US federal personal tax receipts receipts are falling fast. So is the Evercore ISI State Tax Survey.
The last two times the survey plunged this much, the US was already in recession.
Is it different this time?
I like to credit my sources. I picked that chart up from Liz Ann Sonders, Senior Vice President, Chief Investment Strategist, Charles Schwab & Co., Inc.
In turn, Sonders picked that up from Evercore ISI.
I added the recession bars and comments.
Each month, Evercore conducts a State Tax Receipts Survey across 16 states capturing 64% of the US population.
Although 2Q likely up vs 1Q, perhaps not as much as some are hoping as per tax receipts Evercore ISI tax data http://pic.twitter.com/0f5IphfIfR
Soros, Druckenmiller, Icahn, Goldman, Deutsche, and now… Dennis Gartman.
From the latest letter by the “world-renowned” commodity expert who at last check was “pleasantly long.”
We begin then by noting that the CNN Fear & Greed Index is still above 80 in openly “greedy” and thus openly over-extended-to-the-upside territory. Some might call this “nose-bleed” territory and we shall strongly… indeed very strongly…suggest that buying equities here shall be in the end an ill-advised investment philosophy or action.
Bad news for the bears? Not really:
We remain, however, modestly net long of equities given that we are still long of aluminium; long of a small energy production company’s shares and long of a high-tech, “Cloud” related company’s shares, all of which have done quite well recently. We are long too, of course, of gold in EUR and Yen denominated terms; but we have derivatives positions in place sufficient to reduce our net long position to something which we’ve referred to as “pleasantly” long: long, but not materially so. We shall sit tight then and do nothing more… at least for the moment.
And then, another swipe at Bill Ackman, one which may well provoke a response as Gartman goes so far as comparing Ackman to Madoff:
Finally, concerning what has happened of late to Pershing Square and Mr. Ackman, we had a discussion with a friend in the hedge fund industry yesterday… a “rival” of Mr. Ackman’s… whose “take” on this question was most interesting. Our friend is convinced that Mr. Ackman’s effect upon the hedge fund industry may in the end by more dismaying than the effect that Mr. Madoff had upon it, for Madoff was a matter of criminality that should have been discovered but was hidden for a long while from view, while Ackman’s actions have been long standing, inexorable and perhaps repeatable by others, creating fear amongst institutional investors who will, in the future, be unwilling and/or unable to put money at risk in these same manners. Money will not, in the future, allow itself to be gated, and in response the entire hedge fund industry will be diminished.
Once again, averaging down into long positions while averaging up into short positions… and continuing to do so even as the trend is clearly against one… is what we have referred to as the sole “carcinogen” in the investment/trading business. The demise of Nick Leeson; the collapse of Sumitomo Metals; the problem caused by Mr. Kerviel at SocGen… all came about by adding to losing positions and by disregarding risk. It is our duty to avoid such nonsense. Hopefully we shall continue to do so.
Of course, the best way to avoid such nonsense is to just keep trading one’s “retirement portfolio.”
Widespread reports continue to pour in from all over the nation of “glitches” with the food stamp system. It is eight days into the month and large numbers of people still have not received their benefits, and in other instances it is being reported that EBT cards are simply not working correctly. So what in the world is going on here? On downdetector.com there are scores of reports of problems with the EBT system from people all over the nation. Could this simply be another example of government incompetence, or is something else at work here?
I had heard some rumblings about this over the past few days, but I had not really taken them seriously until I read an article from highly respected author Ray Gano…
It interesting over the weekend I got several emails telling me about cell phones being down, internet being down, and get this, EBT cards not working and having no money associated to them.
This is a concern because when the US Government has payment failures, then there is possibly something happening that the press is not telling you about.
Now, we know that computers have problems and that states, counties and cities run on computers. But what is interesting is that since the beginning of 2016, The US government has had over 2,700 reports on downdetector.com showing that they have been late loading the money onto these EBT cards.
Folks, we are now going on 8 days where the Government has not paid the EBT payments so that people have food.
So I went over to downdetector.com myself, and I was stunned to see that reports of EBT outages continue to pour in every hour. Here are just a few of the recent comments that have been left by people that are still waiting for their food stamp benefits for June…
Heidi Lynn: I was supposed to get mine on the 5th and still nothing. Even ebt NJ site says $0 as well as my EBT card says $0. I’m on disability. I forgot to add I tried calling NJ Board of Services and was on hold for over an hour. I had to hang up to take dog out, etc. Does anyone know what’s going on yet?
Ann Wilson: Now that it’s been a whole week since I was supposed to get my June benefits, and haven’t, I’m planning on going to my Illinois FCRC office. I hope they will be able to fix this difficulty.
