Financial Market Report for March 29, 2019
1) … European Financials, Sweden And China Led Stocks Lower As Fears Of Unsustainable Sovereign Debt And The Reality Of China Slowdown Settled In.
Tyler Durden writes European equity prices fell for the third day in a row and pulled back near six week lows, breaking below the 50DMA for the first time since it crossed above on 1/16. Today’s drop was the largest in three weeks as Italian banks were halted, plunging their most in over three months and back at levels not seen since mid January. Most Italian banks are down 9-11% in March but BMPS is down over 24% as Italian sovereign yields start to come unhinged again (ironically a day after Monti announced the crisis was over). 10Y BTPs broke back below last Friday’s lows (the moment the ECB stepped in last time to save the day) up over 5.2% yield – catching up to CDS levels (and ITA spreads are +23bps on the week). Spain is also weak (+15bps on the week) and heading for 3 month highs in its yields. Since the CDS roll (March 20th), the sell-off has accelerated with equity and credit markets tracking lower together (as opposed to the last few months where credit unperformed and then snaps back higher). We discussed the LTRO Stigma trade earlier and that has continued sliding notably wider today as LTRO-encumbered banks hugely underperform. We suspect hedges (sovereign credit, financial credit, and equity) placed early in the year for the 3/20 Greece event (among other things) have run off and now managers are reducing risk in real terms (selling) as opposed to replacing hedges which is why the uber-supported markets of Italy and Spain are losing the battle now. Lastly, Europe’s XVI is its richest relative to US VIX since the rally began, jumping dramatically today.
European Financials, EUFN, and European Shares, VGK, traded lower today as Forbes writes Citi Rings Warning Bell On Spain Debt, and Agence France writes Spain Likely To Need Bailout This Year, and as WSJ writes For Portugal Moment Of Truth Arrives. Bloomberg reports Sovereign, Corporate Bond Risk Rises, Credit-Default Swaps Show. The cost of insuring against default on European sovereign and corporate debt rose, according to traders of credit-default swaps.
Sweden, EWD, whose economy is dependent upon export with Europe, and China, YAO, CAF, where reports of economic slowdown abound, traded lower today. The global export paradigm that underwrites capitalism is faltering, as the dynamos of growth and profit, are winding down.
Country ETFs, Sweden, EWD, China, YAO, India, INP, Brazil, EWZ, Russia, RSX, are at the forefront of the bull whip effect, that is yo yo effect, where there is a sharp retraction in global trade, and carry trade investment in sector ETFS such as infrastructure, CHIX, INXX, BRXX, CHXX, Industrial, CHII, Materials, CHIM, CRBI, particularly KOL, ALUM, and COPX, energy service, OIH, IEZ, and banking, CHIX, EPI, BRAF Argentina, ARGT, and its banks, have been a neo liberal finance darling; but now these are selling off strongly.
A strong recession in Spain and sovereign insolvency in the PIIGS, is causing a bank run in Italy Banking Stocks, and disinvestment out of Spain’s’ bank, Banco Santander, STD, as well as strong disinvestment out of Greece, GREK, Italy, EWI, and Spain, EWP.
Bloomberg reports Greek Deposit Run Update: Hopeless and Getting Worse.
Bloomberg reports Emerging Stocks Tumble to 2-Month Low on Slowdown Concern. Emerging-market stocks, EEM, fell to a two-month low as U.S. jobless claims exceeded economists’ estimates and Chinese earnings missed forecasts. The MSCI Emerging Markets Index (MXEF) declined 1.4 percent to 1,029.67 by 11:34 a.m. in New York, on course for its weakest close since Jan. 31. Information technology and energy companies led declines.
Diminished trade opportunities is causing competitive currency deflation in World Major Currencies, DBV, as well as Emerging Market Currencies, CEW, with the Australian Dollar, FXA, and the Brazilian Real, BRF, selling off.
Bloomberg reports India Raises Heat on Foreign Companies. If businesses like certainty, then India has been a big turnoff for foreign companies. A series of recent developments have greatly increased the perception that the country has a risky business environment where policies suddenly can turn hostile. Tax proposals in the national budget unveiled in March stunned foreign firms. They could create significant retroactive tax liabilities for international mergers stretching back a half-century and eliminate a tax exemption many investors now have, wreaking havoc on corporate deal making, legal experts say. More than a half-billion dollars in foreign capital has left the Indian stock market in recent days. (Hat Tip to Between The Hedges)
Debt deflation, that is currency deflation, is causing disinvestment in world government bonds, BWX, and emerging market bonds, EMB.
