Financial Market Report for February 27, 2012
1) World shares traded lower today, while the S&P, Dow, and Nasdaq traded higher.
Volatility TVIX, VIXY, VIXM, rose today as World Shares, VT, traded lower, led so by EWX, EEM, VSS, and EEB, as the Dow came ust in under 13,000, and the S&P traded at its highest since 2008.
The trade lower in the world shares means that the global debt trade has come to an end on the exhaustion of US central bank and ECB credit policies, as the ECB now has effected sovereignty over national debt with its Greek Debt Collective Action Clause Initiative, and as the EU ECB and IMF Troika have issued 3 Memorandum with 38 stipulations in addition to the Initial Memorandum of the Second Greek Bailout Agreement, and as fears arise over the possibility of Greek Default on its sovereign debt.
The end of the sovereign nation state age has arrived. Fate working through creative destruction is commencing the age of regional global governance, where diktat will underwrite credit and money, as fiat money perishes with confidence and trust in government evaporates.
Political capital is rising to replace investment capital, as the dynamos of growth and profit that powered capitalism are loosing their vigor, and the dynamos of regional security, stability and sustainability are being vitalized powering up regional global governance.
FT reports 160 German tax collectors will descend on Greece to help the country set up an efficient system of tax collections. While the Greek government welcomed the technical assistance, the FT writes that the arrival of the German officials in Athens could reawaken anti-German sentiment, and quotes a front-page headline in a Greek tabloid talking about “an assault force of German tax collectors.”
Today, February 27, 2012, is a pivotal point in world history as capitalism transitions into regional global governance; and where the iron hegemony of world power passes from the US and the UK, into a ten toed kingdom of partly iron diktat and clay democracy.
The National Bank of Greece, NBG traded lower, turning European Financials, EUFN, India Earnings, EPI, Brazil Financials, BRAF, Too Big To Fail Banks, RWW, and Chinese Financials, CHIX, lower. Argentina Banks, BMA, GGAL, traded lower. India Banks, IBN, HDB, traded lower on a lower Indian Rupe, ICN. UK Area Banks HBC, RBS, LYG, traded lower on the British Pound Sterling, FXB.
European Shares, EWS, VGK, EWD, traded lower on a lower Euro, FXE. And India Shares, INXX, INP, INDY, SCIF, led EPHE, IDX, THD, EWT, FXI, EWZ, ARGT, EWY, GMF, and EWJ, lower.
Small Cap Pure Value Shares, RZV, Communication Services, AMT, Leveraged Buyouts, PSP, US Infrastructure, PKB, Steel, SLX, Automobiles, CARZ, VROM, Shipping, SEA, traded lower.
Education Shares APOL, DV, ESI, BPI, STRA, traded lower. And Materials, MXI, URA, XME, COPX, KOL, ALUM, COPX, traded lower.
Preferred, PFF, Mid Caps, JHK, Pharmaceuticals, XPH, IHE, Health Care Provider, IHF, Industrials, IYJ, led US shares, VTI, higher. Retail shares, XRT, led by CHRS, seen in this Finviz Screener traded higher as the New York Post reports US credit-card debt nearing toxic levels
The currency demand curve, that is the ratio of the Small Cap Pure Value Shares relative to the Small Cap Pure Growth Shares, RZG, RZV:RZG, traded lower reflecting that competitive currency devaluation has commenced, as is seen in the chart of the Japanese Yen, FXY, trading lower and Major Currencies, DBV, topping out, and Emerging Market Currencies, CEW, trading lower. The US Dollar, $USD, UUP, traded up to close at 78.50. Falling currencies is the last thing that central bankers want as Wall Street Journal reports Brazil minister says global currency war is intensifying.
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 loss of Greek debt sovereignty poses systemic risk. The fastest fallers are likely to be these ETFs seen in this Finviz Screener, EUFN, PFF, RZV, PKB, SLX, ITB, SCIF,EWZS, PSP, GREK. It may take a while for the Preferred Shares, PFF, to turn lower; but when they cut loose, they will fall dramatically, just as they did in the last downturn. Stock trading higher today included SNX, URI, IP, NP, FAST, MTW. These are likely to be fall quickly, because they have risen quickly, or because they are debt ridden, or both.
