State Corporate Tax Receipts Just Crashed The Most Since The Recession

After flatlining for the past year, US income tax receipts – both at the federal government and on a state and local level – have been disappointing, and have posted a sharp drop since the start of the year, which is “sounding an alarm about the health of the US economy” in BofA’s words (in addition to the countless other alarms about the health of the economy, which however are ignored due to the record stock market).
As Bank of America highlights something we warned about last September, according to the Rockefeller Institute and CBO, US federal income tax receipts have come in about 3% below expectations this year.

This post was published at Zero Hedge on Jun 9, 2017.

Gold’s ‘Bearish Bulls’ Addressed, Now What?

[as to the article’s title, I don’t have a firm, paint-by-numbers answer, but I surely do have strategy… ] An NFTRH subscriber named Joe, who is a former fund guy and current chart cranking, idea generating maniac (said with admiration) came up with the term ‘bearish bulls’ recently, by which he meant that a whole lot of people were looking down in the gold sector, especially heading into this week as the dreaded ‘GDXJ rebalance’ and then next week’s FOMC loomed.
On the former, some bounce opportunities were created in oversold companies involved in the rebalance (with bearish bulls’ short covering providing the accelerant) and on the latter, I very much expect the Fed to raise the Funds Rate next week; and so does the futures market. From CME Group…

This post was published at GoldSeek on 9 June 2017.

House Intel Committee Tells Trump To Hand Over Comey Tapes “If They Exist”

Moments after an exchange between Trump and a reporter during a White House press conference, in which the president refused to publicly state if the “Comey tapes” exist – while insinuating that they do – and that Trump will reveal an answer shortly…
Reporter: “And you seem to be hinting that there are recordings of those conversations.” Trump: “I’m not hinting anything. I’ll tell you about it over a very short period of time…. Oh, you’re going to be very disappointed when you hear the answer. Don’t worry.”
… the House Intel Committee formally requested that the White House produce any tapes (or memos) of such a conversation – if they in fact exist – and that Trump hand them over within two weeks.

This post was published at Zero Hedge on Jun 9, 2017.

RBC’s Mean Reversion Model Is “Exploding Higher” As The “Rotation” Begins

RBC’s head of cross-asset strategy, Charlie McElligott warns that “it’s now clear that as I’ve been anticipating, there is a significant amount of equities buy-side discomfort as consensual positioning is now driving the first period of sustained market underperformance in some time, all on account of the flagged factor-rotation I’ve been focused-upon.”
Having detailed his thesis consistently (and most recently this morning – see notes below), McElligott’s quick message this afternoon should be heeded by many staring at the tumble in FANGs and surge in Small Cap Financials – something big just changed…
As I’ve been pushing over the past few weeks, the over-extension of positioning and factor relative ratios (most notably ‘value : growth’) sent up the ‘red flags,’ and the moment that rates began to lose that downside momentum, we made the call that the rotation was officially beginning.
Here are the optics of the ensuing scramble, obviously still early stages, but with plenty of room to run as long as rates continue to cooperate (higher). Worth noting on that point, that we are seeing fast-money re-engage in fixed-income shorts again today on rates / futures desk…which as I’ve stated is mission-critical to sustain this reversal.

This post was published at Zero Hedge on Jun 9, 2017.

Watch Live: Trump’s First Post-Comey Press Conference

While we are sure the world is waiting with bated breath to hear about US-Romania relations, we suspect their joint-press conference will be slightly more focused on the fallout from yesterday’s Comey testimony and Trump administration reaction…
As we detailed earlier, as “infrastructure week” draws to a close, President Donald Trump is preparing to meet with his Romanian counterpart, President Klaus Iohannis, in the Oval Office on Friday before the two hold a joint press conference in the Rose Garden to talk security, defense spending and other economic concerns.

This post was published at Zero Hedge on Jun 9, 2017.

Hail Zorp! UK Sterling Gets Pounded After Close Election (Conservatives Lose Majority, Brexit in Jeopardy)

UK Prime Minister Theresa May nearly sank her own ship of state by calling for an election … and losing her party’s majority to the anti-Brexit Socialists. It is almost as if she summoned Zorp the Surveyor (the 28-foot-tall lizard-god from Parks and Recreation) by mistake.
(Bloomberg) – The pound tumbled as the U. K.’s ruling Conservative Party lost its parliamentary majority, plunging the country into uncertainty just days before Brexit negotiations were due to start. Crude advanced and the dollar strengthened.

This post was published at Wall Street Examiner on June 9, 2017.

FANG Stocks Slammed After Goldman Warns Of “Valuation Air-Pocket”

Update: FANG Stocks are getting hammered today.
The fascination with the influence of a handful of giant tech stocks on the overall markets continued overnight, when one day after Bank of America found that the tech sector is now the “most overweight it has ever been“, surpassing even the record clustering into tech during the dot com bubble, Goldman issued a report looking at the outsized influence of the five tech stocks in question which it dubs FAAMG – Facebook, Amazon, Apple, Microsoft and Alphabet, which have collectively added a total of $600 bn of market cap this year, “or the equivalent GDP of Hong Kong and South Africa combined.”
This is also the group of names which we reported last month is what virtually every brand name hedge fund purchased in the first quarter based on 13F filings, as active managers abandoned “value” names and factors and rushed into “momentum” and “growth.”

This post was published at Zero Hedge on Jun 9, 2017.