A sell off in industrial mining stocks, CRBI, particularly copper mining stocks, COPX, and aluminum mining stocks, ALUM, metal mining stocks, XME, coal mining stocks, KOL, and steel stocks, SLX, gold mining stocks, GDX, silver mining stocks, SIL, as well as Energy Service, IEZ, OIH, and Wildcatters, WCAT, reflects risk aversion to digging in the ground and drilling in the earth for natural resources, as the world central banks’ monetary policies have failed to stimulate and sustain growth.
We are witnessing the end of the fiat money system and the end of credit as bonds, BND, are now trading lower, as investors have called the interest rate on the US 10 Year Note, ^TNX , above 2.0%, and as investors see recession coming as the Steepner ETF, STPP, is rising and the Flattener ETF, FLAT, is falling. With the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, rising, investors are selling Treasuries, ZERO, EDV, TLT, and with the currency demand curve, RSV:RZG, falling, investors are selling currencies, as evidenced in the dramatic fall of the Yen, FXY.
Retail REIT, Simon Property Group, is now trading lower. It has been the poster company for the Banker Regime of Neoliberalism, with its financial success in shopping malls, it has riden the consumer finance, V, MC, DES, AXP, and retail, XRT, consumer goods, XLC, wave, higher for a 70% gain over the last two years, and now commands a PE of 42, with a 2.6% dividend. Simon Property Group, as well as consumer goods producer, Nike, NKE, epitomize the gains of neo liberal financed, investment capital.
2) … Creative Destruction is At Work Replacing Investment Capital With Political Capital … This Is The Foreordained Plan Of God To Establish Regional Global Governance To Effect His Judgment Upon Humanity.
But with sovereign insolvency, banking insolvency, and failure of global export driven capitalism, and the exhaustion of world central banks’ monetary policy, investment capital is being replaced with political capital, as fate, not any human action, is passing the baton of sovereignty from nation states to 1) regional bodies such as the EU ECB and IMF Troika, 2) regional pacts such as the debt brake, 3) regional monetary authorities such as the ECB through subordination of sovereign debt, and 4) appointed leaders such as technocratic government installed in Italy and Greece.
Look and see, Jesus is opening the seven seals, and has released the rider on the white horse, having a bow but without any arrows, Revelation 6:1-2, to effect economic and political coup d etas, to introduce the ten toed kingdom of regional global governance as called for in bible prophecy of Daniel 2:31-33, and as to introduce the Beast Regime of Neoauthoritarianism in all of mankind’s seven institutions and ten world regions as related by John the Revelator in his dream of Revelation 13:1-4.
Out of Financial Armageddon, the fiat money system, and credit, will utterly fail, and in its place regionalization will emerge to replace capitalism, this being the 1974 Clarion Call of the Club of Rome. The diktat money system will provide diktat for both money and credit, as a Fiscal Union forms in the EU where Budget commissioners rule in debt servitude and austerity. And as a Monetary Union forms where Monetary Cardinals, working under the Monetary Pope Mario Draghi, that is stakeholders from industry, banking and government, manage the economy, direct trade, and oversee natural resources and production. Even now the dynamos of regional security, stability, and sustainability are starting up as leaders meet to discuss the future of the ESM and EFSF. The global export trade paradigm is going to be replaced by a regional trade paradigm where the Euro will survive as a regional group and where in Asia, the Shanghai Cooperative will be the basis for regional exchange of currencies such as the Australian Dollar for the Chinese Yuan as well as the basis for trade in raw materials and finished goods.
The way of the future, particularly in the Euro zone, is statism and totalitarian collectivism. The path of Jeremy Bentham for social justice, resulted in European Socialism, and the most extreme form of liberality in Greece with what The Economist Magazine relates is patronage and pork abounding, is now becoming the FA Hayek Road To Tyranny.
3) … Experience Produces The Person
Continuing on with thoughts from 2 Peter 1:1-10, Fiat experiences produces the Fiat person, whereas virtuous experience when manifested in the elect, produces the Divine person. The former has experience in death, the latter has experience in life.
There are two realms: the fiat realm and the virtuous realm. The fiat realm comes from man, while the virtuous real comes from the Divine.
Fiat experience can be morally neutral, or morally damaging, or morally beneficial, to oneself or others.
