberty and happiness appliues only financiers and corporations. Everyone else has been relegated to footnote status.

The video of the infamous collision between Japanese coastguard vessel and a Chinese fishing boat off the disputed Diaoyu or Senkaku Islands in September was recently leaked and surfaced on YouTube.

We first discussed the topic of cash repatriation (or lack thereof) about a month ago. Since then, more and more seem to be waking up that of the over $1 trillion in cash on the corporate "balance sheet" not only is most of it unusable domestically (without being taxed at the marginal tax rate upon repatriation), but that companies are effectively boosting earnings by not paying taxes (money which should be going to the US coffers to pay for the same corporate friendly policies enacted by the government, that is currently being funded almost exclusively by individual taxpayers, and the Fed of course). And massively so. An expose in Bloomberg details how courtesy of various, perfectly legal, tax avoidance schemes, Google's effective tax rate is 2.4%, which has resulted in $60 billion in less taxes paid to the US, and which has boosted the company's stock price by a whopping $100/share!

Google's earnings surprised everyone except BoomBustBlog readers and subscribers - and this is most likely just the beginning.

The NBER tried to pull a fast one on America a few weeks back when out of the blue it concluded that the recession ended in June 2009. Alas, Google Trends shows otherwise. The attached chart demonstrates the average use of the terms "food stamps", "I need a job", "unemployment claim" and "government assistance" via google trends. Either Americans are really clueless and are completely unable to get the memo that it is now all clear to spend, spend, spend, or the BLS, as John Lohman has suggested, aka the US version of the Ministry of Truth has infiltrated the corpulent and proud NBER Ph.D.s flagbearers.

Eric Schmidt, Google CEO, claims that Android is making money and envisions a potential $10 billion market. However, despite the impressive Android number, keep in mind that the free open source means zero revenue for Google. So in order to evaluate if Android will be the next big revenue stream for Google, one needs to get past the initial excitement arising out of the handsets growth projection.