Financial Market report for the week ending June 14, 2013
I … Introduction
The only number that matters is the Interest Rate on the US Government Note, $TNX, its jump higher in May 2013, constituted a hard frost, that is a quick freezing, causing the death of fiat money.
Fiat money, consisting of Aggregate Credit, AGG, Stocks, VT, Major World Currencies, DBV, and Emerging Market Currencies, CEW, seen in their ongoing Yahoo Finance Chart, died on May 24, 2013 with the failure of currency carry-trade investing, ICI, and disinvestment out of Junk bonds, JNK, as bond vigilantes called the Interest Rate on the US Government Note, ^TNX, higher to 2.01%, on the failure of the world central banks’ monetary authority, and especially the failure of Bank of Japan’s Kuroda Abenomics monetary policies.
The death of fiat money came with a parabolic steepening of the 10 30 US Sovereing Debt Yield Curve, $TNX:$TYX, seen in the weekly chart of the Steepner ETF, STPP, rising parabolically in value, May 2013. The death of money means the decline of nation state GDP and global economic trading.
This weeks financial market action evidences that Jesus Christ acting in dispensation, that is in administrative management of the household of God, Ephesians 1:10, fully completing Liberalism’s democratic nation state, banker regime, and the age of investment choice, and introducing Authoritarianism’s regional governance, totalitarian collectivism, beast regime and age of diktat, as foretold in bible prophecy of Revelation 13:1-4.
II … The failure of Liberalism’s money is seen in this week’s financial market trading.
II A) … On Monday June 10, 2013, the money of Liberalism is seen failing, as global debt deflation gained traction.
Bond vigilantes called the Interest Rate on the US Ten Year Note, ^TNX, jumped higher yet to 2.21%, turning Aggregate Credit, AGG, lower once again. Emerging Market Bonds, EMB, fell strongly lower on falling Emerging Market Currencies, CEW. Credit Investments traded lower across the board, with the longer duration trading lower than their shorter maturity peers, as yield curves steepend acros the whole range of debt. Municipal Bonds, MUB, traded sharply lower.
World Real Estate, DRW, and Yield Bearing Instruments based in the Emerging Markets, EEM, such as Brazil Financials, BRAF, India Earnings, EPI, and Emerging Market Dividend, DGS, traded lower.
Currency traders sold currencies short once again, continuedtheir successful currency war against the world central banks, with the India Rupe, ICN, the Japanese Yen, FXY, Emerging market Currencies, CEW, the Brazilian Real, BZF, and the Australian Dollar, FXA, traded lower.
Competitive currency devaluation is seen in China, YAO, and the Emerging Markets, EEM, trading lower, on a lower Chinese Yuan, CYB, and lower Emerging Market Currencies, CEW. Emerging Market Infrastructure, EMIF, traded lower. China Industrials, CHII, China Financials, CHIX, China Minerals, CHIM, and China Real Estate, TAO, traded lower. India, INP, India Infrastruacture, INXX, and India Earnings, EPI, fell strongly lower on a falling India Rupe, ICN. Brazil, EWZ, Brazil Infrastructure, BRXX, and Brazil Financials, BRAF, traded lower on a falling, Brazilian Real, BZF.
Asia nations, EPP, trading lower included Indonesia, IDX, Malayasia, EWM, Singapore, EWS, South Korea, EWY, Thailand, THD, the Philippines, EPHE, and Australia, EWZ. Egypt, EGPT, Greece, GREK, and Russia, RSX, traded lower. Liberalism’s frailest of nations, Indonesia, IDX, and Egypt, EGPT, are suffering the greatest deflation and investment destruction.
The trade lower in Australia, EWA, KROO, and its yield bearing ETF, AUSE, defines the failure of the monetary policies of world central banks, such as the US Fed, the Bank of Japan, and the Peoples Republic of China, to provide stimulus for ongoing world economic growth and trade.
The economic and political paradigam of Liberalism featured Inflationism, but Authorianism features Destructionism. With the Interest Rate on the US Treasury Bond, ^TNX, being called higher by the bond vigilantes, the former construct is now seen as an age of fiat asset inflation, but today’s reality is one of fiat asset deflation.
The Milton Friedman Free To Choose Floating Currency died with the rise of the US Dollar, $USD, UUP, beginning in 2013, causing derisking and deleveraging out of currency carry trade investments world wide, but especially in the Emerging Markets, EEM, and now in Asia, EPP, on a sinking Australian Dollar, FXA.
Investors are no longer trusting in the monetary policies of Global ZIRP, and as a result Liberalism’s currencies are no longer a trustworth means of facilitating and sustaining economic activity. People will increasingly trust in diktat and the diktat money system as the world central bank monetary policies and nation state currencies fail.
The diktat money system was conceived by Herman van Rompuy acting together with the EU Finance Minsters, in early May 2010 with the provision of Greek Bailout I, as well as the more recent Greek Bailouts II and III, and the Cyprus Bank Bailin, the diktat money system was unleashed onto the world by the bond vigilantes calling the Interest Rates on the US Ten Year Note, ^TNX, higher, and the currency carry traders calling the Yen, FXY, higher, on May 24, 2013, inducing investors out of currency carry-trade, yield bearing investments, such as Electric Utilities, XLU, Mortgage REITS, Global Real Estate, DRW.
With the failure of Liberalism’s fiat money, there be many Angry Byrds. The consolation is that the money of Authoritarianism, that is diktat money, is beginning to win people’s faith and trust, a case in point being that those in Cyprus are now trusting in the ECB’s mandates for regional security, stability, and sustainability.
II B) … On Tuesday, June 11, 2013, commodities and stocks gapped down at market open on the failure of Kuroda Abenomics.
The market turned Risk OFF, OFF, and Volatility, ^VIX, TVIX, rose in the beginning of an Elliott Wave 3 up pattern, as currency traders blasted the Japanese Yen, FXY, higher to strong resistance at 102.99, and the Euro, FXE, higher as well to close at strong resistance at 131.92; which pushed the world’s leading commodity currency, the Australian Dollar, FXA, and the US Dollar, $USD, UUP, lower. MSN Finance charts shows that since May 3, 2013, the Australian Dollar, FXA, has lost 8%, causing disinvestment a 15% disinvestment out of Australia, EWA, as well as out of high yielding Australia Dividends, AUSE, and a 25% disinvestment out of Australia Bank, WBK.
Reuters reports Stocks slump after Bank of Japan disappoints, stoking stimulus jitters. Japan, EWJ, and Japan Small Caps, JSC, both traded strongly lower, on the higher Yen. FXY. Not only did the Nikkei, NKY, trade lower; but bond vigilantes called the Interest Rate on the Japanese 10 Year Government Debt higher, causing its inverse, JGBS, to rise in value.
Global debt deflation is underway, as the monetary policies of Liberalism’s Bankers, Ben Bernanke, Mario Draghi, and Haruhiko Kuroda are failing, and in fact caused the death of the fiat money system on May 24, 2013, when carry trade investment, ICI, and Junk bonds, JNK, trade sharply lower. Global ZIRP, has failed, and out of today’s rising interest rates, there is a soon coming global credit bust and financial system breakdown, as foretold in bible prophecy of Revelation 13:3. Authoritarianism’s new leaders, specifically statist nannycrats, will provide regional governance economic policies, to establish regional security, stability and sustainability, and in so doing establish the diktat money system for one’s trust.
Action Forex mid-day chart shows the EUR/JPY at 128.507, this is seen in the Stockcharts.com chart of FXE:FXY, closing strongly lower, forcing delveraging and derisking out of currency carry-trade investment world wide, especially the S&P High Beta Stocks, SPHB, Semicondutors, SMH, and Global Industrial producers, FXR.
Briefing.com reports Global interest rates continued rising overnight with peripheral European yields coming into focus. In particular, Greece saw its 10-yr yield spike over 100 basis points following the country’s inability to privatize natural gas producer DEPA, which sent Greece, GREK, Ireland, EIRL, Italy, EWI, Spain, EWP, Finland, EFNL, and the Netherlands, EWN, trading lower. Investment death is seen in the ongoing Yahoo Finance Chart of EWN,EFNL,EWD,NORW, and EIRL. Peru, EPU, fell strongly lower on today’s lower Copper, JJC, price, leading the Emerging Markets, EEM, and Emerging Market Leaders, PIE, lower. Russia, RSX, ERUS, fell strongly lower on lower Commodity, DBC, prices, which sent Emerging Market Infrastructure, EMIF, tumbling lower.
Asia excluding Japan, EPP, specifically Thailand, THD, Philippines, EPHE, Indonesia, IDX, IDXJ, Vietnman, VNM, Australia, EWA, KROO, Singapore, EWS, EWSS, Europe, VGK, led the US, VTI, and World Stocks, VTI, lower.
Nation Investment, EFA, and Small Cap Nation Investment, IFSM, traded lower as the Australian Dollar, FXA, and as the US Dollar, USD, UUP, traded lower, and as both the Euro, FXE, and the Yen, FXY, rallied higher. Major World Currencies, DBV, traded lower largely on the lower US Dollar.
