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A stunning piece of insanity came out of Uncle Warren's mouth today.....

He was asked about the CocaCola resolution put before the shareholders (Berkshire has a big position) and how he was voting on it.  He said he "abstained."

But it was the next statement that left me speechless.

He said that "It's kind of un-American to vote 'No' at a Coke meeting"; adding that "taking them on is a bit like belching at the dinner table."


Worse, in a follow-up he was asked if he silently sat for -- or worse, voted for -- other compensation plans he didn't like and he said not only had he but he had never seen anyone in his 55 years speak out against them at a boardroom table!

So exactly what, may I ask, is the purpose of a corporate board if the directors will not vote as the believe is in the best interest of the firm, and worse, what purpose is holding shares in the first place if shareholders won't vote their interests?

What Warren said, in short, is that despite being one of the richest men in the world, despite wielding enormous power through Berkshire's holdings in various companies, far more than you ever will, even for a man like him corporate governance is nothing more than a joke and not only will boards do whatever the hell they want they will also do whatever operating management wants, despite it being their fiduciary duty to act in the best interest of shareholders, not management.

In short not only do you have no voice in the public political sphere you have none in the corporate sphere either.

For extra credit you may attempt to explain why any sane person would comply with the "reasonable requests" of either corporations or government, given these facts.

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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.


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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.

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Come and get it; ~13 minutes in!

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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

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