January 31: Daily Contrarian Reads

About Dow 20,000—-Index Companies Report Worst Revenues since 2010

The Dow-20,000 hats have come out of the drawer after an agonizingly long wait that had commenced in early December…..The Dow-20,000 hats have come out of the drawer after an agonizingly long wait that had commenced in early December. The chart below shows total aggregate revenues as reported under GAAP by the 30 companies that are today in the DJIA. This includes Apple, for example, though it only joined in 2015; and it no longer includes AT&T. For 2016, these 30 companies reported aggregate revenues of $2.69 trillion. That’s down 4.4% from 2011 and the worst year since 2010.

Adventures In Currency Debasement—-A Succinct History Of How Mexico Destroyed Its Money

The juxtaposition of pre-colonial ruins, Medieval Spanish architecture, and modern skyscrapers, all on the same city block, is extraordinarily fascinating. But what’s even more fascinating is the ever-present instruction of what happens when overzealous governments overspend, and then inflate their currency to pay their debts. Mexico offers ominous warning signs of what may be in store for the United States, given the government’s financial imprudence……Currencies, both north and south of the Rio Grande, ain’t what they use to be. Several generations ago they were as reliable as a rooster’s call at dawn. Now they’re as crooked as a politician’s spine. We know this not by reading the history books, nor by hearsay, but by the honest, verifiable, silver dollar and silver peso we’re holding in our hands.

Trump’s Hyper-Patriotic Nationalism Is Dangerous

Who could miss signs? They adorned the speech from brim to dottle with its invocations of solidarity, unity of purpose, devotion, patriotism, “loyalty to our country … and to each other,” “total allegiance,” national striving, nationalism, and assurances that the state would protect us from enemies — including even those would bestow low-priced goods on us. Then, to boot, he followed it all up with a decree that the day be known as the “National Day of Patriotic Devotion.”….. Where the hell are we? And what year is it? The last year has had the feel of a really bad dream. Now it’s taken a turn for the worse. What next? Armbands? His — blessedly brief — inaugural address was just what no freedom-loving American individualist wanted to hear. Sure, presidents invoke nationalism in their inaugural addresses, but Trump laid it on thick, with no reference to individual liberty or limitations of government power.

Draghi Derangement Update—-ECB Assets Rise Above 36% Of Eurozone GDP; Now Owns 10.2% Of European Corporate Bonds

The ECB’s nationalization of the European corporate bond sector continues. In the ECB’s latest update, the six central banks acting on behalf of the Euro system provided an update on the list of corporate bonds they bought. They bought into 810 issuances with a total of €573bn in amount outstanding. For the week ending 27th January, the bond purchases stood at €1.9bn across sectors. This increases the number of securities held by the ECB to 813, and lift the ECB’s total corporate bond holdings to €58.82b, which means that as of the latest weekly data, the ECB now owns 10.2% of the total €575.42BN in European corporate debt outstanding.

February’s FOMC Meeting: A Powder Keg In Search Of A Match

On February 1st the Federal Reserve will conclude its scheduled two-day meeting. No one expects any change in policy to be announced, especially since the Fed. has since hiked rates at the preceding meeting……. However, I believe this meeting followed by its minutes may set up the “markets” as well as the economy for an “Ides of March” we may all soon not want to remember, let alone – never forget. So why is it I imply these minutes might have more onerous implications than prior? Two words: China, Yuan.

Trump’s Economic Nationalism—A Free Market Critique

Clearly this is not the case. Exhibit one: phone calls and meetings with corporate executives before and after assuming the presidency in which he called for them to keep their manufacturing facilities in the United States, insisting that they should focus on creating more jobs in America for American workers, and threatening heavy fiscal penalties for any private enterprise that attempts to move out of the United State and reimport goods produced outside of the country Trump’s vision is not that of individual freedom and economic liberty. No, it is the collectivist ideal of restored “national greatness” for which all Americans should participate and for which all Americans will be made to confirm, if necessary, through the fiscal and regulatory hand of the government.

Congresswoman Tulsi Gabbard Returns From Syria With Proof Obama Funded ISIS And Al-Qaeda

Hawaii Rep. Gabbard went to Syria on a secret fact-finding mission to wade through the lies and propaganda and find out what is really happening on the ground. Immediately on her return CNN booked her for an “exclusive” interview – and Gabbard told them exactly what they didn’t want to hear: she has proof the Obama administration was funding ISIS and Al-Qaeda…..The reality is, Jake – and I’m glad you bought up that point – every place that I went, every person I spoke to, I asked this question to them. And without hesitation, they said ‘there are no moderate rebels, who are these moderate rebels that people keep speaking of?’

Warning From Former Bundesbank VP—-The Eurozone Must Die For Its Members To Survive

The eurozone must break up if its members are to thrive again, according to a former European Central Bank official. Jürgen Stark, who served on the ECB’s executive board during the financial crisis, said it was time to “think the unthinkable” and work towards a “reset” of Europe that pulled power away from Brussels. The former vice-president of Germany’s Bundesbank said the creation of a two-speed eurozone, with France and Germany at its core, would help to ensure the smaller bloc’s survival.

Just A Coincidence?  Dow Hits 20,000 Just As National Debt Reaches $20 Trillion

The Dow Jones Industrial Average provides us with some pretty strong evidence that our “stock market boom” has been fueled by debt.  On Wednesday, the Dow crossed the 20,000 mark for the first time ever, and this comes at a time when the U.S. national debt is right on the verge of hitting 20 trillion dollars.  Is this just a coincidence?  As you will see, there has been a very close correlation between the national debt and the Dow Jones Industrial Average for a very long time. For example, when Ronald Reagan took office in 1991, the U.S. national debt had just hit 994 billion dollars and the Dow was sitting at 951.  And as you can see from this chart by Matterhorn.gold via David Stockman, roughly that same ratio has held true throughout subsequent presidential administrations…

Japan’s Fiscal Delusions

This dance has been repeating for as long as most Japan watchers can remember, and the choreography never changes. Back in the 1990s the country responded to bursting financial bubbles with massive increases in public borrowing and spending, propping up the banks and builders but taking on inordinate amounts of debt to do so. Each subsequent budget has offered more of the same, with ever-higher debt and ever-lower interest rates. Meanwhile the Japanese people, like most rich societies where women have a choice in the matter, have lost their taste for reproduction. More workers are retiring than are being replaced, which increases the cost of public pensions relative to the tax base and accelerates the slide towards insolvency.