August 14: Daily Contrarian Reads

Why FAANG is More Dangerous Than The Four Horseman Of the Tech Bubble And the Nifty Fifty of the Early 1970s

What I will say, however, is that the “FAANG” phenomenon smells like rookie spirit. Facebook (NASDAQ:FB), Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL), Netflix (NASDAQ:NFLX) and Google (NASDAQ:GOOG) (NASDAQ:GOOGL) are hardly unbeatable. They’re actually vulnerable. Not only did the overwhelming bulk of the Nifty Fifty reach their limits of growth, not only did three of the four horsemen hit theirs as well, but “FAANG” exists at a time where leverage in the financial system has never been greater. It follows that when margin calls eventually occur, which leveraged stocks are likely to get slammed the hardest?

Recession Peril Indicator Signaling Big Trouble Ahead

Thanks to Jesse Felder, we recently stumbled upon a measure of economic conditions that has reliably signaled every recession since 1948. The data point, Real Value Added, is currently in negative territory and may, therefore, be a harbinger of an economic downturn.  If it is a false signal, it would be the first in a 70-year history of observations. 720Global does not rely on any one data source to determine the pace of economic activity or to formulate recession probabilities. Instead, we analyze data from many different sources to help better understand the likely path of the economy. That said, when a single data source has an indisputable track record, we take notice and look for other corroborating evidence and bring it to your attention.

What Global Rebound? Mind The Spending Spree Before Party Congress Time In The Red Ponzi

In the run up to China’s blockbuster Communist Party congress later this year, officials have spent big to ensure the economy is humming along nicely when the conclave begins. It’s after that that things get interesting. With the central government’s deficit limit capped at 3 percent, officials usually turn on the taps around November and December, once they know they’ll have raised enough to fund a late-year splurge. Not this time. A push to smooth out spending means the fiscal pump is unlikely to go into high gear at year end, which is when economists see growth moderating toward the government’s baseline of 6.5 percent. While policy makers have quasi-fiscal options up their sleeve — like accelerating infrastructure project approvals or ratcheting up lending via policy banks — efforts to curb profligate local governments and limit debt may restrain those channels too.

Central Bankers Unhinged:  No One Is Buying Italian Government Bonds Except The ECB

New statistical data from the investment bank Jefferies LLC has revealed a startling new trend that could have major implications for Europe’s economic future: Italian banks have begun dumping unprecedented volumes of Italian sovereign debt. Holdings of government debt by Italian financial institutions slumped by a record €20 billion in June — almost 10% of the total — after €9.4 billion of sales in May. As the FT reports, the selling by Italian banks is the most emphatic example yet of a broader trend: banks sold €46 billion of government paper in June across Europe, taking the total reduction since the start of this year to €257 billion…….But then: who’s buying it? The answer, in the case of Italy, is the ECB and its Italian branch office, the Bank of Italy, where Italian bank deposits rose by €22 billion in June and €50 billion since the start of 2017.

Deep State Plotting Trump’s Removal—-Six Months Left?

Is Donald Trump even going to make it to the 2020 election? The rumors that the deep state is planning to make a big move to try to remove President Trump have become a deafening roar, and if they are ultimately successful they are going to unleash a time of chaos and civil unrest unlike anything this nation has ever seen before. At the outset of this article I want to make it exceedingly clear that I do not know what is going to happen over the next six months. I am simply passing along what is being reported by others. Perhaps everyone is wrong and the deep state will back down in their war against Trump, but I wouldn’t count on it.

Imagine That! An Attorney General In Favor Of Flat-Out Theft

Attorney General Jeff Sessions recently ordered the Justice Department to increase the use of civil asset forfeiture, thus once again endorsing an unconstitutional, authoritarian, and increasingly unpopular policy. Civil asset forfeiture, which should be called civil asset theft, is the practice of seizing property believed to be involved in a crime. The government keeps the property even if it never convicts, or even charges, the owner of the property.

Why Coke, Hershey And Wal-Mart Love SNAP (Food Stamps)—–50% of Purchases Are Candy And Soft Drinks

In past economic cycles, Food Stamp participation drops back to pre-recession levels within 2-3 years of the recession. That stopped with the 2001 recession. Why? Because big business stepped in.  A cool $50B per year of government money is being funneled to a handful of companies. These companies spend millions themselves in lobbying to keep the largess going. Almost half of food stamp money is spent on candy and – wait for it – soft drinks.   Wal-Mart is the biggest beneficiary. They get 18% of the total. Amazon sees this big piece of the pie and wants in. Now, Prime members who use their SNAP card get a 45% discount on food and soft drinks.

President Trump: End The Korean War Now!

Why are we even talking about nuclear war in North Asia? Because North Korea has scraped and skimped for decades to build nuclear weapons for the sole reason of deterring a major US attack, including the use by the US of tactical nuclear weapons.  Pakistan ‘ate grass’ for decades to afford nuclear weapons to offset the threat from far more powerful India.  Israel uses the same argument to justify its large nuclear arsenal. After Washington overthrew the rulers of Iraq and Libya, it became painfully apparent that small nations without nuclear weapons were vulnerable to US ‘regime change’ operations.  The North Koreans, who are very eccentric but not stupid, rushed to accelerate their nuclear weapons and delivery systems.

The Last Anti-Iraq War Republican Calls It Quits—-Kudos To Rep Jimmy Duncan

Duncan’s retirement is sad news that hasn’t gotten the attention it deserves. The reliably conservative Duncan has quietly pushed back against a bipartisan foreign-policy consensus that has kept America mired in apparently unwinnable wars for nearly 17 years. Duncan isn’t alone as an antiwar Republican voice in Congress. After a short-lived “freedom fries” crusade, Rep. Walter Jones (R-N.C.) became a passionate opponent of the Iraq war and similar interventions. Sen. Rand Paul (R-Ky.) and Rep. Justin Amash (R-Mich.), meanwhile, are prominent libertarians who are as skeptical of war as they are of welfare. But Duncan was one of just seven Republicans in either house of Congress who voted against the original authorization of the use of military force in Iraq, at a time when half the Democrats in the Senate (including Chuck Schumer, Hillary Clinton, and Joe Biden) were voting for war.

After The Deep State Coup, What Then?

That the Trump presidency is bedeviled is undeniable. As President Donald Trump flew off for August at his Jersey club, there came word that Special Counsel Robert Mueller III had impaneled a grand jury and subpoenas were going out to Trump family and campaign associates. The jurors will be drawn from a pool of citizens in a city Hillary Clinton swept with 91 percent of the vote. Trump got 4 percent. Whatever indictments Mueller wants, Mueller gets.