Jenn Johnson: I always get mine on time. I was due to get mine today June 7th and nothing. I am from kentucky. Why is there nothing on the news about this?
Jarrett Manhart: Havnt received mine either. They are never late. And my fone is off so i cant call em. Im on Wi-Fi down the street from me.
Sunny Nicole Jones: I haven’t gotten mine either! I’m glad it’s not just me though because then I would really be worried!
But when I went to confirm these widespread outages with articles from the mainstream media, I came up empty.
Either the mainstream media does not know what is going on yet, or it is being ignored.
If you have not gotten your EBT benefits for this month yet or you know someone that is in that position, please feel free to let me know. I want to get to the bottom of this. There are people all over the nation that are reporting problems with the food stamp system, but nobody seems to know exactly how widespread this issue is just yet.
Today there are well over 40 million Americans on food stamps, and a lot of them would start rioting tomorrow if you told them that their food stamp cards were being turned off permanently.
EBT cards are the modern equivalent of the bread lines of the 1930s. Instead of having to wait in long lines for food, the government just zaps money on to EBT cards each month, and those that are hurting are able to get something to eat.
But down in Venezuela, extremely long food lines are a daily reality for much of the population right now. The following comes from the Daily Mail…
Venezuela was once South America’s richest nation, but a fall in oil prices combined with other economic problems has led to desperate citizens taking drastic measures.
Nearly half of Venezuelans say they can no longer afford to eat three meals a day, according to a recent poll by the local firm Venebarometro. The poll surveyed 1,200 adults at their homes during the first week of April and had a margin of error of plus or minus of about two percentage points
Those who can, cross the border into Colombia to buy, bring back and then use or sell food and other basic commodities.
Could you imagine not being able to provide three meals a day for your family any longer?
Close to half the population of Venezuela is already in that position, and the economic collapse down there grows worse with each passing day.
Most Americans just assume that nothing like that could ever happen here.
Most Americans just assume that the government will always have plenty of money to give out.
As I mentioned above, there are well over 40 million Americans that receive EBT benefits.
However, when you factor in all government programs, more than 100 million Americans get some form of money or benefits from the federal government each month.
So what would happen someday if suddenly the spigot was turned off?
What would those 100 million people do?
How would they survive?
Hopefully this current EBT outage is just a temporary technical glitch, and hopefully the government will get it fixed in short order.
But someday there will be a major crisis that will cause food stamp benefits to be cut off either permanently or for an extended period of time.
When that day arrives, what will that do to our communities?
In 2013 we reported that the EBT card acceptance system in 16 states crashed, leaving thousands with no way to put food on their dinner tables. As further evidence of what may happen following a widespread outage wherein those on government assistance have no way of buying food and other necessities, consider what this woman had to say:
I go to the register and they ask me “how you going to pay.”
I said with food stamps.
“Oh, we’re shut down, you can’t pay with food stamps.”
I got kids to feed. You know?
And because the government’s down I can’t feed my family?
…
What’s going on with America? Now they trying to starve us to death?
…This is crazy
…I got six kids I have to feed.
…
I’m just trying to figure out how to get something to eat.
Pensions in the UK, EU and internationally will go bankrupt as the long awaited ‘pensions time bomb’ detonates in slow motion.
Max Keiser and Stacy Herbert discuss the end of retirement which many Americans, Britons, Europeans and others will suffer as their pensions are decimated in the coming years due to zero percent interest rates and ultra loose monetary policies pursued for the benefit of banks and corporations.
Governments and central banks bailed out banks at the expense of pensioners and the pensions of workers who have been “thrown under the bus”.
In the second half, Max interviews Constantin Gurdgiev, Professor of Finance at Middlebury Institute of International Studies, about the debt situation in Europe and the NAMA and Irish water debacles.
Constantin points out how Ireland’s economic recovery, the EU’s ‘poster boy’ of recovery is tentative at best and based on less than sounds fundamentals.
Diversification remains the key to weathering the impact of the ‘pensions time bomb’. The traditional and typical retirement or pension fund of simply owning a balanced portfolio of just paper assets – equities, bonds and a small allocation to cash – is now a recipe for financial disaster. This is especially the case given the rich valuations seen in stock indices globally but also the fact that global bond markets are at all time record highs due to QE and central bank’s ultra loose monetary policies.
Having a pension without an allocation to gold today is high risk in the extreme and gold has never been more important as a hedging instrument, safe haven asset and pension portfolio insurance.
Yesterday we warned that a combination of extreme short positioning in bonds and Treasury yields sitting at a crucial support level meant trouble was looming. Today that 'support' level of 1.70% for 10Y yields has been well andtruly broken as 10Y trades to 1.66% – its lowest in 4 months…
Across the entire Treasury futures complex – from 2Y to Ultras – net aggregate speculative positioning is about as short (in 10Y equivalents) as it has been since 2010…
And 10Y yields have definitively broken support…
The last time we broke this key level with such a heavy speculative short (thanks to The Fed telling everyone to be short bonds), we saw the Fed flash-crash in yields.