Falling Chinese Financials, CHIX, turned China, YAO, China Infrastructure, CHXX, and China Industrials, CHII, China Small Caps, ECNS, and Hong Kong, EWH, EWHS, lower.
Competitive currency devaluation coming from higher interest rates has decimated the banking infrastructure of the nations of Argentina, ARGT, on lower banks, BMA, BFR, BBVZ, and Brazil, EWZ, EWZS, on lower banks, ITUB, BBDO, SBR, BBD, and India, INP, SCIN, on lower banks, IBN, HDB. With hollowed out banks, these countries stand as tomstones on Liberalism increasingly desolate landscape. Under Authoritarianism, diktat will establish new banking, economic, and political infrastructure; this infrastrucutre will consist of statist public private partnerships between regional government superstructures and corporations.
I do not call this particularly good news, unless one believes that the purpose of this is to direct one’s hopes out of fiat economic life, and into spiritual economic life in Christ, where one perceives that Christ is dispensing Himself into the believer, completing and fulfilling his life, Ephesians 1:10, so he can experience the divine nature of godliness, that being peace and joy, 2 Peter 1:1-11.
Liberalism’s Banker Regime provided the freedom of investment choice establishing a moral hazard based prosperity. Authoritarianism’s Beast Regime provides the diktat of capital controls, new taxes, and debt servitude, establishing austerity as a way of life. Bible prophecy of Revelation 13:3, foretells that out of Euoprean sovereign insolvency and banking system collapse, regionalism will replace globalism, crony capitalism, as well as socialism. The Eurozone will be the defining model of totalitarian collectivism, where countries will exist as hollow moons revolving around both Berlin and Brussels, where sovereign nannycrats rule all. While Greeks cannot be Finns or Germans, all will be one living in a ditkat union, with centralized fiscal, banking, manufacturing, and economic policies. Given Greek Bailout I, II, and III, as well as the Cyprus Bailin, those living in the EU are no longer citizens of sovereing nation states, but rather residents living in a region of economic governance; welcome to the New Europe.
Financial Investments, IXG, traded lower, as is seen in the ongoing Yahoo Finance chart of IXG, KCE, KIE, IAI, RWW, KRE, EUFN, CHIX, EMFN, FEFN, these include Investment Bankers, KCE, such as JPM, Banks, Insurance Companies, KIE, Stock Brokers, IAI, such as SCHW, ETFC, the Too Big To Fail Banks, RWW, such as BAC, C, Regional Banks, KRE, such as RF, STI, PBCT, HBAN, European Financials, EUFN, such as IRE, DB, Chinese Financials, CHIX, Emerging Market Financials, EMFN, and Far East Financials, FEFN, Asset Managers, ASMA, such as BLK, WDR, EV, STT, WETF, AMG, IVZ, CNS, AMP, PFG, LM, BX, FNGN and BEN. The trade lower in Financials, in particular, Regional Banks, KRE, drove the credit sensitive US Small Cap Stocks, the Russell 2000, IWM, lower.
Most every equity sector traded lower; these included
Uranium Miners, URA, Rare Earth Miners, REMX, and Copper Miners, COPX, which turned Industrial Miners, PICK, lower, which turned Coal, KOL, and Steel, SLX, lower.
Solar Energy, TAN, SCTY, CSIQ, JASO, YGE, FSLR, HSOL, TSL, SPWR, ASTI, which tuned Semiconductors, SMH, BRCM, TXN, AMAT, ONNN, TSM, lower.
Gold Mining, GDX, GDXJ and Silver Mining, SIL, SILJ, SSRI
Energy, XOP, PSCE and Energy Service, OIH, IEZ
Small Cap Pure Value, RZV
US Infrastructure, PKB
Homebuilding, ITB. The sharp rise in the Interest Rate on the US Ten Year Note, ^TNX, is now turning home builders and home improvement retailers lower; the business cycle in home sales is being completed, meaning fewer home sales, fewer home improvements, and fewer new home construction starts. Bespoke Investment Group writes At just over 4%, mortgage rates are obviously low compared to historical levels, but they’re a lot higher than they were just a month ago! To grasp just how much of a shock to the system the rise in mortgage rates has been, we’ve just seen the biggest month over month spike on a percentage basis since at least 1998. Below is a chart showing the rolling month-over-month percentage change of the 30-year fixed mortgage rate. Last Tuesday, the rate had jumped more than 21% (3.42% to 4.16%) over the past month. This took out the prior high of 20% seen back in mid-2003.
Jesus Christ operating in the economic and political plan of God, Ephesians 1:10, has brought Libealism’s age of clean energy evelopment to its fulfillment and completion. With today’s trade lower in Clean Energy, PBD, and the Agence France Presse repors Siemens to scrap 1,000 energy jobs, the age of investment and development and use of alterntive energy is over. News Track India reports India can follow Japan’s solar energy harnessing model to end power shortage. But I comment that it does not have nor will it have the money for solar energy infrastrucutre development given its high rate of inflation and banking system collapse with higher interest rates and falling India Rupe currency.
Yield bearing investments are the hardest hit by higher interest rates; today these incluced EMFN, BRAF, EPI, EUFN, DRW, TAO, DGS, DLS, EDIV, SEA, PSP, DBU, AUSE, also, FNIO, KBWD, REM, REZ, turned IYR, and ROOF, lower. Higher interest rates mean lay offs and diminishing capital improvements at bond intensive infrastructure employers such as Utilities, DBU.
Aggregate Credit, AGG, traded unchanged. Credit investments trading lower included EMB, BABS, PICB, BLV, LQD, JNK. Business Insider reports This is increasingly looking like an Emerging Market Bond meltdown. Dollarization of Emerging Market bonds, is a failed Liberalism credit scheme; emerging market countries will no longer be able to fund fiscal needs, provide for infrastructure development; means of government financing will have to come from inside the country and come from new taxes and integration of government, industry and commerce.
Commodities, DBB, USO, BNO, SLV, and GLD, traded lower, turning Commodities, DBC, lower. Silver is proving not, repeat, not to be an investment metal, rather, its nature as an industrial metal and risk investment is being revealed, as Silver Miners, SIL, SILV, and SSRI, traded, along with Gold Miners, GDX, GDXJ, lower.
With the US Dollar, $USD, UUP, trading lower to close at $81.70, the currency which has served as the International Reserve Currency, that is as the backbonme of globalism, has been broken. The debt monetization policies of the world central banks has finally soured investment trust in both credit and equity investments, as well as currencies. There be no “money good” investment anywhere; not in Commodities, DBC, nor in Credit, AGG, nor in Stocks, VT.
Business Insider reports Government bonds around the world are getting destroyed today. The monetary sovereignty of liberalism’s democracies and the international banking system no longer provides seigniorage, that is moneynes; and most significantly, the basis of power for ongoing US Dollar Hegemony has been compromised.
Some might call for a new Bretton Woods to stablize investments; but Jesus Christ is at the helm of the economy of God, Ephesians 1:10 introducing regionalism. He has released the four horsemen of the apocalypse, Revelation 6:1-8, to termniate the domination of the US as a global super power, and to assure that authoritarianism rule in ten zones of regional governance and totalitarian collectivism, as presented in bible prophecy of Daniel 2:25-45 and Revelation 13:1-4.
IIC) … On Wednesday June 12, 2013, the Interest Rate on the US Ten Year Note, ^TNX, traded higher to 2.23%, pushing the 10 Year US Govenment Bond, TLT, down below support. Both Junk Bonds, JNK, and Aggregate Credit, AGG, traded strongly lower again today.
Bloomberg reports Individuals pull most money from bond mutual funds since 2008. Investors pulled $10.9 billion from U.S. bond mutual funds in the past week, the biggest redemption since October 2008. The Google Finance Chart of Aggregate Credit, AGG, and Emerging Market Bonds, EMB, shows that since May 1, 2013, Aggregate Credit has fallen strongly losing 3%, and that the Emerging Market Bonds have fallen even more strongly losing 9%. Taken together, the Bloomberg report and the Google Finance Chart communicate the failure of credit, specifically the loss of trust in the monetary policies of the world central banks to stimulate global growth and trade, as well as trust in the debtor to repay the lender. Humanity is passing through an epic economic and political point in time.
The death of Liberalism’s credit and currencies is seen in the Google Finance Chart of Aggregate Credit, AGG, together with the Indian Rupe, ICN, the Brazilian Real, BZF, the Australian Dollar, FXA, and the Emerging Market Currencies, CEW. The death of Liberalism’s money, that is wealth, is seen in the Google Finance Chart chart of World Stocks, VT, India, INP, Brazil, EWZ, and Australia, EWA. Debt deflation, that is currency deflation, has finally come of age, through the failure of the world central bank policies of Global ZIRP and ongoing debt monetization, with the result that Liberalism’s Milton Friedman Free To Choose floating currency banker regime no longer provides seigniorage, that is moneyness, of investment choice. Now, Authoritarianism’s diktat beast regime is starting to provide seigniorage of diktat. Jesus Christ is at the helm of the economy of God, Ephesians, 1:10, terminating the fiat money system and introducing the diktat money system.
