September 29: Daily Contrarian Reads

When Investors Seemingly Learned Nothing From History

Investment returns likely have been pulled forward by central bank liquidity, low interest rates and passive investing. However, over the next five years returns may be substandard at best, but more likely, negative. At worse, we face an incipient bear market. As expressed in yesterday’s opener, the nature of and players in the investment business have changed. This helps to explain the Teflon nature of the S&P 500 Index. But as Grandma Koufax used to say, “my matzah brei doesn’t grow to the sky,” and every day we move closer to a Minsky Moment.

Thanks, Alan, Ben And Janet!  Top 1% Now Control 39% of US Wealth

America’s top 1% now control 38.6% of the nation’s wealth, a historic high, according to a new Federal Reserve Report……The top 1% saw their share of wealth rise to 38.6% in 2016 from 36.3% in 2013. The next highest nine percent of families fell slightly, and the share of wealth held by the bottom 90% of Americans has been falling steadily for 25 years, hitting 22.8% in 2016 from 33.2% in 1989.

Propaganda and the Catalonia Referendum—The Russkies Are Coming In Barcelona, Too!

From Brexit to the victory of Donald Trump in the 2016 presidential election, everything the Establishment disapproves of is credited to – or, rather, blamed on – the Kremlin, and specifically the Machiavellian figure of Vladimir Putin, whose demonic genius bestrides the world. Add to this the advance of technology, and the “Putin did it” formula is ready to be deployed by the Powers That Be and their journalistic camarilla. A classic example of the genre is a recent piece by one David Alandete, the managing editor of Spain’s “liberal” nationalist daily, El Pais, who writes: “The network of fake-news producers that Russia has employed to weaken the United States and the European Union is now operating at full speed on Catalonia, according to detailed analyses of pro-Kremlin websites and social media profiles by this newspaper.

Landlord’s View of the Brick and Mortar Meltdown

When the first few raindrops splash you after a long drought, you don’t necessarily think monsoon. When one package a month arrives at your door, and it’s a pair of shoes that are being returned the next day, you’re unlikely to worry about the future of traditional retail. But when that occasional delivery becomes a reliable year-round stream, it’s time to scope the bricks and mortar. If half a dozen friends confirm that they too receive a daily box, you might – if you’re a retail developer – begin to consider your business in a new light, possibly wondering what the ratio is between doorstep deliveries and skipped trips to your mall.

Stop Wrapping the Flag Around Pro Sports

Desperate to fill hours and hours of air time on 24-hour news channels, media corporations have made sure the discussion of the correct posture of National Football League players has been front and center.  Apparently, before grown men can chase a little toy around a grassy field for a few hours, it’s absolutely essential that they take part in a variety of pro-government rituals. This was not always the case, though, and prior to the twentieth century, it was hardly expected that a ballgame be preceded by a recitation of the national anthem or any other song of national allegiance.

Red Ponzi Update: China Mortgage Bubble Looking Like US 2007

Young Chinese like Eli Mai, a sales manager in Guangzhou, and Wendy Wang, an executive in Shenzhen, are borrowing as much money as possible to buy boomtown flats even though they cannot afford the repayments. Behind the dream of property ownership they share with many like-minded friends lies an uninterrupted housing price rally in major Chinese cities that dates back to former premier Zhu Rongji’s privatisation of urban housing in the late 1990s.

The Deluge Begins—Hartford CT Heading For Bankruptcy

The downgrade to ‘CC’ reflects our opinion that a default, a distressed exchange, or redemption appears to be a virtual certainty,” said S&P Global Ratings credit analyst Victor Medeiros. ……In short: while Chicago has so far dodged the bullet, the capital of America’s richest state (on a per capita basis), will – according to S&P – be also the first to default in the coming months.

Debt Boom in India and China threatens new Financial Crisis—-Even Davos Crowd Worried

Banks across the world are more vulnerable to a crisis now than they were in the build up to the credit crunch, the World Economic Forum has warned. Bad loans in India have more than doubled in the past two years, while in China’s financial system “business credit is building up similarly to the United States pre-crisis, and could be a new source of vulnerability.

Chinese Developers Brace for Crash Into ‘Wall of Bonds’

A wave of local-currency debt coming due next year alongside new stricter lending rules are bearing down on China’s developers and posing a risk to the country’s economy….The volume of maturing yuan bonds will jump 64% in 2018 for home builders to at least 230 billion yuan ($35 billion), and rise another 87% the year after that, according to data provider Wind Information Co.

The Illusion of Prosperity—Debt, Debt and More Debt

For the last 50 years, the consumer, that means you and me, have been the most powerful force driving the U.S. economy. Household spending now accounts for almost 70% of economic growth, about 10% more than it did in 1971. Household spending in the U.S. is also approximately 10-15% higher than most other developed nations.