Category Archives: Stocks

Are We Hitting The Wall Here?

(Sven Henrich) Are we hitting the wall? Markets. Economy. Technicals. Valuations. All appear at a key crossroads here. Last week’s 3% pullback, while in itself not seemingly dramatic, came at a very key point. Whether it is meaningful is too early to tell, but I have some eye opening data points for you that suggests it may very well turn out to be extremely meaningful.

In last weekend’s update (End Game) I highlighted the issue of market capitalization versus the underlying size of the economy. Let me dig a little deeper.

Is there a natural wall beyond which bubbles cannot go before they revert back to a more natural state of valuation? It’s a serious question especially looking at the structural context of the last few bubbles. The biggest bubbles in our lifetimes were the 2000 tech bubble, the 2007 real estate bubble and the monstrosity we are witnessing now, the central bank, cheap money bubble.

All 3 have done something unique. They have vastly accelerated asset prices above their historic track record. In 2000 and 2007 these bubbles moved stock markets wildly above the mean and investors got punished badly.

This is the chart I showed last week:

Peaks of 147% and 137% respectively. Now this bubble has arrived in full vengeance on the heels of $20 trillion in central bank intervention, a global collapse in yields and the TINA effects.

Now look closely what just happened in the past 18 months:

We keep hitting the same wall. January 2018 nearly 150% market cap to GDP and stocks got punished with a 10% correction.

Last September/October we hit a slightly lower high around 147% and stocks got hit with a 20% correction.

Now in July we hit 145%, another slightly lower high, and stocks have begun selling off again.

Is that it? Is that the valuation wall? How far and for how long can stock markets stay this far disconnected from the underlying size of the economy? All of history says: Not for very long.

Incidentally, why these slight lower highs? Because the larger stock market is weakening underneath from new high to new high. It’s what I’ve outlined with divergences and weakening participation, but neatly captured by the value line geometric index:

But the plot thickens.

The earth is not flat, despite some adherents to that fantasy, the same valuation wall can be observed across the globe (via Wordbank):

Each time market capitalizations cross the 110% mark things get iffy don’t they? Added plot twist: The world can lead in the realignment to reality process. Note the global valuation scheme peaked in 1999. US markets famously puked some more highs out into March of 2000. Well, this time around the world peaked in 2018 and since then it’s the US again squeezing out marginal new highs in 2019. Not Europe, not Asia, no, it’s the US on its own.

The earth is not flat.

The bull case from here is based on one factor alone: The Fed. I see it in every Wall Street case for new highs. The Fed is cutting, you must buy stocks. That’s it. It’s not earnings, not growth, no, Goldman is cutting earnings and growth, but raising price targets because of the Fed.

I submit to you that, while this may indeed come to fruition, it is structurally a reckless thing to do. For 2 reasons, both of which are predicated on the same thing: History.

There is no history, none, that supports stock market capitalizations above 145% of GDP for an extended period of time. None.

There is also no history, none, that’s suggests unemployment can stay this low for an extended period of time. None.

And their certainly is no history suggests that BOTH can be maintained for an extended period to time concurrently:

None. But you are welcome to believe it if you wish.

And hence, in context, Jay Powell’s comment about a ‘mid-cycle adjustment” was either disingenuous, ignorant or an outright lie.

We are here:

Looking at the yield curve, the reaction of the 10 year off of the 30+ year trend line and the basing of the low unemployment rate, does any of this suggest anything remotely close to mid-cycle? I submit to you that they don’t.

And switching to technicals, look at the trend lines in the $SPX chart above: The 2009 trend line STILL remains broken. I submit to you they jammed stocks higher in 2019 on the Fed pivot, the flip in policy, the promises of a rate cut, and the delivery of a rate cut, aided by still massive buybacks in the system. That’s it. They haven’t changed anything substantive on the economy. It’s still slowing, we still have trade wars and earnings growth remains flat to negative and there’s no growth in CAPEX or business investment.

Previous business cycles came to a sudden end when the employment picture changed trajectory, from a period of basing at the low end to shift to higher unemployment and a sudden steepening in the yield curves:

And guess what? Everything, the yield curves, the stock market valuation to GDP ratio at 145%, the Fed pivot, it all has led to here:

The magic 2.618 fib zone on $SPX (we missed it by a few handles) and exceeded it temporarily on the $DJIA:

We’ve hit walls everywhere. Technically, economically, valuation wise. To trust the Fed and to go long stocks here is to believe that none of these walls mean anything.