Tyler Durden of Zero Hedge writes “Tapering” From Currency-Wars To Interest-Rate-Wars and relates that Citi’s Steve Englander posts EM and DM bond yields have relatively exploded in recent weeks. The backing up of yields represents an increase in risk premium, so this will likely have negative effects on asset markets and the wealth effect abroad as well. It is difficult to explain the magnitude of the yield backup in terms of normal substitution effects, and broadly speaking, if you were to compare the backing up of bond yields with the beta of the underlying economy and asset markets there would be a good correspondence. So, Englander adds, it is fear, not optimism that is driving bond markets.
In Figure1, since May 1 the median increase in 10year local bond yields in 47 major EM and developed markets (DM) is 39bps. Among major EM economies (light blue) it is 83bps; among major DM (dark blue) economies it is 29bps. The US 10year Treasury yield increase (red)is only at the median of developed economies and well below the overall median. In both EM and developed economies, the fat tail of rate increases is to the upside, so average increases are even higher. The paradox is that the run-up in US interest rates, which is arguably the primary driver of these global rate increases, is well below the average and median globally.
Even if we assume that the GDP-weighted average increase in yields is about 30bps, it represents a significant tightening in global economic conditions. The inflation picture has not changed materially in the last six weeks; if anything, it may be more benign than earlier thought. On a global level, exchange rates cancel out and do not affect the effective stance of monetary conditions to a good first order approximation. We may argue that the US rates increase is justified by the improved US economic outlook, and some will debate even that.
However, the US represents about 20% of global GDP, and outside the US there have been very few calls for monetary policy tightening. As a consequence roughly 80% of the world has experienced a monetary policy tightening that was neither expected nor desired.
There is a rule of thumb that 100bps of tightening at the short end translated into 20-30bps of tightening at the long end. If we invert that rule and use 30bps as the global average monetary tightening at the long end, then we have experienced the equivalent of 90-150bps of monetary tightening at the short end. If, given the skew, the effective increase at the long is closer to 40bps, we are looking at the equivalent of 120-200bps of short-end tightening. That is a lot, given that EM has been underperforming all year, and euro zone, japan and UK growth on the whole are not registering major upward surprises.
The backing up of yields represents an increase in risk premium, so this will likely have negative effects on asset markets and the wealth effect abroad as well. It is difficult to explain the magnitude of the yield backup in terms of normal substitution effects, and broadly speaking, if you were to compare the backing up of bond yields with the beta of the underlying economy and asset markets there would be a good correspondence. So it is fear, not optimism that is driving bond markets.
This backing up of yields is spilling over into exchange rates, although the correspondence is less than 1-1. In Figure 2 countries are ordered by the magnitude of their depreciation. By and large countries with bigger depreciations have experienced bigger increased in bond yields, although India and Australia stand out as exceptions on one end, and Hungary on the other. The backing up of yields in the euro zone periphery at some point may become a problem, as this adds to growth headwinds. The fact that this backing up is driven by global forces, not sovereign risk concerns does not make it less negative.
It is tempting to say that DM and EM countries facing bond market pressure should just ease monetary policy further and take the hit on the exchange rate, so that effective monetary conditions are eased. Easing in response to the US-bond-market-induced monetary tightening is not feasible for many central banks. The ECB sees itself as having limited policy room now. The impact of BoJ’s easing has been undermined tremendously by the backing up of risk premia and implied volatility, and consequent softening of asset markets. EM is constrained in easing 1) because inflation may respond much quicker than output growth to a significant depreciation, and 2) there is some evidence that depreciations are now translating into further pressure on bond markets, undermining the effectiveness of ease. So bond wars may not be any more pleasant than currency wars.
The upshot is that we may continue to see pressure on commodity and EM currencies until asset market conditions stabilize. We continue to distinguish between higher levels of rates and higher levels of rate and asset market volatility. If US bond markets were to stabilize at current or even higher levels, but be accompanied by lower volatility, then other countries may be able to introduce offsetting macro policies. However, as long as the backing up of bond yields is accompanied by the higher volatility in asset markets, they are likely to find their policy options very constrained, and their asset markets under continuing pressure.
The chart of the EUR/JPY, seen in FXE:FXY, showed a tiny trade higher, on the Euro, FXE, trading slightly higher, and the Yen, FXY, trading slighly lower. The Acton Forex EURJPY chart pattern with close at 129.243 suggests a massive unwinding of this currency carry trade is imminent.
World Stocks, VT, and most all stocks gapped open higher and fell all day producing a red filled candlestick, sometimes called Red Filled Elder Bar Chart Pattern. World Stocks, VT, and US Stocks, VTI, traded lower to the very edge, that is the precipice of support. Not a single equity ETF traded higher today, And the only credit ETF trading higher was Emerging Market Bonds, EMB, which have been selling massively lower lately.
Paper Producers, WOOD, traded lower on a lower price of Timber, CUT, with Biotechnology, IBB, Semiconductors, SMH, Clean Energy, PBD, US Infrastructure, PKB, Retail, XRT, Internet Retail, FDN, Global Industrial Producers, FXR, Dynamic Media, PBS, and Small Cap Pure Value RZV, trading lower as well.
Investment Bankers, KCE, such as JP Morgan, JPM, Asset Managers, ASMA, such as Blackrock, BLK, the Too Big To Fail Banks, RWW, such as Cititgroup, C, traded lower. Regional Banks, KRE, traded lower, taking the US Small Caps, the Russell 2000, IWM, lower. Countries trading lower included Thailand, THD, and China, YAO, on lower China Real Estate, TAO, and China Industrials, CHII. Spain, EWP, traded higher, but Greece, GREK, and Italy, EWI, traded lower. This as Ambrose Evans Pritchard writes Italian showdown with Germany over euro looms closer. Mexico, EWW, Brazil, EWZ, EWZS, Singapore, EWS, EWSS, traded lower. And Egypt, EGPT, literally collapsed, falling 4.0%
All of the Yield Bearing ETFs, traded lower today. Preferred Financials, PGF, fell strongly lower. And Small Cap Real Estate, ROOF, Mortgage REITS, REM, Industrial Office REITS, FNIO, Residential REITS, REZ, and Premium REITS, KBWY, traded lower on today’s higher Interest Rate on the 10 Year US Government Note, $TNX.
The chart pattern of Oil, USO, traded higher, in a downward sloping channel, to strong resistance at 34.03, like that of World Stocks, VT, and US Stocks, VTI, portending a likely strong drop tomorrow or later this week; this as Bespoke Investment Group writes Crude oil and gasoline inventories rise more than expected
The Yahoo Finance ongoing one month chart of Utilities, XLU, Real Estate, IYR, and Closed End Equity and Closed End Credit Funds, CSQ, PTY, AWP, PFL, RCS, and EIM, shows that the Interest Rate Sensitive Investments have taken a massive trade lower; and stand as a precursor for a soon coming traded lower in their peers.
Trading today in Closed End Funds, CSQ, PTY, AWP, PFL, RCS, and EIM, was decisively lower. Closed End Debt, PFL, traded very strongly lower, and Closed End Equity, CSQ, traded strongly lower, showing that the way is now lower for both credit and equities.
I am left with a feeling that a massive turn lower in the stock market is imminent. All I can say is “lookout below!”
The Finviz chart of the Gold ETF, GLD, shows a 0.75% rise from a double bottom; Stockharts.com shows that Spot Gold, $GOLD, traded higher to $1,387. Fiat money, consisting of Aggregate Credit, AGG, Stocks, VT, Major World Currencies, DBV, and Emerging Market Currencies, CEW, seen in their ongoing Yahoo Finance Chart, died on May 24, 2013, with the failure of currency carry-trade investing, ICI, and disinvestment out of Junk bonds, JNK, as bond vigilantes called the Interest Rate on the US Government Note, ^TNX, higher to 2.01%, on the failure of the world central banks’ monetary authority, and especially the failure of Bank of Japan’s Kuroda Abenomics monetary policies. The investor is left without any reasonable choice of investment vehicles to preserve and grow wealth except personal possession of gold bullion or gold in Internet Trading Vaults such as Bullion Vault.
Matias Vernengo of Naked Keynesianism writes O sacred hunger of pernicious gold! What bands of faith can impious lucre hold? Sociologist Geoffrey Ingham has written a review of David Graeber’s “Debt: The First 5,000 Years”, which can be viewed here (subscription required). According to Ingham, while Graeber’s monumental inquiry is much to be admired, there is quite a bit of room for critical refutation, specifically with respect to the exact nature of money, and its essence as a moral base for economic life.
