January 11: Daily Contrarian Reads

The Dash For Trash Continues—Junk Stocks Have Led The Market Higher In Last Three Months

The fundamental factor that has had the highest r-squared value to the stock market over the past three months is return on equity (ROE). The top three deciles of stocks with the highest ROE have only returned about 0.4% (in USD) while the the bottom three deciles of stocks with the lowest ROE have returned 4.7%. Similarly, stocks with the lowest sales growth have outperformed stocks with the highest sales growth by nearly 8% in just three months. Stocks with the lowest sales growth have returned 7% while stocks with the highest sales growth have returned -0.9%. Lastly, stocks with the highest net debt as a % of total capitalization have compete trounced all other stocks during this period as well. The decile of stocks that have the most debt have returned 9% over the past three months while the average return for the other nine deciles is just 1.3% and stocks with the least amount of debt have fallen by -1.4%. All in all, the rally in developed market equities over the last three months has been clearly led by stocks with the shakiest fundamentals. 

China’s Hottest New Export Coming To A Nearby Store Soon—–Inflation!

China’s producer prices – which measure what is sometimes called “inflation at the factory” – soared 5.5% in December, from a year ago. This was far hotter than economists had expected, though they’d expected a pretty good jump, with the Bloomberg consensus guess coming in at 4.6%…….So producer prices, particularly of export products, are for now left on their own. The yuan’s weakness against the dollar has absorbed some of the price increases on export products, but it also raises some input costs for Chinese producers, further pressuring them to raise prices. And exporters will try to pass these higher prices on to their partners overseas, as far as possible, who in turn will look to consumers and in the US and elsewhere to foot the bill. Higher prices out of China are a phenomenon the US economy hasn’t seen in years.

Now Come The Fake Jobs——Crooked Jack Ma’s 1 Million US Jobs Promise Is A Pure Marketing Scam

These aren’t promises of traditional labor-force “jobs” that many Americans dream of when they listen to Trump’s rhetoric on job creation. They’re merely part of a publicity stunt that plays on Alibaba’s previous announcements to expand its presence outside of China, particularly in the U.S…….Alibaba has fewer than 36,500 global employees despite notching in as one of the most valuable Chinese companies with a market capitalization of $230 billion, according to FactSet. Amazon has 230,800 employees, eBay has 11,600 and Etsy has fewer than 1,000.

The Man Who Could Have Stopped The Bubble—–The Life, Times And Folly Of Alan Greenspan

We are studying the life and times of former Fed chief Alan Greenspan…..The man who knew? Greenspan didn’t seem to know that the biggest bubble in history was created right under his nose. Nor did he seem to notice that the post-1971 fake-money system had created the very distortions and perversities he had warned about as early as 1966.

Bubble Time 2017: Facebook Looks A Lot Like Microsoft In 1999

FB’s valuation looks a lot like Microsoft’s (NASDAQ:MSFT) back in 1999 shortly before the stock’s price per share went on another 20% tear only to crash by more than 50% by 2001…..FB’s valuation looks a lot like Microsoft’s (NASDAQ:MSFT) back in 1999 shortly before the stock’s price per share went on another 20% tear only to crash by more than 50% by 2001.

No Smoking Gun On Russian Hacks—The Definitive Takedown By An Ex-CIA Agent

The eagerly awaited report on the alleged Russian influence operation and hack linked to the recent American presidential election finally appeared on Friday. It is quite possible that President Obama, the intelligence community, and Congress now hope that the case has been definitively made to tighten the screws on Russia. If that is so, they are delusional. Moscow and Vladimir Putin may or may not be guilty as charged, but the paucity of the evidence being presented by the White House and the Director of National Intelligence suggests that the American people are being very poorly served by those who have been entrusted with protecting the nation.

Senator McCain—-A Demented Warmonger With Bloody Hands

Dear Senator McCain: If meddling in foreign governments is an act of war, you are personally involved, with tremendous blood on your hands……“America is with you,” Senator John McCain told demonstrators then, standing shoulder to shoulder with the leader of the far-right Svoboda party as the US ambassador haggled with the state department over who would make up the new Ukrainian government.

How the Mainstream Media Turned Al Qaeda into a US Ally in Syria

As the Syrian government recaptured East Aleppo from rebels in recent weeks, media outlets from across the political spectrum became rebel mouthpieces, unquestioningly relaying rebel claims while omitting crucial details about who the rebels were…..Almost always overlooked in the US (and UK) media narrative is the fact that the rebels in East Aleppo were a patchwork of Western- and Gulf-backed jihadist groups dominated by Jabhat Fateh al-Sham (formerly Jabhat al-Nusra)—Al Qaeda’s affiliate in Syria—along with its ally, Ahrar al-Sham (Daily Beast, 8/8/16; Foreign Policy, 9/1/16). These groups are explicitly anti-democratic and have been implicated in human rights violations, from mass execution and child beheadings to using caged religious minorities as human shields.

The Year Of The Commando——US Special Operations Forces  (SOCOM) Were Deployed to 138 Countries in 2016

From Albania to Uruguay, Algeria to Uzbekistan, America’s most elite forces — Navy SEALs and Army Green Berets among them — were deployed to 138 countries in 2016, according to figures supplied to TomDispatch by U.S. Special Operations Command.        They could be found on the outskirts of Sirte, Libya, supporting local militia fighters, and in Mukalla, Yemen, backing troops from the United Arab Emirates.  At Saakow, a remote outpost in southern Somalia, they assisted local commandos in killing several members of the terror group al-Shabab.  Around the cities of Jarabulus and Al-Rai in northern Syria, they partnered with both Turkish soldiers and Syrian militias, while also embedding with Kurdish YPG fighters and the Syrian Democratic Forces.  Across the border in Iraq, still others joined the fight to liberate the city of Mosul.  And in Afghanistan, they assisted indigenous forces in various missions, just as they have every year since 2001. For America, 2016 may have been the year of the commando.

The Well-Reasoned Basis of Populism

The rise of populism isn’t the politics of rejecting experts, it is the rejection of these “experts” – who quite frankly deserve more than voter disdain. Credentials have come to be seen by a very large and growing proportion of the global population to declare incompetence, having nothing at all to do with intellectual capacity apart from objectivity. It isn’t the denial of reasoned argument but rather the logical end of it.