October 10th – Today’s Contrarian Reads

Doomed To Failure

We’ve been waiting for the U.S. economy to reach escape velocity for the last six years.  What we mean is we’ve been waiting for the economy to finally become self-stimulating and no longer require monetary or fiscal stimulus to keep it from stalling out.  Unfortunately, this may not be possible the way things are going.

Aleppo: ISIS, Not Russia, Is The Enemy

As of today, there is no possibility that the rebels we back could defeat ISIS and the al-Nusra Front, let alone bring down Bashar Assad and run the Russians, Hezbollah, Iran and the Iraqi Shiite militias out of Syria.

Time to stop the killing, stop the carnage, stop the war and get the best terms for peace we can get. For continuing this war, when the prospects of victory are nil, raises its own question of morality.

Millennial Student Loan Debt Tanks Housing Market

Currently, student loan debt has reached $1.3 trillion…this debt burden isn’t helping an already hurting housing marketing, which has seen home ownership rates slip to a 50-year low. A recent study by American Student Assistance and the National Association of Realtors found 71% of students cited student loan burden as the main factor for delaying a home purchase.

Wal-Mart’s Big Pivot—From Giant Superstores To E-Commerce

At an investor meeting Thursday, executives said Wal-Mart would open only about half as many supercenters next year as it did last fiscal year. Instead, Wal-Mart will direct more of its $11 billion in annual capital spending toward boosting e-commerce sales, technology used in stores and customer service.

The Great Debt Unwind: Business Bankruptcies Soar 38%

Something funny happened on the way to the bank: In August, commercial and industrial loans outstanding at all banks in the US fell for the first time month-to-month since October 2010, which had marked the end of the collapse of credit during the Financial Crisis……In September, US commercial bankruptcy filings soared 38% from a year ago to 3,072, the 11th month in a row of year-over-year increases, according to the American Bankruptcy Institute

China’s Housing Bubble Going Parabolic—–Last Year’s Stock Mania All Over Again

Tai Hui is experiencing deja vu. China’s surge in home prices reminds JPMorgan Asset Management’s chief Asia market strategist of last year’s stock market mania. Spiraling leverage and implicit state support are among the common denominators, he says. Shanghai property values jumped 31 percent in August from a year earlier, the latest data show. In 2015, a 60 percent rally in the city’s equities through June 12 was followed by a $5 trillion rout.

French Populist Marine Le Pen Says EU Responsible For “Monstrous Chaos In Syria”

Marine Le Pen, leader of France’s National Front party and the frontrunner for the role of president in near year’s French elections, accused the European Union of being responsible for the ongoing chaos in Syria. She added that Europe has been too busy trying to overthrow Assad while Russia was actually fighting terrorists. “You’ve done everything to bring down the government of Syria, throwing the country into a terrible civil war, while accusing Russia which is actually fighting Islamic State. Your responsibility could not be concealed”, she said speaking at the European Parliament plenary session in Strasbourg on Wednesday.

Since 2014 The US Has Added 547,000 Waiters And Bartenders And Lost 32,000 Manufacturing Workers

As another month passes, the great schism inside the American labor force get wider. We are referring to the unprecedented divergence between the total number of high-paying manufacturing jobs, and minimum-wage food service and drinking places jobs, also known as waiters and bartenders. In September, according to the BLS, while the number of people employed by “food services and drinking places” rose by another 30,000, the US workforce lost another 13,000 manufacturing workers.

September Jobs Report—More Evidence Of Deep Trouble, Not A Pause That Refreshes

This is just not true, a testament to what improper focus on the short run has done to commentary. “An economy that is doing okay” violates every condition about economic sanctity with regard to the business cycle and overarching philosophy. A back and forth economy lurching between possible (and debatable) periods of strength and unnerving slowing is one in serious trouble – no more so than when it is supposed to be experiencing “full employment.” There is always some variation in the short run, of course, but taking steps toward “liftoff” it should be between robust growth and knock-your-socks-off robust growth.

The Next Recession Looms Large

Our current “expansion,“ which began in June of 2009 is 88 months old, and is already the fourth longest since the end of the Second World War (post-war expansions have averaged  61 months) (based on data from National Bureau of Economic Research and Bureau of Labor Statistics). But although it is one of the longest it has also been the weakest….. More ominously, the already weak expansion is beginning to slow rapidly. GDP growth has been decelerating, averaging just 1% in the past three quarters. (Bureau of Economic Analysis) And while hopes were high for a significant rebound in Q3, as has been the pattern all year, rosy estimates have recently been sharply reduced.