WASHINGTON, July 28, 2016 – Market averages are continuing their roughly week-long pout Thursday morning, with the Dow off roughly 0.5 percent, the S&P 500 off a fraction and the NASDAQ actually treading water, throwing off as much green ink (+ 0.14 percent) as the S&P is throwing off red.
The villains of the moment: Wednesday’s Fed minutes, which once again seemed to be plagiarizing T.S. Eliot’s dithering J. Alfred Prufrock (“‘Do I dare?’ and, ‘Do I dare?’”) when it comes to interest rate hikes; and the price of crude oil, which continues to sink like a tire with a slow but relentless pinhole leak.
Volume seems to be picking up today, but it usually does on the downside. Either the world’s central banks will step in again. as they have often done over the last quarter to thwart the sellers and quash the short-sellers. Or stocks will continue to work off their rather alarming intermediate-term overbought situation, which could give us something similar to the House of Pain investors experienced last August and September.
We didn’t write a column yesterday out of sheer boredom. But if we had, we would have noticed the continuing big news stemming from Verizon’s (symbol: VZ) winning bid for key pieces of floundering Yahoo! (YHOO). Once the biggest thing going in search engines and even online content—they were once even rumored to be interested in buying out Google (GOOG and/or GOOGL)—before relentlessly bad management and awful acquisitions permanently punctured that company’s racing tires.
To save the day, as you may recall, rapidly-sinking Yahoo! hired a blondly gorgeous, geeky Google guru named Marissa Mayer as its glamorous, first-woman-ever savior some time back, figuring her executive-level experience at the Alphabet Company would guarantee Yahoo!’s salvation, not to mention an instant replication of the Google growth curve for that long beleaguered company.
Marissa’s solution to the growth problem was to start buying as many California “unicorn” software, social networking, cloud and “whatever” companies, outrageously overpaying for each, perhaps imagining that Yahoo! possessed the growth curve—and the overflowing cash flow—of Google and figuring that the numbers didn’t matter.
Oops. They did. Next, Marissa purchased a temporary get-out-of-jail-free card by spinning off a chunk of Alibaba (BABA) in an exciting IPO, raking in a batch of cash and then promptly spent it on more ill-thought-out but allegedly synergistic unicorn acquisitions. The denouement was inevitable, foreshadowed by Yahoo!’s notorious
Christmas holiday party, a spectacular (and expensive) hubris-fest where Marissa notoriously enthroned herself as sort of a prom queen surveying her subjects from on high.
Too bad I couldn’t afford to post copy-protected pix of Yahoo!’s Last Hurrah in this article. (The one above is nabbed from a YouTube video and has no attribution.) This asinine, self-indulgent display of company-funded munificence was perhaps the finest example yet of the total disconnect between obscenely wealthy Left Bank tech elites from the rest of the country. The party—and Mayer—reminded me of Marie Antoinette, pink sheep, the eating of cake and ultimately “le déluge” that followed.
Marissa bravely opined today that in a few months, after Yahoo! is ultimately digested by Verizon and put into the corporate Waring blender with that other hubristic one-time internet king AOL, she will likely stay on as a special adviser, no doubt hoping that she’ll be able to add a massive “special adviser” consulting fee to her already outrageous tens-of-millions of dollars golden parachute.
Hopefully, Marissa will soon join that other very blonde and glamorous girl genius heartthrob, Elizabeth Holmes, on the scrap heap of young, blonde “first woman success” history. Holmes, who, as some may recall, never graduated from college, is (or was) the now-infamous founder of Theranos, the (former) blood testing firm.
With a wave of Holmes’ magic realism wand, Theranos invented and marketed an infallible and incredibly cheap omnibus medical blood testing regime that swept the cosmos with its simplicity and brilliance. This stunning innovation—the miraculous medical equivalent of cold fusion—was quickly adopted by numerous labs and wholly embraced by the now foreign-owned Walgreens pharmacy conglomerate (WBA).
As was the case for Marissa Mayer, at least early in her glamorous reign, smitten “reporters” of both genders flocked to Elizabeth to bask in the aura of her glamor and brilliance, the better to write fawning articles praising La Liz and the rising tide of heartbreakingly brilliant “first women who” would sweep the dead, white male patriarchy away, supplanting it with a brave new feminist Golden Age.
Holmes’ genius product turned out to be a fraud. It didn’t work, Theranos’ test results were, in fact, obscenely inaccurate; the FDA, perhaps initially dazzled by the glamor of this super-blonde girl genius, finally intervened. The result: Today we find Theranos and its glamor-queen disgraced and Holmes banned from the medical testing business at least for now. That’s two strikes against the blonde, girl-genius, first-woman-ever bandwagon.
One wonders: Will Hillary end up as strike three? Aside from her advanced age, she has for decades displayed all the characteristics of Mayer and Holmes—including zero ability marketed as “first-woman-ever” genius. Will her mythos also end up on the trash heap of history, along with the equally lousy, poorly researched, female Christ-the-King narratives of Holmes and Mayer? Don’t miss the next thrilling episode.
