November 17: Daily Contrarian Reads

More Risky Than Ever

The bullish cabal is taking an incredible leap of faith that the Fed’s tightening cycle is going to be without hiccup and essentially have been brainwashed by not just the Fed but by the actions of all central banks in believing that every slip-up will be fully rectified. The central banks believe they have cured the diseases called “bear market” and recession and convinced us that we are in a new paradigm. I would argue that this is likely a big mistake, as evidenced by the numerous policy boners by the Fed in the last one to two decades.

Beijing Brings Hammer Down On Outbound M&A Frenzy

China’s non-financial outbound investment slumped to $86.3 billion in January to October, plunging 41 percent from a year earlier, as projects in some industries dried up. There were no new real estate, sports or entertainment deals for the period, the Commerce Ministry said in a statement Thursday. Most outbound investment was in leasing and business services, manufacturing, wholesale and retail sales and information technology services.

Fed Can Run But Can't Hide From The CPI

While energy price differences in any given month are largely responsible for the headlines, underneath there is still nothing that would suggest five and half years of price misbehavior is close to ending. The core parts of the index, including Services less Rent, show no signs of economic acceleration or any kind of monetary flow-through from trillions in QE that stopped years ago.....In other words, it’s not that the Fed made a mistake about the last few years, or even the last ten. They really don’t know what they are doing because they never did.

Call/Put Ratio Hits Blow-Off Top

In the past, ISEE readings above 200, i.e., 2 calls bought per every put, have arguably been considered excessively bullish. There have not been nearly as many of these readings in recent years, so yesterday’s number was alarming to say the least. At a reading of 334, it was the highest ISEE recorded in 5 and a half years – and just the 10th ever above 300 since its 2006 inception.

New York Fed: “Underlying Inflation” Hits 11-Year High

Today is inflation day. After the Bureau of Labor Statistics released its Consumer Price Index for October this morning, several other inflation gauges were released, all based on rejiggering in some way the minute disaggregated details of the BLS data pile. This includes the Atlanta Fed’s “Sticky-Price CPI,” which ticked up 2.2%, and the New York Fed’s “Underlying Inflation Gauge,” which hit the highest level since August 2006.

Washington's War On Terror-----$5.6 Trillion And Counting

Neoconservatives, military Keynesians and the two-party cohorts must be thrilled by a new paper that highlights the true cost of the war on terror, which is now known as the overseas contingency operation. According to a new study by Brown University’s Watson Institute for International and Public Affair, the war on terror will have cost the United States government $5.6 trillion between 2001 and 2018, equal to $23,000 per American taxpayer.

Is GE A “Black Swan” In Plain Sight?

GE is a GDP company. Its business activity largely “mirrors” overall real economic activity. If GE’s business is eroding, you can be sure that the Government’s GDP calculations are fraudulent. Yet, GE’s GAAP numbers hide the extent of GE’s deteriorating economic and financial fundamentals. GE has always been a bundle of accounting gimmicks and earnings management. Former CEO Jack Welch was practically the inventor or earnings management.

The Washington Swamp Gets Deeper On The Pentagon Side Of The Potomac

Not only does he seek a $51 billion increase in the base military budget, Trump is putting top defense industry insiders in charge of spending more than $300 billion a year in contract awards to private corporations. Those insiders include former General Dynamics board member James Mattis, now Secretary of Defense; former Boeing Senior Vice President Patrick Shanahan, now Deputy Secretary of Defense; Raytheon’s former top lobbyist, Mark Esper, now Secretary of the Army; and former Textron CEO Ellen Lord, now Undersecretary of Defense for Acquisition, a post that supervises all Pentagon weapons procurement.

Behind The Saudi Troublemaking In The Gulf

Five months after the diplomatic spat between the so-called Anti-Terror Quartet and Qatar kicked off, the ante is being upped. Bahrain — one of the quartet alongside Saudi Arabia, the United Arab Emirates (UAE) and Egypt — has called for Qatar to be frozen out of the Gulf Cooperation Council (GCC). As the council starts to unravel, what will this mean for Qatar and the wider Middle East and North Africa (MENA) region?

Are We Here Or There, Yet?

There’s a lot to infer from the above, but too my eye, along with what is currently taking place in regards to the competing tax bills making their way through both chambers, the repercussions for any misgivings similar to what happened with the healthcare debacle are multiplied exponentially. The reason? The proposed tax bill, and its ultimate passage, is that single “hair” that is holding the “Sword of Damocles” aloft.

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