Blog Posts by Jeff Macke

It's hard to believe but a year ago at this time everyone cared about Facebook (FB). The company was culturally relevant. The idea of owning the stock had investors giddy pre-IPO and miserable literally a day later. The only question was not if but how the geniuses at Facebook were going to make inroads into mobility while maximizing profits from conventional desktop users.

As it turned out, Facebook's didn't have any real idea how to address mobile. What they've done is use the $16 billion of IPO proceeds to throw money into an abyss of laughably bad initiatives and promotional events designed to convince advertisers that users of Facebook mobile apps aren't turned off by product placements.

To be fair every ad-based internet company on earth has the same problem. The others get a pass on their efforts to crack the code on "monetization" because they don't have much riding on mobile bets and haven't been as splashily inept in their efforts.

In January FB hyped up what was supposed to be a game changing new pillar of their business model. The result was Graph Search. Suffice it to say Google (GOOG) remains the market leader in search.

A month ago at another over-hyped event as Facebook unleashed Home. It was a product that was teased to be a Facebook Phone and turned out to be little more than an app that hijacked user's phones. To say customers disliked Home is to suggest they cared about it at all. Fewer than .1% of Facebook users have downloaded Home and the product is reportedly being overhauled.

Here's what you need to know about economics: the price of everything is determined by supply and demand. There are no exceptions to the relationship between supply, demand, and price. By logical extension there is no such thing as a "fake price."

That doesn't mean prices can't be manipulated. It means that such manipulation requires either soaking up supply (e.g., the Fed buying $85 billion a month of paper) or increasing demand (e.g., paying $200 for a dozen roses because it's Valentine's Day).

If you're looking for a unifying theory to explain the stock market rally consider this: buybacks. According to FactSet, year over year buybacks by dollar value increased roughly 10% last year. In fact, $384 billion of shares were repurchased last year. There were about $40 billion worth of IPOs in 2012. Simply put, supply of shares is shrinking.

Demand for stocks is rising. Stock inflows are rising. It doesn't matter why you think that may be. It's simply math. Money is going into equities. Demand is growing.

"You're getting actually a shortage of stocks and too much liquidity not just from the Federal Reserve but all over the planet right now," says Jeff Saut of Raymond James in the attached video.

Lock up the dogs and hide the children. Something wicked will this way come tonight when JC Penney (JCP) allows its earnings to slither out of Dallas. Unlike many earnings reports there isn't a lot of suspense on this one: the company is going to miss and it's going to be ugly. Official estimates are for a loss of 74-cents on revenues of $2.74b compared to a 75-cent loss on $3.2 billion for the same period last year.

How individual investors feel about the results depends entirely on their entry price. JCP stock has risen almost 25% in the last month in a knee-jerk burst of enthusiasm after the firing of former CEO Ron Johnson, an investment by the Soros group, and a $1.75 billion debt deal that ensured the retailer's survival for at least another year.

Those are the good things. On the downside is everything else about the company. The current CEO is the guy Johnson replaced. That means, unlike new bosses who come in to "clean house," Myron "Mike" Ullman actually has a vested interest in Penney's former business model. That being the case, Wall Street's reaction to tonight's earnings report isn't about economics but vision. Specifically, how does Ullman plan to reassemble a company stuck halfway between a radical overhaul that's left stores literally in shambles.

Brian Sozzi of Belus Capital Advisors has been sneaking around the stores taking videos lately and he doesn't like what he sees. "I'm seeing a hodge podge of strategies," frets Sozzi. The stores are an amalgamation of Johnson's hipster colors and lack of discounts coupled with Ullman's hyper-promotional brand of retailing. No one knows what to make of the stores at this point, including management.

Walmart (WMT) missed earnings estimates and guided lower for the current quarter this morning, citing currency impacts and "considerable headwinds to top line sales," in the words of CEO Mike Duke. The news comes just one day after shares of Walmart made an all-time high just under $80 a share. Walmart's stock is up more than 17% year-to-date.

