Reality

Forget Puerto Rico, German Munis Are In Trouble

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.

CEO Of Europe's Largest Insurer Pops The Utopia Bubble: "Nothing Is Solved And Everybody Knows It"

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.”

Is It Time To Sell The "Old Guy At A Club" Market?

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.

Bubbles, Bubbles Everywhere

Is there any doubt that we are living in a bubble economy? At this moment in the United States we are simultaneously experiencing a stock market bubble, a government debt bubble, a corporate bond bubble, a bubble in San Francisco real estate, a farmland bubble, a derivatives bubble and a student loan debt bubble. And of course similar things could be said about most of the rest of the planet as well. And when these current financial bubbles in America burst, the pain is going to be absolutely enormous.

Some Recent Euphoric Comments About Portugal

  • PORTUGAL'S BANKS MORE CAPITALIZED, MORE TRANSPARENT NOW: COSTA
  • PORTUGAL TO OUTPERFORM ITALIAN BONDS ON MACRO OUTLOOK, MS SAYS
  • BARROSO SAYS FOREIGN INVESTOR CONFIDENCE IN PORTUGAL INCREASING
  • PORTUGAL OUTLOOK REVISED TO STABLE AT S&P

Espirito Santo: The Full Timeline

Remember when everyone ignored this story about Espirito Santo in May: "Portugal's Largest Bank "In Serious Financial Condition" Auditor Warns." Good times. Alas, one can only kick the can of Europe's banking sector insolvency so far before everything blows up in everyone''s face all over again and Draghi has to come out of his crypt and spook everyone that he will do "whatever it takes" to ignore reality and just pretend stuff is fixed which carries Europe over for a few more months before the whole charade has to be repeated.

Reality-Optional Economics: Cockamamie Stories Infecting the Body Politic

The total tonnage of economic malarkey being shoveled over the American public these days would make the late Dr. Joseph Goebbels (Nazi Minister of “Public Enlightenment and Propaganda”) turn green in his grave with envy. It’s a staggering phenomenon because little about it is conspiratorial; rather, it’s the consensual expression of a public that wants desperately to believe things that are untrue, and an economic leadership equally credulous, unmanned, and avid to furnish the necessary narratives that might preserve their jobs and perqs.

Germany Blesses "Bail-In" Deposit Confiscation Plan For Failing EU Banks

One year earlier than required, the German government approved plans to force creditors into propping up struggling banks across Europe. As WSJ reports, Germany "leads the way" in Europe by implementing European rules quickly and "creates instruments that allow the winding-down of big systemically relevant institutions without putting the financial stability at risk." What this means is that taxpayers (theoretically) will not be on the hook (though in reality we are sure the mutually assured destruction defense will be played - especially if Deutsche runs into problems) but as German authorities explain, "This ensures that in times of crisis mainly owners and creditors will contribute to solving the crisis, and not taxpayers." As a gentle reminder - creditors includes depositors... remember Cyprus?

One Company Finally Admits: It Wasn't The "Harsh Weather" After All

Yesterday we heard from the CEO of the world's biggest company that the exuberant jobs data did not reflect any economic reality Wal-Mart was seeing. Overnight, William Arthur Tindell, CEO of The Container Store, further destroyed the myth of a 'recovery' stalled by 'weather' and threw the rest of his 'retailer' brethren under the bus: "We thought our sluggish sales were all because of weather and calendar shift...but now we've come to realize it's more than that, consistent with so many of our fellow retailers, we're experiencing a retail funk."

What "Rosy" Job Numbers? Wal-Mart CEO Slams Recovery Mirage

When the CEO of the world's biggest company doubts the veracity of US economic data, you know you have a problem. After quarters of disappointing growth in the face of miraculous equity market performance; Wal-Mart CEO Bill Simon warns that shoppers aren’t returning at the pace one might expect years after the recession peaked, despite mainstream media interpretation of the data showing unequivocal growth. Simply put, he exclaims, "the unemployment numbers particularly have been difficult to read with the number of people dropping out of the work force," adding that if we see a further drop in the participation rate it would fit with the fact that "middle-class and lower-class are still economically challenged, only spending during holidays and for family occasions," adding that traction has only come at the top-end.

Russell Rout Continues - Loses Post-Fed "All-Clear" Gains

A middle of the day co-ordinated VWAP ramp (thanks to VIX) lifted stocks briefly - aftewr the Russell neared unchanged for 2014 - but the last 2 days - the worst in 3 months - pushed small caps into negative territory post-Yellen's June Fed "all-clear". All major equity indices in the US remain notably red post-payrolls. Trannies (miraculously) recovered to unch on the day. Momo names and growth-sensitive stocks have been slammed since the exuberant payroll highs of last week. Treasury yields continues to slide. with the 10Y now 7bps lower in yield post-payrolls (and stocks caught down to that reality) FX markets saw early USD weakness then stability but AUDJPY was in charge of stocks today. Despite early USD weakness, commodities were all rammed lower around the US open - only to recover 'efficiently' back to unch on the day. VIX closes at 12.15 - 3 week highs.