Money serves as a basis for both economic life and for ethics; as ethics is defined as economic regard for the person and property of another that comes from New Testament doctrine of speech and behavior established by the Apostles. The elect have both morals, that is virtue which is defined as the praiseworthy attributes of God, and ethics. These come from the life of Christ, Colossians 3:4, where Christ becomes one’s all inclusive life experience, Colossians 3:11, as one grows in experience of God’s will in all wisdom and spiritual understanding. The word spiritual applies to wisdom as well as to understanding, and is more than a collection and mastery of principles, yes more than just letters written in a book, it is a daily experience of receiving God’s breath in one’s life and being renewed, revitalized, and refreshed thereby so one comes to partake of God’s divine nature, and adds to the like precious faith of the Apostles, the seven additives of 2 Peter 1:5-10, so as to make one’s calling and election a genuine thing, and thus not stumble, and have a broad entrance into God’s kingdom. God is wrapping up not 5,000, but 6,000 years of human governance, as seen in the Statue of Empires prophecy, presented in Daniel 2:25-45, with the US as a global super power, and its Dollar Hegemony, coming to and end on the death of fiat money; and the rise of the ten toed kingdom of regional governance coming out of Eurozone sovereign insolvency and global credit collapse and financial system breakdown.
Leonor Coutinho a PHD Economist, and member of the Euro-Mediterranean Economists Association, in asking How soon can the capital controls on Cyrpus be lifted and whether the recapitalisation plans will be sufficiently convincing to allow the Cypriot banking sector to regain the trust of the public, is just one of many of Liberalism’s economists who fails to comprehend the nature of economy, and that the fiat money system died, and the diktat money system is now in force globally, and will involve a growing use of capital controls.
Please consider that God’s idea of economy is one of empire, specifically a territory where a sovereign or sovereigns rule in dominion providing seigniorage, that is moneyness, as well as ethics, that is regard for the person or property of another, or alternatively, iniquity, where poneros, that is bad, evil, and wicked influence is exercised over people. Economy comes via and is based upon the promises of God, such as the one of Genesis 35:11, where God said to Jacob, that is Israel, “I am God Almighty. Be fruitful and multiply; a nation and a company of nations shall proceed from you, and kings shall come from your body”. The promised nation is the United States, the company of nations was the British Empire, and the kings are the saints, ruling in heavenly places with Christ.
America’s reign of Empire ended on May 24, 2013, with the rise of the Interest Rate on the Ten Year, Note, ^TNX, to 2.01, and the steepening of the Steepner ETF, STPP. Tyler Durder of Zero Hedge relates In Chapter 12 of David Stockman’s new book The Great Deformation, the outspoken truth-sayer discusses the realities of the end of the gold standard (in 1971 via) Nixon and Bretton Woods. The combination of free markets and freely printed money gave rise to a toxic financial deformation; namely, the vast financialization of the world economy and the rise of endless carry trades, massive arrangements of speculative hedging, and monumental daisy chains of debts, owned by debts, owned by still more debts. I comment that the US Federal Reserve Monetary Policy of QE1 as well as the BoJ Kuroda Abenomics monetary policies, were the most significant deformations of money amongst all the world central banks monetary expansion policies; these literally debased money, and warped money so badly, that money finally became untrustworth, as bond vigilantes called interest rates higher, terminating Global ZIRP, and deleveging investors out of currency carry trade positons and derisikng others out of stock investments. Financialization of the world economy as well as equity and credit investments of all types engendered investor trust creating Empire United States. And Aljazerra communicates a Dollar Hegemonic Military Empire with a globe spanning American archipelago of bases surrounding the Middle East. Bill Van Auken writes It is estimated that the US “liberation” of Iraq cost a million lives, turned millions more into refugees and lay waste to the country’s infrastructure and social institutions. Voice Americ relates American Empire, rest in peace. And David Kaiser writes The fall of the American Empire.
The Apostle Paul relates in Ephesians 1:10, that Jesus Christ, God’s Son, has been appointed to rule over God’s economy bringing every age, epoch, era and time period to completion producing fullness therein.
God’s paradigm for the past age was Liberalism; it was based upon the fiat money system, which governed from the creation of the Creature from Jekyll Island, that is the US Federal Reserve in 1913, to May 24, 2013, when fiat money died, on the failure of carry trade investing and credit, on the rise of the Interest Rate on the US Government Note, ^TNX, to 2.01%, providing an age of investment choice, as well as clientelism and dependency, where people trusted in central bank intervention, based upon the rule of law of democratic nation states, to provide credit liquidity, for carry trade based wealth making opportunities, such as nation investment, ie the Philippines, EPHE, Thailand, THD, the Russell 2000, IWM, or leveraged buyouts, PSP, IEP, DLPH, or regulatory capture, PJP, JNJ, or housing development, ITB, DHR, or retail sales, XRT, COST, KIRK, the list of these goes on, and on. Predators, that is those with animal spirits of a bear, lion or leopard, preyed on people; examples include Jimmy Baker, who served five years in prison for his crimes; my mother loved him, and invited him into our home, saying “its time to watch our show”, and sent him a donation monthly.
Under Liberalism, Crony Capitalism, Socialism, and Greek Socialism, provided economic and political governance, which was based upon sovereign democratic nation states, where sovereign bankers held preeminence, and waived wands of credit, producing a moral hazard based prosperity, where inflationism was in effect through interventionist schemes of the Banker Regime which provided free trade, financial deregulation, Federal Reserve POMO, lowering of central bank interest rates, Quantitative Easing, and Global ZIRP. Political parties had movements and worked their agendas. Liberalism’s dynamo was profit from banking, investment banking, corporate global growth and trade.
Thought leaders establishing Liberalism’s knowledge set have been left leaning journalists such as Paul Krugman, and left leaning economicsts such as Donald Markwell, who Wikipedia relates maintains that the absence of an effective international approach in the spirit of Keynes, would risk allowing the return to play of the economic causes of international conflict which Keynes had identified back in the 1930. And Brad DeLong, who Wikipedia relates that along with Joseph Stiglitz and Aaron Edlin, is co-editor of The Economists’ Voice. As well as Lawrence Summers, who Wikipedia relates that upon the death of libertarian economist Milton Friedman, Summers wrote an Op-Ed in The New York Times entitled “The Great Liberator” arguing that “any honest Democrat will admit that we are now all Friedmanites.”
Yet Jesus Christ, operating at the helm of the economy of God, as presented in Ephesians 1:10, in one fell swoop, killed all existing economic and political life by destroying fiat money, on May 24, 2013, by stirring the bond vigilantes to call the Interest Rate on the US Government Note, ^TNX, higher to 2.01%, and the currency traders to start a currency war of competitive currency devaluation against the world central banks, forcing investors to deleverage out of currency carry trade investments.
God’s paradigm for the current age is Authoritarianism; it is based upon the diktat money system, which has been governing ever since the collapse of Aggregate Credit, AGG, specifically Junk Bonds, JNK, and Carry Trade Investing, ICI, on May 24, 2013 when fiat money died, introducing the age of diktak, where people trust in the diktat of sovereign regional nannycrats, such as, Klaus Regling, Jeroen Dijsselbloem, and Michel Barnier, and sovereign regional bodies such as the ECB, based upon the word, will and way of whoever rises, biting, ripping and tearing others apart, to become the top dog leader and top dog banker, to provide diktat schemes, such as bank deposits bailins, additional taxes, privatizations, sale of a country’s central bank’s gold reserves, capital controls, and measures of debt servitude, all with the aim of enforcing austerity. Mike Mish Shedlock reports Infighting is everywhere in Italy now.
Under Authoritarianism, regional governance provides both economic and political governance, and is based upon the rule of sovereign regional nannycrats and regional bodies such as the ECB, as presented in Daniel 2:25-45. The Banker Regime has been replaced by the Beast Regime, which has characteristics of a bear, lion and leopard and preys on people, overseeing totalitarian collectivism in each of humanity’s seven institutions, and rules in each of the world’s ten regions, as foretold in Revelation 13:1-4. There are no citizens of nation states, rather there are only residents of regional panopticons. Political parties have been replaced by statist public partnerships, where economic cardinals oversee the factors of production and regional economies. Thought leaders providing Authoritarianism’s knowledege cage include Olli Rehn, Wolfgang Schäuble, Jens Weidmann, Jörg Asmussen, and Werner Hoyer. Authoritarianism’s dynamos are regional security, stability, and sustainability.
Jesus Christ, acting in dispensation, Ephesians 1:10, has completed Liberalism by terminating floating currencies of democratic nation states. With the introduction of Authoritaranism, and after the soon coming financial apocalypse, that is a global credit bust and world wide financial system collapse, diktat will be the currency of regional governance and its totalitarian collectivism. Diktat will produce Authoritarianism’s wealth of debt servitude.
To effect the complete transfer out of Liberalism and into Authoritarianism, Jesus Christ has unleashed the Four Horsemen of the Apocalypse. The First, is the Rider on the White Horse, who has a bow without any arrows, whose mission commenced in May of 2010 with Greek Bailout I, to pass the baton of sovereignty from nation states to regional governance; something called for by the 300 elite of the Club of Rome, organized in 1968 by the Morgenthau Group, and presented in prophetic writing with publications, World Dynamics, Limits to Growth, and Mankind at the Turning Point.
