The Market Ticker
Commentary on The Capital Markets

In a word, meh.

Verizon churn was up some, postpaid getting hit a bit too.  Am I impressed with this?  No, as I pointed out this is now a mature business and therefore all you're doing is eating one another.  Not a growth industry folks, period.

How about Apple?  The market loves the "China Story."  Uh huh -- how about iPADs?  Down big sequentially and on an annualized basis, which is bad news.  Yes, China had a lot of shipments but they were of the lower-priced products so ARPU was down.  How do you spell "commodity product and margin compression" again?  Of course Wall Street needs a "story", so it gets pumped by $40, then just to play the game the company announces a split.  Big deal.  If you have gotten some of your sore butt back overnight I certainly wouldn't be looking to commit more capital on this mess.

Qualcomm.  Uh, yeah.  What goes into all the mobile products at the build level?  Uh, yes.  Do you like their numbers?  Not me, and neither does the market.  Then there's the Wells Notice.

Facebook.  You want to cheer this one?  Get out.  First, the gains are bleeding back off and it is now under where it opened.  Second, the stock was priced for perfect and yet what you got wasn't, and worse, the forward story is less growth.

No, no and no.  Not at this multiple.  The CFO leaving isn't a good story either irrespective of the spin.

How long will the hype machine -- and Cramer's screaming -- keep levitating prices?

We'll see, but if I had been long any of the big poppers this morning (I wasn't) I would have been out before the bell with my money and enjoying the beer at the local bar.

My money is on these "pops" bleeding back off within a week, and then there's Netflix which has now lost almost all of it's earnings pop as of this morning.

Look out below folks.


View this entry with comments (registration required to post)

Ah, this is an interesting discussion and happens to point out one of the logical fallacies that often is brought up by various pundits.

So could we make marriages stronger by making it harder to exit? Keep people together who rush into divorce court instead of waiting out a temporary spell of unhappiness?

Maybe. But we should be cautious about assuming that this would definitely make marriage stronger. As with so many rule changes, it might have the opposite of the intended effect. To see why, consider European labor markets.

Megan goes on to talk about the laws passed in Europe that made it very hard to fire someone.  What they also did was make it very hard to get a job in the first place, since it would be very hard to fire you later.

This, Megan argues, is something to "consider" in the debate about making divorces harder to get -- because it may discourage people from getting married.

Unlike employment, however, what Megan fails to demonstrate is that this disincentive to get married in the first place would be undesirable.

It's pretty hard to argue that making employment more difficult to come by is a socially-desirable outcome.  But it's not hard at all to argue that raising the bar for entering marriages is in fact a social good!

Further, there is a second-order effect involved here that Megan ignores entirely -- the fact that by getting rid of or severely curtailing "no fault" divorces those people who really want to leave a marriage simply because "they don't love the other person any more" will wind up with a disproportionate share of the cost in splitting up the marriage.

Why is that, pray tell, bad?

Isn't the entire premise of marriage sold as a contract?  And isn't the premise of a contract that when you wish to break it unilaterally that there is some price associated that more-largely (or even exclusively!) falls on you?

Today that is clearly not the case.  And it is also clear that the divorce rate has risen.  What's not clear is necessarily causation between the two, but it's reasonable to infer there might be a connection there, yes?  I think so.

Where else do we see this sort of thing?  Everywhere!

College education and cost anyone?  It's expensive.  People can't afford to go.  But college is universally good, we're told, so we extend lots of loans and other gib-gab to make it possible for "everyone" to attend.

Is it universally good to go to college?  I don't know, but I suspect not.  What I do know is that we seem to have a shortage of people in skilled trades these days and it's damned hard to outsource plumbing or electrical work to India, isn't it?


And finally, I want to point out one other logical fallacy of Megan's, which is disturbing to me:

In short, the legal system of yesteryear didn’t have to worry that harsh divorce laws would discourage marriage entirely; any marriages that they did discourage probably shouldn’t have happened. But people would continue to get married, because there wasn’t any viable alternative for the majority of people who wanted to live on their own and raise a family without the neighbors talking -- or calling the vice squad. 

So what we have instead is a system where fully half or more of the people don't get to raise a family because after they have the kid(s) easy divorce means that one of them gets to make off with the kid(s) for the majority of the time and one also gets the majority of the bill -- and often those are different people.

