December 15: Daily Contrarian Reads

The Force Behind Bitcoin’s Meteoric Rise: Millions of Asian Retail Investors

Despite the attention focused on the launch of bitcoin futures in the U.S. last weekend, the center of gravity for trading the virtual currency, measured by volumes, has been in the East—starting in China, before shifting earlier this year to Japan and recently to South Korea as the latest hot spot.....But by the end of November, Japan, South Korea and Vietnam accounted for nearly 80% of bitcoin trading activity globally.

An Unhealthy Absence of Doubt and Fear

Doubt and fear remain absent from Wall Street despite the specter of numerous potentially adverse economic, interest rate, inflationary, political, geopolitical and market outcomes. Exaggerating the uptrend is the underappreciated and more dominant role of passive investing strategies (ETFs, risk parity and volatility trending) that, when combined with the global short volatility bubbleis distortive to the markets and limits price discovery.

Irrational Exuberance And FOMO

Here’s a little secret, “Animal Spirits” is simply another name for “Irrational Exuberance,” as it is the manifestation of the capitulation of individuals who are suffering from an extreme case of the “FOMO’s” (Fear Of Missing Out). The chart below shows the stages of the previous bull markets and the inflection points of the appearance of “Animal Spirits.” 

Heading For The Showers-----The Deep State's Bogus Russian Meddling Case

As much as the U.S. mainstream media has mocked the idea that an American “deep state” exists and that it has maneuvered to remove Trump from office, the text messages between senior FBI counterintelligence official Peter Strzok and senior FBI lawyer Lisa Page reveal how two high-ranking members of the government’s intelligence/legal bureaucracy saw their role as protecting the United States from an election that might elevate to the presidency someone as unfit as Trump.

Enron 2.0----Why Tesla Is Heading For A Brick Wall

Tesla Inc, a perennial target of short sellers, “is headed for a brick wall,” investor Jim Chanos said......“Detroit and Germany are spending billions of dollars on this,” Chanos said. “Tesla is not a leader.”....Tesla has been working to get its Model 3 sedan into production, burning money at a clip of about $8,000 a minute. The model’s roll-out has been marred by bottlenecks at its battery factory and sole auto plant.

C-Suites Already Spilling The Beans----Slew Of Announcements That Corporate Tax Cut Will Go To Share Buybacks

Long-term investors and workers hoping that the tax overhaul and repatriation holiday will encourage investment in growth and a rise in wages should brace for disappointment. A spike in share buyback and special dividend announcements in the past ten days reveals that companies are more likely to use any money saved on an all-too-familiar item: shareholder returns.

The Deep End of the Swamp Is Getting Deeper----Trump Is Lavishing Money On the Pentagon

But as Christmas approaches this year, leaders of Congress, the Pentagon, and the Trump White House seem to have forgotten that lesson. Their wish list for the U.S. military, if taken seriously, will bust the federal budget at the very time Republicans are ramming through tax legislation that will shrink Uncle Sam’s savings account by more than a trillion dollars over the next decade.

Bitcoin’s Milkshake Volatility Is Bringing Too Many Lads To The Yard

There’s no question that a lot of what you’re seeing in the cryptocurrency space is a combination of stupidity and pure, unadulterated speculation.....The same central bank policies which have helped create demand for these alternative “stores of value” (and the scare quotes are there for a reason) have also served to inflate massive bubbles in financial assets and depress cross-asset volatility. Indeed, one of the only recent bubbles that isn’t completely dwarfed by the run-up in Bitcoin is the short vol. trade (yellow line).

Corporate America's Tax Cut Selfie---Actual Effective Rate Already Just 13%

The shocking result is that the effective corporate tax rate based on actual tax collections was only 13.0% during Q3, and has been mostly well below 20.0% since the start of the previous decade. What gives? I’m not sure, but I am inclined to follow the money, which tends to support the story told by the IRS data. If so, then Congress may be about to cut a tax that doesn’t need cutting.

Inside the "Blow-Out" Retail Sales Report For November

The question is why, or more so why now? Retail sales had been lagging, seriously weak throughout much of the middle parts of 2017. After rising at an almost normal clip in the back half of 2016, consumer spending materially softened starting in February. From that month until August, retail sales were up just 2.8% (seasonally-adjusted), or a 3.3% annual rate of expansion closer to recession levels than accelerating consumer activity.

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