Got Questions.org relates that God’s end time economy will be enforcd through judgements upon mankind with the seven seals (Revelation 6:1-17, 8:1-5), seven trumpets (Revelation 8:6-13; 11:15-19), and seven bowls/vials (Revelation 16:1-21) being three succeeding series of end-times judgments from God. The judgments get progressively worse and more devastating as the end times progress. The seven seals, trumpets, and bowls are connected to one another. The seventh seal introduces the seven trumpets (Revelation 8:1-5), and the seventh trumpet introduces the seven bowls (Revelation 11:15-19, 15:1-8).
IID) … On Thursday, June 12, 2013, the Plunge Protection Team, PPT, bought S&P High Beta Stocks, reversing the failure of the Bank of Japan’s Kuroda Abenomics that came on Tuesday. The Reuters report Japan machine orders down suggests that the world central banks’ monetary policies have failed to provide stimulus to global growth and trade. Japan’s core machinery orders fell in April from the previous month, down for the first time in three months as companies remain hesitant to boost capital spending despite Prime Minister Shinzo Abe’s sweeping stimulus policies. Cabinet Office data showed core machinery orders, a highly volatile series regarded as a leading indicator of capital spending, fell 8.8 percent, compared with a 8.5 percent decline in a Reuters poll of analysts.
The failure of Bank of Japan’s Kuroda Abenomics monetary policies sent World Stocks, VT, plummenting on Tuesday, June 11, 2013. But today, June 12, 2013, the Plunge Protection entered the markets buying the S&P High Beta Stocks, SPHB, despite a strong rally by the currency traders in the Japanes Yen, FXY, this being seen in the ongoing Yahoo Finance Chart of the Nikkei, NKY, together with the Japanese Yen, FXY, the Euro, FXE, S&P High Beta, SPHB, US Stocks, VTI, European Stocks, VGK, and Asia Excluding Japan, EPP. Turkey, TUR, Chine, ECH, Peru, EPU, traded higher. Poland, EPOL, rose to a new rally high; while Argentina, ARGT, traded lower.
High Beta ETFs, seen in this Finviz Screener, soared; these included SPHB, XRT, SMH, PKB, RZV, PSP, IXG, PSCE, RWW, KRE, RXI, KCE, IAI, PBS, IYC, IGN, XLI, XTN, OIH, WOOD, ITB, and PJP. And yield bearing ETFs rising strongly included REM, TAO, IYR, KBWD, ROOF, AUSE, REZ, FNIO, DRW, and KBWY. Major Airlines, seen in this Finviz Screener, rose strongly.
The Interest Rate on the US Ten Year Note, ^TNX, traded lower to 2.17. Aggregate Credit, AGG, rose strongly. The US Dollar, $USD, UUP, traded lower.
Today’s news reflects the growth and pursuit of the Broadcasting Industry, PBS, STRZA, the Retail Sector, XRT, PLCE, and the Shopping Mall, GGP, SPG, in the US, defining corporate interest in media control, as well as the total absence of Broadcasting, Retail, and Shopping Sectors in Greece.
The only reason why Greece was allowed into the Euro Comm Currency Group, was that it was simply an investment play by bankers. As the days of the introduction of the Euro approached, Greek Treasury Interest rates consistenly decreased, providing a windfall for bondholdres. God designed Greece and its Greek Socialism, as the very definition of clientelism, dependency, and anti-competitiveness, to be the far left economic and political experience under Liberalism. There is not a speck of capitalism, or meritocracy in Greece. There was only a pipeline of money flowing from Greek Treasury Bond sales to those who had a constitutionally guaranteed right to employment as state workers. In fact just about the only workers in Greece have been Government workers. Fom the pharmacy technician to the hospital gardner, all have been participants in a system described by the Economist Magazine as pork and patronage. As a result the Greek economy is not an innovative consumer society, IYC, and PBJ, such as the United States. As presented in Revelation 13:1-4, God purposed from eternity past to bring the Beast Regime of regional governance and totalitarian collectivism out of sovereign and baking insolvency of the Mediterranean nation states of Portugal, Italy, Greece, and Spain, that is out of the collapse of the profligate PIGS. Needless to say there will be many Angry Byrds. Of note, Jack Duffy of MarketNews International reports France and Germany are on a collision-course with the European Commission as EU leaders approach a crucial summit that could decide key questions about the future of the Eurozone. With leaders scheduled to meet in Brussels on June 27-28 to decide details of the EU’s proposed banking union, the Eurozone’s two largest economies are determined to ensure that final decisions over when and how insolvent banks are shut down remains with national governments. The Commission is putting forth its own plan to consolidate such power in Brussels. ‘There is a real confrontation here,’ said Zsolt Darvas, research fellow at think tank Bruegel. ‘While it may make sense to do this at the European level, nothing is going to happen without the participation of France and Germany,’ he said.” And Tom Stoukas and Sherine El Madany of Bloomberg report Greece became the first developed nation to be cut to emerging-market status by MSCI Inc. after the local stock index plunged 83% since 2007. Greece failed to meet criteria regarding securities borrowing and lending facilities, short selling and transferability, said MSCI.
Jeremy Bowman reports Why Gannett and Belo Shares jumped. And Reuters report Greeks strike over state TV closure as backlash grows. Greek workers stage a nation wide strike on Thursday, forcing hospitals to work on emergency staff and disrupting transport, in protest against the “sudden death” of state broadcaster ERT, switched off in the middle of the night by the government. Screens went black on state broadcaster ERT, cutting newscasters off mid-sentence only hours after the decision was announced, in what the government said was a temporary measure to staunch a waste of taxpayers’ money. The 75-year-old Hellenic Broadcasting Corporation ERT has shed viewers since the rise of commercial television and radio, and its three statewide stations had just a 13 percent combined audience share when it was switched off. Its 2,600-strong staff include 600 journalists. Many Greeks cite the broadcaster as an example of inefficiency, overspending and jobs given in return for political favors. Nevertheless, in a country where nearly two thirds of young people are now unemployed after years of relentless cuts and tax hikes, there is a visceral public belief that the government should not slash jobs. Greeks were stunned by the speed with which the closure was executed. “It had to happen. ERT was a big fat feast for the political parties,” said Maria Panagiotou, a 65-year-old retiree. “But the way they did it is unacceptable. How can this happen in Europe?” A senior government official said Athens was under pressure to show visiting EU and IMF inspectors that it had a plan to fire 2,000 state workers as required under its bailout, and the ERT shutdown was the only option available to meet the target. The ERT crisis overshadowed MSCI’s reclassification of the country as an emerging market. The chart of Greece, GREK, shows a 7.6% fall in value so far this week.
IIE) … On Friday, June 12, 2013, World Stock, VT, traded slighly lower from Thursday’s rally, on lower Global Financials, IXG, Investment Bankers, KCE, such as JPM, The Too Big To Fail Banks, RWW, such as C, STI, KEY, BK, Stock Brokers, IAI, such as EFTC, Regional Banks, KRE, such as RF, HBAN, and Asset Managers, ASMA, such as BLK, and on a slide in the EUR/JPY, seen in the Stockcharts.com chart of FXE:FXY, with Action Forex reporting a close of the EURJPY lower at 125.527, as well as another strong trade lower in the Far East Financials, FEFN, at support, on a rally Yen, FXY, to close at103.75, reflecting the failure of Kuroda Abenomics. The chart of the S&P 500, $SPX, SPY, shows a 0.6% trade lower on the day, and a 1.0% trade lower for the week; and that of the Dow, $DJW, DIA, shows a 0.1% trade higher on the day and 0.6% trade lowe for the week.
The Interest Rate on the US Ten Year Note, ^TNX, closed the week at 2.13%, and Aggregate Credit, AGG, rose slighly for the week, up from its significant breakout on May 24, at 2.01%.
Volatility, ^VIX, TVIX, VIXY, rose for the day and the week.
Both Brent North Sea Oil, BNO, and Oil, USO, popped higher in what are likely to turn out to be evening star chart patterns.
Sectors trading lower included, Automobiles, CARZ, Clean Energy, PBD, Energy Service, OIH, Energy Production, XOP, and Small Cap Energy, PSCE, on a glut of oil, despite the rise in theprice of oil, USO, S&P High Beta, SPHB, Semiconductors, SMH, Paper Producers, WOOD, Softare, IGV.
Doug Noland reports The U.S. dollar index declined 1.2% to 80.67. (up 1.1% y-t-d). For the week on the upside, the Japanese yen increased 3.5%, the New Zealand dollar 2.0%, the Swedish krona 1.9%, Swiss franc 1.6%, the euro 1.0%, the British pound 1.0%, the Danish krone 0.9%, the Norwegian krone 0.9%, the Australian dollar 0.8%, the Mexican peso 0.4%, the Canadian dollar 0.3% and the South African rand 0.2%. For the week on the downside, the Brazilian real declined 0.9%, the South Korean won 0.8%, the Taiwanese dollar 0.3% and the Singapore dollar 0.2%.