Tyler Durden writes S&P Cuts Greece To (Selective) Default From CC”We lowered our sovereign credit ratings on Greece to ‘SD’ following the Greek government’s retroactive insertion of collective action clauses (CACs) in the documentation of certain series of its sovereign debt on Feb. 23, 2012. We do not generally view CACs (to the extent that they are included in an original issuance) as changing a government’s incentive to pay its obligations in full and on time. However, we believe that the retroactive insertion of CACs will diminish bondholders’ bargaining power in an upcoming debt exchange. Indeed, Greece launched such an exchange offer on Feb. 24, 2012.” Translation: Greece better have that PSI in the bag or else the “Selective” goes away and “Greece would face an imminent outright payment default.” Our question for former Goldmanite and current ECB head Mario Dragi: does the ECB allow defaulted bonds to be pledged as collateral within the Euro System?
Tyler Durden writes How Much Is That Greek Doggy Worth In The PSI Window? Credit markets are not priced for Greek PSI Nirvana. With the Greek government bonds (GGBs) and CDS basis package trading at its highest in six months (over 96% of Par) and GGBs trading below 20% of Par (compared to considerably higher ‘expected’ PSI-based valuations), it seems the market is much more convinced of an imminent credit trigger and no PSI deal than headlines are crowing about. Combining the new 30Y bond, 2Y EFSF add-on, and GDP warrant, BARCAP arrives at a price of around 26.6% of Par for PSI-able bonds – considerably above the current depressed price of GGBs and together with S&P’s negative outlook change to the EFSF this morning, it would appear that market participants are not expecting a deal to get done by March 20th
2) … Angela Merkel is laying the foundation for a European Chancellor to lead an European Economic Government as she and the German Parliament throw dirt into capitalism’s grave.
The Sovereign Lord God, Psalm 2:4-5, has granted his Son, Jesus the Christ, the authority to open the seven seals, and unleash the First Horseman of the Apocalypse Rider on the White Horse, with his bow and no arrows, Revelation 6:1-2, to effect a global political, economic, momentary, currency and financial coup de etat, to pass the baton of sovereignty from nation states to sovereign leaders, in each of the world’s ten regions, to establish a ten toed kingdom or regional global governance, Daniel 2:31-33.
Angela Merkel has heard and heeded the 1974 clarion Call of the Club of Rome, and has been fate’s agent to effect its clear, trumpeting and ringing message for regional global governance.
Obfso writes blog article EU Needs Elected President, Former PM Tony Blair Says. Tony Blair became the third British prime minister and the fourth British statesman to receive, in Aachen, the annual Charlemagne Prize, which is awarded to the statesman, of whatever ever nationality, who has done most for promoting European unity. Aachen, the “Rome of the North, was the favourite city and seat of Charlemagne (742-814), first of the Western emperors. It was in this delightful little city, with its hot springs and Roman remains, that he set about his titanic task of bringing back order to the Europe that had fallen apart with the fall of the Roman Empire itself. He did not hesitate to use the awesome name of Rome for his purpose: he was himself a patrician of Rome: on Christmas Day, 800, in St Peter’s basilica, in Rome, he had been crowned, Imperator Romanorum. The Holy Roman Emperor (German: Römisch-Deutscher Kaiser, or “Roman-German Emperor”) is a term used by historians to denote a medieval ruler who, as German King, had also received the title of “Emperor of the Romans” from the Pope. After the 16th century, this elected monarch governed the Holy Roman Empire (later called Holy Roman Empire of the German nation), a Central European union of territories of the Medieval and Early Modern period, according to Wikipedia in coverage of the Holy Roman Emperor.
Janeh writes The Dark Ages are the period between the fall of Rome and the installation of Charlemagne as Holy Roman Empire on Christmas Day in 800. The Dark Ages were Dark not because religion ruled them, but because nobody did. When Rome fell, all effective government in Western Europe pretty much disintegrated. Nobody had the power or the resources to keep order, and the result was predictable.
