June 30: Daily Contrarian Reads

Another Record High—-Global Debt Reaches $217 Trillion or 327% of GDP

Global debt has hit a record level in the first quarter of this year, mainly driven by emerging markets, raising questions of whether there will be another financial crisis in the near future. Data from the Institute of International Finance showed that global debt reached $217 trillion in the first quarter of this year, or 327 percent of gross domestic product.

Yes, Ms. Yellen…There Will Be Another Financial Crisis

Will there will be another “Financial Crisis” in our lifetimes?  Yes, it is virtually guaranteed. The previous “crisis” wasn’t about just “an asset gone bad,” but rather the systemic shock caused by a “freeze” in the credit markets when Lehman Brothers filed for bankruptcy. Counterparties evaporated, banks froze lending and the credit market ceased to function……Credit, not the stock market, is the “lifeblood” of the economy.

Is RussiaGate Really HillaryGate?

According to an insider account, the Clinton team, put together the Russia Gate narrative within 24 hours of her defeat. The Clinton account explained that Russian hacking and election meddling caused her unexpected loss. Her opponent, Donald Trump, was a puppet of Putin. Trump, they said, “encourages espionage against our people.” The scurrilous Trump dossier, prepared by a London opposition research firm, Orbis, and paid for by unidentified Democrat donors, formed a key part of the Clinton narrative: Trump’s sexual and business escapades in Russia had made him a hostage of the Kremlin, ready to do its bidding. That was Hillary’s way to say that Trump is really not President of the United States—a siren call adopted by the Democratic party and media.

The Mother Of All Bait’n Switches

There are only two pillars holding up markets right now, especially, very especially, stocks. Valuations for shares are in the aggregate stretched to dot-com levels based on the idea that growth will accelerate; and if it doesn’t, the Fed, ECB, or whomever else will limit shareholders’ collective risk. Should there not be growth, at least equity participants will have monetary policy “accommodation” to fall back on. We should clear up immediately that such “accommodation” is a total fiction. Bank reserves are not money which is why central banks are in this mess. But for the stock market in particular, urged on by the media, QE was and low interest rates are believed to be a powerful instrument (no matter how much the idea has been thoroughly refuted even long before 2008).

Get Ready for Risk Off

In Salem’s view, stocks remain close to levels that could presage a full-scale break down. On Tuesday, the NASDAQ Composite closed right on its rising trend channel line that has been in effect for the last few months. It also closed just above the 50-day moving average which is reinforcing support at that 6100 level. As I noted in my 6/21/17 report (see Could Recent FANG Weakness Be Signaling the End of the Bull Run?), any significant move below 6100 on the NASDAQ Composite would have to be viewed as quite bearish…..

Chaos In Trump White House Masks Dangerous US Military Escalation Abroad

While Washington is fixated on President Trump’s tweets, antics, lies and Russiagate, the administration is ramping up a stealth escalation of our military involvement across the Middle East. As Naomi Klein warns, Trump’s “rolling shock of the chaos and spectacle” distracts from radical actions both at home and abroad. Across the Middle East, the administration drives the United States ever further into wars without end, increasing the dangers of direct military confrontation with Russia and Iran, with little awareness and no mandate from the American people. This is a recipe for calamity.

Thanks, Janet! Banks Unleash Surprisingly Big Payouts After Fed’s Stress Tests

The Federal Reserve told big banks they have more than enough capital, and they promptly announced a windfall for shareholders. JPMorgan Chase & Co., Citigroup Inc. and Bank of America Corp. led U.S. firms in unveiling plans to boost dividends and stock buybacks more than analysts had projected……JPMorgan, the nation’s largest lender, said it’s boosting its quarterly dividend 12 percent and may increase share repurchases to $19.4 billion over the next 12 months — roughly 90 percent more than in the prior year. Citigroup plans to double its dividend and may purchase up to $15.6 billion. Bank of America hiked its dividend 60 percent and will buy back up to $12 billion.

How To Revive American Capitalism—Make The Dollar Honest Again

Our point today is that anything short of real major reform won’t help. Fiddling… tinkering… trying to shift the burden from Blue to Red… wasting more on military cronies and less on civilian zombies… wasting time “investigating” – none of this is going to make much difference. We need real transformational reforms. And the problem is not taxes, not Russia, not ISIS… not Blue, not Red; the problem is money. The typical American has too little of it. The Deep State insiders have too much. And the money itself is a fraud.

CNN Resignations  Merely Latest Example of Media Recklessness on the Russia Threat–Here’s Chapter And Verse

Three prominent CNN journalists resigned Monday night after the network was forced to retract and apologize for a story linking Trump ally Anthony Scaramucci to a Russian investment fund under congressional investigation. That article — like so much Russia reporting from the U.S. media — was based on a single anonymous source, and now, the network cannot vouch for the accuracy of its central claims….But CNN is hardly alone when it comes to embarrassing retractions regarding Russia. Over and over, major U.S. media outlets have published claims about the Russia Threat that turned out to be completely false — always in the direction of exaggerating the threat and/or inventing incriminating links between Moscow and the Trump circle. In virtually all cases, those stories involved evidence-free assertions from anonymous sources that these media outlets uncritically treated as fact, only for it to be revealed that they were entirely false.

“Tightening” Slugfest Erupts behind the Fed

It has been a veritable slugfest by central bank chiefs today and yesterday: Fed Chair Yellen, ECB President Draghi, Bank of England Governor Carney after his chief economist suddenly turned hawkish last week, and Bank of Canada Governor Poloz. And there are rate hikes in the air. Bank of Canada’s Poloz didn’t want to “prejudge” the rate decision in July, he told CNBC yesterday, but “extraordinarily low interest rates” – the BoC had cut twice in 2015 in response to the oil bust – “have done their job.” And “certainly we need to be at least considering that whole situation now that the excess capacity is being used up steadily.”