The Visual History Of State Credit Ratings In The 21st Century

When Standard & Poors is not engaged in "Puffery" (a defense which admits "our entire business model is worthless") it pretends to analyze credits and assign ratings, usually with both humorous and systematically catastrophic results. Just as it has done in the chart below. In the aftermath of the Detroit filing, one may be interested to see just how the rating agency, which had Greece rated at "A" months before the Eurozone's bananaest-republic member had its first bailout, evaluated America's various states since the start of the 21st century through 2012. Among the best: Florida. Worst: California. Michigan, whose main city just went bankrupt: AA-. And with countless cross-default provisions and collateral waterfalls upon a multi-notch downgrade, one can be certain that as reality finally comes to the muni space with roughly a 3 years delay, that this too will have a happy ending.

Europe's Best (And Worst) Week Of The Year

European financial stocks had their best week of the year - jumping an impressive 6.2% on the week and over 10% in the last two - as once again 'Europe is fixed' (except credit markets don't seem as enthused). At the same time as this exuberance is taking place, Germany's DAX and Switzerland's SMI saw almost their worst weeks of the year (down 1% and 1.7% respectively). The week was very oddly dispersed with Spain, Portugal, and Greece (up 5%, 4%, and 3%) having an incredible rip while the broad-based Bloomberg Europe 500 (Europe's S&P) dropping 0.25%. Bond markets were just as enthused with Portugal, Spain, and Italy continuing their un-Taper rallies (spreads down 49bps, 20bps, and 15bps respectively). All of this as the EUR strengthened, composite PMI peeked over the 50 mark, French unemployment hit a record high and Italian bad loans surged to a new record. Schrodinger has moved from China to Europe it would seem...


The ABCs Of The 'Little Red Riding Hood Market'

There appear to be three critical aspects playing out behind the scenes in markets that are little discussed as potentially catalyzing events. With all eyes focused on FOMC next week (and Kuroda Sunday), the ABCs (Angela Merkel's election, Bankrupt Detroit's fallout, and Corrupt Cohen's potential contagion) make few strategists' notes but could quickly ascend to public enemy number one for the secular bull case. Little Red Riding Hood thought it a lovely day to walk to Grandma’s house. Then look what happened.

2013 Bitcoin Mid-Year Review And Outlook

To understand Bitcoin’s role in the first half of 2013, one must understand the macro trends driving its recent more widespread adoption. From Capital Controls to Currency Wars and Monetary Easing, the 'freedom' offered by Bitcoin has garnered a great deal of attention as these topics have recently re-emerged to the forefront of global attention. The following in-depth review (and outlook) of the Bitcoin environment covers trading, exchanges, venture capital, mining, and regulatory developments of the crypto-currency. The past six months may one day prove to be among the most important in bitcoin’s history. As global events sparked increasing need for frictionless wealth transfers, Bitcoin’s popularity ballooned and ignited a conversation that will likely continue to flourish in the years to come.

When The Economic Indicators Finally Break

"We are left in the world of Wile E. Coyote who had the habit of dashing off cliffs in the pursuit of the elusive Road Runner, before  noticing the thin air below. Plenty of economists and money managers have their eyes fixed on leading indicators and tell me that Southern Europe’s economies are "stabilizing" and "prosperity is around the corner." In reality economic activity in Greece, Portugal, Italy, Spain, and also France, is collapsing."

Crashing China Got You Down? Don't Worry, There's A "Soaring" Europe For That

Plunging Chinese manufacturing and an 11 month low PMI got you down? Don't worry: there's a Europe for that, which overnight reported that manufacturing and service PMI in Germany and, don't laugh, France soared far above expectations (German Mfg and Services PMIs of 50.3 and 52.5, up from 48.6 and 50.4, and above expectations of 49.2 and 50.8; French Mfg and Services PMIs of 48.3 and 49.8, up from 47.2 and 48.4 and an 11 and 17 month high, respectively, blowing away expectations of 47.6 and 48.8). The result was a composite Eurozone Manufacturing PMI of 50.1, above 50 for the first time since February of 2012, up from 48.8 and at a 24 month high - reporting the largest monthly increase in output sunce June 2011, as well as a composite Services PMI of 49.6, up from 48.3, and an 18 month high. In other words, European Composite PMI is expanding (above 50) for the first time since January 2012.

Can The US Economy Keep Up With This Exponential Chart?

Anyone that thinks that the U.S. economy can keep going along like this is delusional.  We are in the terminal phase of an unprecedented debt spiral which has allowed us to live far, far beyond our means for the last several decades.  Unfortunately, all debt spirals eventually end, and they usually do so in a very disorderly manner


A Different View Of The Iceland "Recovery"

Without doubt, Iceland was the canary in the coalmine for the sovereign debt crisis that is unfolding across the world right now. Today, Iceland is held up as the model of recovery. 'Famous' economists like Paul Krugman praise the government for rapidly rebuilding the economy without having to resort to austerity. This morning’s headline from The Telegraph newspaper sums it up: “Iceland has taken its medicine and is off the critical list”. It turns out, most of these claims are dead wrong. Despite being so widely reported by the mainstream financial media, Iceland is not a story of model economic recovery. It’s a story of how to fool people. And for now, it’s working.

Pivotfarm's picture

Sovereign debt is the bonds that are issued by national governments in foreign currencies with the intent to finance a country’s growth. The risk involved is determined by whether that country is a developed or a developing country, whether that country has a stable government or not and the sovereign-credit ratings that are attributed by agencies to that country’s economy.

If You're Spanish, Move To Norway

As the nations of Europe argue over and over that France is not Greece, Portugal is not Ireland, and reality is not fantasy, Bloomberg has in fact quantified just where each of these troubled nations stands for the next five years. The bad news for the Spanish - facing demands for Rajoy's resignation over the graft - is that they have the worst five-year outlook of all European nations. Worse than Portugal, notably worse than Greece, and dismally worse than Bulgaria. On the bright side, Norway - with the best outlook by far over the next five years - looks attractive (or closer still Luxembourg.)

European Stocks Rise For 4th Week

The broad Bloomberg 500 European index is up for the 4th week in a row (+6.9% over that time) showing a strikingly similar move to the pre-May collapse run. European stocks remain well off their YTD highs (unlike the US exuberance though) and there is an increasing dispersion across various countries (and asset classes). It appears that the rising tide of global liquidity is not floating all boats the same anymore. Italian and Portuguese stocks had their best week in almost 3 months at +4.3% (and Greece best in 2 months) but Italy's bonds only managed a meager 5bps compression in spreads. Spanish stocks gained only 1% on the week, much more in line with its 6bps spread compression. Portuguese bond spreads collapsed 64bps on the week - the best week in over 4 months as it's all fixed again eh? Europe's VIX is back below 17.5% and has seen its biggest 2-week drop in almost five months.

GoldCore's picture

In testimony yesterday on Capitol Hill before the Senate Banking Committee, Federal Reserve Chairman Bernanke remarked:

“Gold is an unusual asset. It's an asset that people hold as disaster insurance. A lot of people hold gold as an inflation hedge.  But movements of gold prices don't predict inflation very well, actually. But anyway, the perception is that by holding gold you have a hard asset that will protect you in case of some kind of major problem.