That, people wish to argue, is a superior outcome?

I argue it is not.

View this entry with comments (registration required to post)

Come and get it; ~13 minutes in!

View this entry with comments (registration required to post)

Gee, am I supposed to be surprised by this?  smiley

Several states have recently implemented laws requiring the collection of sales tax on online purchases. In practice, however, only has been affected. We find that households living in these states reduce Amazon expenditures by 9.5%, implying an elasticity of –1.3. We find the effect to be more pronounced for large purchases, for which we estimate an elasticity of –3.2.

So essentially 10% of Amazon's business disappears where they have to collect sales tax, and large purchases are close to three times as negatively-impacted as smaller items!

Now who has been talking about this is going to be massively material to them as it rolls out nationally?  Uh, yep.


Source: Copyrighted NBER Working Paper Series, #20052

View this entry with comments (registration required to post)

An interesting case is being heard in the Supreme Court regarding the start-up "Aereo."

For those who are unaware of them they put up thousands of dime-sized antennas that can receive broadcast television stations.  You rent one of the antennas and the electronics necessary to turn the signal it receives into a digital stream that you can watch from anywhere.

Broadcasters and content providers sued them, arguing copyright infringement.

Uh, not so fast Kemosabe which is why this is at the US Supreme Court.

A broadcaster uses public airwaves and in exchange for their license to use a limited and public resource they are required to broadcast using specific standards and methods.  Note that this does not necessarily preclude using encryption; that depends on the specifics of the license.  For example, on HAM Radio bands (I'm a licensed HAM) it is illegal to use any form of code; your transmissions must not only meet certain technical requirements so as to avoid interference with other users on different frequencies but you must also use plain language with the only exception being for commonly-known shorthands (e.g. "CQ", "73", etc.)  On parts of the band where "digital" emissions are permitted you have to use a documented and publicly-known encoding so anyone who cares to can decode and understand your transmission (you can find me, W3KSD, lurking around on PSK31 once in a while; it's an interesting technology.)  But over-the-air encrypted signals are not new; when I was growing up we had a TV station that during the daytime broadcast an open and clear signal but at night it shifted to an encrypted one that required a box to decode and view.  In addition there are a number of other commercial bands for various radio services (think WiFi for just one example) where encryption is perfectly legal.

The problem the broadcasters have is that there is not "copying and redistribution" happening in the traditional sense.  It's legal to use a DVR on an over-the-air signal you receive as well as to use something like a Slingbox to watch the signal somewhere other than at your house; what the broadcasters are effectively trying to argue is that these devices are unlawful!

IMHO they should fail in that argument and thus their complaint against Aereo fails.  If I can do a thing legally then I can by extension pay an agent to assist me in doing the same thing; that's one of the fundamental realities of freedom and commerce whether the broadcasters like it or not.

It will be interesting to see how this case is decided and the logical path taken to that resolution; I'm especially interested in whether the Supremes torture the English language once again in trying to craft a contrived response.

IMHO the decision on this case is simple -- the underlying conduct, that of receiving an unencrypted broadcast in a given market -- is lawful and in fact exactly what was contemplated by both the broadcaster and the terms of their license to use the spectrum they occupy.

The fact that I pay an agent to install an antenna for me (by leasing same) for my singular, exclusive use during a given period of time doesn't change the essence of the underlying and lawful act.

View this entry with comments (registration required to post)

Main Navigation
Full-Text Search & Archives
Archive Access
Get Adobe Flash player
Legal Disclaimer

The content on this site is provided without any warranty, express or implied. All opinions expressed on this site are those of the author and may contain errors or omissions.


The author may have a position in any company or security mentioned herein. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

Market charts, when present, used with permission of TD Ameritrade/ThinkOrSwim Inc. Neither TD Ameritrade or ThinkOrSwim have reviewed, approved or disapproved any content herein.

The Market Ticker content may be reproduced or excerpted online for non-commercial purposes provided full attribution is given and the original article source is linked to. Please contact Karl Denninger for reprint permission in other media or for commercial use.

Submissions or tips on matters of economic or political interest may be sent "over the transom" to The Editor at any time. To be considered for publication your submission must include full and correct contact information and be related to an economic or political matter of the day. All submissions become the property of The Market Ticker.