Housing Market

For those concerned if their city is among the top most frequented by this particular, and very unpleasant, breed of "zombies", here are the top 50 cities in the US in which zombie foreclosures represent the highest percentage of all properties in foreclosure. For those readers certainly located among the Top 10, now may be a great time to hit a bid, any bid and get out while the getting is good.

Elizabeth Warren may or may not understand the "global banking system" as Jamie Dimon alleges, but the JPM CEO certainly does as the following 14 "reasons" clearly confirm...

Hovnanian shares are down 13% this morning (the most since 2011) after a worse than expected loss and drop in margins stunned shareholders. In a 2007-esque reflection, Hovnanian's CEO appears to be admitting things are not as rosy as homebuilders have all been projecting: HOVNANIAN "TOO AGGRESSIVE" IN PRODUCING HOMES ON SPEC, CEO SAYS, HOUSING MARKET FEELS A "BIT TENTATIVE." However, the CEO added 2016 will be the breakout year... so that's nice.

Something happened in late 2008 that has skewed the recovery towards the wealthiest Americans.

• White House denies Obama said strong dollar a problem (Reuters)
• Lira Falls to Record Amid Stock Rout as AK Party Loses Majority (BBG)
• Bond-Market Game of Chicken With Fed Is Riskier Than Ever (BBG)
• Xetra Dax enters correction territory (FT)
• China trade shrinks amid slowing demand (FT)
• Greek government eyes compromise with lenders, rules out snap polls (Reuters)
• If You Think Greece’s Crisis Will End Soon, Think Again (BBG)
• China growth data ‘overstated’ due to data error (FT)
• Calpers to Cut External Money Managers by Half (WSJ)

The world’s financial system is saturated with speculations fostered by nearly two-decades of central bank credit inflation. Just since 2006, the footings of central bank balance sheets have expanded from $6 trillion to upwards of $22 trillion. That’s all combustible monetary fuel that cannot be recalled; it can only be liquidated in the course of a monumental meltdown in the casino. So, yes, after the carnage of the past few days the global sovereign bond index has lost $625 billion since the bond bubble peak in late March. Call that spring training.

“Volatility and repricing,” euphemism for losses, are the New Normal.

Paper Propaganda

Ali and Frazier, Laurel and Hardy, Mayweather and Pacquiao, Liesman and Santelli, and now Schiff and Maloney. Peter and Mike join clash of the titan-like to discuss their investment strategies and expose the charts the government doesn't want you to seeas "people like Bernanke are taken seriously still and the people that did predict [the crisis] are dismissed as lunatics half the time." The wide-reaching conversation covers everything from gold and stocks to The Fed and The Dollar - Bernanke "took the coward’s way out because all he did was exacerbate the problems to postpone the day of reckoning." The air is coming out of the bubble, they warn, "Bernanke and Greenspan have absolutely destroyed America. People don’t realize what is coming..."

Two years ago, bank analyst Mike Mayo asked JPM chief Jamie Dimon a simple question: why should affluent customers not pick UBS over JPM due to a mismatch in capital ratios, to which Dimon's response was even simpler: "that's why I'm richer than you." To which we then added: "No logic, no rationale: all about the bottom line, which to Jamie at least is all that matters. The bottom line was indeed all, because as Bloomberg calculated overnight, over the past several years, Jamie Dimon quietly became not just "richer than you", but "much" richer: his net worth is now well over $1 billion!

But the post-weather bounce? Markit's Services PMI in May missed expectations and dropped for the 2nd month in a row to its lowest since January. This notched the Composite PMI also down to its lowest since Jan, leaving Markit warning "the US economy has lost some momentum after an initial bounce-back from weather-related weakness at the start of the year." Worst still, ISM Services thenprinted a notably disappointing 55.7 (against 57.0 expectations) - its weakest since April 2014. The breakdown shows weakness across the board with prices rising. Finally, we note that an incredible 75 of 79 'qualified' economists had an ISM Services estimate that was too high... extrapolated hope springs eternal until it is smashed on the shores of reality.

China may raise the quota on a critical debt swap plan by as much as CNY1 trillion, underscoring how important its success is both in terms of kicking the can for the country's heavily-indebted local governments and in terms of jumpstarting the credit creation machine. Meanwhile, an effort to encourage ABS issuance is sputtering amid rising NPLs.

When the "very serious people" start to admit that the entire house of cards was held together with nothing but bullshit and propaganda, it may be a time to panic...

Following the March pending home sales report which saw growth moderate after February's 3.6% surge to 1.1%, the flurry of contract signings, not actual purchases, in April rebounded by 3.4% - the biggest jump since September 2012 - far above the 0.9% consensus estimate and 14% higher than a year ago, pushing the pending home sales index to 112.4, the highest level since 2006. The driver: pending sales in the Northeast, which soared 10.1% from the month before, and 9.4% from a year ago.

Courtesy of central planning, virtually every single capital market has become an illiquid penny stock, with wild swings from one extreme to the other, the latest example of this being the Shanghai Composite, which after soaring 10% in the past ten days, crashed 6.5% overnight tumbling 321 points to 4620 after it briefly rose just shy of 5000. This was the biggest drop since January 19 when the Composite dropped 7.7% only to blast higher ever since. Putting the "plunge" in perspective, now the SHCOMP is back to levels not seen in... one week.