More Carmageddon Data—-Used Car Prices Are Sinking, Fast
This is just relentless: Wholesale prices of used vehicles up to eight years old going through auctions across the US dropped another 1.5% in April from the prior month. It pushed the seasonally adjusted Used Vehicle Price Index by J.D. Power Valuation Services (formerly known as NADA Used Car Guide) down to 109.9. The 10th month in a row of declines. The index is down 7.1% year-over-year and down over 13% from its peak in mid-2014. It’s at the lowest level since September 2010, when prices were still spiking from the cash-for-clunkers program which had eliminated a whole generation of often perfectly good cars. In that sense, values are just now beginning to normalize……
A Monster Eating the Nation—-The NYT, WashPo, CNN Axis of Hysteria
Is there any question now that the Deep State is preparing to expel President Donald Trump from the body politic like a necrotic organ? The Golden Golem of Greatness has floundered pretty badly on the job, it’s true, but his mighty adversaries in the highly politicized federal agencies want him to fail spectacularly, and fast, they have a lot of help from the NY Times / WashPo / CNN axis of hysteria, as well as such slippery swamp creatures as Lindsey Graham.
Bobby “Three Sticks” Mueller Is Back In Town—-The Moscow Show Trials Come To Washington
Donald Trump ran on a platform of improving relations with Russia: his victory was a mandate for that policy. Yet the real power in this country doesn’t reside within the ballot box, and that reality was brought home when the Justice Department appointed a “special counsel” to investigate “any links and/or coordination with the Russian government and individuals associated with the campaign of President Donald Trump.” After months of leaks coming from the intelligence agencies, who bitterly oppose the new policy, and a barrage of innuendo, smears, and character assassination in the media, the will of the people has been abrogated: the Deep State has the last word. The denizens of Langley, and the career spooks within our seventeen intelligence agencies, have exercised their veto power – a power that is not written into the Constitution, but is nevertheless very real……Their goal is to not only make détente with Russia impossible…..
China Creates Its Own Insurance Monster
Is Beijing about to find out what it’s like to be held hostage by a monster it helped create? For the last several years, China has allowed smaller insurance companies to flourish in the interests of creating competition for industry heavyweights such as China Life Insurance Co. and Ping An Insurance Co. Authorities wanted to shake-up the population’s save at all costs mentality and at the same time, encourage investment in areas other than the nation’s oftentimes volatile stock market……Sales of universal life products — short-term, high-yielding investments that include a small insurance component — boomed, with newer market entrants like Anbang Insurance Group Co., Huaxia Life Insurance Co. and Foresea Life Insurance Co. the main issuers. To fulfill the heady returns promised, those firms embarked on highly leveraged acquisitions, from hotels in New York to insurance assets in South Korea and Belgium.
Another Federal Deficit Bomb—-The Fed’s Shrinking “Profits” and Funny Money Payment s To The Treasury
On the fiscal side, the expansionary effect of tighter monetary policy has thus far been di minimus as the IOER was only 0.25 percent up until December 2016. The Fed surplus should shrink further as the IOER has increased 50 bps since the last Fed income statements: “The Federal Reserve Banks’ 2016 estimated net income of $92.7 billion represents a decrease of $7.6 billion from 2015, primarily attributable to a decrease of $2.5 billion in interest income from changes as a result of the composition of securities held in the Federal Reserve System Open Market Account (SOMA) and an increase of $5.2 billion in interest expense associated with reserve balances held by depository institutions. Net income for 2016 was derived primarily from $111.1 billion in interest income from securities held in the SOMA (U.S. Treasury securities, federal agency and government-sponsored enterprise (GSE) mortgage-backed securities, and GSE debt securities). As the Fed reduces its balance sheet, its income will shrink more rapidly and add to the U.S. budget deficit…
Forget The Hopium! This Time Isn’t Different
“This time is different.” Sir John Templeton famously called these, “the four most dangerous words in investing,” but that hasn’t stopped many pundits from pointing out the obvious ways in which this time is truly different from the past. And I don’t disagree with them. In fact, we have seen this plenty of times before. During the late-1920’s stocks rose to valuations that were unprecedented at the time. They did so again in the late-1990’s. And it’s true once again that things are now very different than what we have witnessed previously in the markets.
Household Debt Update for Q1 2017—–It’s Even Worse Than It Appears
Another key trend in household debt relates to debt defaults and risks. Here too 1Q 2017 data is far from encouraging. Pre-Global Financial Crisis average delinquencies (120 days or more overdue loans and Severely Derogatory delinquencies) average 2.07 percent of total debt outstanding. In 1Q 2017, some 29 quarters of deleveraging later, the comparable percentage is 3.0 percent. This is bad. Worse, take together, all household debt that was in delinquency in 1Q 2017 was 4.8 percent, which is still above 4.56 percent average for pre-2008 period……
An Eerie Similarity to 2007——Before the Bulls Were Slaughtered
Last week Rudolf E. Havenstein retweeted a RealMoney column I wrote back on Dec. 13, 2007. I got to thinking how many conditions that existed back then exist today — most importantly, like in 1999, when there emerged the untimely notion of The Long Boom (Wired Magazine)……As noted in my column below, which summarizes my Kudlow appearance of 10 years ago, the hubris and denial of political, geopolitical, economic and valuation reality of self-confident bulls such as TrendMacro’s Don Luskin on Kudlow & Company in December 2007 and other vocal economists such as David Malpass, John Ryding, Brian Wesbury and Bob Stein who filled the corridors of CNBC was a continuing feature of the times — much as that investment and economic confidence is, in a different way, demonstrated today, as discussed in my opening missive yesterday.
No Bailout For You! Wall Street Is Home Alone This Time
…….we concluded that aside from the decision-making mechanics of systematic funds, the biggest question would be if the Fed, or other central banks, do not do step in to prop up the market as they have on every other similar occasion in the past 8 years. Would that imply that traders – be they CTAs, risk-parity, or simply carbon-based – are finally on their own? According to a follow up note sent overnight by Evercore ISI’s Krishn Guha, the answer is yes… at least for the first 10% of any upcoming market drop. As Guha writes, “with the US equity market sell-off intensifying Wednesday afternoon, a number of clients have asked at what point the Fed would ride to the rescue. Our answer is that this time the cavalry is not coming…..
Seth Rich Murder Case Stirs Doubts That Russian Agents Were Source of Podesta Emails
private investigator looking into last year’s murder of Seth Rich, an employee of the Democratic National Committee, has said that the victim’s computer shows he was in contact with WikiLeaks and may have leaked Democratic Party emails being blamed instead on Russia……And an anonymous federal investigator has gone even further, reportedly telling Fox News that the slain employee sent WikiLeaks more than 40,000 emails and 17,000 attachments, which would suggest that Rich, not Russia, leaked the material to Wikileaks.
