Puerto Rico

Frontrunning: June 14

  • German 10-Year Government Bond Yields Dip Below Zero for First Time (WSJ)
  • U.K. Moves Closer to Brexit as The Sun Backs ‘Leave’ Vote (BBG)
  • Global Stock Selloff Deepens as Investors Seek Safer Assets (WSJ)
  • Futures tread lower for fourth day; Fed meet awaited (Reuters)
  • Oil falls as Brexit threat rattles markets (Reuters)

Puerto Rico Bonds Jump As Supreme Court Strikes Down Debt Restructuring: Only Congress Can Bail Them Out Now

"Our constitutional structure does not permit this court to rewrite the statute that Congress has enacted," explained Justice Clarence Thomas, siding with bondholders challenging the law, the court ruled 5-2 that the measure was barred under federal bankruptcy law. Puerto Rico bond prices are rallying on the news. The decision leaves Puerto Rico dependent on Congress to extricate the island from its difficulties.

"We Don't Have A Wage Problem; We Have A Money Problem"

Minimum wage advocates seek to solve a legitimate problem facing American workers: their dollars buy less and less every year. But simply mandating employers fork over more dollars is a little like putting a band-aide on an amputation. It doesn’t do anything to address the underlying problem. Our money is broken, and we need to fix it.

Frontrunning: June 10

  • Bund Brexit rally puts zero yield firmly in sight (Reuters)
  • Investors Shed Assets as Government-Bond Yields Hit Fresh Lows (WSJ)
  • Stocks Retreat With Oil as Record-Low Bond Yields Point to Angst (BBG)
  • Oil prices ease from 2016 highs on stronger dollar (Reuters)
  • Puerto Rico Debt Crisis Bill Passes U.S. House (WSJ)

Futures Slide On Rising Dollar As Global Bond Yields Hit Fresh Record Lows

Please do not adjust your screens: that off-green color you are seeing, that is not a malfunction. Yes, for the first time in six days, global stocks are lower with the MSCI all-country world index dipping from a 6 month high dragged down by lower European and Japanese equity markets, as the USDJPY dropped to a fresh five-week low while Treasury yields continued to hit new record lows because, as Bloomberg explains, "traders assessed the outlook for the global economy."

It's Official: Hillary Clinton Wins The Democratic Presidential Nomination

An Associated Press count of pledged delegates won in primaries and caucuses and a survey of party insiders known as superdelegates shows Clinton with the overall support of the required 2,383 delegates. Now the presumptive nominee, she will formally accept her party's nomination in July at the Democratic National Convention in Philadelphia.

Frontrunning: June 6

  • Yellen faces fine balance on Fed rate hike after job growth tumbles (Reuters)
  • Oil Advances as Abu Dhabi Sees $60 Crude on Shrinking Surplus (BBG)
  • China to submit 'negative list' for U.S. investment treaty talks next week (Reuters)
  • Buoyed by attacks on Trump, Clinton heads into pivotal week (Reuters)
  • Clinton's IT aide keeps email server shrouded in mystery (The Hill)

Futures Flat Following Friday's Jobs Fiasco: All Eyes On Yellen Again

Every ugly jobs report has a silver lining, and sure enough following Friday's disastrous jobs report, global mining and energy companies rallied alongside commodities after the jobs data crushed speculation the Fed would raise interest rates this month.  “The disappointing U.S. jobs report on Friday means that a summer Fed rate hike is off the table,” said Jens Pedersen, a commodities analyst at Danske Bank. “That has reversed the upwards trend in the dollar, supporting commodities on a broader basis. The market will look for confirmation in Yellen’s speech later today.”

The Equal Sign Can Be A Real Bitch

On a long enough timeline, consumption equals production. Understand that equality, and the future comes into stark relief.

Plunging Personal Income Tax Revenues Slam State Budgets In April

April is the most important revenue month for states because it contains the tax filing deadline and taxpayers tend to wait until the last minute to pay any taxes that may be owed from the prior year. This April, personal income tax revenue fell by an average of 9.88 percent compared to the same period last year in the 32 states for which Reuters has data (Puerto Rico as well). Due to the drop in income taxes, and April being near the end of the fiscal year for many states, states that were depending on a strong inflow of revenues in April are now left scrambling to fill budget gaps.

Knave Dave's picture

This past Thursday marked the one-year anniversary of the US stock market’s death when stocks saw their last high. Market bulls have spent a year looking like the walking dead. They’ve tried to push back up to that distant high that means new life several times, but each time the market falls into a pit again to where the market is once again lower than it was a year ago. These are the last gasps of a stock market (and economy) that is struggling to rise again, which it simply cannot do now that QE has been turned off and the oxygen tank of zero interest is being slowly turned down.

"Government Ain't Fixable But It Will Correct!"

Government as we know it is doomed. It will not recognize this reality until markets and/or citizens force it. This time is likely close and the process will not be painless. The more government ignores what is inevitable the greater the pain will be. One hopes that civilization does not enter an economic and anarchical Dark Ages. To the extent that government refuses to respond to the fantasy world they have created, the more likely that is to be the outcome.