November 11: Daily Contrarian Reads

The Fed’s Hothouse Is In Danger—-The $8 Trillion Heist From Savers

But the Fed – without so much as a by-your-leave or a thank-you note – took it upon itself to decide the fate of more than $8 trillion. That is a rough estimate of the amount not paid to savers over the last eight years as a result of the Fed’s ultra-low interest rate policy. The total transfer is much greater – since stock, bond, real estate, and other asset prices all rose in response to the trillions of dollars of new credits the Fed was putting into the system. This enriched their owners and made those who didn’t own them relatively poorer.

Why Trump Won: The Foreign Policy Factor—-America First

The one factor conspicuously missing from these expositions on the electorate’s romance with Trump is the attraction of his “America First” foreign policy stance. Indeed, Trump’s view that the US footprint abroad is too large and his vow to make it much smaller is what enraged the Washington, D.C. elites the most about his candidacy: a bevy of GOP foreign policy “experts” sent out at least two “open letters” excoriating Trump for his “isolationism” – the cardinal sin, according to neoconservative orthodoxy. This was the core of the Republican “Never Trump” faction’s complaint. And the Clintonites added their voices to this chorus, gladly welcoming the neoconservatives into their ranks.

The Unbearable Smugness of the American Press

The mood in the Washington press corps is bleak, and deservedly so. It shouldn’t come as a surprise to anyone that, with a few exceptions, we were all tacitly or explicitly #WithHer, which has led to a certain anguish in the face of Donald Trump’s victory. More than that and more importantly, we also missed the story, after having spent months mocking the people who had a better sense of what was going on. This is all symptomatic of modern journalism’s great moral and intellectual failing: its unbearable smugness. Had Hillary Clinton won, there’s be a winking “we did it” feeling in the press, a sense that we were brave and called Trump a liar and saved the republic.

Death of A Dynasty That Was Rotten To The Core

Almost 40 years after Bill and Hillary Clinton first entered American public life, they are to leave it beset by crushing humiliation. There will be no first female U.S. President — this time. History will not be made by a wife following her two-term husband into the Oval Office. There will be no dynasty, no President Hillary Clinton. Why did they think they deserved otherwise?

Sheep To The Slaughter—-Here It Comes Again

It is effectively the final evolution of ‘bull market psychology’ as investors capitulate to the ‘if you can’t beat’em, join’em’ mentality. But it is just that. The final evolution of investor psychology that always leads the ‘sheep to the slaughter.’ Let me just clarify the record – ‘There is no such thing as passive investing.’ While you may be invested in an ‘index,’ when the next bear market correction begins, and the pain of loss becomes large enough, ‘passive indexing’ will turn into ‘active panic.’  Sure, you can hang on. But there will be a point where your conviction will eventually be broken. It is just a function of how much loss it takes to get there.”

Mind The Red Ponzi—–Trump Is Not Merely Waving His Arms

The yuan slipped to a six-year low as concern about China’s trade relationship with a more protectionist U.S. provided a new reason to sell the currency that’s heading for a third annual loss.Trump has called China a “grand master” at currency manipulation and has threatened tariffs of up to 45 percent on the country’s imports, a step that Commonwealth Bank of Australia estimated would cut China’s shipments to the U.S. by 25 percent in the first year.

Trump’s Midnight In America—-It’s Not Like The Gipper’s Time

Stunned political analysts are missing the most plausible argument explaining Donald Trump’s unexpected victory. The misreading of the American electorate stems from the political class’ acceptance of mistaken (and increasingly insane) economic dogma that has arisen over the past generation. Based on their flawed understanding of economics, the pundits could simply not understand why the electorate had become totally disillusioned

Capital Allocation Inefficiency Worst Since The Great Depression

The above chart depicts net domestic private business investment to GDP (blue line) and dividends to GDP (red line).  The chart  shows that the massive monetary easing that started in the mid 1990’s has failed to incentivize private business investment over cash distributions.  CEO’s are now allocating capital to cash distributions at a rate 3x higher than to private domestic business investments.  The only other time in history we’ve seen such an inefficient use of capital were the years heading into and through the great depression (note the above chart is 7 year moving avg so raw data begins in 1929; also it does not include buybacks).

Obama’s Biggest Record—–$268 Billion Arms-Export Tally More than Doubles Bush’s

The Obama administration has approved more than $278 billion in foreign arms sales in its eight years, more than double the total of the previous administration, according to figures released by the Pentagon on Tuesday.

Trump’s Geographic Landslide

Geographically speaking, Trump won at least 80% of the Nation. The only states Hillary carried are Vermont, Massachusetts, and Connecticut. Trump won every county in Oklahoma and West Virginia. Trump won all but one county in Wyoming, and Kansas. Trump won all but two counties in North Dakota, Kentucky, Tennessee, Utah, and Nebraska. Nearly the entire state of Minnesota, Illinois, New York, Oregon, Iowa, Missouri, Ohio, Michigan, etc., went for Trump.