October 24: Daily Contrarian Reads

Global Debt Investors: The Silence of the Lambs

recent, reluctant re-viewing of the film, only the third in history to win the “Big Five” Oscars, Best Picture, Actor, Actress, Director and Screenplay, fed fresh food for thought. The image of captives rejecting their freedom brought to mind another flock of corralled and stunned lambs — bond market investors. They too have been given the opportunity to escape their fate. But so many choose instead to stay. Such is the reality of a world devoid of options, with time ticking ruthlessly by.

Get Some Gold—-A Global Financial Crash Is Coming

Mirror, mirror on the wall, which asset is most mispriced of all? According to a Goldman Sachs alum who predicted the financial crisis in 2008, it’s gold.

The precious metal should be a lot more expensive when the likelihood of a global financial collapse and a move toward negative interest rates is accounted for, says Global Macro Investor founder Raoul Pal, who now sees a U.S. recession within 12 months.

Why the Stock Buyback Bubble Is About to Burst

Remember, this earnings season is expected to be the fifth consecutive quarter of falling profitability. As a result, analysts at Barclays Capital are warning that shareholder payouts (dividends and buybacks) are exceeding cash flow at a $115 billion annual rate. Unless profitability and revenue growth return soon, companies will be forced to scale back these capital returns, and thus, remove a major source of buying demand from the stock market…..Now with earnings and cash flow drying up and debt financing becoming pricier (as long-term interest rates drift higher), the slow-motion buyout is about to come to an end.

The Obamacare Death Spiral—-Chapter and Verse

And healthcare costs are projected to rise about another 9% in 2017. Is it any wonder that 47% of Americans have less than $400 saved up for an emergency? The Trump and Sanders phenomenon – whatever you may think about either as candidates – is a sure indication that a significant portion of this country is very distressed. People don’t like the direction we are going. If you think the situation is going to be any better when healthcare costs have gone up (at least) another 30% between now and 2019–20, you are not paying attention.

Yellen: Maybe We Don’t Know What We Are Doing

It has been the biggest lie of the latter half of the 20th century and so far of the 21st: economists are believed to be experts on the economy. They are not; they are statisticians and Yellen’s speech leaves absolutely no doubt as to this fact. She starts out by making an astounding claim:

Subprime Frenzy, China Style——Beijing Median Home Price Rises To 34X Median Income

Data released Tuesday showed medium- and long-term household loans, almost all of which are mortgages, made up 60% of all new loans created in the third quarter, up from 47% in the second quarter and 23% in the first. Easy credit has fanned a property-buying craze in many Chinese cities this year, helping shore up an otherwise weak economy.

Robert Kennedy’s Speech Writer On How The Democrats Became The War Party

John and Robert Kennedy devoted their greatest commitments and energies to the prevention of war and the preservation of peace. To them that was not an abstract formula but the necessary foundation of human life. But today’s Democrats have become the Party of War: a home for arms merchants, mercenaries, academic war planners, lobbyists for every foreign intervention, promoters of color revolutions, failed generals, exploiters of the natural resources of corrupt governments. We have American military bases in 80 countries, and there are now American military personnel on the ground in about 130 countries, a remarkable achievement since there are only 192 recognized countries.

Foreign Policy ‘Elite’ Eagerly Await Overseas War Expansions Under Hillary Clinton

There is one corner of Washington where Donald Trump’s scorched-earth presidential campaign is treated as a mere distraction and where bipartisanship reigns. In the rarefied world of the Washington foreign policy establishment, President Obama’s departure from the White House — and the possible return of a more conventional and hawkish Hillary Clinton — is being met with quiet relief.

European Taxpayers Now On The Hook For Junk Debt As ECB Bond-Buying Debacle Builds

“Picking winners” was never a good idea for policymakers – no matter what the economics textbooks say – and now the ‘market’ has given the ECB a big headache. Draghi’s corporate-bond-buying scheme has backfired as the European Central Bank finds itself holding junk bonds in its so-called ‘stimulus’ plan after K+S AG was downgraded by S&P (sending its price plunging).

The Jig Is Up—-Why Exporters Are in Double Trouble 

Essentially, the core global consumer base is now falling and will fall for decades…fewer consumers every year.  Attempts to have ever fewer buy ever more with ever lower interest rates has run its course and is no longer of any value.  The game is up and expect some very sore losers to begin acting very badly very soon.