Stocks Rise Near Their Former Highs As The US Dollar and Bonds Trade Lower On Lower Distressed Securities Values.

Financial Market Report for March 3, 2010
World Stocks, ACWI, rose near their former highs; and Utilities, XLU, rose to a new high on a higher Euro, FXE, as the US Dollar, $USD, and Bonds, BND, fell sharply lower in an Elliott Wave 3 of 3 Down as bond vigilantes called the Interest Rate on the 30 Year US Government Bond, $TYX, higher, and the Interest Rate on the 10 Year US Government Note, $TNX, higher, as well; sending the 30 Year US Government Bond, EDV, and the 10 Year US Government Note, TLT, strongly lower in an Elliott Wave 3 Down.

The 30 10 Sovereign Debt Leverage Curve, $TYX:$TNX, turned lower, as investors deleveraged more out of the riskier longer duration bonds.

The gold mining stocks, GDX, and the the junior gold mining stocks, GDXJ, traded lower, as investors deleveraged out of these historically profitable swing stocks. The ratio of the HUI precious metal mining stocks relative to the 30 Year US Government Bond, $HUI:$USB,  manifested a lollipop hanging man candlestick evidencing that the gold mining stocks have leveraged out on US Sovereign Debt; either the price of gold will have to go up or the price of the 30 Year US Government Bond will have to go up for the gold mining stocks to rise.         

The old political and economic paradigm supporting seigniorage, and ponzi economics, was neoliberalism ….. specifically the neoliberal Milton Friedman Free To Choose floating currency regime, which has been based upon US Treasuries, and most recently QE 1 with its TARP Facility, in which money good US Treasuries were traded out for distressed securities like those held in Fidelity Mutual Fund FAGIX, with most of the banks placing the Treasuries in Excess Reserve, as well as QE 2, where Ben Bernanke used his authority to print money out of thin air and buy US Treasuries.

The old political and economic paradigm failed February 22, 2011 ….. as seigniorage failed with the downturn in distressed securities, like those held in FAGIX, which caused the stock market, ACWI, to turn lower. Neoliberalism is a dead man walking; it is a bankrupt, burned out and zombie economic and political paradigm that has turned toxic and cannot sustain investment or growth.

Lacking seigniorage, stocks, ACWI, despite today’s rally, will soon fall lower.

The chart of US Stocks Relative To The US 10 Year Government Note, VTI:TLT, and the chart of the chart of World Stocks relative to World Government Bonds, VT:BWX, shows that stocks have lost their leverage on sovereign debt.

A sovereign crisis on a global scale, is just now starting to develop, as is seen in the value of world government bonds, BWX, turning lower today March 3, 2011. The Morgan Stanley Cyclical Index Stocks, $CYC, have not recovered from their February 22, 2011 fall evidencing that the stocks which precede growth have topped out. One might consider investing in Market Vectors-RVE Hard Assets Producers ETF, HAP, I recommend that one buy and take possession of gold, GLD, and silver bullion, SLV.
A new political and economic paradigm, that being rule of the sovereigns, will emerge out of Götterdämmerung, an investment flameout, where a Chancellor, that is a Sovereign, and a Banker, a Seignior, will arise and govern through global corporatism. National leaders will waive national sovereignty and announce Framework Agreements. These Agreements will appoint stakeholders to oversee regional economic governance. The two leading Sovereigns will provide a new seigniorage, that is a new moneyness, with austerity and democratic deficit for all. The word, will and the way of the sovereigns will be law replacing constitutional as well as historical rule of law.

Today’s news comes courtesy of Between The Hedges
Erik Schatzker and Sree Vidya Bhaktavatsalam of Bloomer report Fink Says He’s a ‘Big Buyer’ of Dollars That Gross Says Avoid. BlackRock Inc, BLK, Laurence D. Fink, chief executive officer of the world’s largest asset manager, said he’s a “big buyer” of the U.S. dollar, which rival Bill Gross has urged investors to avoid. Fink, 58, doesn’t see a “bear market” in bonds and would buy U.S. Treasuries if yields rise above 4 percent, he said today in an interview from New York with Bloomberg Television’s Erik Schatzker. Gross, manager of the world’s largest mutual fund, has said the best days for bonds are over. He has cut holdings in U.S. government debt to the smallest level in two years, while boosting non-dollar securities. “We believe rates will creep up,” Fink said. Still, with inflation likely to be muted, “we’re not calling that a bear market.”

David Cutler or Reuters reports the upcoming events linked to the debt crisis in the euro zone:
— Mar. 4 — Fourteen EU leaders from centre-right parties– hosted by Finland — meet to prepare a comprehensive responseto euro zone debt crisis.
— Mar. 4 — EU leaders from socialist parties — hosted byGreece — meet to discuss the way forward in the financialcrisis.
— Mar. 11 — Euro zone summit in Brussels to prepare forfull EU heads of state summit on Mar. 24/25.
— Mar. 14 – Eurogroup meeting of euro zone financeministers in Brussels.
— Mar. 15 – Ecofin meeting of EU finance ministers inBrussels.– Mar. 24/25 – Full summit of EU heads of state andgovernment in Brussels to agree package of details for newfinancial rescue facility/euro zone competitiveness.


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