Sweden Leads World Shares Lower As Competitive Currency Devaluation Commences Causing US Dollar To Rise

Financial market report as of Sunday March 4, 2012

Sweden, EWD, has been a value investment leader due to its outperforming export driven economy, and its strong Swedish Krona, FXS, currency appreciation, seen in this combined chart of FXS, FXE, FXM, FXC, FXF, FXA.  But these factors will work to its detriment as global growth turns to global economic contraction, causing a rate of asset deflation that may equal that of the emerging market leaders, EWX, such as MELI, and the small cap value shares, RZV, such as SNX, DY, and others seen in this Finviz Screener.   

Global growth and export leader Thailand’s THD, rate of descent, which can be followed in this chart, is likely to be less step than Sweden’s rate of deflation, as it has trading partners in the stronger Asia region, EPP, than in the weaker European region, VGK. Value investing fails to apply in a deflationary investment environment. Purchasing high quality companies whose price has dropped will be like catching a falling knife. Buying on dips will present one with a series of ongoing losses. There will be no companies that will out perform in the coming downturn, as the weekly chart of world stocks, VT,  shows a loss of 0.19%, as it has crested into an Elliott Wave 2 Up in the last week of February 2012, and is now falling into an Elliott Wave 3 Down. The only value investing that will work is taking possession of gold bullion or buying gold in an Internet Vault.

Corey Rosenbloom in article Tying intraday divergences together with Elliott Wave charts the S&P on the start of its Elliot Wave Up on April 27, 2009. And TheWaveTrading in Safehaven charts the S&P, SPY, turning down from its Elliott Wave 5 Up, The “triumvirate” of MACD, Summation Index & BPI are now aligned with a sell signal while the daily RSI has breached the rising trend line support.

The collapse of the global debt trade has commenced, and can be followed in this chart ACWX, EWD, EWX, RZV as investors loose faith in the world central bank’s monetary policies, and the global government finance bubble, BWX, EMB, bursts. The currency demand curve, RZV:RZG, has turned lower, indicating a failure of monetary policy to stimulate and sustain risk.

Tan Soon Youn in Small-Cap Value Investing – the USA Experience documents the small cap value premium. The chart of RZV, SNX, MELI, DY shows the recent strong appreciation of the small cap value shares due to a safe haven flight to safety from Eurozone debt contagion and LTRO financing.  

Now debt deflation and exhaustion of neo liberal finance, will cause a fast derisking out of Sweden stocks such as Volvo, Electrolux, Sandvik, Svenska Cellulosa, Atlas Copco, Autoliv, seen in this combined chart.

Major world currencies, DBV, and emerging market currencies, CEW, will soon be turning lower, when it becomes apparent that Greece is an insolvent nation, and that its sovereign debt is unsustainable, and as confidence in the world central banks’ monetary policies fails. Open Europe writes Take III: Don’t Bore Me With The Details. Felix Salmon writes The Improbable Greece Plan. Greece’s debt dynamics get even worse. But of course even with well-below-market interest rates, Greece is still never going to pay that money back. The cost of this plan is €130 billion right now, and €170 billion over three years, through the end of 2014; it just continues going up from there, with no end in sight. Remember that total Greek GDP, right now, is only about €220 billion and falling.

King World News relates Fears Of Debt Contagion. These, as well as fears of decreased growth, and loss of confidence in the world central bank fiat monetary policies will cause disinvestment out of glow growth stocks, such as mining equipment manufacturers MTW, IR, TEX, TSCO, and out of agricultural companies, MON, ADM, and out of natural resource companies, IP, and also delveraging out of commodities, DBC,such as JJC, as fiat money dies globally on competitive currency devaluation.

Future EU Leader’s framework agreements will serve as the constitution for the New Europe, and usher in the ten toed kingdom of regional global governance, where the Beast Regime of Neoauthoritarianism, will be replacing the Banker Regime of Neoliberalism.