The US is now rapidly approaching, if not already in a recession.
The media likes to talk about unemployment. But the unemployment rate is so gimmicked to make the economy look strong, that even THE FED had to create its own employment metric.
When even the Fed calls out data for being phony, you know it’s complete fiction.
The Fed’s metric for job growth is the labor market conditions index. And it is firmly in recessionary territory.
An even more sensitive measure for economic are tax receipts. The two that matter most are state sales tax receipts, which indicate how much people are spending, and Federal Personal tax receipts which show who has a job.
BOTH are collapsing into recessionary territory.
h/T Modest Proposal
Meanwhile, stocks are just 1% away from their all time highs.
More and more this environment feels like late 2007/ early 2008: when the economy was in collapse but stocks held up on hopes that the Fed could maintain the bubble.
The time to prepare for this bubble to burst is now. Imagine if you'd prepared for the 2008 Crash back in late 2007? We did, and our clients made triple digit returns when the markets imploded.
On that note, we are already preparing our clients for this with a 21-page investment report titled the Stock Market Crash Survival Guide.
In it, we outline the coming crash will unfold…which investments will perform best… and how to take out “crash” insurance trades that will pay out huge returns during a market collapse.
We are giving away just 1,000 copies of this report for FREE to the public.
Dr.Copper is sick again as the almost unprecedented surge in inventories, that we detailed previously, continues to pressure the economic metal to its lowest levels since January…
Copper held in Asian warehouses tracked by the London Metal
Exchange jumped 50 percent in the past two days, the most in seven
years.
Supplies are moving to Singapore, South Korea and Taiwan from China,
where stockpiles tracked by the Shanghai Futures Exchange have almost
halved since mid-March.
Base metals are still trading at “relatively low levels,” Jens
Naervig Pedersen, a senior analyst at Danske Bank in Copenhagen, said by
e-mail. “Uncertainty over the outlook for global manufacturing is outweighing the positive effect of the lower dollar,” he said.
Whether this is more CCFD unwinds or the hangover from the massive
speculative bubble of the last 3 months is unclear but the inventory
spike in almost without precedent.
A few days after the ECB unexpectedly announced its CSPP, or corporate bond buying program which based on its definition was limited to investment grade, non-financial debt, we explained “Why The ECB Will Be Forced To Buy Junk Bonds“, saying that “the reasons to believe Draghi will take the plunge into non-IG corporate credit go beyond the “MOAR is always better” line. As BofAML’s Barnaby Martin explains, the EU corporate sector’s penchant for bond buybacks may ultimately force Draghi further down the ratings ladder lest the ECB should end up entangled tender offers or else end up without enough debt to monetize.“
This was confirmed on the very first day of the ECB’s bond purchases.
As Bloomberg writes, purchases on the first day included notes from Telecom Italia SpA, according to people familiar with the matter, who aren’t authorized to speak about it and asked not to be identified. Italy’s biggest phone company has speculative-grade ratings at both Moody’s Investors Service and S&P Global Ratings.
Telecom Italia’s bonds are in Bank of America Merrill Lynch’s Euro High Yield Index and credit-default swaps insuring the notes against losses are part of the Markit iTraxx Crossover Index linked to companies with mostly junk ratings.
Moody’s and S&P have ranked Telecom Italia one level below investment grade, at Ba1 and an equivalent BB+ respectively, since 2013. Fitch puts the company at the lowest investment-grade rating and only revised its outlook on that level to stable from negative in November. “This dispels any doubts investors may have had about the commitment of the ECB and the central banks to tackle lower-rated names,” said Alex Eventon, a Paris-based fund manager at Oddo Meriten Asset Management which oversees 46 billion euros ($52 billion). “Telecom Italia is firmly at the weak end of the spectrum the ECB can buy.”
Telecom Italia used to have three investment-grade ratings and the notes are still held by many bondholders that focus on higher rated debt, said Saida Eggerstedt, who helps oversee about 29 billion euros of corporate bonds at Deka Investment GmbH in Frankfurt.
So how did the company sneak by? “The company’s bonds only qualify for the central bank’s purchase program because Fitch Ratings ranks it at investment grade.“
Ah yes, the old “one rating agency IG rating” loophole, abused so extensively when it cames to the ECB’s purchases of sovereign bonds, which had junk ratings from one or more rating agencies, but were kept IG by the questionably conflicted DBRS. As such, expect more quasi fallen angels to sneak through the ECB buying filter.