It’s to believe unemployment can be maintained at a historic 50 year low for an extended period of time, it’s to believe that stock market capitalization can be accelerated above a historic unproven 145% threshold for an extended period and it’s to believe in one’s ability to time any future steepening in the yield curves.

That’s a lot of believing.

I prefer seeing. And here’s what we just saw. We saw a market enter a technical risk zone that was outlined in advance:

And we saw market cleanly rejecting from that risk zone:

That doesn’t mean immediate confirmed doom and gloom, certainly not with a mere 3% from from the highs, but it speaks to the impressive confluence of technical and valuations factors that suggest that markets may be hitting the wall.

Technicals matter. Valuations matter.

For a run down on the technicals and implications please see the video below:

Source: by Sven Henrich | Northman Trader

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Hedge Fund Closures Exceed Launches For The Third Straight Quarter

Global hedge fund liquidations exceeded launches for the third straight quarter as a result of a tougher capital raising environment, according to Bloomberg.

During the first quarter of this year, about 213 funds closed compared to 136 that opened. Liquidations remained steady from the quarter prior and launches were up about 23%. 

But hedge fund startups remain under pressure due to poor performance and investors grappling with high fees. $17.8 billion was pulled from hedge funds during the first 3 months of the year, marking the fourth consecutive quarterly outflow. Additionally, the industry has seen a number of funds shut down or return capital, including Highbridge Capital Management and Duane Park Capital.

The average management fee for funds that launched in the first quarter was down 10 bps to 1.19%, while the average incentive fee increased to 18.79% from 17.9% in 2018.

Hedge funds on average were up 3% in the first quarter on an asset weighted basis, which lagged the S&P index by a stunning 10.7% with dividends reinvested over the same period. 

In May we had noted that the broader S&P 500 had trounced the average hedge fund, returning 18% YTD, and charging precisely nothing for this out performance. 

Also in late May, we documented shocking losses from Horseman Global. The fund’s losses more than doubled in April, when the fund was down a was a staggering 12%, which brought its total loss YTD to more than 25%. 

In early June, we wrote about Neil Woodford, the UK’s equivalent of David Tepper, blocking redemptions from his £3.7bn equity income fund after serial under performance led to an investor exodus, “inflicting a serious blow to the reputation of the UK’s highest-profile fund manager.”

Source: ZeroHedge

If History Still Matters, Silver Is Poised For A Huge Move

It’s been a pretty good couple of months for precious metals, but more so for gold than silver. Both are up but gold is up more, and the imbalance that this creates might be one of the major investment themes of the next few years.

The gold/silver ratio – that is, how many ounces of silver it takes to buy an ounce of gold – has bounced all over the place since the 1960s. But whenever it’s gotten extremely high – say above 80 – silver outperformed gold, sometimes dramatically.

https://www.zerohedge.com/s3/files/inline-images/bfm55B9.jpg?itok=R5jGg8Ef

As this is written, the ratio stands at almost 93x, which is not far from its record high. With precious metals finally breaking out of a five-year siesta – and the world getting dramatically scarier – it’s not a surprise that safe haven assets are catching a bid. And it would also not be a surprise if the current move has legs, as central banks resume their easing and geopolitical tensions persist.

Combine a chaotic, easy-money world with silver’s relative cheapness and the result is a nice set-up, for both the metal and the stocks of the companies that mine it. Here’s the one-month chart for First Majestic Silver (AG), a large primary silver producer. It’s up about 40%, even while silver underperforms gold. Let the metal start to outperform in the context of an overall precious metals bull run, and stocks like this will go parabolic.

https://www.zerohedge.com/s3/files/inline-images/bfm24B9.jpg?itok=AdGN9Ul2

Source: ZeroHedge

 

“On The Precipice”

Authored by Kevin Ludolph via Crescat Capital,

Dear Investors:

The US stock market is retesting its all-time highs at record valuations yet again. We strongly believe it is poised to fail. The problem for bullish late-cycle momentum investors trying to play a breakout to new highs here is the oncoming freight train of deteriorating macro-economic conditions.

US corporate profit growth, year-over-year, for the S&P 500 already fully evaporated in the first quarter of 2019 and is heading toward outright decline for the full year based on earnings estimate revision trends. Note the alligator jaws divergence in the chart below between the S&P 500 and its underlying expected earnings for 2019. Expected earnings for 2019 already trended down sharply in the first quarter and have started trending down again after the May trade war escalation.