Please consider Michael’s post Twenty Quotes From European Leaders That Prove That They Know The Financial System In Europe Is Dead.

Soon out of financial armageddon, that is a credit bust and global financial collapse, the most credible  leader will rise to provide order out of chaos. This seemingly Little Authority, will be a New Charlemagne, who will rise to rule the Euro zone, where Germany, EWG, will be preeminent, as a type of revived Roman Empire that governs the European continent.

As it stands now, fiat money has expanded to its full potential and competitive currency devaluation has starting, with the Euro FXE, the Swedish Krona, FXS, the Brazilian Real, BZF, and the Indian Rupe, ICN, trading lower in value, causing the US Dollar, UUP, to rise.

The global debt trade is starting to exhaust as is seen in the recently Small Cap Pure Value, RZV, US Infrastructure, PKB, Small Cap Industrial, PSCI, Small Cap Technology, PSCT, Coal, KOL, Semiconductors, XSD, Leveraged Buyouts, PSP, Homebuilding, ITB, trading lower.

The Two Hundred Percent Volatility, TVIX and Volatility, VIXY, are bottoming out, providing further evidence that a market turn is at hand. TheWaveTrading in Safehaven writes Another opportunity could result with TVIX (2 x long VIX etf) since it could be on the verge of completing a large sideways corrective move. If the count that I am following is the correct one then the target range for a pending wave (C) up is located in the range: 22.85-27.32

The decrease in the Citi Economic Surprise Index from 37 to 32 indicates that global growth has turned from economic contraction, with the result that corporate earnings cannot be sustained, with the result that investors will be derisking out of stocks, ACWI, world small cap stocks, VSS, and emerging market leaders, EWX, and also deleveraging out of commodities, DBC, which traded lower.

Investors cannot leverage carry trade lending in a growth exhausted world, as the seigniorage of sovereign debt, US Debt, TLT, EDV, ZROZ, Italy Debt, ITLY, world government bonds, BWX, is turning lower, and emerging market bonds, EMB, is reaching over extension, on soon coming debt deflation, that is currency deflation, as fiat money dies, and bond vigilantes call interest rates higher globally, as will be reflected in the Flattner ETF, FLAT, falling, and the Steepner ETF, STPP, rising, which will be seen in the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, continuing its rise in an Elliott Wave 3 Up.

The moneyness of central bank authority is failing. A new moneyness, the seigniorage of diktat is rising to rule economics as political capital replaces investment capital as the dynamos of growth and profit that have driven capitalism are winding down, and the dynamos of regional security, stability and sustainability are powering up regional global governance.

Swedes are not Greeks. One is of the industrious and creative state; while the other is strident in affirming that it is the first republic. One manufactures exports, IYJ; while the other transports goods, SEA. Both are socialist, one is competitive and taxpaying; while the other is non competitive and non taxpaying. Wikipedia has superlatives in describing one; while The Economist says the other is characterized by patronage and pork.

Said again, Swedes are not Greeks. But they will both be one living in a global gulag of debt servitude, as the debts of Neoliberalism, that came through the Milton Friedman Free To Choose floating currency script, gives way to the austerity measures, structural reforms, and economic restructuring of Neoauthoritarianism, where diktat replaces choice. The debts of capitalism will be applied to every man woman and child in the world, as ten world regions of statism and totalitarian collectivism, rise to govern all.

The diktat money system is rising to replace the fiat money system. Libertarianism is dead on arrival in the age of deleveraging. The Ron Paul agenda of freedom, freedom enterprise, and the free market monetary system, are simply mirages on the neo authoritarian desert of the real. Fate, not any human action, is bringing forth a New Europe, in a New Age, which will be ruled by New Sovereigns.