One’s social membership places one under fiat rule, unless the Divine rule supersedes, which presents responsibility: these rules will be morally neutral, damaging, or beneficial in one’s life. For example fiat community rule requires a seat belt and fitness club membership requires one follow rules such as 30 minutes on the exercise machines if others are waiting. Joining the pot dispensary club is not like joining Sam’s Club as it pus one at risk for moral damage.
There is either faith in fiat rule or faith in virtuous rule. The two are mutually exclusive. Many reference human laws for social experience. For example some reference criminal law and do not steal. Others reference a family law. For example, some have a nanny who prepares and serves food at 6:00 PM; and others have a mother who asks a son to prepare a meal three nights a week. When one places faith in fiat rule, one becomes a Fiat person.
On the other hand, when one of like precious faith of Jesus Christ, places faith in virtuous principles, that one becomes a Divine person. So how does one place faith in virtuous rule. One places faith in virtuous rule through the addition process of adding to faith virtue, and to virtue, knowledge, and to knowledge, self moderation, and to self moderation, perseverance, and to perseverance, godliness, and to godliness, brotherly kindness, and to brotherly kindness, love.
Fiat is good if one uses it lawful. Knowing this the law, that is fiat anything, is not made for a righteous person, but for the lawless and subordinate, for the ungodly, for sinners, for the unholy and profane, for murderers of fathers, and murders of mothers, for man slayers, for fornicators for kidnappers, for liars, for perjurers, and anything outside of sound doctrine. It is sound doctrine that calls for virtuous living. 1 Timothy 1:8-11. In the community where I live, Preacher Mike, not his real name, frequents the soup kitchens where I have a meal. He continually wants himself and others to have identity and experience out of the Old Testament. Those laws were for the Jew, not Spiritual Israel. He continually wants to reference the nation of Israel, its prophets and priests, and its lawful experience. I avoid him because he refuses to live in virtue, that is a set of moral excellencies; he has no conscience, that is knowledge of the Present Truth, and thus cannot experience the Divine Nature and come to know the exceedingly great and precious promises of God.
4) … There is a church that has honored God, is honoring God, and will honor God.
There was a small flock, who honored God in the first century. It was the Church at Philadelphia for it kept the Word and honored the Name of the Lord, Revelation 3:8.
There be “called out ones” today, a tiny flock, in these last days, that is the church of Brotherly Love, which maintains and preserves and has experience out of The Logos, and the holds dear the Presence and Authority of the Lord, Revelation 3:8. It is this church amongst all the so called churches, that honors the lord, and has experience in the Divine nature; it is the Spiritual Israel of God, that is the Prince of God; and inherits His exceedingly great and precious promises. The elect seek divine moments to manifest in virtue, God’s Moral Excellencies, so as to participate in the Divine Realm and participate in the Divine Nature.
One of like precious faith prays for a good conscience, and examine oneself to see if one be of faith. That is one examines his motives, and examines his speech and actions to see if they are morally beneficial to himself and to others. And prays for the Blood, to cleanse impurities, and to wash away sin, and to make one’s person whole, removing blemishes, restoring dents and dings, and smooting rough spots. And one then feasts upon the Body of Christ, for spiritual food to go forward in life with Christ, and not carry out the desires of the flesh.
Jesus through the eternal Spirit offered Himself to God to purify our conscience through purging all dead works so we serve the living God, in newnss of life, Hebrews 9:14.
In the Divine moment, as one partakes of the Divine nature, one is immersed into and lost in the Divine, where there is a union with the essence of God. In the Divine Moment, one comes to know and experience, “Christ in you, the hope of glory”, Colossians 1:27. As Daniel Whittle’s, 1840-1901, hymn states in the stanza: As lives the flower within the seed, As in the cone the tree, So, praise the God of truth and grace, His Spirit liveth in me. And in the chorus states: Christ liveth in me, Christ liveth in me; Oh, what a salvation this, That Christ liveth in me!
One of the exceedingly great promises is that For now we see through a glass, darkly; but then face to face: now I know in part; but then shall I know even as also I am known, 1 Corinthians 13:12, KJV.
Dr. Michael Brown writes on the Genuine Honor of God so as to experience His Divine Nature
5) … In today’s news
Open Europe reports To avoid being expelled from the EU border-free Schengen area, Greece is accelerating the construction of prison-style asylum centres, Euractiv reports. Greek authorities have defended the plans, citing similar facilities in France and Spain. EurActiv Guardian