Continue reading

The Fed, QE, And Why Rates Are Going To Zero

Summary

  • On Tuesday, Federal Reserve Chairman Jerome Powell, in his opening remarks at a monetary policy conference in Chicago, raised concerns about the rising trade tensions in the U.S.
  • The extremely negative environment that existed, particularly in the asset markets, provided a fertile starting point for monetary interventions.
  • Given rates are already negative in many parts of the world, which will likely be even more negative during a global recessionary environment, zero yields will still remain more attractive to foreign investors.
  • This idea was discussed in more depth with members of my private investing community, Real Investment Advice PRO.

(Lance Roberts) On Tuesday, Federal Reserve Chairman Jerome Powell, in his opening remarks at a monetary policy conference in Chicago, raised concerns about the rising trade tensions in the U.S.,

“We do not know how or when these issues will be resolved. As always, we will act as appropriate to sustain the expansion, with a strong labor market and inflation near our symmetric 2 percent objective.”

However, while there was nothing “new” in that comment, it was his following statement that sent “shorts” scrambling to cover.

“In short, the proximity of interest rates to the ELB has become the preeminent monetary policy challenge of our time, tainting all manner of issues with ELB risk and imbuing many old challenges with greater significance.

“Perhaps it is time to retire the term ‘unconventional’ when referring to tools that were used in the crisis. We know that tools like these are likely to be needed in some form in future ELB spells, which we hope will be rare.”

As Zerohedge noted:

“To translate that statement, not only is the Fed ready to cut rates, but it may take ‘unconventional’ tools during the next recession, i.e., NIRP and even more QE.”

This is a very interesting statement considering that these tools, which were indeed unconventional“emergency” measures at the time, have now become standard operating procedure for the Fed.

Yet, these “policy tools” are still untested.

Clearly, QE worked well in lifting asset prices, but not so much for the economy. In other words, QE was ultimately a massive “wealth transfer” from the middle class to the rich which has created one of the greatest wealth gaps in the history of the U.S., not to mention an asset bubble of historic proportions.

https://static.seekingalpha.com/uploads/2019/3/8/saupload_Household-NetWorth-GDP-030519.png

However, they have yet to operate within the confines of an economic recession or a mean-reverting event in the financial markets. In simpler terms, no one knows for certain whether the bubbles created by monetary policies are infinitely sustainable? Or, what the consequences will be if they aren’t.

The other concern with restarting monetary policy at this stage of the financial cycle is the backdrop is not conducive for “emergency measures” to be effective. As we wrote in “QE, Then, Now, & Why It May Not Work:”

“If the market fell into a recession tomorrow, the Fed would be starting with roughly a $4 Trillion balance sheet with interest rates 2% lower than they were in 2009. In other words, the ability of the Fed to ‘bail out’ the markets today, is much more limited than it was in 2008.

But there is more to the story than just the Fed’s balance sheet and funds rate. The entire backdrop is completely reversed. The table below compares a variety of financial and economic factors from 2009 to present.

https://static.seekingalpha.com/uploads/2019/3/8/saupload_Economy-Then-Vs-Now-030519.png

“The critical point here is that QE and rate reductions have the MOST effect when the economy, markets, and investors have been ‘blown out,’ deviations from the ‘norm’ are negatively extended, confidence is hugely negative.

In other words, there is nowhere to go but up.”

The extremely negative environment that existed, particularly in the asset markets, provided a fertile starting point for monetary interventions. Today, as shown in the table above, the economic and fundamental backdrop could not be more diametrically opposed.

This suggests that the Fed’s ability to stem the decline of the next recession, or offset a financial shock to the economy from falling asset prices, may be much more limited than the Fed, and most investors, currently believe.

While Powell is hinting at QE4, it likely will only be employed when rate reductions aren’t enough. Such was noted in 2016 by David Reifschneider, deputy director of the division of research and statistics for the Federal Reserve Board in Washington, D.C., released a staff working paper entitled “Gauging The Ability Of The FOMC To Respond To Future Recessions.”

The conclusion was simply this:

“Simulations of the FRB/US model of a severe recession suggest that large-scale asset purchases and forward guidance about the future path of the federal funds rate should be able to provide enough additional accommodation to fully compensate for a more limited [ability] to cut short-term interest rates in most, but probably not all, circumstances.”

In effect, Powell has become aware he has become caught in a liquidity trap. Without continued “emergency measures” the markets, and subsequently economic growth, cannot be sustained. This is where David compared three policy approaches to offset the next recession:

  1. Fed funds goes into negative territory, but there is no breakdown in the structure of economic relationships.
  2. Fed funds returns to zero and keeps it there long enough for unemployment to return to baseline.
  3. Fed funds returns to zero and the FOMC augments it with additional $2-4 Trillion of QE and forward guidance.

