November 1: Daily Contrarian Reads

Wall Street Feasts On Record Surge In Junk Loans----Again

The volume of leveraged loans – the riskiest loans Wall Street banks provide – has surged 38% year-over-year and has already beaten the full-year record set in 2013, according to Dealogic. Total of leveraged loans outstanding has reached $1.25 trillion. Nine of the 10 largest banks in the leveraged-loan business have already surpassed their respective 2016 full-year totals.....The fees that the banks are raking for putting these loans together are also record-breaking: $8.3 billion so far this year, just 6% below the full-year total of 2016.

Red Ponzi Update----The Data Is Getting Soft

China’s just-released official PMI estimates for October show us just that potential. After rising suspiciously just before the start of the 19th Party Congress, both the manufacturing (51.6 in October vs. 52.4 September) as well as the non-manufacturing (54.3 in October vs. 55.4 September) PMI fell back this month. The former version was slightly less than the reading for August, while the latter is right back at the same low average level for the last year.

Tesla---A Cash-Burning Vanity Project Looking For A Mercy Killing

Of course, Tesla (TSLA – USA) is something of an anomaly here. While the companies in the above list, all produced prodigious cash while they were industry leaders, Tesla seems to incinerate cash while in the lead—using repeated equity and now debt offerings to plug the hole. While other companies had a huge stash of cash to fall back on when others overtook them, Tesla’s cash balance leaves it only a few quarters from insolvency. Add in a host of questionable related party transactions, convoluted financial statements (what the hell is pro-forma revenue?), the inability to ever hit company guidance, deceptive disclosures and a business that seems to lose more money with each vehicle it produces, is it any wonder that Tesla is one of the most shorted large-cap stocks today? If I had to choose the most obvious pending bankruptcy of a large-cap stock, it is clearly Tesla.

Public Pension Ponzi Schemes---The Killer Charts

Starting with a high-level status update, Milliman figures the largest 100 public pensions were roughly just as underfunded on June 30, 2017 as they were on June 30, 2016...not an encouraging development given that the S&P 500 surged 15% over that same period......As our readers are well aware, we've long argued that public pension funds essentially hide their true funding status by simply choosing artificially high discount rates for future liabilities thus making their present values appear lower than they actually are.  It's a clever scam but one that can only persist until the Ponzi runs out of cash.

 JFK Papers Reveal Yet More CIA False Flags

“We could develop a Communist Cuban terror campaign in the Miami area, in other Florida cities and even in Washington. The terror campaign could be pointed at Cuban refugees seeking haven in the United States. We could sink a boatload of Cubans en route to Florida (real or simulated). We could foster attempts on lives of Cuban refugees in the United States even to the extent of wounding in instances to be widely publicized. Exploding a few plastic bombs in carefully chosen spots, the arrest of a Cuban agent and the release of prepared documents substantiating Cuban involvement also would be helpful in projecting the idea of an irresponsible government.”

How To End The Endless War----The Upcoming Yemen Resolution

The upcoming vote — if House leaders let it happen — will be about far more than Yemen. It is a test of whether Congress will continue allowing presidents to make decisions that push the United States into war, or whether it will awaken from its constitutional coma and assert its own right to do so. More than 200 years ago, when President Thomas Jefferson asked for authorization to send warships to fight pirates in North Africa, he said presidents are “unauthorized by the Constitution, without the sanction of Congress, to go beyond the line of defense.” Does that principle still apply, or does today’s rapidly changing “threat matrix” mean that Congress should stay out of the business of war? This question lies behind the upcoming congressional vote on Yemen.

The Real Evil Of Keynesian Central Banking Is Not Consumer Inflation

Secondly, rising consumer prices are by no means the primary evil of monetary expansion. The primary evil of monetary expansion under our money and banking system is the harm done to the capital structure. The artificial suppression of interest rates that results from the expansion of the money supply has an eroding effect on the economy’s capital stock. When interest rates are suppressed below what they would have been without the monetary expansion, investments in unprofitable projects suddenly appear to be profitable. This is the basis for the Austrian Theory of the Business Cycle. Capital is allocated to projects that the economy cannot in actuality support and is therefore squandered.

US Savings Rate Crashes To 10-Year Lows As Spending Surges Most Since “Cash For Clunkers”

While incomes grew at an expected 0.4% MoM, US consumers spent at an exuberant 1.0% MoM clip - the biggest monthly rise since Aug 2009 (cash for clunkers). To cover this spending surge, the savings rate tumbled. The last time - Aug 09 - that spending surged like this was when the government unleashed 'cash for clunkers', it plummeted the following month.

Why Catalonia Is Just The Beginning

Picture a life where you do most of your shopping through Amazon.com and the local farmers’ market, most of your communicating through Facebook and Instagram, much of your travel via Uber, and much of your saving and transacting with bitcoin, gold and silver. Do you really need an immense, distant, and rapacious central government? Maybe not. Perhaps your region or ethnic group would be better off forming its own independent country. This question is being asked — and answered — in a growing number of places where distinct cultures and ethnic groups within larger nations now see their government as more burden than benefit. The result: Secession movements are moving from the fringe to mainstream.

War Party Liars----About Most Everything

More recently, we have seen Vietnam with its Gulf of Tonkin fabrication, Granada and Panama with palpably ridiculous pretexts for war, Iraq with its nonexistent weapons of mass destruction, Afghanistan with its lies about bin Laden, Libya and its false claims about Gaddafi, and most recently Syria and Iran with allegations of an Iranian threat to the United States and lies about Syrian use of barrel bombs and chemical weapons. And if one adds in the warnings to Russia over Ukraine, a conflict generated by Washington when it brought about regime change in Kiev, you have a tissue of lies that span the globe and bring with them never-ending conflict to advance the American imperium.

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