Major Inflection Point Coming – 01.31.17


  • Fund manager John Hussman is always good for dramatic charts.
  • This ratio is even scarier than it looks, says Hussman:
  • Historically-reliable valuation measures now approach those observed at the 2000 bubble peak. Yet even this comparison overlooks the fact that in 2000, the overvaluation featured a subset of very large-capitalization stocks that were breathtakingly overvalued, while most stocks were more reasonably valued (see Sizing Up the Bubble for details). In many ways, the current speculative episode is worse, because it has extended to virtually all risk-assets. To offer some idea of the precipice the market has reached, this chart shows the median price/revenue ratio of individual S&P 500 component stocks. This median now stands just over 2.45, easily the highest level in history. The longer-term norm for the S&P 500 price/revenue ratio is less than 1.0. Even a retreat to 1.3, which we’ve observed at many points even in recent cycles, would take the stock market to nearly half of present levels.

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Dow Companies Report Worst Revenues since 2010, Dow Rises to 20,000 (LOL?) – 01.31.17


  • The Dow-20,000 hats have come out of the drawer after an agonizingly long wait that had commenced in early December with the Dow Jones Industrial Average tantalizingly close to the sacred number before the selling started all over again.
  • What a ride it has been. From the beginning of 2011 through January 27, 2017, so a little more than six years, the DJIA has soared 73%, from 11,577 to 20,094. Glorious!!
  • But when it comes to revenues of the 30 Dow component companies – a reality that is harder to doctor than ex-bad-items adjusted earnings-per-share hyped by Wall Street – the picture turns morose.
  • The 30 Dow component companies represent the leaders of their industries. They’re among the largest, most valuable, most iconic American companies. And they’re periodically booted out to accommodate a changed world. For example, in March 2015, AT&T was booted out of the Dow, and Apple was inducted into it, as its ubiquitous iPhone had become the modern face of telecommunications. New blood with booming revenues replaces the stodgy old companies. In aggregate, revenues should therefore rise, right?

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Why Our System Is Broken: Cheap Credit Is King – 01.30.17

  • You want to fix the economic system, reduce political bribery and reduce rising income inequality? Shut off the cheap unlimited credit spigot to banks, financiers and corporations.
  • Cheap credit–newly issued money that can be borrowed at low rates of interest–is presented as the savior of our economic system, but in reality, it’s why our system is broken. The conventional economic pitch goes like this: cheap credit enables consumers to buy more goods and services (and since the system needs growth or it implodes, that’s good).
  • Cheap credit also enables companies to invest in new productive assets (capital).
  • Last but not least, low rates of interest enables the government at all levels to borrow money at relatively low cost.
  • That all sounds good in theory, but let’s see how cheap credit works in the real world.
  • The first thing we observe is those closest to the central bank credit spigot get the lowest rates and nearly unlimited lines of credit.

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Remember The Time Bill Clinton Got A Standing Ovation For “Cracking Down On Illegal Aliens” – 01.30.17

  • Before Trump, there was President Obama’s Iraqi refugee ban and seven nations of terror proclamation.
  • But before Obama there was Bill Clinton who received a standing ovation for demanding stronger border defenses, and deporting criminal illegal immigrants.
  • “We are a nation of immigrants.. but we are a nation of laws”
  • Our nation is rightly disturbed by the large numbers of illegal aliens entering our country…
  • Illegal immigrants take jobs from citizens or legal immigrants, they impose burdens on our taxpayers…
  • That is why we are doubling the number of border guards, deporting more illegal immigrants than ever before, cracking down on illegal hiring, barring benefits to illegal aliens, and we will do more to speed the deportation of illegal immigrants arrest for crimes
  • It is wrong and ultimately self-defeating for a nation of immigrants to permit the kind of abuse of our immigration laws that has occurred in the last few years.. and we must do more to stop it.”

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Paul Craig Roberts: “Bannon Is 100% Right – The Media Is Now The Opposition” – 01.29.17


  • Bannon is correct that the US media – indeed, the entire Western print and TV media – is nothing but a propaganda machine for the ruling elite. The presstitutes are devoid of integrity, moral conscience, and respect for truth.
  • Who else but the despicable Western media justified the enormous war crimes committed against millions of peoples by the Clinton, Bush, and Obama regimes in nine countries—Afghanistan, Iraq, Libya, Pakistan, Yemen, Syria, Somalia, Palestine, and the Russian areas of Ukraine?
  • Who else but the despicable Western media justified the domestic police states that have been erected in the Western world in the name of the “war on terror”?
  • Along with the war criminals that comprised the Clinton, Bush, and Obama regimes, the Western media should be tried for their complicity in the massive crimes against humanity.
  • The Western media’s effort to sustain the high level of tension between the West and Russia is a danger to all mankind, a direct threat to life on earth. Gorbachev’s warnings are correct..

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rump Signs Executive Orders To Keep “Radical Islamic Terrorists” From Entering US, Rebuild US Military, Safe Zones Not Included – 01.28.17

  • Shortly after the swearing in of General Mattis as the new US Defense Secretary, Trump signed two new executive orders, one to begin the “great rebuilding of the US military” according to which US military strength “will be questioned by no one”, and a second order implementing “new vetting measures” to keep “radical Islamic terrorists” out of the United States.
  • Speaking Friday at the Pentagon, the president said the action includes plans for new planes, new ships and new resources for the men and women in uniform. Trump announced the plans following a ceremony honoring his new Defense Secretary, retired Gen. James Mattis.
  • Trump also signed an executive action implementing “new vetting measures” that are aimed at keeping “radical Islamic terrorists” out of the United States. Trump says, “We don’t want them here.” The president says he only wants to admit people to the United States who will support the country. His comments echoed his campaign pledge to implement “extreme vetting” programs, particularly for people coming from countries with ties to terrorism.

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Japan Gears Up For Trade War – 01.27.17

  • While so far Trump’s trade focus was fallen mostly on Nafta countries, and to a lesser extent China, one country that is taking precautionary steps is the one which recently suffered a major loss when Trump signed an executive order to exit the TPP, effectively killing the trade deal: Japan. The TPP, which took years to negotiate among 12 countries, has often been described as being, at its core, a deal between the United States and Japan, the world’s largest and third-largest economies respectively. Abe has touted TPP as an engine of economic reform and a counterweight to a rising China but said on Thursday it was possible Tokyo and Washington could hold bilateral free trade talks
  • According to Reuters, Japan is “preparing for all possible contingencies regarding trade talks with the United States“, the top government spokesman said on Friday, after U.S. President Donald Trump ditched the Trans-Pacific Partnership free trade deal this week. PM Shinzo Abe is preparing for a visit Washington next month, and in a sequel of what Trump is expected to unveil with Theresa May today, an official in Trump’s administration said Trump would seek quick progress toward a bilateral trade agreement with Japan in place of the broader Asia-Pacific deal.

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