Nation Inestment, EFA, and Small Cap Nation Investment, IFSM, traded lower, on Friday June 14, 2013, as well as for the week, as the Emerging Markets, EEM, and their Infrastructure, EMIF, their Financials, EMFN, such as CIB, BCH, BAP, BSMX, and their Bonds, EMB, have traded lower. Mike Mish Shedlock writes Fierce selloff in emerging market currencies The economies of the emerging countries, such as Vietnam, VNM, Malayasia, EWM, Philippines, EPHE, Indonesia, IDX, Chile, ECH, Peru, EPU, and developing countries, such as Thailand, THD, Mexico, EWW, Brazil, EWZ, Russia, RSX, India, INP, and China, YAO, have abruptly disintegrated on debt deflation, that is on falling currency values associated with higher interest rates, on the collapse of credit, AGG, as the debt monetization policies of the World Central Banks have failed to stimulate global growth and trade and have turned “money good” investments bad. The Milton Friedman Free To Choose scheme of floating currencies, has failed. God, through Jesus Christ, Ephesians 1:10, is sending a new scheme of diktat and diktat money to establish regional security, stability, and sustainability, through regional governance and totalitarian collectivisim, enforcing debt servitude.
Doug Noland of Prudent Bear writes in Safehaven.com The King of EM, It is not easy to explain exactly why the subprime Bubble began to lose air when it did. Today, it’s not easy to pinpoint exactly why the “developing” Bubble has begun to falter. But in both Bubbles, leverage and speculation played integral roles. From my perspective, there reaches a point of acute excess where the most sophisticated market operators recognize trouble on the horizon and begin to reverse their leveraged positions (and/or begin building speculative bearish bets) and exit the Bubble. This move by the sophisticated speculators works to change the market liquidity backdrop at the margin, leading to higher financing costs and waning Credit Availability.
Importantly, it is the nature of major Bubbles to become acutely dependent upon ongoing cheap finance and rapid Credit expansion. As such, the marginally higher costs and tightened finance engendered by the reversal of speculative activities begins to weigh on asset prices, financial flows and general Credit Availability.
Few in the spring of 2007 appreciated the ramifications for the market reversal in subprime finance. Very few recognized the significance of this initial crack in the mortgage finance Bubble. I believe the more sophisticated hedge fund and global market operators are beginning to appreciate the importance of what is unfolding in the global marketplace. On the margin, de-risking and de-leveraging dynamics have commenced with an immediate impact on marketplace liquidity.
Meanwhile, the “developing” market Bubble continues to unwind. And leverage comes out the commodities, currency “carry trades” and developing stocks and bonds. And as capital flight becomes a more serious issue, the marketplace must ponder the consequences not only of what a faltering Bubble means for scores of markets and economies, there is as well the issue of developing central banks having to sell from their trove of Treasuries and bunds and such to finance a surge in outflows (“hot” and otherwise).
I suspect that the global jump in yields (and CDS and risk premiums) has more to do with de-leveraging than it does with tapering worries. This dynamic has caught many by surprise. The speculators anticipated cleverly exiting their leveraged MBS and other trades based on their expectations for Fed policy. Now, there’s a tremendous amount of unanticipated market uncertainty.
The yen “carry trade” (sell yen and use proceeds to buy higher-yielding instruments globally) is doling out painful losses – forcing the unwind of leveraged trades across many markets. I wouldn’t be surprised if the yen short is the largest short position in modern history. The yen bears are now running for cover – causing all kinds of havoc in the currencies and securities markets.
China, the King of Emerging Markets. I have posited that China is in the midst of an historic Credit Bubble. I have over the years tried to explain how interrelated their Bubble is to ours. Our mismanagement of the world’s Reserve Currency led to 20 years of huge Current Account Deficits. A large portion of the Trillions of associated IOU’s have made it onto the balance sheet of the People’s Bank of China. And no Credit system and economic system has gone to greater excess during the post-2008 global reflation. It was the “fledgling” Credit Bubble spurred to “terminal phase” excess over the past five years.
Over the coming weeks and months, China will be an analytical focal point. If the “developing” Bubble has passed an important inflection point, then China is vulnerable. If “hot money” is leaving EM, then China should be susceptible. And, let there be no doubt, when China finally succumbs global economic prospects really dim – and prospects for some fellow EM economies turn downright dismal. Recall how the tightening of subprime finance gravitated to “Alt-A” and then worked its way to “conventional.” And when housing in general began to falter the bottom fell out of subprime.
This week provided a bevy of notable China-related headlines: From the Financial Times: “China Debt Auction Failure Raises Liquidity Fears;” From Bloomberg: “China Debt Sale Fails for First Time in 23 Months on Cash Crunch;” “China Local Debt Audit ‘Credit Negative,’ ”China State Auditor Warns Over Local Government Debt Levels.” The price of Chinese sovereign Credit default swap (CDS) “insurance” jumped from 92 to 113 in three sessions, before dropping back down to 98 on Friday. Chinese interbank lending rates have recently spiked higher – and there were even reports of several borrowers forced to pay up for increasingly scarce liquidity. There were debt auctions that did not go smoothly. The currency forwards market is showing some atypical downward pressure on the renminbi.
Ambrose Evand Pritchard writes China braces for capital flight and debt stress as Fed tightens. A front-page editorial on Friday in China Securities Journal – an arm of the regulatory authorities – warned that capital inflows have slowed sharply and may have begun to reverse as investors grow wary of emerging markets. “China will face large-scale capital outflows if there is an exit from quantitative easing and the dollar strengthens.” it wrote.
The journal said foreign exodus from Chinese equity funds were the highest since early 2008 in the week up to June 5, and the withdrawal Hong Kong funds were the most in a decade.
It also warned that total credit in Chinese financial system may have reached 221pc of GDP, jumping almost eightfold over the last decade. Companies will have to fork out $1 trillion in interest payments alone this year. “Chinese corporate debt burdens are much higher than those of other economies and much of the liquidity is being used to repay debt and not to finance output,” it said.
There have been signs of serious stress in China’s interbank lending markets, with short-term SHIBOR rates spiking violently. Bank Everbright missed an interbank payment last week in a technical default.
“Liquidity conditions have tightened severely due to the crackdown on shadow banking activities,” said Zhiwei Zhang from Nomura. “We believe the series of policy tightening measures in the past three months have reached critical mass, such that deleveraging in the banking sector is happening. Liquidity tightening can be very damaging to a highly leveraged economy,” he said, warning that local government finance vehicles may have trouble rolling over debts.
Also, International Debt Statistics, from the World Bank, World Development Indicators reveal that China has the largest domestic debt as a percent of GDP of any developing and emerging market at 160%.
Ambrse Evans Pritchard writes Fitch says China credit bubble unprecedented in modern world history. And Reuters reports Fitch warns on shadwo banking in China. And Benton te writes China’s debt markets suffers from cash squeeze
And John Rubino asks in commenting on the Doug Noland article, So can the US stay placid when the rest of the world turns chaotic? Highly doubtful. There’s a market phenomenon in which one investment play blows up and forces those on the wrong side of the trade to dump their liquid assets to raise cash, which causes the high-quality assets to fall as much or more than the junk. As Noland notes, the world’s premier liquid asset is the Treasury bond. If the developing world’s need to raise cash is a factor in the recent spike in US interest rates, this implies a feedback loop in which rising US rates further destabilize emerging markets, forcing the sale of more Treasuries, and so on. Can the Fed stop this? Not unless it wants to buy up not just all the newly-issued Treasuries as it does now, but the trillions of dollars of bonds that might be dumped once things really get going.
It’s important to understand that we’re here because for years the developed world in general and the US in particular have been exporting their problems to the developing world via monetary policy. We fund our overspending by creating a bunch of new dollars, many of which flow beyond our borders looking for higher yields. They land in, say, Brazil, pushing up both local asset prices and the exchange rate of the real. So individual Brazilians see their cost of living rise while Brazilian exporters are priced out of global markets. This is the currency war that Brazil’s government has been complaining about.
Then the hot money flows back out, causing a different set of problems for a country that has spent the past decade trying to adjust to excessive capital inflows. The result: some seriously fragile banks and over-leveraged companies and investors, any of which could trigger a nationwide crisis.
The same general process is at work in other major emerging markets, with each in its own way now posing a threat to the global financial system — at the pinnacle of which sit the S&P 500 and the Treasury market, looking an awful lot like Southern California real estate circa 2007
China Financials, CHIX, traded lower, forcing China, YAO, Chin Industrials, CHII, China Small Caps, ECNS, alllower on the week.
The Nikkei, NKY, traded lower on the week. The Philippines, EPHE, Thailand, THD, Hong Kong, EWH, EWHS, South Korea, EWY, Taiwan, EWT, and Vietnam, VNM, Malayasia, EWM, Singapore, EWS, EWSS, all traded lower lower on the week.
India, INP, SCIN, and Brazil, EWZ, EWZS, both traded lower on the week.
Poland, EPOL, traded lower from its rally high; and Mexico, EWW, and Egypt, EGPT, traded lower on the week. Spain, EWP, Germany, EWG, Ireland, EIRL, and Italy, EWI, traded lower.