What happens if and when Fitch downgrades the bonds and all three rating agencies have it at junk, making it ineligible for ECB holdings? Nothing:
Investors can be reassured that the ECB won’t immediately dump the bonds if the ratings fall below the criteria for purchase. The central bank said last week securities can be retained even if they lose all their investment-grade ratings.
Ironically this is taking place as Draghi called on politicians to help the European Central Bank’s bid to restore economic health to the region by accelerating reforms. “There are many understandable political reasons to delay structural reform, but there are few, very few, good economic ones,” the ECB president said in a speech in Brussels on Thursday. “The cost of delay is simply too high.”
Draghi said fiscal policy should not work against monetary policy by curbing aggregate demand, and should be seen as a microeconomic tool to enhance growth. He also called for measures to increase workforce participation and to improve productivity, and said the economic and monetary union must urgently be completed.
”If other policies are not aligned with monetary policy, inflation risks returning to our objective at a slower pace,” he said. ”I will only note once more the critical need to restore clarity and confidence on the institutional setup of the euro area. We know that the current setup is incomplete.”
The speech was seen by many as a direct response by Mario Draghi to DB‘s scathing critique released yesterday in which the bank’s chief economist David Folkerts-Landau unleashed on the ECB as the main catalyst damading the European project, to wit:
“by appointing itself the eurozone’s “whatever it takes” saviour of last resort, the ECB has allowed politicians to sit on their hands with regard to growth-enhancing reforms and necessary fiscal consolidation.
The benefits from ever-looser policy are diminishing while the litany of distortions, perversions and disincentives grows by the day. Savers are punished and speculators rewarded. Bad companies survive while good companies are too scared to invest. Moreover, governments no longer fear that failure to reform their economies or reduce debt will raise the cost of borrowing. In fact, total indebtedness in the eurozone has been rising, with the reformed and re-interpreted Stability and Growth Pact as toothless as ever. Risk-spreads have all but disappeared from government bond markets. Badly needed labour, banking, political, educational and governance reforms have been slowed or abandoned.
All of these earnings have clearly fallen on deaf ears, because while Draghi was making hollow chit chat, his traders were busy: today they bought bonds from another soon to be junked company, Volkswagen and, as the FT points out, some 15% of corporate bonds in the Eurozone now have negative yields.
Needless to say, Europe’s politicans take one look at these self-funding government and corporate bonds and decide… to do nothing at all.
The Department of Labor says initial jobless claims for the last week were 264k, better than expected and falling back towards best in 42 year lows. The Federal Reserve says Labor Market Conditions are deteriorating at the fastest rate since 2009. The Bureau of Labor Statistics said last week that nonfarm payrolls rose just 38k, the worst since 2010… So who is right?
No wonder The Fed has no credibility with its “data-dependent” narrative.
I want to conclude with the most important reason of all not to vote for Hillary Clinton come November. If you do, you will be rubber-stamping everything the Democratic Party and the mainstream media has done during this election cycle. Voting for Hillary Clinton will send a message to the Democratic Party that change is unnecessary. That the status quo can kick you, spit on you and laugh in your face for months straight and get away with it.
Donald Trump is not your problem. Of course, Sanders supporters cannot actually consider voting for the man, but don’t let anyone tell you a vote for a third-party candidate or no vote at all is a “vote for Donald Trump.” The fault is not yours if Trump gets elected. The fault lies with the DNC and the media.
Most importantly, all Sanders supporters need to understand that if you sacrifice your principles and shift to Clinton just to defeat Trump, you have psychologically taken yourself out of the real fight to come. By supporting her to defeat someone who you think is worse you are harming yourself and your ability to think clearly and engage in activism going forward. The best advice I can give anyone is to vote third party or sit this charade out. As such you’ll remain engaged in the real fight, and fully prepared to act as much needed resistance to whichever authoritarian is elected, Trump or Clinton.
Hillary Clinton is wasting no time trying to woo Republicans turned off by Donald Trump now that she’s the presumptive Democratic nominee, as her campaign has launched a new website aimed at courting disaffected GOP voters.
The website, republicansagainsttrump.org, was registered on May 27 and launched on June 2, according to domain registration records. The Clinton campaign only appears to have begun buying ads to promote the site more recently.
The ads promise potential supporters a “free ‘Republicans Against Trump’ sticker” if you pledge to oppose Trump in the fall.
The small print, if a visitor scrolls to the bottom of the page, reads: “Paid for by Hillary for America.”
Until she clinched the primary, Clinton’s campaign has been leery of openly appealing to Republican voters, lest she turn off progressive backers of her primary rival, Bernie Sanders. But with the nomination sealed mathematically, her campaign now appears comfortable make such solicitations overtly.