Infographics: The Rise and Fall of Yahoo THE 20 YEAR ROLLER COASTER FOR YAHOO FINALLY ENDS

Yahoo's interesting boom bust story as chronicled by the Visual Capitalist. 

As a side note, I would add to Yahoo's saga, the Fed's easy money policy influence to the sector's boom bust cycle.

The saga surrounding one of the world’s most recognizable internet stocks has come to a close.

Yahoo has finally sold its operating business to the highest bidder. The winner was Verizon – and the price was $4.8 billion.

That’s worth less than 1% of the company it had multiple opportunities to buy: Google (now Alphabet).

WHAT HAPPENED?

Technology changes fast, and successful companies must leverage smart acquisitions in building for the future. Facebook bought Oculus Rift and Instagram, and Google bought companies like Youtube, DoubleClick, Boston Dynamics, and DeepMind to help flush out its strategy.

The executives running Yahoo have a rough track record in reading industry tea leaves. It’s not just about the deals they made, but it’s also the deals they failed to make.

In the end, a lack of execution with acquisitions proved to be the company’s Achilles’ Heel.

MISSED OPPORTUNITIES

In 1998, Yahoo was approached by two young Stanford Ph.D. students to buy their search engine algorithm. Larry Page and Sergey Brin had created PageRank – a quick way to find the most relevant website for a given search query. Yahoo skipped out on buying it for $1 million, rationalizing that it would take people off of Yahoo’s website, while decreasing traffic and ad revenues.

Even later on when Google’s search business was well-established, Yahoo CEO Terry Semel balked at Larry and Sergey’s $1 billion asking price. He would eventually agree to it, but by then it was too late. The Google guys had already decided to up their price to a heftier $3 billion.

Around that same time, Yahoo was turned down by a 22-year-old Mark Zuckerberg. Yahoo offered to buy Facebook for $1 billion, but Zuckerberg declined. This was a moment that billionaire Facebook investor Peter Thiel lauds as the major turning point for the company that allowed it to become the behemoth it is today. Some sources even say that if the offer was increased to $1.1 billion, that Facebook’s board would have forced Zuckerberg to take it.

But it’s not just the offers made that were missed opportunities. Yahoo also turned down a hostile takeover from Microsoft in 2008 for $44.6 billion that valued the company for far more than it is worth today.

DEALS THAT BOMBED

Finally, the deals that did close were unable to add any value to the company.

Yahoo famously made two acquisitions in 1999 that are now ranked by Forbes as some of the worst internet acquisitions of all-time.

The first was a $4.58 billion deal for Geocities, a site that enabled users to build their own personal websites. While Geocities was a pioneer in this regard, it eventually was shuttered in 2009 after failing to deliver any value to Yahoo shareholders.

The second was the famous $5.7 billion deal for Broadcast.com, an online television site that was founded by Mark Cuban. Perhaps way ahead of its time, internet connections were too slow in 1999 to run this type of video content off the web.

Yahoo also bought Tumblr for $1.1 billion in 2013. While it is not ranked as one of the worst acquisitions of all time, it is not doing particularly well either.

YAHOO’S SAVING GRACE

There was one M&A decision that wasn’t a whiff. In 2005, the company bought a 40% stake in emerging online retail company Alibaba. The remainder of those holdings, now worth $30 billion, make up the majority of Yahoo’s market capitalization today.

In the context of the recent Verizon deal, the Alibaba shares are likely being spun off into a separate investment vehicle.

Courtesy of: Visual Capitalist

More Signs of Panic by the South Korean Government: 11 trillion won (US$9.64 billion) of Fiscal Stimulus Launched!

Some key Asian governments have truly been in panic.

South Korea’s central bank just slashed interest rates only last June.

Now they are doubling down by supplementing fiscal stimulus to monetary policy.

In a way this would seem like a trial balloon towards “helicopter money”

From Yon Hap news (July 22)

South Korea on Friday outlined an 11 trillion won (US$9.64 billion) extra budget plan designed to prop up its economy facing sluggish exports and a possible fallout from corporate restructuring in key industries.

It is part of the government's 28 trillion won economic stimulus package aimed at helping Asia's fourth-largest economy achieve 2.8 percent growth this year, which was downgraded last month from an earlier 3.1 percent.