Indonesia, IDX, rose this week as Lilian Karunungan and Kyoungwha Kim of Bloomberg report Indonesia is consuming foreign currency reserves at the fastest pace in Asia as policy makers struggle to contain the rupiah’s plunge, a sign to PT Mandiri Sekuritas that the central bank will pare intervention. Reserves dropped 5.7% in a year to $105 billion in May as Bank Indonesia sold dollars to bolster the rupiah. The rupiah fell to 5.6% below the local spot rate in the offshore non-deliverable forward market yesterday. Defending the currency helped reduce reserves to the equivalent of 6.6 months of imports, the worst ratio in Asia after India.
III) … The Surveillance State with its surveillance infrastructure comes of age as Obama recognizes the NSA Programs.
The Apostle Paul reveals that Jesus Christ heads up the economic and political plan of God for the completion and fulfillment of every age, epoch, era and time period, Ephesians, 1:10.
With the Edward Snowden revelations through Glenn Grenwall of The Guardian, and confrimation of NSA Programs by President Obama, its is clearly evident that Jesus Christ has terminated Liberalism’s democracy, and is introducing Authoritarianism’s Surveillance State.
Zero Hedge reports AT&T, Verizon & others have been providing NSA with phone records since 2001. NSA Intelligence public private partnerships are an integral part of the creeping emergence of Authoritariansism. It is Edward Snowden who has revealed some of the details of Authoritarianism’s new form of governance, which is termed the Surveillance State, which terminates Liberalism’s traditional democratic governance.
Under the Obama administration there has been a proliferation of private government contractors who store, sift and manage information on people. Siobhan Gorman of The Wall Street Journal writes thousands of workers employed by government contractors sit side by side with federal workers and hold security clearances that provide access to intelligence databases. The result is a system so enmeshed that government and contract workers are often indistinguishable. Agency Edward Snowden has said he worked for consulting giant Booz Allen Hamilton as an ‘infrastructure analyst.’
Mr. Snowden, an employee of the consulting behemoth Booz Allen Hamilton, has said he leaked highly classified information because he felt Americans should know more about NSA surveillance programs. Director of National Intelligence James Clapper said a “crimes report” was filed with the Justice Department and government officials are pursuing an investigation. Mr. Snowden, a former Central Intelligence Agency employee, apparently checked out of a Hong Kong hotel and his whereabouts weren’t known Monday.
The size and scale of private contracting for intelligence goes “well beyond the scope of anything the public is aware of or even imagines,” said Peter Singer, director of the Center for 21st Century Security and Intelligence at the Brookings Institution. About 1.2 million Americans hold top-secret clearances, the Director of National Intelligence reported this year. More than a third of those, 38%, are private contractors.
Such companies as Booz Allen Hamilton had the most ample supply. Mr. Snowden has said he worked for Booz Allen as an “infrastructure analyst” at an NSA facility in Hawaii. His security clearance for the job would have been approved by the NSA, which also would have determined the systems he could access from his desktop, said contractors familiar with the process. Government contracts have been lucrative for Booz Allen. In a government filing last month, Booz Allen said that nearly a quarter of its most recent annual revenue, about $1.3 billion, came from its work with the intelligence community and that another 55%, about $3.2 billion, came from its defense business. More than two-thirds of Booz Allen’s 25,000 workers hold government security clearances, and more than a quarter of those hold the highest security clearance. In 2008, Booz Allen separated its commercial business from its government consulting work and sold the latter to Carlyle Group—another politically connected firm, for $2.54 billion. The Carlyle-owned government business, Booz Allen Hamilton Holding, sold shares to the public in a November 2010 IPO. On Sunday, Booz Allen moved quickly to tamp down news of Mr. Snowden’s breach. The firm’s chairman, Ralph Shrader, sent a memo to Booz Allen employees just hours after the revelation, advising them to keep quiet. The public statement “will be our only external communication on this issue for the time being,” he wrote.
Facing congressional criticism in 2007, intelligence agencies promised to cut back on private contractors but few have made substantial headway, former officials said. “Yes, there were initiatives to reduce contractors, but at the end of the day, the budget goes up another billion dollars, and what do you do?” said a former U.S. official. Mr. Snowden had specialized technical skills that are frequently outsourced because the U.S. government doesn’t have enough employees with such training. Contractors defended the government’s reliance on private companies, arguing there often are few distinctions between a federal worker and a contractor. They cited Pfc. Bradley Manning as a counterargument to the idea that contractors pose more of a security risk than government workers.The Army private is currently on trial and facing life in prison after admitting to providing WikiLeaks with a trove of classified documents.
Kenneth Cukier and Viktor Mayer-Schoenberger relate in Foreign Affairs, The rise of Big Data. Acxiom and Experian are amassing vast amounts of information on everyone and everything. Big Data is poised to reshape the way we live, work and think.
MaddMedic in Freedom Is Just Another Word Blog provides 27 quotes from Edward Snowden which presents the powers of the NSA Surveillance State.
America Blog writes Edward Snowden explains his actions. Via the Washington Post, which he was also in contact with, in addition to the Guardian: I asked him, at the risk of estrangement, how he could justify exposing intelligence methods that might benefit U.S. adversaries. “Perhaps I am naive,” he replied, “but I believe that at this point in history, the greatest danger to our freedom and way of life comes from the reasonable fear of omniscient State powers kept in check by nothing more than policy documents.” The steady expansion of surveillance powers, he wrote, is “such a direct threat to democratic governance that I have risked my life and family for it.”
FLL comments Snowden’s basic premise is sound: Policy, rather than law, controls the surveillance state, which means that any change in leadership could trigger tyranny. The scope of domestic government surveillance really should be defined by law, and those laws, like any laws, should be subject to the constitutional oversight of the federal judiciary. The NSA, as part of the Department of Defense, is answerable only to the president, rather than being bound by any set of laws. One of the definitions of being civilized is the rule of law. The scope of domestic surveillance should be determined by the people through their legislators and federal judges, rather than a president (United States) or a warlord (Somalia), depending on the individual country.
Matthew Weidner writes The American Surveillance State surrounds and imprisons us all. The NYT wrote A 29-year-old former CIA computer technician went public on Sunday as the source behind the daily drumbeat of disclosures about the nation’s surveillance programs, saying he took the extraordinary step because “the public needs to decide whether these programs and policies are right or wrong.”
From MyBlogDammitNet Excerpts from the Greenwald Snowden interview. Greenwald: “Talk a little bit about how the American surveillance state actually functions. Does it target the actions of Americans?” Snowden responds: “NSA and intelligence community in general is focused on getting intelligence wherever it can by any means possible. It believes, on the grounds of sort of a self-certification, that they serve the national interest. Originally we saw that focus very narrowly tailored as foreign intelligence gathered overseas.”
“Now increasingly we see that it’s happening domestically and to do that they, the NSA specifically, targets the communications of everyone. It ingests them by default. It collects them in its system and it filters them and it analyses them and it measures them and it stores them for periods of time simply because that’s the easiest, most efficient, and most valuable way to achieve these ends. So while they may be intending to target someone associated with a foreign government or someone they suspect of terrorism, they’re collecting you’re communications to do so.”
“Any analyst at any time can target anyone, any selector, anywhere. Where those communications will be picked up depends on the range of the sensor networks and the authorities that analyst is empowered with. Not all analysts have the ability to target everything. But I sitting at my desk certainly had the authorities to wiretap anyone from you or your accountant to a Federal judge to even the President if I had a personal e-mail.”
The Liberty Crier presents Ron Paul NSA’s PRISM is an awakening call Ron Paul speaks with Anderson Cooper in video interview about the NSA’s PRISM spy program and the value of privacy.
Rutherford Institute writes America’s new normal: mass surveillance, secret courts.
Elaine Meinel Supkis writes Zionist neocons demand more spying and punishment of US citizens blowing the whistle on this spying and communictaes that the US is no longer a representative democracy in the traditional sense of the word, but is an authoritaran state, molded by Zionism, and dominated by the Zionist State of Israel and its leaders.
In audio broadcast The Scott Horton show relates Truth is treason in the Empire of Lies, as Ron Paul comments on the Snowden revelations.
Amy Goodman write in Truthdig Edward Snowden and the Architecture of Oppression
Thomas Drake of The Guardian Snowden saw what I saw: Surveillance criminally subverting the Constitution
Rasmussen reports 57% fear Government will use NSA data to harass political opponents
The Guardian reports Utah: The NSA’s desert home for eavesdropping on America
IV) … The Government Entitlement Complex will soon be coming to a screaching halt.
Jason Hartman writes Enter the Government-Entitlement Complex. During the time in which defense spending has been contracting as a percentage of GDP, it is impossible to ignore the extent to which non-defense government spending has expanded. This perpetual increase in transfer payments from entitlement programs and interest on the debt that has compounded from perpetual deficits driven by this binge of entitlement spending has created a new paradigm. The “Military Industrial Complex” has been effectively dead for nearly 40 years, and was replaced with a “Government Entitlement Complex” that is continuing to grow and expand.
