Almost a year after China rolled out steps to rein in soaring corporate leverage, concerns are rising that undeserving companies are benefiting while households are getting saddled with risks……China unveiled guidelines for debt-to-equity swaps in October, part of measures to trim the world’s biggest corporate debt loads. The idea was that healthy firms would use the program to cut interest-bearing borrowings, while bloated companies would be shunned. But it hasn’t always worked out that way, even as the total value of swaps reached 776 billion yuan ($116.3 billion) in the second quarter when volumes jumped to a record, according to Natixis SA.
The exit of Steve Bannon, the President’s political strategist, from the White House and his return to Breitbart.com marks the defeat, if not quite the end, of the “isolationist” America First faction within the Trump administration. It is a victory for what I call the Junta – the coterie of generals who now surround President Trump, and appear to have captured the conduct of American foreign policy. It is a victory, in particular, for Gen. H. R. McMaster, who took over the National Security Agency after Michael Flynn’s ouster, and who is the architect of the “new” Afghanistan strategy – the one that is merely a reiteration of the old strategy.
The real cause of this epidemic is various government policies and the real solution is the dismantling of those same policies, in perpetuum…. Let us start with drug prohibition which dates back to the Harrison Narcotic Act of 1914. Drug prohibition results in a black market where illegal products are not commercially produced and where suppliers are not constrained by the rule of law and product liability law. The result is that illegal drugs are more dangerous than legal drugs. Potency varies greatly from batch to batch and products often contain dangerous impurities and substitute ingredients. Opiate overdoses often occur when an addict is unaware that a particular dose is highly potent or contains Fentanyl, a pain medication that is 50 to a 1,000 times more potent than morphine. The Failed War On Drugs—-The Real Cause Of America’s Opioid Crisis.
Not surprisingly, investors have become “trained” each “dip” in the market is a reason to “buy” even in the areas with the least fundamental quality. The perception of “risk” has been entirely eliminated which has once again brought about a sense “this time is different.” Of course, this is not unusual as we have seen it at each major bull market peak throughout history……The problem, however, comes when the Fed begins to stop those reinvestment processes. As shown above, where support has been previously provided to offset potential declines, such support will no longer be available. Such will eventually return the view of the markets back to the fundamentals. It is there we find more troubling issues. The table below from Goldman Sachs shows a variety of measures of current valuation. With the exception of Free Cash Flow, every other measure suggests investors are “over paying for playing” currently.
House prices and end-user, shelter-buyer fundamentals have never been further apart in key, economically significant cities. The two charts presented in this note highlight just how diverged house prices have become from end-user, shelter-buyer, employment and income fundamentals in the most populated, economically significant US cities…….But, sometimes House prices, like other asset prices, go through periods of separation from end-user, shelter-buyer cohort fundamentals. And based on the most recent data of incomes, mortgage rates, and House prices in key cities around the nation, house prices and end-user fundamentals have never been further apart. Even in Bubble 1.0, the divergence wasn’t this bad because exotic loans, which were the incremental driver of House prices, made for legitimately low monthly payments.
This year, the show is going to be even more magnificent. My guess is that the debt will spike $420 billion a business day or two after the debt ceiling is lifted and then continue to surge, and that it will jump by close to $800 billion in the 30 days following the debt-ceiling increase.This will put the US gross national debt at around $20.6 trillion before the year is up. And there will be debt out the wazoo going forward.
Mr. Luskin points to a number of polls suggesting that the hysterical reaction to Mr. Trump is occurring within the media profession, not among the public at large. For example, an NPR/PBS NewsHour/Marist Poll finds that even a survey sample that gives Mr. Trump his standard lousy approval rating overwhelmingly agrees with the President that statues of Confederate leaders should not be torn down. Even a plurality of African-Americans agrees that the statues should remain in place as symbols of our history.
Despite rhetoric to the contrary, we believe the data show that in 1H17 China embarked on quite possibly its most aggressive debt-fueled stimulus program yet (targeted primarily at infrastructure projects). That is, with cheaper credit leading to a lift in property sales (Ex. 1) as well as spiking infrastructure project investment, infrastructure FAI now comprises over half of China’s total FAI growth (Ex. 2) – as recently as 2/29/16, infrastructure FAI accounted for just 25% of China’s total FAI growth. And, as would be expected, construction vehicle sales (Ex. 3) – excavators + cranes + loaders – have virtually exploded higher, reaching record levels for two of three categories in 1Q17.
Refuse Fascism’s involvement has spurred questions about who is behind the group. In a series of tweets on Thursday, Trump asserted that the protesters were paid to agitate. While it is unclear whether those who carried out the violence were paid to do so, the benefactors of the Alliance for Global Justice — and Refuse Fascism — are listed online. According to its most recent 990 tax form, Alliance for Global Justice (AfGJ) received $2.2 million in funding for the fiscal year ending in March 2016. One of the group’s biggest donors is the Tides Foundation, a non-profit funded by billionaire progressive philanthropist George Soros. Tides gave AfGJ $50,000. Other notable donors include the city of Tucson and the United Steel Workers labor union. The former gave $10,000 to AfGJ while the latter contributed $5,000. Charities associated with several major corporations also donated. Patagonia.org, the outdoor apparel and equipment company, gave $40,000. The Ben & Jerry Foundation, the charity associated with the ice cream maker, gave $20,000. And Lush Cosmetic gave $43,950.
Solutions abound, but they require the retirement of obsolete systems that defend entrenched interests and soul-crushing inequalities. It turns out Nero wasn’t fiddling as Rome burned–he was 60 km away at the time….(So) are we fiddling while Rome burns? I would say yes–because we’re not solving any of the structural problems that are dooming the status quo. Instead, we’re allowing a corrupt, corporate mainstream media to distract us with fake “Russians hacked our election” hysteria, false “cultural war” mania, and a laughably Orwellian frenzy over fake news which magically avoids mentioning the propaganda narratives pushed 24/7 by the mainstream media–narratives that are the acme of fake news.