Meanwhile, lest we forget, our third heartbreaking genius of the day, a non-dead but definitely white and foreign-born male rounds out today’s diatribe. We’re talking about the greatest, most brilliant contemporary genius of them all: Elon Musk. Now rich beyond avarice, he’s blessed and enriched America with the Tesla (TSLA), the world’s most wonderful-ever electric automobile that nobody can afford (without generous taxpayer-sustained rebates); a sleek, piece of gears, software and extensive sheet metal that enthusiasts say can rival a Dodge Viper off the line while saving the planet as well.
Adding this greatly-in-demand-by-all-Americans product to his outer-space adventures and his hugely profitable solar company, SolarCity (SCTY) and…
Wait a minute. SolarCity is losing buckets of money? Tesla’s “eagerly awaited autonomous car” just killed someone? No one’s made a dime yet on that outer space venture? Now Musk—who owns most of both publicly traded companies’ shares—wants Tesla to “buy” SolarCity, further jeopardizing all the taxpayer money that’s been wasted on Tesla thus far. Seriously? How many “insiders” are on both companies’ boards?
Could all the fawning media reports on Musk’s near Newtonian genius be greatly exaggerated? If a Republican named Trump is elected president this fall, we might get to find out. If the government suddenly defunds Tesla and, by extension, SolarCity, it’s curtains for these two visitors from Cloud Cuckoo Land.
The only reason Tesla and SolarCity even exist is because we, the American taxpayers are supporting both companies with vast quantities of capital, courtesy of the Obama administration, which never met a “green”
“global warming” “climate change” huckster it didn’t love. Both Musk’s companies would have been DOA a long time ago without this massive government largess. Since when are America’s stretched taxpayers required to fund this kind of crony capitalist fraud?
Ditto, Musk’s much-ballyhooed “state of the art” battery factory, which is only being built in job-scarce Nevada because the state government there forked over a $1 BILLION (with a B) subsidy to induce Musk to build it. Watch this one go the way of the Michigan battery factory of the Obama-supported, taxpayer-funded—and now defunct—A123, which went under about two years after its IPO, with its remnants bought up for pennies by Chicom entrepreneurs.
The Maven predicts that Musk will be the next liberal icon to take an epic tumble, joining Mayer and Holmes on that growing scrap heap of history. “First-this,” “first-that” and politically correct “green” mythologies are just that: mythologies. At least in the world of business, where our nation’s economy and countless jobs are daily on the line, we need a lot more truth-in-advertising from business reporters and government taxpayer abusers alike.
Mayer and Holmes proved that being the “first” of their gender didn’t do a damned bit of good for their respective companies, which were ultimately destroyed by their overconfidence, lack of executive experience and mythology-induced hubris.
We suspect that Musk, whose lavish lifestyle is being subsidized by saps like you and the Maven, may be headed for a similar fall. The basic questions behind Musk’s green ventures in particular are these:
- Why should taxpayers subsidize a car that only the rich can afford, even with subsidies?
- Why are all-electric cars even desirable, given that they don’t “save the planet” anyway but require just as much, if not more, fossil fuel-generated electricity as we do now in order to power up their expensive electronics?
- And that all-important follow-on: Who the hell is “demanding” autonomous electric cars of the future—cars whose software guts can potentially be controlled by our ever-grasping U.S. government to rob America’s citizens of their mobility by controlling where they can go? (Memo to Apple’s Tim Cook.)
Time for folks to wake up. As anyone can see today with the confluence of costly, government-and-taxpayer subsidized crap we’ve just described, this isn’t progress we’re seeing. It’s a massive transfer of wealth to our betters, including chosen genders and geniuses. Where is it written in the U.S. Constitution that it’s the duty of the federal government to pick and choose—and fund—its pre-chosen winners over its unsubsidized losers?
We’d be all better off if we simply went back to the kind of merit-based capitalism that created the finest, wealthiest and, yes, the most egalitarian society the world has yet seen. But if we keep glorifying obvious current and future would-be failures like Mayer, Musk and Holmes, whose pie-in-the-sky ventures are sapping America of its wealth and spirit, we’ll soon end up like the late Roman Empire: sacked and utterly defeated.
As was also true for those unfortunate late-stage Romans long ago, today’s barbarians are already at our gates, as we’ve already learned in Orlando, Brussels, Paris, Munich and many other Western locales the media simply won’t report on. Time to wake up, America. Let’s stop promoting cute blondes who don’t know how to run anything, and let’s quit glorifying politically well-connected “geniuses” whose costly products no one but the wealthy can need, let alone afford.
After a huge run-up Wednesday, our Allergan preferred shares (AGN/PRA) are getting kicked in the teeth today, with rampant profit-taking the obvious villain. Who can blame them, after this stock’s phenomenal 32 point (more or less) one-day rise? We’re holding these shares until maturity in early 2018, so let the short termers scoop up the profits. We’ll make more when this issue is retired.
Everything else is looking more wobbly by the day. If Friday is off again, we may start nibbling at our favorite pair of S&P 500 short ETFs: SH (the slow-moving regular index ETF), and SDS (the double-fast leveraged short ETF). Pretty much everything is too pricey right now, although even if we run into a nasty 10 percent-plus correction, we’re inclined to keep holding our REITs and preferreds for the yield.
The Fed could scare us out of our current positions. But they punted on Wednesday—again—and we don’t think the scaremongers will start beating the drums again for another two to four weeks, at least.