December 20: Daily Contrarian Reads

When The Central Bank Put Goes On Autopilot----Look Out For A Policy Shock

......But that's the paradox. Exogenous shocks can happen, but as long as the market is confident that it retains its role as a co-author of the policy narrative, those exogenous shocks will not translate to a sustained spike in volatility. Here's the bottom line: if you firmly believe that a selloff (SPY) would immediately engender a policy response (e.g. jawboning or in an extreme case, the postponing of a taper), why would you not go ahead and buy the dip or re-engage in vol. selling? Why wait around for a policy response you know is coming? That's how the central bank "put" became self-fulfilling......This is why a sudden upturn in DM inflation is so dangerous. It would effectively force an endogenous shock.

Growing Your Way Out---Not!

While tax cuts may provide a temporary boost to after-tax incomes, that income will simply be absorbed by higher energy, gasoline, health care and borrowing costs. This is why, 80% of Americans continue to live paycheck-to-paycheck and have little saved in the bank. It is also why, as wages have continued to stagnate, that the cost of living now exceeds what incomes and debt increases can sustain.

Here's A Better Idea For Trump---Fire Sessions!

So with Attorney General Jeff Sessions saying things may have "more innocent explanations" here are some questions: Did Peter Strzok innocently tell his mistress that there was an "insurance policy" against a Trump win, which likely referenced the Russia investigation which GOP lawmakers think was based on an unverified dossier? Was Peter Strzok innocently texting Lisa Page "F Trump" while he was the lead investigator on the Clinton email case?  Was Peter Strzok's edit of the phrase "Gross negligence" to "extremely careless" innocent? It very innocently changed the entire legal standing of the case from criminal conduct to a layman's opinion of carelessness.

Why The 21% Corporate Rate Will Not Unleash An Investment Boom

Whoa, Nellie! There are some ugly facts that counter this beautiful hypothesis.  For starters, profits from domestic corporate operations after federal tax as a percent of GDP are relatively high in a historic context, as shown in Chart 1.....The data in Chart 4 show that starting in the mid-1980s, nonfinancial corporations stepped up their dividend payments and equity retirement (share buybacks) relative to their after-tax profits. How could the sum of dividend payments and equity retirement be more than 100% of after-tax corporate profits in some cases? Corporate borrowing.

The RussiaGate Narrative Is Getting Absurd

If Russia-gate is the massive scandal that we are told it is by so many Important People — across the U.S. mainstream media and the political world — why do its proponents have to resort to lies and exaggerations to maintain the pillars supporting the narrative?.......As nefarious as the Times may think it is for Russians to promote a Facebook page about “adorable puppies,” the absurdity of that concern – and the dishonesty of the Times then “forgetting” what it itself reported just two months ago about the timing and contents of these “Russian-linked ads” – tells you a great deal about Russia-gate.

Fractures In The Money Markets----A Big Red Warning Sign

The 3-month €/$ cross currency basis swap has plunged this week, a descent that really started the week after Thanksgiving. It has reached a level today last seen during the 2011 crisis. And this latest detour clearly marks its inflection where else but the week of September 5. In other words, you rarely find an exact match like the one we have here repo to €/$ swaps.

The National Security State And JFK, Part 1

In 1954, the CIA published a top-secret classified document titled “A Study of Assassination.” The document confirms that within seven years of the CIA’s founding in 1947, the agency was specializing in the art of assassination.

Good Riddance To Net Neutrality

Net Neutrality was a trojan horse designed to replicate the old shout-based advertising model of the golden age of print and TV advertising.  It was a way to control the megaphone and promote a particular point of view. Look no further than the main proponents of it.  George Soros and the Ford Foundation are two of the biggest lobbyists for Net Neutrality.  Only the political left and its Marxian fantasies of evil middle men creating monopolies fell for the lies, as they were supposed to.

The FBI Is No Friend Of Liberty And Justice---And Never Was

What is arguably most disturbing about this case is that then-National Security Adviser Flynn was pushed into a perjury trap by Obama administration holdovers at the Justice Department who concocted an unorthodox legal rationale for subjecting Flynn to an FBI interrogation four days after he took office, testing Flynn’s recollection of the conversations while the FBI agents had transcripts of the calls intercepted by the National Security Agency.

A Zombie Called Sears---Death Throes Prolonged By Easy Money

Sears is hemorrhaging money. Sales are down 45% since early 2013, its debt load has spiked to over $4 billion, and the company is losing well over $1 billion annually. To meet its obligations, Sears has been selling off brands and properties and its CEO, who owns almost half the retailer's shares, has been lending the company money to pay off its debt. The company has also delayed an upcoming loan repayment to give it more time to turn business around.

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