No sovereign debt is sustainable in a world awash in debt deflation. The dreams of Austrian Economists such as Rothbard, Hayek, and Mises cannot, and do not apply in today’s environment of   economic, political and investment coup d etats, and in a world of failed nation states, which have lost their debt sovereignty. Currently, nation states such as Greece, are losing their fiscal sovereignty, as sovereign leaders and sovereign bodies dictate monetary policy, fiscal policy, and economic policy. In a credit depleted world, people in China, Europe, and North America, will look to sovereign leaders, and place their trust in them, giving them their full allegiance, relying not on fiat money, but rather their word, will and way for economic livelihood.

Systemic stability simply is not possible in a world of failed and insolvent sovereigns, BWX, and insolvent financial institutions, IXG.  Soveign insolvency and banking insolvency, as well as trade imbalances, both regional and intra-regional, are the issues that is turning inflationism into destruction, and is moving the world from US and EU UK hegemony into regionalization.

King World News writes Horrendous implications for systemic stability. And WKTV reports Screws Tighten on European Automakers. Milan, As automakers prepare to roll out new models this week at the Geneva Auto Show one of the major events in the automotive calendar they are being forced to fight for a slice of an ever-shrinking European market. And Mike Mish Shedlock writes of Deteriorating European economic statistics.

Ilango Karuppannah asks Is ASEAN an imagined region?  Regionalization takes place beyond the state and is an informal and bottom-up process that encompasses market-driven activities, civil society activism and people-to-people interaction. “Old regionalism” involves only the state and its institutions whereas “new regionalism” is “more pluralist and inclusive of different actors, institutional forms, combinations of actors and development experiences beyond Europe; is more interdisciplinary and multilevel in its analysis. And Alex E. Fenandez authors Regionalization and Globalization in the Modern World Economy: Perspectives on the Third World and Transitional Economies. And Mike Mish Shedlock writes Money for debt swaps but no money for Greece.

Wealth can only be preserved by dollar cost averaging into, and taking possession of, and safely storing, gold bullion as in an Internet Vault or in a safe in one’s home. In a world of failing sovereign, gold will be the premier form of sovereign wealth.

Soon, there will be no free land, that is no place to live free, except in the conscience of one’s mind. A good conscience, sound faith, abiding virtue (Arete), persistent goodness, ongoing brotherly kindness, and genuine love for all comes at a cost. ”Soon we must all face the choice between what is right and what is easy.” – Albus Dumbledore

The Sovereignty of God is being unveiled by current events. The Sovereign Lord God, Psalm 2:4-5, is in the process of judging governments, and replacing them with regional authorities, Daniel 2:31-33, and is bringing forth the Beast Regime of Neoauthoritarianism to replace the Banker Regime of Neoliberalism, in order to reveal the Sovereignty of His Son Jesus Christ, Revelation 2:26-27.

With the trade lower in world government bonds, BWX, we are witnessing the breakdown of sovereign authority. The age of sovereign crisis, sovereign insolvency, and universal sovereign unsustainability has commenced. God is in the process of slaughtering human government; and to accomplish his purpose, He has sent the four horsemen of the apocalypse to make sure the job gets done. The end result will be new government, that of His Son, who will rule from Jerusalem for a thousand years. He being the Sustaining One, will restore a destroyed Jerusalem, which will complete the Lord’s Recovery and the government will be upon His shoulders.  

I recently wrote Sovereignty comes by appointment. Angela Merkel is God’s appointed person to bring forth the New Europe. The Economist relates the details of Angela Merkel’s shrew leadership. “To begin with, Greece has more obstacles to overcome before securing the vital second rescue package it has been promised. Whether it can implement all the budget cuts and reforms it has promised is the subject of great doubt. But for now the mood is to push the rescue through; talk of forcing Greece into an early default has died away. So has the invective against Antonis Samaras, the leader of Greece’s New Democracy party, who has often questioned the EU-IMF conditions imposed on his country. Just before the summit, Mr Samaras had a long private meeting with Angela Merkel, the German chancellor. Both sides said it had gone well. Germany said it was reassured that Mr Samaras would stick with the programme if elected in Greece’s general election, expected in April. He said he had voted in favour of it and “paid with the blood of my party” after 21 members were expelled for opposing the EU/IMF demands.”

