February 2: Daily Contrarian Reads

Here They Go Again—Goldman’s Man Mnuchin Set To Deep Six Trump’s Pledge To Audit The Fed

Auditing the Federal Reserve was once part of the Trump administration’s first 100 days’ action plan to “Make America Great Again,” but it appears that Wall Street banker and Treasury Secretary nominee Steve Mnuchin is now trying to undermine President Trump and the momentum of this important campaign promise……Although Trump recognizes that “Auditing the Fed is so important,” so much so that he publicly called out Sen. Ted Cruz (R-Texas) for missing a vote on the bill last year, Mnuchin is quietly working to stop the legislation from advancing. When questioned last week by Sen. Bill Nelson (R-Fla.), Mnuchin said, “As you know, the Federal Reserve is organized with sufficient independence to conduct monetary policy.” Mnuchin is merely echoing his former Wall Street cohort’s talking points, and it’s important that we debunk them now before   further damage is done to this important cause.

Trumpian Bull Set To Charge Into Mideast China Shop

President Donald Trump is getting ready to plunge into the burning Mideast with all the zeal and arrogance of a medieval crusader. The new administration’s knowledge of the region is a thousand miles wide and two inches deep. Reviving a truly terrible idea originated by know-nothing Congressional Republicans, Trump proposes US-run safe zones in Syria for refugees from that nation’s conflict. The president went out of his way to insist that such safe zones would spare the United States from having to shelter Syrian refugees. He should better worry about Chicago where 762 citizens were murdered last year.

Goodbye Dow 20,000: The Trump Rally Is Running On Fumes

“I think the sell-off is because there has been too much excitement and not enough substance on the policy side from Washington,” says Rajiv Jain, a fund manager at GQG Partners in Ft. Lauderdale. Until March 2016, Jain spent over 10 years running nearly $30 billion in global equity at Vontobel Asset Management in New York…..Another reason for the sell-off: taxes. The Republican Party seems willing to push tax reform out until next year. A lot of the post-election rally was pricing in corporate tax cuts coming within the first 100 days of Trump.

The Travel Ban Seven—-Why Trump’s List Is So Bizarre

Conceivably this list of seven could dilute the anti-Islam flavor of the order somewhat, given that other Muslim-majority countries are not so listed. But looking closely at who was listed and who wasn’t only underscores how far divorced this matter is from counterterrorism. No one from any of the seven countries on the list has killed anyone in a terrorist attack in the United States. By contrast, the hijackers who perpetrated 9/11 came mostly from Saudi Arabia and the rest from the United Arab Emirates, Egypt, and Lebanon; none of these countries are on the list.

President Donald Trump’s Policies Have Brought Gold Back to Life

Gold futures rose for a second day, posting the biggest monthly gain since June, on investor concern over moves by Trump that included barring entry by citizens from seven predominantly Muslim nations and firing the acting U.S. attorney general for refusing to enforce the order. The dollar headed for a third straight decline against a basket of 10 currencies, and U.S. stocks slid. Confusion over U.S trade and immigration policies has helped rekindle haven demand for gold, which in December capped its biggest quarterly decline in more than three years. Money is also flowing back to precious metals as speculation mounts that the Federal Reserve may be more cautious in raising U.S. interest rates amid concerns Trump’s policies could stifle economic growth. Protests from New York to Atlanta to Detroit were held Sunday.

Mind The European Bond Market—-Yields Spiking In France, Italy And Greece

Bond yields for France, Italy and Greece are all spiking higher relative to benchmarks. French 10-year borrowing costs have surpassed 1 percent for the first time in more than a year on fears that its presidential election will result in a victory for National Front leader Marine Le Pen, whose policy ideas are hardly market-friendly. Italy, deeply divided after a referendum on constitutional reform that led to a change in government, has the added problem of a banking industry that defies remedial efforts. And Greece is back in the news for all the wrong reasons as its creditors wrangle over the latest bailout review.

Harry Dent: Stocks Will Fall 70-90% Within 3 Years

All four of the cycles I track point down now. One after the next has peaked in the last several years. All four point down into early 2020 or so. That’s only happened in the early to mid-’70s when we had the worst stock crashes back then, the OPEC embargo, etc — the worst set of crises since the 1930s……The next three years are likely to be the worst we see in our lifetimes. It will be more like the early 1930s when stocks hit a debt bubble and financial asset bubbles crashed, which they only do once in a lifetime such as the early 1930s. Stocks will be down 70, 80, 90% — that’s to be as expected in this stage of the cycle after such a bubble….

2017 Outlook: Signs Of The Global Crisis Ahead

We are in the midst of a once in a lifetime crisis and there is only one thing more frightening than not knowing what is coming next, and that is living in a world run by “experts” who think they know exactly what is going to happen next. These are the same “experts” who didn’t see the 2005 housing bubble, the 2008 financial collapse, the EU implosion, Brexit, or the Trump presidency. It is fascinating to me no one seems all that worried about the systematically dangerous levels of global debt supporting essentially bankrupt governments, banks and consumers. Global debt stood at $142 trillion at the end of 2007, just prior to a worldwide financial meltdown, caused by too much bad debt in the financial system. To “fix” this problem, central bankers around the globe ramped up their electronic printing presses to hyper-drive and created another $57 trillion of debt by mid-2014. They haven’t taken their foot off the gas since. Today, global debt most certainly exceeds $225 trillion and has surpassed 300% of global GDP.

Trumpian Currency Wars-Ahead—–Navarro Slams Germany For “Weak” Euro

Germany is using a “grossly undervalued” euro to exploit the US and its EU partners, Donald Trump’s top trade adviser has said in comments that are likely to trigger alarm in Europe’s largest economy. Peter Navarro, the head of Mr Trump’s new National Trade Council, told the Financial Times the euro was like an “implicit Deutsche Mark” whose low valuation gave Germany an advantage over its main partners. His views suggest the new administration is focusing on currency as part of its hard-charging approach on trade ties.

Italy’s Banking Crisis Just Re-Erupted—–Largest Bank Posts $12 Billion Loss

Ever since the European Commission and ECB jointly decided that Italy’s government could bend EU banking rules out of all recognition in order to bail out the country’s third largest bank, Monte dei Paschi di Siena, Europe’s financial stocks have been on a tear. But the good times were brought to a grinding halt Monday after Italy’s largest bank, Unicredit, which employs 55,000 people in 17 countries, announced losses for 2016 of €11.8 billion. By the bank’s logic, it would have announced profits if it hadn’t had to write off €12.2 billion, including billions of euros of non-performing loans (NPLs) festering on its balance sheets.