Brian Sozzi of Belus Capital Advisors says the quarter was worse than it appears. "I see a lot of disaster in the quarter," the dapper Sozzi says in the attached video. The stock's ramp up was a function of a quest for yield by investors, he says. Traffic was worse than last quarter, same store sales were negative, and the expense of feeding so many core growth opportunities is simply too much.

Doctor Sozzi has a prescription for what's ailing the world's largest retailer: "get rid of Sam's Club... it doesn't belong in the company especially when the focus is clearly on investing online and winning internationally."

This year marks the 8th battle in the so-called "Console Wars," with the release of long-awaited sequels to Microsoft's (MSFT) XBox 360 and Sony's (SNE) Playstation 3. With Microsoft set to reveal at least some details of its new console next week ahead of June's E3, Breakout asked Wedbush' Michael Pachter to help handicap the high stakes battle for your living room TV.

In the attached video Pachter says this round will be all about multimedia and Microsoft has the early lead. Pachter expects this to finally be the year when the gaming console becomes the long-awaited Trojan Horse for the living room. That doesn't just mean connecting to your digital content or being able to talk to your friends while gaming. We can do that now. It's not even going to be a matter of tweaking the Xbox Kinect or adding Skype features. Think bigger.

European GDP data were released this morning, missing expectations and offering scant evidence of improvement for the troubled region. GDP for the 17-nation Eurozone dropped 0.2%, worse than the 0.1% expected contraction. The recession has now extended into a sixth consecutive quarter. As for the two stalwart nations on the continent, Germany saw 0.1% growth and France officially fell into a recession with a contraction of 0.2%. European markets had little reaction to the news.

The optimists at the IMF point to the improvement last year. Germany, worried about picking up the tab for potential stimulus, seems to think things are going just fine as long as deficits are under control. According to Marc Chandler, head of global currency strategy at Brown Brothers Harriman, Germany's push for austerity is still carrying the day in Europe.

History suggests Europe is reluctant to be dictated to by the Germans. If they object this time around they shouldn't look to the U.S. for help. As Chandler sees it America and the IMF are just fine with the current path. "For the first time in American history its alright for a hedgom to come in power in Europe," he says in the attached video.

Unless you're one of the two men Martha Stewart has chosen as finalists for her Match.com date, you probably think your chance to cash in on online dating is gone. In the attached clip, Whitney Tilson author of The Art of Value Investing, says there's a more conventional strategy most people miss.

While Match.com is already owned by Barry Diller's IAC/InterActiveCorp (IACI), Tilson says he's taken a shine to online personal website operator Spark Networks (LOV), stressing that the stock is only appropriate for those "with an appetite for something very small."

Spark is the company behind JDate.com, by far the dominant player in the niche of setting up Jewish couples. As the dominant brand in a slow-growth space, Spark was kicking off cash with JDate but struggling for growth. To address that happy problem, Spark decided to expand in the most logical way possible.

"About three years ago they decided to go after the much bigger market of Christians in this country, which is about 30 times the size of the Jewish market," Tilson explains. Using profits from JDate, Spark started ChristianMingle.com. "Christian Mingle, in just three years, is now bigger than JDate and growing like a weed."

The Bank of Japan's so-called Abenomics monetary policy makes Bernanke's quantitative easing look like a spit in a bucket on a relative basis yet the early reviews are positive. The yen is weakening as was hoped, Japanese stocks are strong and for the first time in recent memory the world's third largest economy seems relevant again.

Marc Chandler, global head of currency strategy at Brown Brothers Harriman, puts the BOJ's plan into perspective and what it means in the U.S. in the attached video. The Japanese economy is 1/3 the size of ours, Chandler reminds viewers. As part of quantitative easing the Fed is spending $85 billion a month. As part of Abenomics Japan is spending $75 billion a month and plans to double the money supply.

Japan's "foot is on the monetary accelerator," Chandler says, quickly reminding viewers that this is precisely what the rest of the world's central banks have wanted to see for years. As a vote of confidence Chandler says foreigners have invested some $65b in Japanese stocks, driving the benchmark Nikkei (^N225) to 5 year highs.

Should the U.S. be worried? Chandler says success for Japan is success for the U.S., at least in the short run. In the longer-term, structural reforms and changes to fiscal policy will be needed to create sustainable improvements.