Paul Singer: The Financial System Is Not Sound (Video)

Billionaire investor Paul Singer says the financial system is no more sound than it was in 2008. In fact, he contends that in many cases, it is more leveraged than it was leading up to the 2008 crash.
During an interview at the Bloomberg Invest New York summit, he pinned the blame squarely on what he calls extreme central bank monetary policy and growth suppressing government actions. And he warned it’s going to create a ‘ruckus’ when the bubble pops.
I’m very concerned about where we are in terms of the financial system, the economy, the American economy, the global economy. After nine years of what I consider to be a distorted set of policies, completely oriented towards what I regard as monetary extremism – the quantitative easing that has put about $15 trillion dollars of bonds, and now stocks on the books of the developed country’s central banks, zero percent and negative interest rates; emergency monetary policy persisting for eight years after the emergency is over, combined with what I consider to be growth restrictive fiscal policies – regulatory, tax. So, I think it’s created a distorted recovery.’

This post was published at Schiffgold on JUNE 9, 2017.

We Are Now At The Tipping Point, The Economic Contraction Picks Up Speed – Episode 1302a

The following video was published by X22Report on Jun 9, 2017
Mexican industrial production crashed, this is a somewhat unprecedented and sudden downshift. Retail, commercial real estate is in trouble. Retailers are asking for very short lease deals just in case they go bankrupt. Consumer push their credit to the limit and now we are seeing a surge in credit defaults. Boeing laying off thousands and moving some operations to China. Consumers are at their weakest point since the great recession. GDP will need to be revised for the 2nd quarter because wholesale inventories have plunged. The Fed will make their decision about an interest rate hike next week. Glass-Steagall needs to be reinstated and this is now on Trumps radar.

Wall Street Wakes Up to #Carmageddon

Auto industry faces ‘Unprecedented Buyer’s Strike’: Morgan Stanley
After five months in a row of year-over-year declines in auto sales, and therefore after five months in a row of sales that fell below already lowered expectations, the big guns on Wall Street are now seeing the writing on the wall, and are trying to come to grips with it.
‘A stretched auto consumer, falling used [vehicle] prices, and technological obsolescence of current cars are ingredients for an unprecedented buyer’s strike,’ wrote Morgan Stanley’s auto analyst Adam Jonas in a note to clients.
He now sees a ‘multiyear cyclical decline.’ In this environment, he sees an impaired ability by these stretched consumers to buy new vehicles. He sees a declining ‘willingness of financial institutions to lend as aggressively as in the past.’ He’s particularly worried that even the automakers’ captive finance operations – such as Ford Motor Credit, GM Financial, Mercedes-Benz Financial Services, and Toyota Financial Services – which have been doing everything they could to get people into new cars, are at the end of their wits:
Up to this point, we had believed that competitive forces, particularly the ability of the captive finance subs to find new ways to lower the monthly payment and put ‘money on the hood,’ would help extend the US auto volume cycle a few more years to new heights.

This post was published at Wolf Street on Jun 9, 2017.

The Marlboro Red Consumer Sentiment Indicator

After last earnings season I noted without a strong rebound in consumer spending, I expect aggregate earnings growth to slow later this year (especially if declining energy prices cause credit to tighten). While asset inflation remains unchecked, consumer spending does not appear to be responding or accelerating. Two consumer companies on my possible buy list announced earnings this week – both suggest the operating environment remains challenging.
Casey General Stores (CASY), the convenience store operator, reported results on Monday with sales and earnings that were less than expected. Specifically EPS declined to $0.76 from $1.19 during the quarter and $4.48 vs. $5.73 for the year. During the quarter, same-store fuel gallons declined -0.5%, while grocery same-store comps increased 1.5% and prepared food/fountain comps were up 3.2%.
Management noted that similar to others in its sector, Casey’s ‘experienced downward pressure on customer traffic which had virtually impacted same-store sales across all of our categories.’ Management blamed decelerating customer traffic on the weak agricultural economy, the difference in food away and food at home prices, and competitor promotional activities.
Management commented further on the agriculture economy saying, ‘The USDA anticipates either a flat to slightly declining farm income in calendar 2017. So we’d anticipate this piece of the challenging environment to continue to at least to the end of the calendar year.’

This post was published at Zero Hedge on Jun 9, 2017.

Chinese Companies Ask Employees To Buy Their Stock, Promise To Cover Losses

Just when we thought there were no surprises left in the world’s foremost incubator of “financial engineering” that is China, we got a stark lesson in never underestimating China’s market manipulating ingenuity.
According to Caixin, around two dozen Chinese companies recently offered their employees a deal: buy company shares while guaranteeing that any losses would be covered.
While employees think they may be getting an unbeatable deal – who can say no when your employer promises you all the upside and no downside – the reality is that any participants in such scheme are merely locking in their fates with that of their soon to be insolvent employer, who desperately needs to raise the price of their stock to fend off collateral calls on stock-backed loans usually made by founders and other major sharehholders.
As Reuters points out, attracted by guarantees that their principal is “safe”, workers have eagerly stepped up to take advantage of the “offer” even as it remains far from clear how these guarantees would work, with employees in some cases being asked to buy shares and hold them for at least 12 months. Details aside, many of the companies that resorted to this drastic stock price manipulation were quickly rewarded and saw their share prices spike.
The entire farcical episode is reminiscent of what happened in 2015 when China’s stock bubble grew exponentially, then burst just as dramatically. At the time, there were similar efforts, but then it was the government appealing to major shareholders’ patriotism to buy and hold shares in what Beijing said was as a battle against speculators, both domestic and foreign. This time, with the proposal centered entirely on the private sector, the motive is different and is the result of companies using their own stocks as loan collateral, a practice that according to Reuters’ estimates has quadrupled in China over the past two years, and which is driven mostly by founders and major shareholders posting large batches of stock as loan collateral in recent months.

This post was published at Zero Hedge on Jun 9, 2017.