Alex writes Charlemagne was saluted as Pater Europae. The division of Christendom due to the Reformation with the 1520s sounded the close for any Holy Roman Empire. It wasn’t theology which was the predominant drive from the break-up of Europe’s non secular unity. Quite, it absolutely was the ambition and avarice of kings and popes, and the expansion of nationalist sensation resentful of global command Third Period European Nation States. In 1751 Voltaire defined Europe as: A form of fabulous republic divided into a vary of states, some monarchical, the many people blended, but all corresponding with each other.
Steve Barnes provides the Andrew Garvin Marshall, Research Associate with the Centre for Research on Globalization, article, The High Priests of Globalization. Last year, Belgian Prime Minister Yves Leterme endorsed such an idea of a ‘European Economic Government’ when he stated: The idea of strengthened economic government has been put on the table and will make progress. In the end, the European Debt Agency or something like it will become a reality. I’m convinced of this. It’s about Europe’s financial stability and it’s not an ideological debate about federalism. I myself am a federalist. But more integration and deeper integration are simply logical consequences of having a single currency. Daniel Hannan, European economic government is inevitable, Telegraph Blogs, 17 March 2010.
The plans for an ‘economic government’ require the strong commitment of both France and Germany, which may explain Merkel’s reported appearance at Bilderberg. In March of 2010, the German and French governments released a draft outline that would “strengthen financial policy coordination in the EU.” The plan, seen by German publication Der Spiegel, “calls for increased monitoring of individual member states’ competitiveness so that action can be taken early on should problems emerge.” Luxembourg Prime Minister Jean-Claude Juncker stated in response to the plan, “We need a European economic government in the sense of strengthened coordination of economic policy within the euro zone.” Spiegel, Plans for European Economic Government Gain Steam, Der Spiegel, 1 March 2011.
Two German leaders, Angela Merkel and Jean Claude Trichet, are laying the foundation for the rise to power of a European Chancellor. These two have received the much coveted, Charlemagne Prize, for strengthening the Union and shepherding the Euro through a time of sovereign crisis. Spiegel reports Angela merkel was awarded the Charlemagne prize on April 30, 2008. Angela Merkel is a globalist and very much dedicated to global governance, as the BBC reported on May 20, 2010, Angela Merkel as saying “If we are to have a global order and global governance we need to have an understanding for each other. Note that she said “for each other”, and not “of each other”; in other words there is to be a singular understanding that underwrites regional global governance in Europe. And on June 2, 2011, Jean-Claude Trichet, soon to be retired president of the European Central Bank, (ECB), was awarded the Charlemagne Prize in Aachen. The general idea about the Charlemagne Prize, is that an honor is given to an individual who has worked to further the construction of “Europe”.
On August 2, 2011, The Guardian reports France and Germany have set out plans to create the first “true European economic government” headed by a single appointed leader, as part of major moves to synchronise tax and spending to save the failing eurozone.
Angela Merkel spoke at the Bundestag and won the approval of the German Parliament for the Second Greek Bailout, and in so doing she and the German Parliament buried capitalism in the earth’s grave.
Greece was the most extreme form of socialism. With the arrival of the German tax collectors and the approval of the Second Greek Bailout, together with its 3 Memorandum, Greece is a client state of a Federal Union, where economic experience is debt servitude in a totalitarian collective of regional statism. Youtube presents Nigel Farage, Euro Currency Crisis: Trapped Inside An Economic Prison.
Sovereign insolvency and banking insolvency is destroying fiat money. In its place, diktat is rising to both as money and credit.
The Libertarian Prophets of freedom, free enterprise, and a free monetary system, such as Hayek, Rothbard and Mises are dead. There is no human action, there is only fate, bringing forth the Apostle of Diktat, Angela Merkel, who is effecting diktat, regionalization, and a diktat monetary system.
Greek Crisis relates that the WSJ reports with a solid majority of Germans opposed to the package and growing opposition in her own coalition, Ms. Merkel could find it difficult to secure continued support down the line. Yet, Angela Merkel has crossed the Economic And Political Rubicon, taking the entire world from democracy into regional global governance. With the first bailout in May of 2010, the Beast Regime of Neoauthoritarianism rose out of the profligate Mediterranean Sea state of Greece. Now this monster of regional statism has made landfall in Germany, and has taken hold of its institutions, where it will now resides preeminent over all of the Euro zone. The Los Angeles Times reports Germany finds itself back in power in Europe. Germany is the unquestioned boss amid Europe’s debt crisis and economic woes; but the turnaround has inspired discomfort among its neighbors and among Germans. Greece once the poster nation for the debt trade, is now an epitaph on the tombstone of the Milton Friedman Free To Choose floating currency regime. Milton Friedman and his Free To Choose Script is history; Angela Merkel and her true European Economic Government script shows that the new economy of regional global governance, not capitalism, is the future.