Analysis of total transfer payments and interest payments as a percentage of GDP paints an undeniable picture of the extent to which this pervasive phenomenon has come to dominate American life. In total, 18% of US GDP is driven by either entitlement payments or owed by the government as interest on debt from past entitlement spending. The importance of this Government-Entitlement-Complex™ is that it controls so much money and hold so much political influence that it dwarfs the supposed “Military Industrial Complex” in size, scope, and impact. The staggering amount of money controlled by the Government-Entitlement-Complex™ makes it the single most dominant force in American electoral politics. As more people become dependent on the government for their livelihood either from subsidies or subsistence, the more resistance there will be against reforms that are necessary to develop a healthy economy. As individual investors, we do not have the power to reverse this destructive trend, but we do have the capacity to structure our income and investments in such a way that the likely actions of a Government-Entitlement-Complex™ will help us become wealthy instead of sending us into destitute poverty.
The economic paradigm known as Liberalism was one of investment choice, as well as clientelism, and was centered around the US Federal Reserve monetary policy of credit liquidity, which created a historic credit bubble, AGG, which provided a moral hazard based prosperity, and was facilitated by financial system intervention in QE, the pursuit of ZIRP, the securitization of credit such US Treasury Notes, TLT, which funded entitlements of all types, such as social security disability.
Increasingly many qualified for Social Security Disability, and either ceased to work or never did work, and starting living as clients of the state. The development and use of the Euro, FXE, established Greek Clientelism, where many in Greece have state employment as a constitutional guarantee, which the Economist Magazine described as a system of pork and patronage.
I differ from Mr. Hartman, as individual investors now have no power as fiat money, consisting of Aggregate Credit, AGG, Stocks, VT, Major World Currencies, DBV, and Emerging Market Currencies, CEW, seen in their ongoing Yahoo Finance Chart, died on May 24, 2013, with the failure of currency carry-trade investing, ICI, and disinvestment out of Junk bonds, JNK, as bond vigilantes called the Interest Rate on the US Government Note, ^TNX, higher to 2.01%, on the failure of the world central banks’ monetary authority, and especially the failure of Bank of Japan’s Kuroda Abenomics monetary policies. The investor is left without any reasonable choice of investment vehicles to either shape the destiny of the Government-Entitlement-Complex™ or to preserve and grow wealth except personal possession of gold bullion or gold in Internet Trading Vaults such as Bullion Vault of Gold Is Money.
Out of a soon coming global credit bust and financial system breakdown, as foretold in bible prophecy of Revelation 13:3, there will be no money to fund any Government-Entitlement-Complex™
V) … Saturday night proved to be gaudy just as the Lord prophecied. While out walking on Saturday night, I encountered two groups from the leading Oneness Pentacostalism church here in Bellingham, both of which told me that their church was going to be in revival at Depot Market Square, seen in this photo.
The words of the Lord came to mind, who said, “As it was in the days of Noah, so it will be in the days of the coming of the Son Of Man” Matthew 24:37.
How was it then in Noah’s time? Well, it was gaudy; that is, outrageously festive. Wikipedia relates that the word gaudy comes from latin. The origin of the term may be connected to the traditional student anthem, Gaudeamus. Gaudies generally involve a celebratory formal dinner, generally in black tie and academic gowns (scarlet festal robes for doctors), and may include events such as chapel services, lectures or concerts beforehand.
When in ministry, and when in public revival, this church group, dresses gaudy and acts gaudy. I asked for one of their pamphlets, and engaged a young man in conversation, asking if any at their church had someone interested in bible prophecy; he didn’t want to discuss that at all; he communicated that the church was in revival, and then proceeded to communicate his church doctrine to me. Well for me it was a dead end. The gaudies have a church agenda of preeminence which I do not want any part of, and I have a prophetic ministry and seek another to discuss bible prophecy.
VI) … The Ezekiel 38 War beigns as Putin warns the US against arming Syrian rebels.
Please consider that Turkey will serve as the gateway for NATO troops, particularly from Germany, entering into Syria for a global war, foretold in Bible Prophecy, as the Ezekiel 38 war. Jack Kelley provides the details here
Jason Ditz of Antiwar reports Lets not arm those organ eating Syrian rebels, Putin says.
Bill Van Auken writes The White House spokesman Jay Carney writes After making it clear that Obama would make no statement nor would he speak to Erdogan about the repression, the spokesman concluded: “Turkey is a very important ally. And look, all democracies have issues that they need to work through, I think that we continue to work with Turkey on a range of issues—as a NATO ally and as a key player in the region, and we look forward to doing that.”
In calling Turkey a “key player in the region,” Carney was obviously referring to its role as a safe haven and forward base for the Islamist militias that Washington has unleashed on Syria. Foreign fighters from as far away as Chechnya, the Balkans and Western Europe are funneled across the Turkish border; Turkey also hosts a CIA station that coordinates the flow of billions of dollars in money and arms provided by Qatar and Saudi Arabia to fuel the slaughter across the border.
Washington thus hypocritically claims that its war for regime change in Syria is driven by its horror at Assad’s repression of armed Islamist opposition groups, but supports Erdogan’s repression of peaceful protests that could interfere with US war plans.
The events in Turkey and Syria, however, are intimately connected. Erdogan’s participation in the US-led war against Syrian President Bashar al-Assad is immensely unpopular with the Turkish people. Polls indicate that between 70 and 80 percent of Turkish citizens oppose this intervention.
There is widespread concern that the war being promoted by Erdogan in Syria will engulf Turkey itself. Twin car bombs killed 50 people in the town of Reyhanli on the Turkish border last month, followed by the arrest in the same region of 12 members of the Al-Qaeda-affiliated Al-Nusra Front, who initial reports said had a quantity of deadly sarin gas.
The Turkish government’s war policy is particularly unpopular among Turkey’s major religious and ethnic minorities, such as the Alevis. Erdogan’s backing for Al Qaeda-linked Sunni Islamist fanatics in Syria is an extension of his domestic policy of imposing Islamist social policies in Turkey. His decision to name a new bridge over the Bosporus Strait after a 16th century Ottoman sultan who slaughtered tens of thousands of Alevis heightened these concerns.
In a more fundamental sense, the Turkish developments mirror those within the United States itself, with the turn towards militarism and intervention abroad feeding the growth of attacks on democratic rights and police state measures at home. In both countries, both foreign and domestic policies are pursued in the interest of ruling corporate and financial cliques at the expense of the broad masses of working people.
The moral charades performed by the Obama administration and its pseudo-left assets about “human rights” and “democracy” in Syria are, as the case of Turkey makes clear, completely hypocritical. They are designed to deceive the public about the criminal nature of Washington’s escalating campaign of military aggression to secure US hegemony over the oil-rich regions of the Middle East and Central Asia—a campaign that threatens to drag the people of Turkey, the entire region and beyond into a bloody conflagration.
The struggle for the democratic and social rights of working people in Syria, Turkey and throughout the planet can be conducted only on the basis of the independent political mobilization of the working class in struggle against imperialism and the capitalist profit system.
VII) … In the news The Economist reports Action Women: President Obama appoints two interventionsists; these being Susan Rice and Susan Power, described as one with enthusiasm for UN led invterventionism The departure of Tom Donlin removes a voice of caution from White House Debate on Syria.
The Australian reports Jordan key to Pentagon plan for no-fly zone
The Economist in Scratching a living in the Missippi River Delta, highlights the depopulation of the rural south, in particular Lake Village, Chicot Country, AR, and Greenville, MS, that has come as agricultural laborers have been replaced by mechanization, leaving the hubris of a liquor store and pawnshop economy.
The WSJ reports Skyscraper prices head north
Reuters reports Obama to name Jason Furman as Chief Economist
Bespoke Investment Group reports Most short sellers dan’t catch a break. Given the new downward trend in stocks, things should finally be looking up for the short-sellers. Unfortunately, though, they cannot seem to catch a break. The table below lists the most heavily shorted stocks in the Russell 1000 (as a percent of float) as of the end of May. For each stock, we also calculated its performance so far in June. As shown, the average stock in the table is down 0.93%, which is worse than the average return of all Russell 1000 stocks so far in June (-0.59%). However, were it not for one stock in the list (Walter Energy – WLT), the average return would be a gain of 0.62%! Granted, you can’t pick and choose which stocks to use when looking at performance, but one would have thought that these stocks would be performing a lot more poorly given the overall market environment. I comment that it seems to me that the following are good short selling prospects at this time include Specialty Retailer, GME, Movie Production Theater, DWA, Footwear Manufacturer, DECK, and the world leader in high power Fiber Lasers and Amplifiers for material processing, IPGP.
Other short selling opportunities abound such as Florida Real Estate Developer, JOE, of which Interactive Buyside in Seeking Alpha reports JOE’s overhyped asset base consists of secluded rural land in Northwest FL, undeveloped residential lots in vacant communities, and primarily empty commercial acreage that is dependent on the success of a relocated Panama City airport