Ubiquity, and how “the higher your social influence, the better your life”. Umm. Ok.
I am sure you have all been hearing this word these last few months. It used to be a word associated with religion, and GOD (i.e. God is ubiquitous in our lives). However, now the word is used in the buzz around all the social media sites. It is what they are all aspiring to. What is Ubiquity? Well, it is being omnipresent. In social media it is how each of these companies is trying to be the gateway to all parts of your lives. They want you to share with them your email, your address, who your relatives are, your phone numbers, where you have worked, your photos, your salary, your likes in music, political groups, what videos you watch on YouTube, style of clothes, favorite brands, medicines you take, etc., and I can go on and on. Why would anyone do this? I guess in the short term it is convenient for folks to have their important Life Folders at arms-length. If you listen to Social Media Type Folks, they say that in a different way; Lou Kerner of Wedbush Securities, and Partner in SecondMarkets.com, says it this way:
“The Higher Your Social Influence,
The Better Your Life”
We at Themis have grown very skeptical of infrastructures that capture your private data, ostensibly for what is good for you. We have watched time and time again for-profit stock exchanges use data and information for their own short term advantage, and this is data that its customers did not even realize it was providing, albeit legally. This is why we are watching the development of this Social Media Evolution/Revolution. You see, we think what is driving this evolution/revolution is not the demands and needs of all of you; rather what is driving the craze is that companies want to sell you crap. They want to manipulate your actions and behaviors in a way that benefits them. They want to sell you crap in the most evolved hyper-efficient ways, via use of algorithms and robots instead of human sales people. The ones who are driving this movement are highly staked, make no mistake.
Consider Mr. Kerner. He is a very smart man, no doubt. Here he is on CNN talking about Facebook’s valuation, and how this is just the beginning: Lou Kerner on CNN. He may very well be right. But he is also very staked. Mr. Kerner is a partner at SeconMarkets.com, the private market place that is trading “shares” in Facebook, and other social media companies, as well as a partner at Wedbush Securities, the firm better known for its sponsorship/clearing of high frequency trading hedge funds.
The better the buzz and awareness and valuations of Facebook, Twitter, Groupon, LinkedIn, Zynga, etc. the more trading Mr. Kerner will do, which is good for his stake in Wedbush, as well as his stake in SecondMarkets. Do you doubt for a second that Mr. Kerner, and the good folks at Second Markets, are not courting large sophisticated investors to trade in these companies? So careful… they are doing nothing wrong, but they are talking their book.
The SecondMarkets model only works when these companies have less than 500 registered shareholders [I think?], as after a certain point these corporations have to register with the SEC and go public. And these companies don’t want to go public. If they were to, they would be subject to disclosures, levels of transparency, Sarb-Ox, exchange trading (churning) of their shares by HFT, the possibility of their shares trading down to a penny, and just plain headache. However, in their “private” model, their investors and traders can be outside of the SEC.
Goldman Sachs, JP Morgan, large hedge funds, and other “big boys” can invest and trade and share in the successes and growth of these firms. The public can’t. The next GOOGLE, or Microsoft, or Apple, or Amgen, is not starting out public, for all Americans to have the opportunity to share in the growth. We are just sharing in the risk, and subsidies! The taxpayer bailouts of TBTF institutions, as well as the 0% interest rate free money we (through The Bernank) are lending them, is being used to enrich that club, and not the public.
Public markets? They used to serve a purpose: Capital Formation. All Americans had the opportunity to invest in America’s prospects and growth. But that has changed. Unless the market structure is addressed by the regulators, the public markets will continue to only cater to nanosecond trading of HFT shops, and derivatives of ownership, and real economic growth will only be achieved (shared) by the very rich and privileged. Exchanges will abandon cash equity trading and continue to focus on spreading their model globally in derivatives, and the “next big thing”. They won’t focus on capital formation, though. Lou Kerner and Second Markets will, but it will be a private club, and not everyone will be invited to share in the opportunity. And that is not what America is all about.
Off the soap box.
Where we left off 4:00pm EST:
INDU 11,774.59 +161.29
SPX 1,273.72 +16.84
CCMP 2,636.05 +19.23
Futures now at 7:00 am EST:
Key Data out today:
Since the prior close, some key stories:
– G-7 selling Yen
– China raises bank reserve requirements for 3rd time in 2011 on inflation worries.
– Fed is said to be balking at banks planning for higher dividends and buybacks.
– Record beef prices (aw heck you know the drill… cotton, soy, milk, oil, food, grain, etc.)
– Saudi Arabia initiates $67billion house-building program. Yup. Uhh huh. They should just buy a crap-load of iPads and give them to every citizen. But better block some internet sites.
– US FED balance sheet reaches record size.
– UN approves no-fly zone over Libya.
– Stern Agee offers to buy SWS for $200 million (psst you guys can buy us for less than half that!)
– NKE missed.
– LDK beats.
Pre-market: CTFO, PERY
After the Close: none
Significant Movers This Morning:
SWC +5%, NKE-8%,