December 2: Daily Contrarian Reads

Global Bonds Suffer Worst Monthly Meltdown as $1.7 Trillion Lost

The Bloomberg Barclays Global Aggregate Total Return Index lost 4 percent in November, the deepest slump since the gauge’s inception in 1990. Bonds in Europe extended declines with their U.S. peers as OPEC’s agreement on Wednesday to cut oil production added to prospects of higher inflation. The reflation trade has been driving markets since Donald Trump’s presidential election win due to promises of tax cuts and $1 trillion in infrastructure spending. All this has prompted investors to dump debt that was offering near-record-low yields and pile into stocks.

Mind The VIX/S&P 500 Divergence---Pain Comes Next

The level of “complacency” in the market has simply gotten to an extreme that rarely lasts long. The chart below is the comparison of the S&P 500 to the Volatility Index. As you will note, when the momentum of the VIX has reached current levels, the market has generally stalled out, as we are witnessing now, followed by a more corrective action as volatility increases.”

Thanks Barry! U.S. to Forgive at Least $108 Billion in Student Debt in Coming Years 

The federal government is on track to forgive at least $108 billion in student debt in coming years, as more and more borrowers seek help in paying down their loans, leading to lower revenues for the nation’s program to finance higher education.....President Barack Obama has promoted income-driven repayment plans—passed by Congress in the 1990s and 2000s—to stem a sharp rise in borrowers defaulting on their loans since the recession. Enrollment in such plans has more than tripled over the past three years to 5.3 million borrowers, who owe roughly $355 billion.

The Great Unwind Unravels Hottest Rental Markets in the US

In San Francisco, the number one most ludicrously expensive rental market in the US, rents have now sagged for the fifth month in a row. Asking rent for a median one-bedroom fell to $3,330. That’s still a lot of moolah: $40,000 a year for a small, very average apartment. But that’s down 9.3% from the peak of the rental bubble in October 2015....The last time rents declined year-over-year was in April 2010 in the process of the housing bust bottoming out. Now it’s just the beginning, a turning point, not a blip.

Why Faltering Growth In US Trade Matters

While certain markets continue to dream of the economy that might be, we continue to be stuck with the economy that continues to be nothing like it. Last week the Census Bureau reported that exports fell slightly year-over-year in September 2016 after rising slightly in August for the first positive number in two years. On the import side, marginal US demand remains non-existent; imports fell almost 3% year-over-year in September. The brunt of domestic weakness continues to fall on the Chinese. This year is by far the worst year for US imports of Chinese goods since the Great “Recession.” Year-to-date through September 2016, imports have declined by more than 6% from the first nine months of 2015. That is a huge downturn from even last year’s weakness, where exports YTD through September 2015 were up 6% over the same period in 2014. As always, Chinese economic and financial baselines were written for 20% growth; single digits are trouble, negative single digits big trouble.

Lock Them Up! Angry Indian Mobs Incarcerate Bankers Amidst Cash Chaos

India's demonetization campaign is not going as expected......This strategy however, appears to not have been conveyed to the public, and as Bloomberg adds, "bankers are bracing for long hours and angry mobs as pay day approaches in India." "Already people who are frustrated are locking branches from outside in Uttar Pradesh, Bihar and Tamil Nadu and abusing staff as enough cash is not available," said CH Venkatachalam, general secretary of the All India Bank Employees’ Association. The group has sought police protection at bank branches for the next 10 days, he added.

Why Burning Your Own Flag (But Not Mine) Is Protected By The 1st Amendment

Before the Supreme Court ruled that burning your own flag in public is lawful, federal law and numerous state laws had made it criminal to do so. In analyzing those laws before it declared them to be unconstitutional, the Court looked at the original public understanding of those laws and concluded that they were intended not as fire safety regulations – the same statutes permitted other public fires – but rather as prophylactics intended to coerce reverence for the American flag by criminalizing the burning of privately owned pieces of cloth that were recognizable as American flags.

6 Million Americans are Delinquent with Auto Loans---And Getting Worse

The number of subprime auto loans sinking into delinquency hit their highest level since 2010 in the third quarter, with roughly 6 million individuals at least 90 days late on their payments. It’s behavior much like that seen in the months heading into the 2007-2009 recession, according to data from Federal Reserve Bank of New York researchers. “The worsening in the delinquency rate of subprime auto loans is pronounced, with a notable increase during the past few years,” the researchers, led by Andrew Haughwout, said Wednesday in a blog on their Liberty Street Economics site.

Red Suzerains Of Beijing Get Desperate----Even Raising Tax On Ferraris, Bentleys And Aston Martins

Super-luxury car dealers in China made calls to their best prospects Wednesday evening, urging them to buy before the clock struck midnight to avoid paying extra taxes on the gilded rides. Some distributors sold as many cars that night as they deliver in three months, as buyers sought to beat the implementation of a 10 percent levy on vehicles costing more than 1.3 million yuan ($189,000) before a value-added tax, according to Wang Cun, an official at the China Automobile Dealers Association.

A Few Surreal Thoughts On “Fake News”

My articles have also appeared on more than a few of the 200 websites the WP is willfully trying to blacklist. Websites I’ll also openly state I am honored found anything I may articulate worthy for their viewership. And to all of them I say thank you, also. (On an aside David Stockman’s along with Ron Paul’s web site made this list? Again David Stockman and Ron Paul? The WP is trying to imply they’re either knowingly or unknowingly working for the Ruskies? I mean, please excuse my french but – Have they (at the WP) all lost their F’n minds?!)

David Stockman's Contra Corner is the only place where mainstream delusions and cant about the Warfare State, the Bailout State, Bubble Finance and Beltway Banditry are ripped, refuted and rebuked. Subscribe now to receive David Stockman’s latest posts by email each day as well as his model portfolio, Lee Adler’s Daily Data Dive and David’s personally curated insights and analysis from leading contrarian thinkers.

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