Wolf Richter of Testosterone Pit writes Merkel’s Next Phase  The conflict within the Eurozone has been simmering for weeks. On one side: German Chancellor Angela Merkel and her efforts to protect and promote her oeuvre. On the other side: Socialist François Hollande who is running against President Nicolas Sarkozy in the French presidential elections. But now, Merkel has raised the stakes by roping in three powerful allies and lining them up against Hollande—a desperate and risky gamble to keep Sarkozy in power.

And now it has leaked out that Merkel has advanced to the next phase in her fight against Hollande: She roped in three powerful allies, Italian Prime Minister Mario Monti, Spanish Prime Minister Mariano Rajoy, and British Prime Minister David Cameron. All are conservatives, and they were “scandalized” by Hollande’s plan to renegotiate the fiscal-union pact—though ironically, Cameron himself had refused to sign it. And they have entered into a confidential verbal agreement to boycott Hollande. Their motto: don’t give him a platform. And they agreed not to receive him when he visits their countries. A nasty slap in the face.

But the boycott heightens the risks in Merkel’s desperate gamble: the latest polls show just how much of a steamroller Hollande has become. During the first round on April 22, when a number of candidates fight it out for the top two spots, Hollande would obtain 30.5% of the vote, and Sarkozy 23%, well ahead of the rest of the field. In a faceoff between the two in the second round on May 6, Hollande would demolish Sarkozy with 58% of the vote against 42%. In French politics, this kind of lead against an incumbent is a phenomenon.

Hollande reacted on Sunday morning: “We’re a great nation, and a great country, whose choices will not be determined by the heads of state and governments that are our friends.” And he issued a veiled threat: “There comes a moment when Germans say it’s better to allow the French to choose freely, without pressuring them, so that the relations between France and Germany can remain relations of friendship.”

These machinations show just how brittle the Eurozone has become. And now Sarkozy and Merkel both face economic headwinds, as evidenced by an all-important industry. In France, new vehicle registrations have plunged for three months in a row, with French automakers suffering the most. While German automakers were still basking in last year’s glow of record worldwide sales and profits, registrations in February have collapsed brutally. And it’s only the beginning. Read…. Deep Trouble at the Core of the Eurozone.

Neoliberalism was characterized by what Doug Noland describes as wildcat finance, where bankers waved wands of credit. But, neoauthoritarianism will be characterized by wildcat governance, where leaders command with authoritarian clubs, as they bite, rip, and tear one another, fighting to become top dog.

Summary
The weekly chart of world stocks, VT,  shows a loss of 0.19%, as it has crested into an Elliott Wave 2 Up in the last week of February 2012, and is now falling into an Elliott Wave 3 Down.

The collapse of the global debt trade has commenced as reflected in the Small Cap Pure Value Shares,  RZV, turning lower, as investors loose faith in the world as investors loose faith in the world central bank’s monetary policies bank’s monetary policies, and the global government finance bubble, BWX bursts. The currency demand curve, RZV:RZG, has turned lower, indicating a failure of monetary policy to stimulate and sustain risk.

As it stands now, fiat money has expanded to its full potential and competitive currency devaluation has starting, with the Euro FXE, the Swedish Krona, FXS, the Brazilian Real, BZF, and the Indian Rupe, ICN, trading lower in value, causing the US Dollar, UUP, to rise.

The Two Hundred Percent Volatility, TVIX and Volatility, VIXY, are bottoming out, providing further evidence that a market turn is at hand.

The moneyness of central bank authority is failing. A new moneyness, the seigniorage of diktat is rising to rule economics as political capital replaces investment capital as the dynamos of growth and profit that have driven capitalism are winding down, and the dynamos of regional security, stability and sustainability are powering up regional global governance.

The diktat money system is rising to replace the fiat money system

This article has been posted on the Internet

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