Honest price discovery is essential to capitalist prosperity since it is the miraculous mechanism by which capital is raised from savers and investors and efficiently allocated among producers, entrepreneurs and genuine market-rate borrowers. What the central banks have generated, instead, is a casino that is blindly impelled to churn the secondary capital markets and inflate the price of existing assets to higher and higher levels - until they ultimately roll-over under their own weight. The Easy Button addiction of our central bankers is thus not just another large public policy problem. It is the very economic and social scourge of our times.
One look at the charts below and one should start wondering just how viable is social media any more as a business model.
"Twitter has likely the greatest array of company-specific catalysts of any company in its sphere this year, including Periscope, core monthly active user (MAU) acceleration from the Google partnership, and new core features like embedded video.... building out the "tail" should allow Twitter to grow well-above average over the next several years. With a global ad load between 1% to 2% and 85% from mobile, we think TWTR has more revenue runway than any other company in the Internet space. Our target is $55."
Well, the leak (which ironically came out on Twitter only, and not Facebook) was right, and the full story is even worse than Selerity reported:TWITTER 1Q LOSS PER SHARE 25C; TWITTER INC 1Q ADJ. EPS 7C , EST. 4C.
That much we knew. Here is where it gets worse:
- TWITTER 1Q REV. $ 435.9M, EST. $456.2M
- TWITTER SEES 2Q REV. $470M TO $485M, EST. $538.1M
- TWTR SEES YR REV $2.170B-$2.270B, SAW $2.3B-$2.35B, EST $2.37B
And now perhaps someone will ask how much of Facebook's 1.4 billion "users" are actually real.
When we first exposed in February how yet another bank - Bank of America - has been quietly preserving the post Glass-Steagall world in which cash depositing taxpayers are on the hook for a bank's stupidity, some shrugged it off and looked to stress test to solve all the problems. However, it appears - for once - the SEC is not willing to just ignore the bank's actions. Just as JPMorgan's CIO Office, aka the London Whale, took advantage of fungible, taxpayer-insured funding in the form of excess US deposits over loans, to corner the US credit market (in what was clearly a directional prop trade); so, as WSJ reports, The SEC is investigating whether BofA broke rules designed to safeguard client accounts, potentially putting retail-brokerage funds at risk in order to generate more profits using large complex trades.
It had been a relatively good quarter so far when it comes to leaked earnings... until moments ago when website scouring service Selerity managed to sniff out Twitter results, and they are not pretty.
The sudden closure of Corinthian Colleges' remaining campuses has displaced some 16,000 students. If all of their student debt is canceled — which is possible — it will cost taxpayers more than $200 million. With the government cracking down on the for-profit education space and with nearly 90% of students at for profit-colleges dependent on loans, the demise of the for-profit model could end up costing taxpayers quite a pretty penny.
Thus, the mistaken conceit of monetarism is on full display, especially in Japan, as they boil down their efforts to substitute financial wealth for true wealth as if they could simply conjure industrious creation from nothing. And Japan is proving useful as the full and complete refutation of every facet of such a notion, even if the mainstream resists so far confessing it.
It was all too easy to see the devastation unleashed on Baltimore last night as angry protesters showed their disgust at the police by burning, breaking, and looting their city; and give up hope for America's future. But there was a bright spot... a sign that people really do know right from wrong...
"An 'oil-debt nexus' could create a vicious circle whereby overindebted companies pump more oil to ensure they can pay interest on their loans, adding to the current global oil glut, and further depressing energy prices," WSJ notes, citing a BIS report. The interplay between the industry's growing debt pile and falling prices is a microcosm of the deflationary dynamic that’s taking hold in the macroeconomy and that serves, in Citi's words, to destroy creative destruction, creating "zombies" along the way.
It's difficult to estimate the quantity of our work devoted to data-shuffling compliance with and enforcement of perverse regulations and neofeudal menial-servitude to the top 10%, but shall we start with 40% and go from there?
It appears the banana-stand guy has more than a few friends...
The European Parliament continues to surprise as the parliamentarians got to vote on raising their own paycheck (always a good idea). The best thing about the story is that not everyone voted in favor; but most did... and the numbers are stunning. Given all their failures over the last decade, why would anyone, any country, want to have these people take their decisions for them?
Earlier today the US Census released its latest quarterly data, which confirmed that for what is left of America's middle class, owning a home has become virtually impossible, with the homeownership rate tumbling from 64.0% to 63.7%, which is tied for the lowest historic print since the first quarter of 1986, with the only difference that then the trendline was higher. Now, as can be seen on the chart below, it isn't. At this rate, by the end of the 2015 and certainly by the end of Obama's second term, the US homeownership rate will drop to the lowest in modern US history.