September 27: Daily Contrarian Reads

Corporate Mirage: Debt out the Wazoo, Sales Languish, Stocks Soar

But that relationship between debt, sales, and share prices has gone completely out of whack. First things first: Debt at nonfinancial companies – this excludes banks and nonbank lenders such as mortgage lenders – has soared. To get a feel for just how much, I have pulled the data on three major components of corporate debt.

Smoking Gun Proof—-Why The Fed’s Monthly Activity Surveys Are Bogus

There you have it, folks. Hurricane Harvey was very disruptive nationally, just not in the Dallas Fed region. This curious statistic is despite the fact that Dallas Fed region refineries and chemical production plants were shut down for lengthy periods.

This Time One Thing IS Different—Massive Shift To Passive Holdings Will Accelerate The Sell-Off

The massive adoption of passive products, particularly exchange-traded funds, is having a pronounced impact on the stock market, but in ways that may not be apparent to the average investor, according to Goldman Sachs. “One unintended consequence from the relentless inflow of passive is the liquidity profiles of stocks—even those with related fundamentals—now look vastly different,” wrote Goldman analysts led by options strategist Katherine Fogertey, in a note to clients.

No, Donald, What’s “Stupid” Is Not The Iran Nuke Deal—It’s The Neocon Case Against It

But, the most comprehensive plan of action for leaving the JCPOA and eventually going to war with Iran was proposed by John Bolton, former US ambassador to the UN and Assistant Secretary of State during the first term of President George W. Bush. For years Bolton has been advocating bombing Iran’s nuclear facilities, either by Israel, the US, or both. He is also a lobbyist for Mujahedin-e Khalgh Organization (MEK, also known as MOK), an Iranian opposition group that for years was listed by the State Department as a terrorist organization, and is universally despised by the Iranian people for its collaboration with the regime of Saddam Hussein during Iran-Iraq war, and working with Israel to assassinate Iranian nuclear scientists…. Bolton’s comprehensive plan of aggression (BCPOA) against Iran is built upon lies, exaggeration, warmongering, and twisting the truth. Let us consider the essence of his “arguments” one by one.

Levered Loan Volumes Soar Past 2007 Levels As “Cov-Lite” Deals Surge

If a surge in covenant-lite levered loans is any indication that debt and equity markets are nearing the final stages of their bubbly ascent, then perhaps now is a good time for investors to take their profits and run.  As the Wall Street Journal pointed out, levered loans volumes in the U.S. are once again surging, eclipsing even 2007 levels, despite the complete implosion of bricks-and-mortar retailers and continued warnings that “the market is getting frothy.”

The War That Never Ends—ISIS Defeated in Syria, Centcom Starts A New War With Russia

Yesterday three high ranking Russian officers were killed in an “ISIS attack” in eastern-Syrian. It is likely that they were killed by US special forces or insurgents under US special forces control. The incident will be understood as a declaration of war. The US Central Command in the Middle East wants the oil fields in east-Syria under control of its proxy forces to set up and control a US aligned Kurdish mini-state in the area. The Syrian government, allied with Russia, needs the revenues of the oil fields to rebuild the country.

HIBOR And The Red Ponzi’s “Dollar” Problem—-Another Shuffle of The Pea

Hong Kong doesn’t have a “dollar” problem, China does. If Hong Kong has developed one, it isn’t very likely to be anything other a transformation done so with added energy and emphasis. Those additions as well as their mere existence tell us what we have suspected all along. The difference between 2016 and 2017 was never an end to the eurodollar issue. The specific part or phase related to the “rising dollar” may have concluded (not surprisingly during a Golden Week), but the structural eurodollar issues dating back ten years linger ever onward. The way in which various places attempt to deal with the never-ending problem has evolved; the results have not.

Angela’s Ashes: 5 Takeaways from the German Election

Angela Merkel will remain German chancellor. That widely anticipated outcome was about the only unsurprising element of Sunday’s German election. The far-right Alternative for Germany (AfD) finished much stronger than most observers dared predict, becoming the first unabashedly racist, anti-foreigner party to sit in Germany’s parliament since the days of Hitler.The Social Democrats (SPD) all but imploded, opting to go into opposition to lick their wounds rather than risk another “grand coalition” with Merkel. The Free Democrats, back in parliament after four years in the wilderness, along with the Greens, finished slightly better than projected, opening the door to a three-way tie-up with Merkel’s conservatives. Previously considered a long shot, the combination Germans call “Jamaica” now looks like the only option left to form a government.

The ECB’s Secret Bailout of Club Med—Inside Target2

The ECB claims that Target2 does not represent capital flight. Evidence says the ECB is wrong, especially for Italy and Spain. I have discussed this previously, but let’s recap Target2 before taking a look at new charts. Project Syndicate writer, Hans-Werner Sinn, explains why the ECB’s asset purchases and Target2 imbalances constitute “Europe’s Secret Bailout”.

Been There, Done That! The North Korea Problem Exists Because Washington Already Destroyed It Once—In 1950-53

Many of these atrocities refer to what Blaine Harden, author and former Washington Post reporter, recently called a “long, leisurely and merciless” US bombing campaign: well over half a million tons of bombs dropped, napalm and chemical weapons deployed, cities leveled…..Air Force general Curtis LeMay, head of the strategic air command during the Korean War, estimated that the American campaign killed 20 per cent of the population. “We went over there and fought the war and eventually burned down every town in North Korea,” he said.