December 29: Daily Contrarian Reads

Mind LBO Alley---Leveraged Loans Lack Cushion For A Crash

Some have been warning recently that a crash in leveraged loans, one of Wall Street's hottest debt markets, could do investors a lot more damage than in the past. Investors, though, show little signs of concern.

Recession Sighting----California May Already Be There

In this chart, we find that California's employment to population ratio peaked at 59.2% in December 2016, having slowly declined to 59.0% through October 2017. Meanwhile, California's labor force to population ratio last peaked at 62.6% in October 2016, which has since dropped to 62.1% a year later. Going by these measures, it would appear that recession has arrived in California, which is partially borne out by state level GDP data from the U.S. Bureau of Economic Analysis.

The Donald, Jr. Calls Out The Deep State

“There is, and there are, people at the highest levels of government that don’t want to let America be America,” Trump Jr. noted, echoing many voices in the alternative media who have discussed this very fact since the moment Trump was elected. “My father talked about a rigged system throughout the campaign, and people were like, ‘Oh, what are you talking about?” he continued. “But it is. And you’re seeing it.”

Tax Reform----Not On The Carried-Interest Loophole

The $2.5 trillion private equity business, comprised of Wall Street behemoths Blackstone Group (BX), Carlyle Group (CG) and KKR & Co. (KKR), funneled massive amounts of campaign cash into the coffers of Republican leaders in the House and the Senate as these same lawmakers voted for a tax bill that preserves the so-called carried interest loophole, campaign contribution documents reviewed by FOX.....In 2017 alone, members of the three private equity firms gave a combined $1.31 million to GOP lawmakers in the House and the Senate, compared to just $438,000 to Democrats, documents show.

Bank of America: 11 Bear Market Indicators Are Now Being Triggered

Two weeks ago, Bank of America tripped recession-watcher alarms, when it announced out that one of its surest bear-market indicators, one which has never had a false negative, had just been triggered. As we said at the time, according to BofA's Savita Subramanian in November the S&P 500's three-month earnings estimate revision ratio (ERR) fell for the fourth consecutive month to 0.99 (from 1.03), indicating that for the first time in seven months, there were more negative than positive earnings revisions, needless to say a major negative inflection point in the recent surge in profits.

Airlines Should Compete Rather Than Whining To Uncle Sam For Help

As often happens when companies become entrenched oligopolies, the Big 3 are fighting to limit competition. Instead of fighting in the marketplace for consumers' hard-earned money, they are lobbying the government for protection; complaining about "unfair" subsidies, “unfair” advantages, and "unfair” competition.

Here We Go Again----Full-Out Bubble Time

Remember the 1998/99 timeframe when any company that put the word internet or web into its name suddenly doubled, tripled, or went up in price by 10x?  Not a single thing changed in its operation, but the name alone was good for that doubling. Well, here we are again.  When this happens in a so-called “market” the entire market is full of nothing but hot air.

RussiaGate----The New McCarthyites Have Gotten The Kremlin All Wrong

While the Iraq deception was driven by the neoconservatives in the Bush-Cheney administration, the Russia paranoia was started by the nominally left-of-center administration of Barack Obama in the closing months of his presidency. It has been fanned ever since by liberals and centrists in the Democratic Party and the never-Trump contingent in the Republican Party as well as the mainstream media – with the goal of either removing Trump from office or politically crippling him and his administration, i.e., to reverse the results of the 2016 election or, as some might say, reverse the “mistake” of the 2016 election.

Whither The Corporate Tax Savings-----2018 Likely To See Surge Of M&A Deals

The starting gun for the latest deal-making wave went off a couple of months ago when the contours of the tax bill started to come into focus. Now with the plan nearly done, mergers and acquisitions should accelerate next year.......The tax bill was a gift to business. For some it will be a wedding gift.

While the US Obsesses Over Iran, Saudi Arabia Just Executed 10 Women in Yemen

Saudi Arabia – a country that now sits on the U.N. Women’s Rights Commission – just executed ten women in an aerial bombardment that appeared to target a wedding procession in Yemen......According to Haaretz, a prominent Israeli newspaper, witnesses and health officials speaking on the condition of anonymity say an airstrike by a Saudi-led coalition warplane struck a wedding east of Yemen’s capital on Sunday, killing ten women (possibly including the bride-to-be).

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.