What the government will spend on…

According to the ministry, the proposed 11 trillion won extra budget plan showed that 9.8 trillion won will be used to stimulate the economy, with the remaining 1.2 trillion won to go to pay back the state debts. (bold mine)

Out of the 9.8 trillion won fiscal program, 1.9 trillion won will be set aside to support the corporate restructuring efforts and another 1.9 trillion won will be spent to create jobs and boost the real economy. Some 2.3 trillion won will be injected into the shipyard cluster areas to prevent a sudden economic slump, with 3.7 trillion won to finance local provincial government budgets.

As part of the program, the government will send out orders for 61 vessels such as patrol boats and warships in order to help small and medium-sized shipbuilders survive, while it will pour out an additional 400 billion won in public credit guarantee funds to ease their cash flow problems.

It also includes a plan to increase the foreign exchange stabilization fund by 500 billion won to get prepared preemptively against possible financial turmoil in the aftermath of the Brexit.

Separate from the supplementary budget, at the same time, the government said it will spend an additional 17 trillion won to increase investments and foster domestic demand by encouraging state-run companies to make large-scale investments and expand state-run trade funds.

So South Korean government's picking of winners will include the defense industry and their favored private sector suppliers, partial bail out of the shipping industry, subsidies to state owned enterprises, lending to select private and public corporations, as well as, paying back local debts.

With a total of 28 trillion won in increased fiscal spending, the government forecast that it will likely push up economic growth by 0.1 and 0.2 percentage point this year and create 68,000 new jobs.

Yet all these are all nothing but rose colored assumptions that are truly bandaid therapy.

They don’t deal with the real cause of the South Korean economy’s lethargy: strained debt plagued balance sheets!

Yet the South Korean government sees free lunch from the crony based stimulus

The finance ministry added that the proposed extra budget will decrease the country's debt-to-gross-domestic-product ratio to 39.3 percent from the current 40.1 percent, as it will be financed with a tax surplus and others, without selling state bonds.

Really?

The public sector's balance sheet has already seen ballooning deficits, which have been funded by swelling debt.

And yet the ironic thought that the new set of fiscal spending will be funded from tax financed surpluses?  Or the South Korean government believes that (government) consumption spending will produce economic value added surpluses or free lunches!

Sad to see how present government policies worldwide have all been anchored on hope pillared on false reality.

Don’t worry be happy, stocks will continue to rally premised on the free lunch miracles!

Infographics: The Top 10 Emerging Technologies of 2016

Top 10 emerging technologies according to the Visual Capitalist :

Sometimes the world is not yet ready for a new technology to enter the fray.

Virtual reality, for example, sat on the sidelines for many years. The industry went into hibernation around the time of the Dot Com Bust, and it has only recently re-emerged with promise.

It is only today that big companies like Microsoft, Google, Samsung, HTC, and Facebook have the infrastructure, peripheral technologies, and capital in place to properly commercialize the technology. Now, instead of using primitive 300 x 200 pixel LCD displays that were prohibitively expensive in the 90s, we are looking at a world where display will be in beautiful 4k quality. Meanwhile, accelerometers and gyroscopes can measure head movement, and modern computing power can reduce lag and latency. It took many years, but finally the true potential of VR is being realized.

Like virtual reality, there are 10 other emerging technologies that are finally ready for prime time. Some, like the recent advances in artificial intelligence, have been decades in the making. Other emerging technologies such as the blockchain are relatively new phenomenons that are also ready for their time in the spotlight.

EMERGING TECHNOLOGIES OF 2016

1 Nanosensors and the Internet of Nanothings is one of the most exciting areas of science today. Tiny sensors that are circulated in the human body or construction materials will be able to relay information and diagnostics to the outside world. This will have an impact on medicine, architecture, agriculture, and drug manufacturing.

2 Next Generation Batteries are helping to eliminate one of the biggest obstacles with renewable energy, which is energy storage. Though not commercially available yet, this area shows great promise – and it is something we are tracking in our five-part Battery Series.

3 The Blockchain had investment exceeding $1 billion in 2015. The blockchain ecosystem is evolving rapidly and will change the way banking, markets, contracts, and governments work.

4 2d Materials such as graphene will have an impact in a variety of applications ranging from air and water filters to batteries and wearable technology.

5 Autonomous Vehicles are here, and the potential impact is huge. While there are still a few problems to overcome, driverless cars will save lives, cut pollution, boost economies, and improve the quality of life for people.

6 Organs-on-Chips, which are tiny models of human organs, are making it easier for scientists to test drugs and conduct medical research.

7 Petrovskite Solar Cells are making photovoltaic cells easier to make and more efficient. They also allow cells to be used virtually anywhere.

