December 8: Daily Contrarian Reads

Mother of All Bubbles Too Big To Pop

This is the third gigantic bubble that the Fed has inflated, and when this one pops, it’s not going to be ‘the third time is a charm.’  It’s going to be ‘three strikes and you’re out.’  I think this bubble is too big to pop.  I think it’s the mother of all bubbles, and when it bursts, there is not a bigger one that the Fed is going to be able to inflate to mask these problems, meaning we can’t kick the can down the road anymore.”

Thanks, Donald! Fed Nominee Goodfriend Is An Anti-Cash Warrior

Goodfriend’s dislike for cash could become an issue in his confirmation hearings……Goodfriend is concerned that the existence of cash makes it harder for the Fed to lower interest rates below zero. In the next crisis, he says, the Fed might want to push interest rates into negative territory to prod people to stop sitting on their money and do something with it, such as consumption or investment……. “Is Marvin Goodfriend the Worst Fed Nominee of All Time?”

Good Job, Mario! ECB-Held Corporate Bonds Go Up In Smoke

But it is what happened to the company’s bonds that mattered most: Steinhoff International debt plunged, with €800 million of senior unsecured bonds due in 2025 falling as much as 41 cents on the euro, to 42 cents, before rebounding modestly. What makes the collapse remarkable is that the notes were issued just six months ago, in July, and have a Baa3 investment-grade rating from Moody’s Investors Service……That’s right: the ECB has emerged as the most prominent, if not so proud, owner of Steinhoff 2025 bonds as a cursory look of the ECB’s latest holdings reveals.

The Curtain Rises On Trump Theater

What in the real, actual, physical world will change as a result of this empty “recognition”? The answer is: nothing. The embassy will stay where it is. The Palestinians will remain in their prison-like condition, and their Israeli jailers will continue to praise the President in public while continuing to guard their own interests even when it comes at the expense of the Americans. Any questions?

The Great Credit Party Is Almost Over

The great credit party that’s taken yield premiums in major markets down around lowest in a decade is probably months away from an end, as central banks normalize monetary policy and the economic outlook softens, Société Générale SA predicts….U.S. investment-grade bond premiums will widen by mid-2018, with European counterparts following suit, as credit markets price in the economic slowdown.

Finally, An Honest Inflation Index—And It Shows 3% Inflation

Well it appears that someone at the Fed has finally decided to see what would happen if the CPI included those assets, and surprise! the result is inflation of 3%, or half again as high as the Fed’s target rate.

The Ultimate Swamp Scam: Fed-Funded CFPB Funneled Billions To Democrat Slush Fund

A consultant who worked with the highly politicized Consumer Financial Protection Bureau (CFPB) claims the organization funneled a large portion of over $5 billion in collected penalties to “community organizers aligned with Democrats” as part of a giant slush fund, the Post reports.

Waiting For Godot’s Wages

Though the BEA revised GDP slightly higher for Q3 2017, the government agency took hourly compensation out to the woodshed…….With the latest revisions, nominal hourly compensation….. is growing on average at the lowest pace since 1994. The 4-quarter year-over-year change is less than 1% now, which is worse than at any point in 2008-09.

The Spurious Math Of The Tax Cut Rally

Since at least 1947, historical data has provided sufficient evidence to show that corporate tax reductions, subsidized by federal deficits and individual taxpayers, have resulted in slowing GDP growth. Accordingly, we believe that the current proposal will follow the path of prior tax reductions and result in weaker economic growth and ultimately lower corporate earnings than would have occurred without the legislation.

Mueller Charged Trump Aide With Obstruction For… Shutting Down His Facebook!

Here’s what we didn’t know: before the plea agreement, Papadopoulus was originally arrested as he got off a flight at Dulles airport in July. He was charged with lying to the feds and obstruction of justice…… for shutting down his Facebook account one day after a follow-up interview with the FBI in February.