Something is not making sense. During the debates Trump declared on more than one occasion the stock market was in a bubble. It is now 2,000 points higher and he is proclaiming its advancement as an endorsement of his plan to drastically cut taxes, spend trillions, and Make America Great Again. The financial media, which despised Trump six weeks ago, is now peddling an economic recovery, soaring future corporate profits, and a stock market poised to blast through 20,000 to higher and higher all-time highs. I think that would be swell, but let’s examine a few facts before putting our life savings in Twitter and Fakebook stock
Chief executives and other corporate insiders, whose personal and corporate coffers are supposed to fatten under the policies of President-elect Donald Trump, are dumping stock during this postelection rally while other investors are falling over themselves to buy into the “Trump trade. So who’s the sucker?…..There were nearly 5 insider sale transactions for every 1 purchase on the U.S. stock market last week, according to Vickers Weekly Insider. That’s nearly double the 2.5-to-1 ratio it takes for that firm to get bearish.
I’m going to have to throw a flag on the existing home sales report for November published today by the National Association of Realtors. The NAR would have us believe that home sales occurred in November at 5.6mm annualized rate for the month, up 15.4% from November 2015 and up .7% from October. I will point out that, of course, the orignal report for October was revised lower. But who pays attention to those details?I hate to be cynical, or accuse anyone of presenting “fake news,” but the mortgage application data completely contradicts the NAR’s “seasonally adjusted, annualized rate” interpretation of the data it collected
But something is happening that hasn’t happened since the Financial Crisis. Share buybacks in the third quarter plunged 28% year-over-year, to $115.6 billion, the biggest year-over-year dive since Q3 2009, according to FactSet. It was the second quarter in a row of declines, from the glorious Q1 this year, when buybacks had reached $168 billion, behind only Q3 2007 before it all came apart. From that great Q1 2016 to Q3, buybacks plunged 31%, or by $52 billion. “Only” 362 of the S&P 500 companies bought back shares in Q3, the second lowest number in three years, with Q2 having been the lowest number (blue line in the chart below).
Yet 21st-century America is witnessing a new and revolutionary moment: the elevation of losing generals to the highest offices in the land. Retired Marine Corps general James “Mad Dog” Mattis, known as a tough-talking “warrior-monk,” will soon be the nation’s secretary of defense. He’ll be joined by a real mad dog, retired Army lieutenant general Michael Flynn as President-elect Donald Trump’s national-security adviser. Leading the Department of Homeland Security will be recently retired general John Kelly, another no-nonsense Marine. And even though he wasn’t selected, retired Army general David Petraeus was seriously considered for secretary of state, further proof of Trump’s starry-eyed fascination with the brass of our losing wars. Generals who fought in Iraq and Afghanistan to anything but victory—pyrrhic ones don’t count—are again being empowered. This time, it’s as “civilian” advisers to Trump, a business tycoon whose military knowledge begins and ends with his invocation of two World War II generals, George S. Patton and Douglas MacArthur, as his all-time favorite military leaders.
A newly-leaked German intelligence report states Saudi Arabia, Kuwait and Qatar are funding extremist Islamic groups in Germany…….The report, compiled by German domestic intelligence agency Bft and Federal Intelligence Agency (BND) allegedly accuses Saudi Arabia and the two Gulf nations of funding various Islamic institutions including mosques and religious schools, as well as individual strict preachers and conversion, or “dawah” groups.
The vague assertions of the secret CIA memorandum have been repeated so assuredly and emphatically as to sometimes echo the jingoistic lead-up to the disastrous Iraq War. Keith Olbermann provided perhaps the most comical contribution to the new Russian scare, crawling out from under his American flag blankie to rave that “we are the victims of a bloodless coup engineered by Russia.” Other commentators were not quite so colorful, yet they largely uncritically repeated the CIA narrative that Russia “hacked the election” to secure a Trump victory. And this kind of hyperbole was not limited to the press: the White House went so far as to accuse the president-elect of knowingly benefiting from Russia’s assistance.
Millennials finally get to claim a trophy for an achievement they actually earned (no participation medals here)…that’s right, Millennials have officially set a 75-year record for highest percentage of young adults living at home with mom. At just under 40%, Millennials are barely shy of the all-time record of 40.9% set in 1940, after the end of the Great Depression. For once, we have every confidence that our young snowflakes will excel in crushing this longstanding record….
The global financial system continues to groan under the strain of the accumulated weight of trillions of dollars worth of debt and derivatives, which have built up to even more fantastic levels than those that precipitated the near collapse in 2008, thanks to the policy of solving liquidity problems near-term by creating even more debt and derivatives, Quantitative Easing being the most obvious example. However, while the majority consider the situation to be hopeless, there is actually “light at the end of the tunnel”. If only a way could be found to freely tap the funds of savers at will, by imposing duties or taxes on bank accounts, with the additional option to appropriate savers’ funds on occasion as required, then the systemic liquidity problems will be solved. Banks need never fear solvency problems again and they can simply fall back on the account holder’s funds to meet any obligations. There are in fact already names for these restorative operations, they are called “bails-ins” and NIRP (Negative Interest Rate Policy).
Candidate Donald Trump did the seeming impossible: get elected president while speaking truths that shocked establishment policymakers. Such as criticizing the defense dole for South Korea, one of Washington, D.C.’s, most sacred sacred cows. However, as his swearing in nears, he is being strongly pressed to abandon his contrarian views…Alas, Trump fell short when discussing the solution. He argued: “They have to protect themselves or they have to pay us.” The U.S. shouldn’t hire out its military like a mercenary force. Rather, Washington should turn over defense responsibilities to one of the world’s wealthier nations. Serious, mature countries should protect their own people, rather than beg others to do so.