The Market Ticker
Commentary on The Capital Markets
2017-10-18 07:00 by Karl Denninger
in Market Musings , 243 references
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Never take credit for a stock market bubble.

Why not?

Because when it pops, and it always does, you own it.

Good luck President Trump.  You're gonna need it.

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2017-10-17 16:18 by Karl Denninger
in Musings , 58 references
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Come and get it!

Video Here!

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2017-10-17 10:56 by Karl Denninger
in Foreign Policy , 395 references
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Oh, you want some Russian interference eh?

How about bribery and extortion?

Before the Obama administration approved a controversial deal in 2010 giving Moscow control of a large swath of American uranium, the FBI had gathered substantial evidence that Russian nuclear industry officials were engaged in bribery, kickbacks, extortion and money laundering designed to grow Vladimir Putin’s atomic energy business inside the United States, according to government documents and interviews.

So tell me, Mr. Swamp Drainer, why isn't this being prosecuted by Jeff Sessions, why hasn't the "ownership" that was "negotiated" voided (under due process of law, of course) as the fruit of a poison tree and why isn't this all over the front page of the paper with both Hillary and Holder sitting in the ****ing dock right now?

Spare me Mr. So-called Swamp-Drainer Trump.

YOU LIE, just like everyone before you.

Oh, and while you're at it lock that ********** Obama up too.

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2017-10-17 10:42 by Karl Denninger
in Company Specific , 198 references
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You have to love the insanity that's being touted all over the street this morning.

Here's the bottom line folks: Netflix is not "buying" content, they're (for the most part) leasing it at ever-increasing cost.  That cost in terms of negative cash flow is rising rapidly as they acquire customers.

This is a ponzi scheme that is "hidden" by GAAP abuse; in other words, they can report "earnings" under GAAP that do not reflect the fact that on a cash flow basis they're bleeding from the ass.

If you buy plant with said money like this then you have a permanent (ex depreciation) asset.  But Netflix isn't doing that, and further, once someone has watched a given show they've watched it, which means that said customer probably won't pay to see it again.

That is for the current customer base the "value" of the content produced that they've already been exposed to is very close to zero.  Said content is only valuable to new customers who haven't yet seen it.  As new content is produced it has value to a customer once.

Here's the problem: The amount of money they're spending to develop and license this content is accelerating rapidly, and the negative cash flow is also accelerating rapidly.  They are doing this because for existing customers they have to or there's nothing "new" for said customer to watch.  Yet they don't have an asset in most cases, they leased said content instead of developing and owning it themselves.

There is a point at which this goes severely negative on the firm but they'll never get there; it's like going into a black hole.  You never actually get to the singularity before you die; you're ripped into sub-atomic particles first.  Likewise the street will eventually realize that this is an exponential cost curve with a linear, and terminal point on customer acquisition and eyeball time.  That is, you can only watch Netflix so many hours in a day and there are only so many humans, so if you produce more than those hours of watchable shows some is wasted on said customer because he can't watch it.  That content doesn't result in a ratable amount of revenue; it's "contribution" to revenue is zero for that particular customer.

Today Netflix is circling the black hole at an ever-increasing velocity and decreasing distance and their "performance" (speed around the black hole) is causing people to say "wow, these guys are great."  Just like you though they won't hit said singularity.  Either they'll get ripped to atoms first or the street will call bull**** on their business model and when that happens the company will detonate in a day as it will be locked out of the financing market for its ever-more-voracious appetite for fuel in its cash bonfire and collapse.

I find the stock price of this "company" tremendously amusing; like so many companies in the "social" and "media" space today they are serial abusers of the exponential function which they know cannot continue indefinitely.

This model was tried in the 1990s, and it blew up in spectacular fashion in 2000.  The reason Hastings and the rest of these clowns are running that same scam today is that nobody went to jail for doing it in the 1990s.

It will blow up again, just as in 2000, because it mathematically must.

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2017-10-17 07:00 by Karl Denninger
in Environment , 171 references
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Then start turning your attention to these nationsnone of which are in the developed Western World, or STFU.

See, the problem with all the crazies on the environment is that the real problem is hard.  It's hard because you can't have China and other nations making all the **** you want to consume (like your iPhoneys) while at the same time trashing the environment and have soaring stock prices.

I talked about this at some length in Leverage; my answer is wage and environmental parity tariffs.

Of course nobody likes that idea, because then they can't******you, and they can't******the planet either.

So instead we have this, and it's your fault if you're a so-called 'environmentalist.'

All of you are going to burn in Hell, and that's if you don't burn here first.

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