This is exactly the prescription that Jerome Powell laid out on Tuesday, suggesting the Fed is already factoring in a scenario in which a shock to the economy leads to additional QE of either $2 trillion, or in a worst-case scenario, $4 trillion, effectively doubling the current size of the Fed’s balance sheet.

This is also why 10-year Treasury rates are going to ZERO.

Why Rates Are Going To Zero

I have been discussing over the last couple of years why the death of the bond bull market has been greatly exaggerated. To wit:

“There is an assumption that because interest rates are low, that the bond bull market has come to its inevitable conclusion. The problem with this assumption is three-fold:

  1. All interest rates are relative. With more than $10-Trillion in debt globally sporting negative interest rates, the assumption that rates in the U.S. are about to spike higher is likely wrong. Higher yields in U.S. debt attracts flows of capital from countries with negative yields which push rates lower in the U.S. Given the current push by Central Banks globally to suppress interest rates to keep nascent economic growth going, an eventual zero-yield on U.S. debt is not unrealistic.
  2. The coming budget deficit balloon. Given the lack of fiscal policy controls in Washington, and promises of continued largesse in the future, the budget deficit is set to swell back to $1 Trillion or more in the coming years. This will require more government bond issuance to fund future expenditures which will be magnified during the next recessionary spat as tax revenue falls.
  3. Central Banks will continue to be a buyer of bonds to maintain the current status quo, but will become more aggressive buyers during the next recession. The next QE program by the Fed to offset the next economic recession will likely be $2-4 Trillion which will push the 10-year yield towards zero.”

It’s item #3 that is most important.

In “Debt & Deficits: A Slow Motion Train Wreck”, I laid out the data constructs behind the points above.

However, it was in April 2016, when I stated that with more government spending, a budget deficit heading towards $1 Trillion, and real economic growth running well below expectations, the demand for bonds would continue to grow. Even from a purely technical perspective, the trend of interest rates suggested at that time a rate below one percent was likely during the next economic recession.

https://static.seekingalpha.com/uploads/2019/6/7/saupload_10-yr-interest-rates-bollingerbands-060419.png

Outside of other events such as the S&L Crisis, Asian Contagion, Long-Term Capital Management, etc. which all drove money out of stocks and into bonds pushing rates lower, recessionary environments are especially prone at suppressing rates further. But, given the inflation of multiple asset bubbles, a credit-driven event that impacts the corporate bond market will drive rates to zero.

Furthermore, given rates are already negative in many parts of the world, which will likely be even more negative during a global recessionary environment, zero yields will still remain more attractive to foreign investors. This will be from both a potential capital appreciation perspective (expectations of negative rates in the U.S.) and the perceived safety and liquidity of the U.S. Treasury market.

Rates are ultimately directly impacted by the strength of economic growth and the demand for credit. While short-term dynamics may move rates, ultimately, the fundamentals, combined with the demand for safety and liquidity, will be the ultimate arbiter.

With the majority of yield curves that we track now inverted, many economic indicators flashing red, and financial markets dependent on “Fed action” rather than strong fundamentals, it is likely the bond market already knows a problem in brewing.

https://static.seekingalpha.com/uploads/2019/6/7/saupload_Inverted-Yield-Curve-060419.png

However, while I am fairly certain the “facts” will play out as they have historically, rest assured that if the “facts” do indeed change, I will gladly change my view.

Currently, there is NO evidence that a change of facts has occurred.

Of course, we aren’t the only ones expecting rates to go to zero. As Bloomberg noted:

“Billionaire Stan Druckenmiller said he could see the Fed funds rate going to zero in the next 18 months if the economy softens and that he recently piled into Treasuries as the U.S. trade war with China escalated.

‘When the Trump tweet went out, I went from 93% invested to net flat, and bought a bunch of Treasuries,’ Druckenmiller said Monday evening, referring to the May 5 tweet from President Donald Trump threatening an increase in tariffs on China. ‘Not because I’m trying to make money, I just don’t want to play in this environment.'”

It has taken a massive amount of interventions by Central Banks to keep economies afloat globally over the last decade, and there is rising evidence that growth is beginning to decelerate.

While another $2-4 Trillion in QE might indeed be successful in further inflating the third bubble in asset prices since the turn of the century, there is a finite ability to continue to pull forward future consumption to stimulate economic activity. In other words, there are only so many autos, houses, etc., which can be purchased within a given cycle.

