February 27: Daily Contrarian Reads

Blind Faith And The “Buy Everything Market”

Yesterday, CNBC’s “Fast Money” summed up the optimism when it asked the question, “Best Move: Just Buy Everything?”  Quite honestly, the presumption of optimal outcomes — especially of a fiscal kind — seems far-fetched in the current atmosphere of deep-seeded animus between the Republican and Democratic parties Those optimal outcomes presume an unlikely cooperation and thoughtful legislation — two conditions that have been an anathema in Washington, D.C., for years…… But it is important to recognize that in terms of implementing budgets, the executive branch is among the least powerful people in Washington, D.C. According to JP Morgan, “The White House budget is nearly always immediately dismissed and considered ‘DOA.’……At the end of the day, it really doesn’t matter what Trump or Ryan want; if legislation can’t get passed through the Senate, it won’t become law.”

China’s Wealth-Management Time Bomb

China wants to wean investors off implicit guarantees on the country’s ballooning stock of wealth-management products. The effort looks half-hearted at best……The concern is understandable. Asset-management products, mostly held off-balance sheet, totaled about 60 trillion yuan ($8.7 trillion) as of June 30, equal to more than three-quarters of China’s 2016 gross domestic product. Wealth-management products, a shorter-duration subset sold mostly by banks, jumped 30 percent to more than 26 trillion yuan last year. Yield-hungry savers have flocked to WMPs because they offer returns as high as 8 percent — far more than the one-year benchmark deposit rate of 1.5 percent.

Why True Liberals Must Oppose the Kremlin-Baiting Against Trump

The bipartisan, nearly full-political-spectrum tsunami of factually unverified allegations that President Trump has been sedi-
tiously “compromised” by the Kremlin, with scarcely any nonpartisan pushback from influential political or media sources, is deeply alarming. Begun by the Clinton campaign in mid-2016, and exemplified now by New York Times columnists (who write of a “Trump-Putin regime” in Washington), strident MSNBC hosts, and unbalanced CNN commentators, the practice is growing into a latter-day McCarthyite hysteria. Such politically malignant practices should be deplored wherever they appear, whether on the part of conservatives, liberals, or progressives.

Tear Down These Walls—-Why Health “Insurance” Desperately Needs Competition

But I never lean over the fence to discuss purchasing health insurance. This is because Americans have sealed health insurance in a landscape of separate walled cities. Seniors go to Medicare, lower-income people to Medicaid. Large employers offer Employee Retirement Income Security Act, or ERISA, plans. Small businesses offer small business plans. Military get TRICARE and veterans, the Veterans Administration. Some people go to brokers and others, the Obamacare exchanges. American Indians get coverage through the Indian Health Service. Certain children get the Children’s Health Insurance Program, or CHIP. Very sick people go to high-risk pools.

Why Real Estate Will Never Be the Same—–the Demographic Crunch Ahead

After this brief bounce in housing demand in recent years, net demand will drop into 2040. Basically, we don’t need to build more houses for a long time, if ever! Knowing that, do you want to be a housing developer, or even invest in them? Yes, residential real estate will never be the same! It most certainly will be nothing like what we experienced into 2005. The same logic applies to commercial real estate. It gets hit harder in downturns as businesses voluntarily abandon leases and real estate faster than households do (after all, we’re more emotionally attached to our homes!). Commercial real estate is driven by the combination of new entrants adding to the workforce at age 20 (on average) and leaving the workforce when they retire at age 63 (although that retirement age trends up a bit in a bad economy, as we’ve seen in Japan).

David Stockman: Bull Stock Market Is ‘Wild West Casino’

He said such wreckless Fed policies has destroyed discipline in financial markets. “When you have markets that only go one way up, when you have people that learn year after year that you buy the dips and the market is going to go up tomorrow that there’s really no downside risk and that the Fed is there to prop up things,” he said. “But you don’t solve that by regulating tens of thousands of brokers and other financial intermediaries,” said Stockman, who was the Director of the Office of Management and Budget (1981–1985) under President Ronald Reagan.“You go to the 12 people sitting on the Open Market Committee at the Fed who are causing the problem. I don’t know whether the Trump administration is going to get this right or not,” he said.

The Fed’s Playbook Uncovered: Gaslighting Us to Recovery

After more than a decade of diving deep into the macro, I’ve come to the conclusion that the disconnect between economic fundamentals and stock prices is being perpetuated and nurtured by the Federal Reserve. To put it as bluntly as I can, I think the Fed is trying to “gaslight” us towards an economic recovery. “Gaslighting is a form of manipulation that seeks to sow seeds of doubt in a targeted individual or members of a group, hoping to make targets question their own memory, perception and sanity. Using persistent denial, misdirection, contradiction and lying, it attempts to destabilize the target and delegitimize the target’s belief”

Trump’s First “Terror” Arrest: A Broke Stoner The FBI Threatened Knifepoint

The Department of Justice proudly announced the first FBI terror arrest of the the Trump administration on Tuesday: An elaborate sting operation that snared a 25-year old Missouri man who had no terrorism contacts besides the two undercover FBI agents who paid him to buy hardware supplies they said was for a bomb — and who at one point pulled a knife on him and threatened his family. Robert Lorenzo Hester of Columbia, Missouri, didn’t have the $20 he needed to buy the 9-volt batteries, duct tape, and roofing nails his new FBI friends wanted him to get, so they gave him the money. The agents noted in a criminal complaint that Hester, who at one point brought his two small children to a meeting because he didn’t have child care, continued smoking marijuana despite professing to be a devout Muslim.

The Increasingly Unhinged Anti-Russia Rhetoric Comes From Old Deep State Playbook

Much of Stone’s writings, particularly throughout the 1950s and into the 1960s, focused on the techniques for keeping Americans in a high state of fear over the Kremlin. One passage, from August 1954, particularly resonates; Stone explained why it’s impossible to stop McCarthyism at home when — for purposes of sustaining U.S. war and militarism — Kremlin leaders are constantly being depicted as gravely threatening and even omnipotent. Other than the change in Moscow’s ideology — a change many of today’s most toxic McCarthyites explicitly deny — Stone’s observations could be written with equal accuracy today.

Good On You, Donald—-He’s Got European Central Bankers Sputtering

Two top European central bankers had harsh words about the economic policy coming from the U.S. in remarks Thursday. The establishment of protectionist policies in the U.S. risks undermining a key element to wealth, the head of Germany’s central bank said.Speaking in London Thursday, the ECB’s chief economist, Peter Praet, also expressed concern about the new U.S. administration. He said some of the noises coming from Mr. Trump’s administration on international cooperation were “worrisome.” Some of Mr. Trump’s complaints about international trade and multilateral institutions reflected “simplistic narratives,” he said, though he added that economic imbalances between countries and regions are real enough.