Capitalism Meets Its Waterloo … Stocks Pivot Lower On Spanish Bond Auction Yield, As Well As On Job, Home Sales And Manufacturing Reports

Financial Market Report for April 19, 2012

Today April 19, 2010, was Capitalism’s Waterloo as the charts of Volatility ETF VIXY, TVIX, VIXM, all show a rise today, on a pivot lower in world stocks, VT, and US Stocks, VTI, as jobless claims, existing-home sales and manufacturing in the mid-Atlantic region all suggested that the robust start to 2012 seems to have lost momentum.

The declines also reflected significant drops in many European markets after an auction of Spanish bonds was oversubscribed but produced slightly higher-than-expected yields. CNBC reports investors’ fears about Spain eased for a while after the country sold 2.54 billion euros in two-year and 10-year bonds, more than the expected range of 1.5 billion to 2.5 billion euros set for the auction. The Spanish government sold 10-year bonds at an average yield of about 5.7%. The average yield for the two-year was about 3.5%. But the yield on the Spanish 10-year bond rose to 5.925%, up from Wednesday’s 5.82%.

Transports, IYT, and  Industrials, IYJ, both traded lower today giving Dow Theory confirmation that the bear market that began this month is definitely underway. Transportation Shares, IYT, traded 1.5% lower, and Industrial Shares, IYJ, traded 1.1% lower.

Shares leading the way lower today included Steel, SLX, Housing, ITB, Small Cap Pure Value, RZV, US Infrastructure, PKB, and Large Cap Growth, JKE.

Large Cap Growth shares trading lower included QCOM, NEU, AAPL, CAT.  Apple, AAPL, -3.2%; shares dropped below $600 after Verizon Wireless said it had sold 3.2 million iPhones in the first quarter, down from 4.2 million in the fourth. The Nasdaq 100, QTEC, Technology, XLK, and MTK, traded lower.

Spain’s BBVA and STD led European Financials, EUFN, Spain, EWP, Italy, EWI, Greece, GREK, France, EWQ, lower.

Emerging Markets, EEM, the BRICS, EEB, China Industrials, CHII, Steel, SLX, which turned lower in March, continued lower today.

Performance of Proshare 200% inverse ETFs this week include EEV 3.5%, TWM 2.1%, BZQ 6.5%, SSG 4.1%, SIJ,  1.5%, REW 5.7%, BIS -1.7%.

Today’s trade lower in world stocks, ACWI, evidences the death of fiat money and credit, as well as capitalism. Confirmation of such comes from yesterday’s trade lower in Commodities, DBC.

Debt deflation is seen in the Small Cap Pure Value Shares, RZV, Large Cap Growth, JKE, Agricultural Commodities, RJA, DBA, Base Metals, DBB, Oil, USO, all trading lower on the exhaustion of the world central banks’ monetary policies to sustain growth, and the failure of debt sovereignty of the peripheral European nations.

Insolvent sovereigns and insolvent banks can’t support either capitalism or European Socialism. The baton of sovereign authority is passing from sovereign nation states to sovereign bodies, such as the ECB and EU ECB IMF Troika. Both European socialism and capitalism are dying and regional global governance is rising in its place, as foretold in bible prophecy of Daniel 2:31-33, and Revelation 13:1-4.

The global investment tectonic plates have shifted, and an authoritarian tsunami is on the way. Investment capital that has governed capitalism is failing as the dynamos of growth and profit are winding down on the exhaustion of the world central banks’ monetary authority. Political capital is rising to govern regional global governance as the dynamos of regional security, stability and security are winding up, as investors derisk out of stocks and delever out of commodities. Regionalization, as foreseen by the Club of Rome in 1974 to 1976, is mankind’s future; regional blocs will form the basis of future political and economic activity.

After the soon coming Sovereign Armageddon, that is a credit bust and financial system breakdown, caused by the collapse of sovereign debt, that is Treasury Debt, traded by the ETF BWX, and especially Treasury debt of the PIIGS, leaders will meet in additional summits to waive national sovereignty, and pool sovereignty to integrate European financial institutions and regional government; this new entity will be known as the Government Bank or Gov Bank for short.

Money and credit as they have traditionally been known, are history. European socialism is no longer providing money and credit in the Euro zone; neo liberal credit has run its course. Previously floating currencies and the global government debt trade, that have been the backbone global growth, trade and profit for capitalism are exhausted.

The seigniorage, that is the moneyness, of European Socialism is history. The seigniorage, that is the moneyness of integrated banking and government, is rising. Neoliberal credit such as sovereign bonds is being replaced by Neoauthoritarian money and credit such as ECB LTROs. 

The seigniorage of speculative choice is being replaced by the seigniorage of diktat.

The fiat money system is being replaced by the diktat money system. Capitalism is being replaced by regional global governance.

There is no longer any fiat wealth that is money good. As fiat wealth falls lower in to the pit of financial abandon, the investment demand for gold will arise; physical possession of gold will  be the only money good. Soon the gold ETF, GLD, will be rising from its current price of 159.43.