There is evidence the cycle peak has been reached.

If I am correct, and the effectiveness of rate reductions and QE are diminished due to the reasons detailed herein, the subsequent destruction to the “wealth effect” will be far larger than currently imagined. There is a limit to just how many bonds the Federal Reserve can buy and a deep recession will likely find the Fed powerless to offset much of the negative effects.

If more “QE” works, great.

But, as investors, with our retirement savings at risk, what if it doesn’t?

Source: by Lance Roberts | Seeking Alpha

The Fall Of Facebook Has Only Just Begun

Their platform is broken and neither human nor machine can fix it.

Even after losing roughly a third of its market cap, it still may prove one of the great shorts of all time.

https://www.zerohedge.com/s3/files/inline-images/1_HagRF3FUkll6wLqx0bcLmA.jpeg?itok=pPpNa24c

(ZeroHedge) “There’s no mental health support. The employee suicide rate is extremely high,” one of the directors of the documentary, “The Cleaners” told CBS News last May. The film is an investigative look at the life of Facebook moderators in the Philippines. Throughout his 2018 apology tour, Mark Zuckerberg regularly referenced the staff of moderators the company had hired as one of two key solutions — along with AI — to the platform’s content evils. What he failed to disclose is that the majority of that army is subcontractors employed in the developing world.

For as long as ten hours a day, viewing as many as 25,000 images or videos per day, these low-paid workers are buried in the world’s horrors — hate speech, child pornography, rape, murder, torture, beheadings, and on and on. They are not experts in the subject matter or region they police. They rely on “guidelines” provided by Facebook — “dozens of unorganized PowerPoint presentations and Excel spreadsheets with bureaucratic titles like ‘Western Balkans Hate Orgs and Figures’ and ‘Credible Violence: Implementation standards’,” as The New York Times reported last fall. The rules are not even written in the languages the moderators speak, so many rely on Google Translate. As a recent op-ed by John Naughton in The Guardian declares bluntly in its headline, “Facebook’s burnt-out moderators are proof that it is broken.”

As we noted in last week’s issue, 41 of the 53 analysts tracked by Bloomberg currently list Facebook as a buy, with “the average price target… $187, which implies upside of nearly 36%.” That optimism springs from a basic assumption: the company’s monopolistic data dominance means it can continue extracting more from advertisers even if controversy after controversy continues to sap its user growth. Given the depth and intractability of Facebook’s problems, this is at best short-sighted.

The platform’s content ecosystem is too poisoned for human or machine moderators to cleanse. Users are fleeing in droves, especially in the company’s most valuable markets. Ad buyers are already shifting dollars to competitors’ platforms. Governments are stepping up to dramatically hinder Facebook’s data-collection capabilities, with Germany just this week banning third-party data sharing. The company is under investigation by the FTC, the Justice Department, the SEC, the FBI, and several government agencies in Europe. It has been accused by the U.N. of playing a “determining role” in Myanmar’s genocide. An executive exodus is underway at the company. And we believe, sooner or later, Facebook’s board will see no option but to remove Sheryl Sandberg and Mark Zuckerberg.

The market is drastically underestimating the peril the company is in. In the very short term, the user backlash may simply hinder its revenue growth. In the longer-term, however, the institutionalized failure to see and respond to the platform’s downsides may render Facebook the Digital Age’s Enron — a canonized example of how greed and corruption can fell even the mightiest.

According to data recently released by Statcounter, Facebook’s global social media market share dropped from 75.5% in December 2017 to 66.3% in December 2018. The biggest drop was in the U.S., from 76% to 52%. As Cowen survey results released this week suggest, these engagement declines will continue to depress the company’s earnings. Surveying 50 senior U.S. ad buyers controlling a combined $14 billion in digital ad budgets in 2018, 18% said they were decreasing their spend on Facebook. As a result, Cowen estimates the Facebook platform will lose 3% of its market share.

No doubt Facebook’s struggles are not just about the headline scandals. For years, one innovation priority after another has fallen flat, from VR to its video push to its laggard position in the digital-assistant race. The company’s most significant “innovation” success of the past few years was copying the innovation of a competitor — pilfering Snapchat’s ephemerality for its “moments” feature.

