June 26: Daily Contrarian Reads

It Was Just A Small Economic Bounce, And It’s Ending Already

Increasingly sentiment, particularly in manufacturing and not limited to just those in the United States, is reverting back to where oil prices actually are of late. The latest is the IHS Markit flash PMI reading for US manufacturing in the month of June 2017. At 52.1, that is the lowest since last September and a level far too much like the worst of the downturn (the Markit PMI never did drop below 50, suggesting once more why PMI’s should not be read as above or below that level but rather as relative indications of relative conditions).This over-optimism compared to oil prices is not a singular correlation; we find it to an even higher degree elsewhere.

The American Invasion Of Syria—-What We’re Not Being Told

It’s time to have a sane discussion regarding what is going on in Syria. Things have escalated exponentially over the past month or so, and they continue to escalate. The U.S. just shot down yet another Iranian-made drone within Syrian territory on Tuesday, even as authorities insist they “do not seek conflict with any party in Syria other than ISIS.”

2007 All Over Again—Why The Stock Market’s In Denial

“We all have to make up our minds as to which of these two asset classes has the right story,” Rosenberg said Monday on CNBC’s “Trading Nation.” “It reminds me of the period in the fall of 2007 when the stock market was putting in a classic double top, and everybody thought that we were going to have the longest cycle on record. The bond market was telling you a different story altogether.” In a recent research note, Rosenberg wrote: “Mr. Market spent most of 2000 and most of 2007 in similar denial mode.” Within a year, a recession hit the U.S. both times.

America’s Credit Card Slaves Move To Top Of Fed’s Worry List

The less comforting news in the stress test is that credit card debt – generally the most expensive and risky debt for consumers – has now moved to the top of the Fed’s worry list in the “severely adverse scenario” of the stress test. The projected losses for the 34 largest banks – not counting the losses at the 4,997 smaller banks – are expected to hit $100 billion, up nearly 9% from the stress test a year ago.

Rain Dance

Think of the ObamaCare reform debate now playing in the US Senate as the final gurglings of polity that knows it is whirling around the drain. They’re pretending to attempt to fix a racket that comprises one-eighth of the American economy. Yikes! How did that happen? At the beginning of the 20th century it was one-quarter of one percent (.25 percent) of the economy.

An Open Letter To B-Dud

Unfortunately, Mr. Dudley, the Fed miscalculated.  Efforts to now raise rates will be too little, too late.  To be clear, there ain’t a snowball’s chance in hell the Fed will get the federal funds rate up to 3 percent before the next recession.  You likely won’t even get it up to 2 percent. Nonetheless, you should stay the course.  If you’re gonna raise rates, then raise rates.  Don’t cut them.  Raise them.  Then raise them some more. Crash stocks.  Crash bonds.  Crash real estate.  Crush asset prices.  Purge the debt and speculative excesses from financial markets.

FAANG Is Now a Textbook Example of an Overheated, Unsustainable Market

I think most of these rules are obvious to investors who experienced the 2008 mess, the dot-com crash, and (if you’re of a certain age) the 1987 Black Monday. Some of us can remember 1980 and ’82. ’82 was especially ugly.  Maybe we mostly forget these experiences, but we pick up a little wisdom along the way. The problem is that now a new generation of investors lacks this perspective. They had little or no stock exposure in 2008 and experienced the Great Recession as more of a job-loss or housing crisis than a stock market crisis.

Albert Edwards: “Citizens Will Soon Turn Their Rage Towards Central Bankers”

During the populist revolt of 2016, which first led to the “shocking outcomes” of Brexit and then Trump, we cautioned that these phenomena were merely the “silent majority” of the developed world’s middle class expressing their anger and frustration with a world that has left them – and their real disposable income – behind, while rewarding the Top 1% through policies that have led to a relentless and record ascent in global asset prices, largely the purview of the world’s wealthiest. More recently, we also noted that it was only a matter of time before this latest “revolt” fizzled, as the realization that changing one politician with another would achieve nothing, and anger shifted to the real catalyst behind growing global inequality (and anger): central banks. In his latest note today, Albert Edwards picks up on this theme to write “Theft redux: the citizens will soon turn their rage towards Central Bankers.” The core of his argument is familiar…

Dear Oliver (Stone): About Those Putin Interviews

Dear Mr. Stone: I have just finished watching all four episodes of The Putin Interviews. May I give you my critique? Overall, I felt that the series is Very Good but felt just short of Great. I will explain below what I feel could have made it Great. First, I want to tell you what I really loved about it.

The Over-Criminalization of American Life

The over-criminalization of America has undermined justice, the rule of law and legal egalitarianism. While the corporate media devotes itself to sports, entertainment, dining out and the latest political kerfuffle, America has become the Over-Criminalization Capital of the World. The proliferation of laws and administrative regulations, federal, state and local, that carry criminal penalties has swollen into the tens of thousands. The number of incarcerated Americans exceeds 2.3 million, with the majority being non-violent offenders–often for War on Drugs offenses.