The short URL for this article, Capitalism Meets Its Waterloo … Stocks Pivot Lower On Spanish Bond Auction Yield, As Well As On Job, Home Sales And Manufacturing Reports, is http://tinyurl.com/7cc5azq

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3 Responses to “Capitalism Meets Its Waterloo … Stocks Pivot Lower On Spanish Bond Auction Yield, As Well As On Job, Home Sales And Manufacturing Reports”

  1. kvilia Says:

    “Capitalism is being replaced by regional global governance.” Can you elaborate on this? I would certainly like to see the break down of this definition.

    • theyenguy Says:

      Yes,I can and do elaborate. The trade lower in world stocks, ACWI, this month evidences the death of fiat money and credit, as well as capitalism. Confirmation of such comes from this month’s trade lower in Commodities, DBC.

      Debt deflation is seen in the Small Cap Pure Value Shares, RZV, Large Cap Growth, JKE, Agricultural Commodities, RJA, DBA, Base Metals, DBB, Oil, USO, all trading lower this month on the exhaustion of the world central banks’ monetary policies to sustain growth, and the failure of debt sovereignty of the peripheral European nations.

      Insolvent sovereigns and insolvent banks can’t support either capitalism or European Socialism. The baton of sovereign authority is passing from sovereign nation states to sovereign bodies, such as the ECB and EU ECB IMF Troika. Both European socialism and capitalism are dying and regional global governance is rising in its place.

      Bloomberg reports Spanish Banks Gorging on Sovereign Bonds Shifts Risk to Taxpayer. Spanish, Italian and Portuguese banks are loading up on bonds issued by their own governments, a move that shifts more of the risk of sovereign default to European taxpayers from private creditors. Holdings of Spanish government debt by lenders based in the country jumped 26 percent in two months, to 220 billion euros ($289 billion) at the end of January, data from Spain’s treasury show. Italian banks increased ownership of their nation’s sovereign bonds by 31 percent to 267 billion euros in the three months ended in February, according to Bank of Italy data. German and French banks, meanwhile, have cut holdings of those countries’ bonds, as well as Irish and Greek debt, by as much as 50 percent since 2010 in some cases. That leaves domestic firms on the hook for a restructuring such as Greece’s last month and their main financier, the European Central Bank, facing losses. Like Greece, governments would have to rescue their lenders with funds borrowed from the European Union. “The more banks stop cross-border lending, the more the ECB steps in to do the financing,” said Guntram Wolff, deputy director of Bruegel, a Brussels-based research institute. “So the exposure of the core countries to the periphery is shifting from the private to the public sector.” (Hat Tip to Between The Hedges)

      A comment in relation to the report that “Spanish, Italian and Portuguese banks are loading up on bonds issued by their own governments, a move that shifts more of the risk of sovereign default to European taxpayers from private creditors.” These banks realize that the end of Neoliberalism, that is Milton Friedman Free To Choose Era, is almost over, and are seeking to develop a new banking model, one not based upon investment capital, but rather a banking model based upon political capital. The bankers want to stay employed and they want power, the kind of power that comes from their firms being integrated with government.

      And a comment in relation to the report that ”Like Greece, governments would have to rescue their lenders with funds borrowed from the European Union. “The more banks stop cross-border lending, the more the ECB steps in to do the financing,” said Guntram Wolff, deputy director of Bruegel, a Brussels-based research institute. “So the exposure of the core countries to the periphery is shifting from the private to the public sector.” The banks are not only integrating with their government, but they are integrated with the ECB, and have expanded moral risk, that is increased moral risk to all people living within the EU as a whole. This subordinates their banks and their governments to the ECB. This has broken down national sovereignty. Portugal, Italy, Greece, and Spain are no longer sovereign nation states. Rather the ECB is now the monetary authority for all of the Euro zone; the ECB is now the sovereign authority in Europe. There is no genuine independent European sovereign debt market place, rather there is a singular purchaser of Euro zone Treasury debt, that being the ECB. The ECB is not only the sovereign in Europe, it is also the seignior, that is the top dog banker who takes a cut. The ECB, not an independent Treasury debt market place, is the sole funder of fiscal spending in the periphery nations. The resource for fiscal spending of the PIGS is not from traditional Neoliberal sources, but rather from new Neoauthoritarian sources. Investment capital is waning and regional political capital is rising to grease Europe’s economic wheels. Neoauthoritarianism’s regionalism is replacing Neoliberalism’s creditism, where the global sovereign debt trade, financialized by Investment Bankers such as Morgan Stanley, MS, and country specific housing industry debt trade, financed by Mortgage REITS such as Annaly Capital Management, NLY, and municipal debt financed by European State Banks such as Dexia, underwrote the foundation for global trade growth and corporate expansion.

      Money and credit as they have traditionally been known, is history; capitalism is no longer providing money and credit in the Euro zone; neo liberal credit has been extinguished.

      Neoauthoritarian credit is flowing as economic resource. Neoauthoritarian money and credit is rising to power Europe’s economy.

      The seigniorage, that is the moneyness, of capitalism is history. The seigniorage, that is the moneyness of regional integrated banking and government is rising.

  2. kvilia Says:

    Interesting! So you think the governments orchestrated liquidity pumping is not a temporary measure and will not end once the economies of EU, US, Japan and BRIC (other leading) countries will start shaping up for better. This means long years of economic depression and virtually no growth. Pretty sad and hope this will end sooner than later.

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