However, it’s the scandals that have most crippled the company’s brand and revealed the cultural rot trickling down from its senior ranks. Consider just the most-sensational revelations that emerged in 4Q18:

  • Oct. 17: The Verge reports that Facebook knew about inaccuracies in the video viewership metrics that it provided to advertisers and brands for more than a year. “The inflated video views led both advertisers and media companies to bet too much on Facebook video.”
  • Nov. 14: The New York Times publishes an investigative report that reveals Facebook hired a conservative PR firm to smear competitors and minimize the company’s role in Russia’s 2016 election meddling.
  • Dec. 5: British lawmakers release 250 pages of internal Facebook emails that show that, “the company’s executives were ruthless and unsparing in their ambition to collect more data from users, extract concessions from developers and stamp out possible competitors,” as The New York Times reported.
  • Dec. 14: Facebook reveals that a bug allowed third-party app developers to access photos people may not have shared publicly, with as many as 6.8 million users potentially affected.
  • Dec. 17: Two Senate reports reveal the shocking extent of Russia’s efforts on social media platforms during the 2016 election, including the fact thatInstagram was their biggest tool for misinformation.
  • Dec. 18: The New York Times reports that Facebook gave the world’s largest technology companies far more intrusive access to user data than previously disclosed, including the Russian search firm Yandex.
  • Dec. 20: TechCrunch reports that, “WhatsApp chat groups are being used to spread illegal child pornography, cloaked by the app’s end-to-end encryption.”
  • Dec. 27: The New York Times obtains 1,400 pages of Facebook’s moderation guidelines and discovers an indecipherable mess of confusing language, bias, and obvious errors.

Scandal after scandal, the portrait of the company is the same: Ruthlessly and blindly obsessed with growth. Overwhelmed by that growth and unwilling to take necessary steps to compensate. Willing to lie and obfuscate until the truth becomes inescapable. And all the time excusing real-world consequences and clear violations of user and client trust because of the cultish belief that global interconnectedness is an absolute good, and therefore, Facebook is absolutely good.

The scale of Facebook’s global responsibility is staggering. As Naughton writes for The Guardian:

Facebook currently has 2.27bn monthly active users worldwide. Every 60 seconds, 510,000 comments are posted, 293,000 statuses are updated and 136,000 photos are uploaded to the platform. Instagram, which allows users to edit and share photos as well as videos and is owned by Facebook, has more than 1bn monthly active users. WhatsApp, the encrypted messaging service that is also owned by Facebook, now has 1.5bn monthly active users, more than half of whom use it several times a day.

Relying on tens of thousands of moderators to anesthetize the digital commons is both inadequate, and based on the reported working conditions, unethical and exploitative. AI is not the solution either, as we explored in WILTW April 12, 2018. According to Wired, Facebook has claimed that 96% of the adult and nude images users try to upload are now automatically detected and taken down by AI. That sounds like a success until you consider that that error rate means 1.3 million such images made it to the public in the third quarter of 2018 alone (30.8 million were taken down).

In fact, the company has acknowledged that views with nudity or sexual content have nearly doubled in the 12 months ending in September. And detecting nudity is a far easier task for a rules-based algorithm than deciding the difference between real and fake news, between hate speech and satire, or between pornography and art.

Facebook has economically and culturally empowered hundreds of millions of people around the world. It cannot be blamed for every destabilized government, war, or murder in every region it operates. However, more and more, it’s clear that one profit-driven platform that connects all of the world’s people to all of the world’s information — the vision Zuckerberg has long had for his invention — is a terminally-flawed idea. It leads to too much power in the hands of too few. It allows bad actors to centralize their bad actions. And it is incompatible with a world that values privacy, ownership, and truth.

Governments are waking up to this problem. So is the public. And no doubt, so are competitive innovators looking to expand or introduce alternatives. Collectively, they will chip away at Facebook’s power and profitability. Given the company’s leaders still appear blinded by and irrevocably attached to their business model and ideals, we doubt they can stave off the onslaught coming.

Source: ZeroHedge

This Time Is Different

Bubble Burst? Smart Money Flow Index Continues To Decline To 1995 Levels

The Smart Money Flow Index, measuring the movement of the Dow in two time periods: the first 30 minutes and the last hour, has just declined AGAIN.

https://confoundedinterestnet.files.wordpress.com/2018/11/smartdow.png

The Smart Money Flow Index, like the DJIA, has been around for decades. But it has just fallen to the lowest level since 1995.

https://confoundedinterestnet.files.wordpress.com/2018/11/smfdow31.png

Is the asset bubble starting to burst? Or is it just one lone indicator getting sick?

https://confoundedinterestnet.files.wordpress.com/2018/11/008-sick-of-this-party-2132469.jpg

Source: Confounded Interest