November 9: Daily Contrarian Reads

Curb Your Enthusiasm!

The Bear Cave has become a lonely place; like the dodo bird, bears are an endangered species. And so has the contrary, non-consensus view become endangered. Like Larry David, I am candid and can be neurotic, but I am generally disposed to pursuing what I perceive to be the right investment course! At times like this, when the pendulum of investor optimism has moved to the right and some valuations have moved to the 95th percentile as every dip is being purchased, it is the best of times to consider the value of contrarian opinions.

Momentum Trading Has Not Been This Extreme Since The Dotcom Bubble

The last month or so has seen 'momentum' dramatically outperform the market as retail flows chase 'what is working'......But, as Bloomberg notes, U.S. stocks with the fastest-rising prices are showing the kind of strength they did in the 1990s, according to Jonathan Krinsky, chief market technician at MKM Partners LLC.

The Palace Coup In Riyadh And Its Ramification For The Endless Mideast Wars

In April 2015, Crown Prince Moukrine was relieved of his functions. Mohamed Ben Nayef succeeded him, and « MBS » entered into politics by suddenly becoming the second Crown Prince. In June 2017, « MBS » managed to get rid of Nayef and had him placed under house arrest. In order to be not only the first Crown Prince, but also the only contender, he now had to eliminate the Abdallah clan. For that, he had to strip Prince Muteb of power, despite his control over the Royal Guard, not forgetting Saad Hariri, who could have offered help to the members of his clan in his quality as Prime Minister of Lebanon.

Mind The Slack---Why The Fed Is Dead Wrong About The Economy

If the unemployment rate is instead wrong, then: wages aren’t going to accelerate; inflation is in no danger of picking up because significant labor slack remains; meaning that the 15 or 16 (or more) million Americans left out of the official ratio do matter; and therefore after ten years the US and global economy still has much bigger problems than the ridiculous dots. For the Fed, it would be huge, failing on both of its statutory mandates in a very big way.

Even The People's Printing Press of China Is Worried

China’s financial system is becoming significantly more vulnerable due to high leverage, according to central bank governor Zhou Xiaochuan, who has made a series of blunt warnings in recent weeks about debt levels in the world’s second-largest economy.

Revenues That Disappear Into Surging Losses-----Why Snapchat Was Never Worth $30 Billion

Snap Inc., the parent company of Snapchat, reported late Tuesday that its revenues in the third quarter rose 62% from a year ago, to $208 million, while its net loss more than tripled to $443 million. How? It wasn’t easy, but here’s how they did it.

Short Vol Funds Being Flooded With Cash

Exchange-trade products betting that volatility will sink lower have never been more popular. Even as the CBOE Volatility Index plunges to its lowest on record and U.S. stocks march to fresh highs, investors have continued to give the short-volatility trade their vote of confidence this year. With $2.4 billion in assets, short volatility exchange-traded funds are backed by the most cash on record, according to data compiled by Bloomberg.

Saudi Crackdown Targets Up to $800 Billion in Assets 

The Saudi government is aiming to confiscate cash and other assets worth as much as $800 billion in its broadening crackdown on alleged corruption among the kingdom’s elite, according to people familiar with the matter......Crown Prince Mohammed bin Salman, the son of King Salman, was named heir to the throne in June and has moved to consolidate power. He has said that tackling corruption at the highest level is necessary to overhaul what has long been an oil-dependent economy. The crackdown could also help replenish state coffers. The government has said that assets accumulated through corruption will become state property,

The Next Crisis Will Reveal How Little Liquidity There Is In The Credit Markets

Dodd–Frank has greatly limited the ability of banks to provide market-making opportunities and credit markets, a function that has been in their wheelhouse for well over a century. However, when the prices of massive amounts of high-yield bonds that have been stuffed into mutual funds and ETFs begin to fall, and the ETFs want to sell the underlying assets to generate liquidity, there will be no buyers except at extreme prices.

Business As Usual In The Deep End of The Swamp

The revolving door between major defense contractors and the Pentagon is spinning ever more rapidly, notes FP: Foreign Policy. Here’s a telling report from last week:........In short, there are no fresh thinkers at the Pentagon: just men and women drawn mainly from the corporate world or from the ranks of military retirees (or both). They’re hired because they know the system – but also because they believe in it. They’re not going to rock the boat. They believe in “staying the course.”

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