Thursday, May 21, 2015

The Haiku of Finance for 05/21/15

Depositing checks
Best done immediately
Do not let them sit

Wednesday, May 20, 2015

The Haiku of Finance for 05/20/15

Startup growth hack plan
Hire people with deep contacts
Work their networks hard

Tuesday, May 19, 2015

The Haiku of Finance for 05/19/15

Startup gourmet food
Costly way to find talent
Immature workers

Winter Is Coming To Venture-Backed Startups' Gourmet Food

I recently attended a founder's talk at a SOMA tech startup.  Confidentiality agreements prevent me from revealing its identity.  Suffice it to say that the '90s dot-com era is back with a vengeance.  All of the trappings of excess capital were on display:  custom bike racks, stacks of board games, and even a Foosball table.  The one contemporary update was the constant flow of gourmet food.  All of these things will be gone in short order.

Venture-backed startups can afford expensive nonsense like in-house dietitians and custom menus in gourmet food courts.  Conventional wisdom holds that top-notch technical talent absolutely must have a work environment that resembles their parents' living rooms.  Talented engineers can't be bothered to make their own cheap lunches at home or grab a quick pizza slice at the corner shop.  Catering to these whims cultivates a perpetual adolescence among the most highly educated people in the world.  It's no wonder Millennials are in love with the Affordable Care Act and other government entitlement programs.  Desire for cradle-to-grave security now carries over into their Silicon Valley workplaces.

Here comes a hard-core smack upside the head for these overgrown babies.  Venture capital funds have an easy time attracting investors right now because institutional investors (pension funds and university endowments) need higher yields in their portfolios to match the liabilities of their future payout streams.  They can't find those yields in the Federal Reserve's zero interest rate environment.  The easy availability of risk capital thus engenders VC investments in wasteful startups.  Fast talkers with a cute coding idea are now populating very crowded B2B and B2C marketplaces, all because VCs need to throw money at things.

These euphoric waves in hot startup sectors always end painfully.  Normal interest rates will destroy investors' appetites for risky investments.  Higher rates will also destroy the stock market's bull run that would otherwise have allowed lucrative exits for even the worst tech businesses.  Startups with tons of pampered employees will be nothing memories in a couple of years.  Maybe their exposed brick SOMA offices can be re-zoned for affordable housing, where former tech rock stars can live once their unemployment checks kick in.

I will not miss the gourmet food or its enabling ecosystem of culinary experts.  Vegetables and other healthy things are cheap.  Insanely expensive spices have low-cost substitutes called salt, pepper, and butter.  Healthy meal ideas are one web search away, with no need for costly food professionals on retainer.  A return to financial sanity in Silicon Valley means a return to frugality.  Millennials will learn to pack their own brown bag lunches.

Monday, May 18, 2015

The Haiku of Finance for 05/18/15

Call up trading floor
Ask for spread on position
Laugh at poor flunkie

Financial Sarcasm Roundup for 05/18/15

Behavioral finance research discovered that good financial decisions are often counterintuitive.  Sarcasm can also be counterintuitive but that is not an iron law.

Credit card companies love doing business in hyperinflationary Venezuela.  Charging fees to banks that pay in hard currency (the US dollar at present) is the key to success.  When hyperinflation comes to the US, expect card companies to charge banks using Australian and Canadian currency.  Americans won't know the difference because they'll be swiping that card for a jar of peanut butter priced at $10M of worthless US currency.

Critics of the TPP's fast-track bill may be right about some of its risks.  The business elites pushing the trade deal don't care much for Dodd-Frank rules.  Wall Street sees the rules as little more than a nuisance because its lobbyists helped write the law.  Sleepwalkers at the SEC have little incentive to enforce rules that will harm their chances for future employment on Wall Street.  Waving a weakened Dodd-Frank in the progressive Left's face is a cheap tactic for policymakers who know how banks get around rules.

Fannie and Freddie securities will soon be one combined issue.  The sucker institutional investors who buy MBS will now have an easier time going bankrupt.  They only have to buy one product full of subprime mortgages for people who can't pay bills.  No one learned anything from the mortgage loan nonsense of the last housing crash.  The chase for yield in a zero interest rate world now means dumb fixed-income portfolio managers will pile into MBS all at once.

I have spent way too much time lately dealing with trivial things and people.  I must now make more effort to ignore those things and avoid those people.  I will soon discover whether a small amount of time I spent on a high-payoff opportunity was time well spent.

Sunday, May 17, 2015

The Limerick of Finance for 05/17/15

Mining spinoff fell short of some hope
Analysts now have reason to mope
Mature mines in the fold
Production getting old
Markets always find some way to cope

Saturday, May 16, 2015

The Haiku of Finance for 05/16/15

Convention conflict
Two events in same time frame
Business one wins out

Friday, May 15, 2015

The Haiku of Finance for 05/15/15

Starbucks mobile breach
Stealing app account money
Grab the tall mocha

Thursday, May 14, 2015

The Haiku of Finance for 05/14/15

Record rally done
Endless pump fools investors
Buying in while high

Wednesday, May 13, 2015

The Haiku of Finance for 05/13/15

Two paths to success
Raise revenue or cut costs
Nothing else matters

Tuesday, May 12, 2015

The Haiku of Finance for 05/12/15

Chicago credit
Blame pensions for junk rating
Windy City bust

Monday, May 11, 2015

The Haiku of Finance for 05/11/15

Pushing inflation
Reckless with wage-price spiral
Playing with matches

Financial Sarcasm Roundup for 05/11/15

The foxes are in the hen-house, the inmates run the asylum, and perversity remains a hallmark of the financial sector.  Here I sit in my San Francisco sanctuary, pondering it all.

Japan's public debt continues to balloon out of control.  Abenomics is no more sane than the Bernanke/Yellen paradigm.  How many yen Japan will have to print to hyperinflate the debt mountain away is anyone's guess.  I won't guess the number of yen I should hold; it will be precisely zero until Japan wises up.

Fitch raised the latest alarm about real estate collateral under Chinese banks.  No one really listens to Fitch anyway because they're the smallest of the three main ratings agencies.  It's good that they went on the record so Moody's and S+P will look bad in hindsight for not badmouthing China.

China is eager to do business with Russia.  Sanctions are for law-abiding countries, not single-party kleptocracies.  Russia knows it's the junior partner here and doesn't care as long as it gets cash up front.  Expect Putin's circle to steal that cash and leave Russian infrastructure to languish further.  The scheme will come back to haunt Russia in about a decade when Chinese colonists try to slice off Siberia.

The ECB is getting excited about the prospect of QE driving up inflation.  The stupidity is so hot it just burns.  Runaway inflation will destroy the value of whatever bonds the ECB and others are buying.  Choosing fiscal sanity is the furthest thing from the ECB's planning process.  They instead prefer a junkie's rush into a bond-buying addiction.

In other news, I'm sure someone did something nutty in San Francisco today.  I'm just as sure it wasn't me.

Sunday, May 10, 2015

The Limerick of Finance for 05/10/15

China rate cut preps markets to move
Traders ready to show they approve
Pushing people to bet
The pumping's not done yet
While macro stats fail to improve