8 Open AI Ecosystem will allow for smart digital assistants in the cloud that will be able to advise us on finance, health, or even fashion.

9 Optogenetics, or the use of light and color to record activity in the brain, could help lead to better treatment of brain disorders.

10 Systems Metabolic Engineering will allow for building block chemicals to be built with plants more efficiently than can be done with fossil fuels.

Original graphic by: Futurism

Courtesy of: Visual Capitalist

Helicopter Money: The Japanese Government’s Addiction to Destructive Monetary Inflationism

Former Fed chair Ben Bernanke’s meeting with Japanese authorities early last week sparked fervid speculations that the fresh electoral victory by PM Shinzo Abe would extrapolate to the administration’s introduction of the “helicopter money”.

The proposed adaption of Helicopter money represents essentially a fiscal policy. However, the difference with that of QE is that such increase government spending will be financed directly by the central bank through the printing press via debt purchasing. Or central banks will monetize government spending via the printing press. Another difference, spending targeted on the real economy rather than merely through financial channels.

Nevertheless the promise of “helicopter money” means that developed economy governments will likely inundate global economies with liquidity. With Japan as likely the first developed nation to experiment on Bernanke’s “helicopter money”, the yen crashed by a shocking 4.32%! But such crash has implied of the triggering of the yen carry or borrowing or shorting of the yen to finance arbitrages on assets of other ex-USD currencies.

Remember for Japan, after ZIRP, QE, NIRP and now comes helicopter money. Like a late stage cancer patient, every new applied medication provides a shot of adrenalin of hope. But eventually reality based on entropic economic forces will dominate.

Just look at how the Nikkei 225 has transformed into a humongous rollercoaster.

Since the Helicopter money was floated the Nikkei spiked by 9.2% this week and 12.19% includingFriday of the other week. To consider that the Bank of Japan has accounted for as top 10 shareholders of 90% of the Nikkei composite stocks!

Sustained interventions by the BOJ would mean that the pricing discovery function of Japan’s stock markets would lose its essence.

Furthermore, Nikkei companies has been transforming into wards of the Japanese government or as state owned enterprises. Should the Japanese government continue to muster shares, policy actions will now be coursed through the board room than through policies. In addition, given the Japanese government’s increased absorption of the private sector, this translates to a slippery slope of socialism of the Japan’s economy.

In other words, the effects from the aggregate interventions by the Japanese government and by the BOJ had little or no improvements to show. What it has done has been to amplify volatility and to accrue more systemic imbalances.

But there has been no accountability for policy errors. In fact, in the bizarre world of politics the Japanese rewarded the Abe with a landslide victory! And PM Abe’s recourse has been to double down on gambling with the citizenry’s wellbeing through more radical experiments! ZIRP, QE and NIRP had all failed. The Japanese government had also tried various forms of stimulus since its bubble bust in 1990! Perhaps Abe’s motto may have been “Try and try until the Japanese die”!

Yet via Bernanke, the Japanese government is now considering an emerging market policy path of fiscal deficit monetization by the central bank in order to combat deflation. In short, desperation seems to force the hand of the Japanese government to embrace the Argentine and Venezuela model. Except that such an experiment will be draped with technocratic tools such as perpetual bonds.

ZIRP, QE, NIRP and now Helicopter Money reveals of how central bankers have become totally addicted towards the use of destructive runway inflationism.

Michael Hartnett, chief investment strategist at Bank of America Merrill Lynch, recently explained at the Marketwatch that “Central banks around the world have cut interest rates a combined 659 times since Lehman Brothers filed for bankruptcy on Sept. 15, 2008, resulting in negative rates in many major economies”, in addition, central banks’ holdings of financial assets to swelled to $24.6 trillion just “to prop up their economies by continuously funneling funds in to the system”. $24 trillion would account for about 32% of the global economy!

And global central banks will continue to push such policies to the limits with almost no prospects of backing off.

Proof? This week, the new governor of Bank Negara Malaysia unexpectedly chopped interest rates. While the Bank of England (BoE) left rates unchanged also during the week, the BoE’s chief’s economist expects of a “significant” and “material” package of action by the English central bank in August.

Such radical experiments only postulates to accidents waiting to happen anytime!

With the exception of 30 and 40 year, the entire yield curve of Japanese government bonds (JGBs) have all drifted to negative territory, this means that if Bernanke’s squadron of monetary choppers will succeed in the cash bombardment of the Japanese economy to ignite inflation, what this entails could be a crash in JGBs! (if not a crash in global bonds)

So be careful of what you wish for.