We earlier showed the close-up-and-personal images from the bombing raids between Hamas/ISIS/Al-Qaeda and Israel; but the following clip (which we still have not heard the final conclusion of) shows just how much of a 'surprise' these shellings can be... as a reporter is hit by a shell live on air.
Goldman Admits Market 40% Overvalued, Economy Slowing, So... Time To Boost The S&P Target To 2050 From 1900Submitted by Tyler Durden on 07/12/2014 - 17:24
Recall that it was Goldman's David Kostin who in January admitted that "The S&P500 Is Now Overvalued By Almost Any Measure." It was then when the Goldman chief strategist admitted there was only 3% upside to the bank's year end target of 1900. Well, that hasn't changed. In his latest note Kostin says that "S&P 500 now trades at 16.1x forward 12-month consensus EPS and 16.5x our top-down forecast... the only time S&P 500 traded at a higher multiple than today was during the 1997-2000 Tech bubble when margins were 25% (250 bp) lower than today. S&P 500 also trades at high EV/sales and EV/EBITDA multiples relative to history. The cyclically-adjusted P/E ratio suggests S&P 500 is now 30%-45% overvalued compared with the average since 1928." And this is where Goldman just goes apeshit full retard: "we lift our year-end 2014 S&P 500 price target to 2050 (from 1900) and 12-month target to 2075, reflecting prospective returns of 4% and 6%, respectively."
Martin Armstrong warns that 50% of the municipal governments in Germany are on the verge of bankruptcy. This is part of the reason they are looking for bail-ins and even Merkel has determined they cannot allow any referendums fearing the people will vote against the EU. The Bremen state government has now imposed a spending freeze today. The reason has been the unexpected expenditure and revenue shortfalls in the total amount of 60 million euros. Politicians cannot see that this system is doomed. They keep looking for everything possible to raise more and more taxes. It is just amazing who disconnected government are from the reality of the economy. Everything is geared to move toward the confiscation of wealth not reforming the system.
Having dictated to the citizenry - "Do not get cynical. Hope is the better choice," this week, we thought the following cartoon was particularly appropriate...
Occam’s razor is a principle that states that among various hypotheses that might be used to explain a set of observations, the hypothesis – consistent with the evidence – that relies on the smallest number of assumptions is generally preferred. Essentially, the razor shaves away what is unnecessary and retains the most compact explanation that is consistent with the data. When we observe the increasingly tortured arguments that “this time is different,” we see investors discarding straightforward explanations that are fully consistent with the evidence and opting instead for the aliens-from-Xenon theory. nothing even in recent market cycles provides any support to the assumption of permanently elevated valuations. The only support for it is the desire of investors to avoid contemplating outcomes the same as the market suffered the last two times around. “This time is different” requires a lot of counterfactual assumptions. Occam’s razor would suggest a nice shave.
With EURUSD hardly budging, constantly disappointing economic data (from periphery to the core now), and central bank transmission mechanisms that are entirely clogged and useless for anything but stuffing the pockets of bloated bank balance-sheets with domestic sovereign debt, it is no wonder Germany's Bundesbank has said 'enough'. "If we pursued our own monetary policy... it would look different," explained Bundesbank chief Jens Weidmann. As Reuters reports, Weidmann noted that many savers in Germany were irritated by low interest rates and property prices were overvalued in some big city areas in Germany; implicitly threatening the ECB's chatter-box that "this phase of low interest rates, this phase of expansive monetary policy, should not last longer than is absolutely necessary."
Israel's bombing campaign of Gaza shows no signs of abating: as WaPo reports "Israel widened its air assault against the Gaza Strip’s Hamas rulers on Saturday, hitting a mosque it said was hiding rockets" as well as a school which it said was used by Hamas as a cover, "as Palestinians said their death toll from the five-day offensive rose to over 125." The military said it has struck more than 1,100 targets, including Hamas rocket launchers, command centers and weapon manufacturing and storage facilities, in a bid to stop relentless rocket fire coming Gaza. Officials in the territory said that besides the mosque, the strikes also hit Hamas-affiliated charities and banks, as well as a home for the disabled, killing two women.
This is it! The holy grail of forecasting, Jeffrey Kleintop has discovered it. You'll never have to worry about actual earnings reports, a massive bubble in junk debt, the sluggishness of the economy, new record levels in sentiment measures and margin debt, record low mutual fund cash reserves, the pace of money supply growth, or anything else again. Just watch the yield curve! Unfortunately, as we showed here in the US, this advice could turn out to be extremely dangerous for one's financial health - and has been across many nations throughout time. People remain desperate for excuses as to why the latest bit of asset boom insanity will never end
The Atlantic City casino industry implosion continues. Following the second, and final, bankruptcy of AC's "state of the art" Revel Casino a month ago, as well as the shuttering of Atlantic Club hotel Casino and the Showboat hotel casino, the grim corporate reaper has come for one of the most prominent boardwalk casinos of all: Trump Plaza. "Trump Plaza Hotel & Casino will shut its doors for good in mid-September, according to state officials who were briefed Friday by lawyers for the casino."
Meet Bill Binney, one of the earliest NSA whistleblowers (well before anyone had ever heard of Edward Snowden). He worked for the NSA for 30 years before resigning because of concerns he had regarding illegal spying on U.S. citizens in 2001. Mr. Binney thankfully has never stopped fighting for The Constitution that he swore to defend, unlike most other government officials who happily stomp all over the basic civil liberties enshrined in our founding document. He had some very choice words recently and it would be wise for all of us on planet earth to pay very close attention - Binney recently told the German NSA inquiry committee that his former employer had a “totalitarian mentality” that was the “greatest threat” to US society since that country’s US Civil War in the 19th century.
We previously noted the "miracle" of China's PMI, and the lack of statistical validity and consistency in the government's survey; but this simple graphical illustration exposes exactly why the widely-celebrated China PMI number upon which so much current optimism is being grounded may be entirely misplaced...
The first big wave of embracing a liberal international economic order - relatively free trade, rising international capital flows and rapidly growing global economic integration - resulted in something remarkable. Between 1870 and 1914, there was a 45-year span of rising living standards, stable prices, massive capital investment and prolific technological progress. In terms of overall progress, these four-plus decades have never been equaled — either before or since. Then came the Great War. It involved a scale of total industrial mobilization and financial mayhem that was unlike any that had gone before. In the case of Great Britain, for example, its national debt increased 14-fold.
“The fundamental problems are not solved and everybody knows it,” Maximilian Zimmerer, CEO of Allianz, said at Bloomberg LP’s London office. The “euro crisis is not over,” he said. “There is only one country where the debt level last year was lower than 2012 and this is a signal the debt crisis can’t be over, only a recognition of the debt crisis has changed,” Zimmerer said on July 9. “If the debt levels are not going down in the end we will have a problem, that is for sure.”
Having already warned that looming political uncertainty is not at all priced-in to US equities, Goldman's Alec Phillips points out that legislation was introduced earlier this week (July 7) in the US House that would attempt to revamp the FOMC's monetary policy process. The bill would require the FOMC to justify to Congress each policy decision relative to a Taylor rule specified in the legislation. While Goldman, do not expect the bill to get very far, but the issue does appear to be a growing focus for some lawmakers and we expect further action on it in the near term.
It’s time to think like a contrarian. Why? Because capital markets seem as bulletproof as one of those up-armored military personnel carriers you see in war zones. So what could really rattle stock, bond and commodity markets over the next 3-6 months? The go-to answer, steeped in history, is geopolitical crisis, where the logical hedges are precious metals, volatility plays, and possibly crude oil. Look deeper, however, and other answers emerge.