The Iron Lady, is a precursor, for the Iron Ruler, who will emerge in the EU as the most credible sovereign to provide order out of chaos. After Financial Armageddon, The Little Authority, Daniel 7:24-25, will work behind the scenes in regional framework agreements to change our times and laws. He will rule Europe as a type of Revived Roman Empire. The people will be amazed by this, and place their faith and trust in the Sovereign, Revelation 13:5-10, and his banker, the Seignior Revelation 13:11-18, they will give their allegiance to his diktat, Revelation 13:3-4.
3) … The death of fiat money and the rise of regional global governance means the end of value investing and the deleveraging of many commodities.
Value investing cannot work in a credit evaporated and deb deflationary investment world. Associated Press reports Proponent of value investing Billionaire Warren Buffett said that stocks remain relatively cheap compared to other investments as the economy continues to improve.
One scientific tool used for value investing is MSN’s StockScouter which analyzes four attributes of each stock, Fundamental, Ownership, Valuation, and Technical, to come up with a total score representing the expected stock price appreciation during the next six months. StockScouter has beaten the market, but the market has been rising, not falling. Its recommendation of a buy for Region’s Financial, will not work as the S&P, seen in this monthly chart, is cresting into an Elliott Wave 2 Up, and is ready to enter an Elliott Wave 3 Down. These economic waves are the most destructive of all waves as they destroy practically all of the wealth produced in all of the prior five waves up.
Region’s Financial, RF, as seen in this six month chart has out performed Regional Banks, KRE. But it is not suitable as an investment to garner or preserve wealth in a capital depleting environment. The yearly chart of RF, suggests that it is now a good short seller at the top of this current bull market.
All forms of fiat wealth will be falling lower as currencies fall in value and as risk appetite wains. The failure of growth and no where left to hide from debt contagion and falling currencies, will cause fast derisking out of stocks and out of many commodities. The large cap growth, JKE, seen in this comparative chart, will likely be slower to fall than the stocks which have benefited from LTRO 1 financing such as JHK, IWO, RZG, PKB, INXX.
Bloomberg reports Bullish futures exceed 1 million for first time in 2012. Bullish commodities futures rose above 1 million contracts for the first time in five months as U.S. growth prospects improved and Goldman Sachs Group Inc. predicted further price gains.
The burning platform writes Extend and Pretend coming to an end. Base Metals, DBB, will be falling lower, having risen parabolically on LTRO liquidity and soon coming competivive currency deflation. i doubt that even further LTRO neo liberal finance cause a crack up boom in US Commodities, USCI, and world commodities, DBC, as inflationism is turning to destructionism, and it will come in very forcibly, strongly deleveraging even commodities. LTRO 2 may never happen as Business Week reports Draghi may have shelved ECB bond program as loans fuel rally. So either way, the spigots of investment liquidity, that is neoliberal credit coming from carry trade lending or from central bank monetary policy, is turning toxic and/or running dry.
4) … Conclusion: in the age of deleveraging, the only money good will be diktat.
Gold will be the best investment that garners and wealth as fiat assets fall in value. I recommend that one dollar cost average a purchase of gold bullion and take physical possession of it and store it in a safe at home and declare and insure its value with an insurance company.
Between The Hedges reports Shanghai Copper Inventories are near their all time high. Stockpiles of copper are used as collateral for lending in China. These are high only because the spigot of credit liquidity is running full open in China as well as around the world. When steel stocks, SLX, turn lower on competitive currency devaluation, then Copper, JJC, and the whole financial China Structure, CHIM, CHIX, CHII, and TAO, seen in this combined chart, will crumble. And when the debt trade finally gives way, and financial armageddon comes, then diktat, not fiat money, will rule economically in ten regions of global governance.
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 Revelation 13:3-4.