Financial Market Report for April 23, 2012
Build America Bonds, BAB, and the US Dollar, $USD, UUP, rose as stocks, silver, currencies and base metals, tumbled, as investor angst over the French election, and the failure of Netherlands government, rose.
Continuing a trend since the first of the month, investors continued to head to the exit doors over concern that the periphery European nations such as Portugal, Italy, EWI, Greece, GREK, and Spain, EWP, and their banks such as STD and BBVA, are insolvent. Investor angst is now effecting Germany, EWG, EWGJ, which led European shares, VGK, lower.
The National Bank of Greece, NBG, European Financials, EUFN, Chinese Financials, CHIX, and World Financials, IXG, led World Shares, VT, lower on the failure of the world central banks’ monetary authority to stimulate global growth. Zero Hedge reports Europe Slumps to 3-Month Lows as Spain Nears 2009 Lows.
Homebuilders, ITB, led US Shares, VTI, lower on the failure of the US Fed to continue its expansionary monetary policies.
Mining sectors URA, COPX, REMX, and mining stocks ACH, RIO, SLT, MCP, SCCO, traded lower on the failure of neo liberal finance to stimulate corporate growth and profit.
Airlines, FAA, and Shipping, SEA, led Transports, IYT, lower. General Motors, GM, Nucor, NUE, Boeing, BA, Dow Chemical, DOW, Du Pont, DD, and International Business Machine, IBM, led Industrials, IYJ, lower
Carry trade currency countries, Sweden, India, INP, SCIF, Poland, EPOL, South Korea, EWY, SKOR, Taiwan, EWT, and Shanghai China, CAF, traded lower on diminished prospects of global trade.
And the failure of neo liberal finance is seen in Argentina’s banks, BMA, BBVA, GGAL, and BFR, trading lower, which turned Argentina, ARGT, lower.
All of the BRICS, EWZ, RSX, INDY, and YAO, traded lower on falling Industrial, CHII, Mining, CHIM, and Banking, BRAF, EPI, CHIX, shares. Brazil, Russia, India, are the BRIC loss leaders. Trading in Russian shares was suspended during the day.
And steel, SLX, and semiconductors, XSD, traded lower, on fears of diminished prospects of global trade.
Cloud Computing, SKYY, Networking, IGN, and Small Cap Technology, PSCT, stocks falling lower included NTGR, INAP, RHT.
Small Cap Industrial, PSCT, stock falling lower included FAST, TRS, HEES, MSM, SNHY.
Global Infrastructure stocks falling lower included the dig and dirt moving stocks MTW, TEX, JOY, as well as the Rail Infrastructure stocks GBN, TRN and ARII.
Emerging Market Currencies, CEW, and Major World Currencies, DBV, trading lower included, Swedish Krona, FXS, Brazilian Real, BZF, Indian Rupe, ICN, Australian Dollar, FXA, the Euro, FXE.
The exhaustion of the world central banks’ monetary authority is reflected in the trade lower in World Commodities, DBC, and US Commodities, USCI, which were led lower by Silver, SLV, and base metals, DBB.
In today’s news
CNBC reports Le Pen voters to arbitrate Hollande-Sarkozy duel. The centre-left Hollande narrowly beat the conservative Sarkozy in Sunday’s 10-candidate first round by 28.6 percent to 27.1 percent, the Interior Ministry said with 99 percent of votes counted, but Le Pen stole the show by surging to 18.0 percent, the biggest result for a far-right candidate.Her breakthrough mirrored advances by anti-establishment Euroskeptical populists from Amsterdam and Vienna to Helsinki and Athens as anger over austerity, unemployment and bailout fatigue deepen due to the euro zone’s grinding debt crisis.”The battle of France has only just begun,” Le Pen, 43, daughter of former paratrooper and National Front founder Jean-Marie Le Pen, told cheering supporters. Declaring that her wave of support was “shaking the system” of mainstream consensus politics, she said: “We are now the only real opposition.”
The gravel-voiced blonde, who wants France to abandon the euro currency, said she would give her view on the runoff at a May Day rally in Paris next week. But she saved most venom for Sarkozy, aiming to pick up the pieces in any recomposition of the right and hoping the Front can enter parliament in June.More than one third of French voters cast their ballots for protest candidates outside the political mainstream.
The deeply unpopular Sarkozy, the first sitting president to be forced into second place in the first round of a re-election bid, will have to do the splits to attract both far-right and centrist voters he needs to win the May 6 runoff. Sarkozy becomes defiant. Saarkozy struck a defiant tone after his setback, steering to the right to try to attract Le Pen voters by vowing to tighten border controls, stop factories leaving France, make work pay and uphold law and order, rather than reaching out to centrists. He challenged Hollande to three live television debates over the next two weeks instead of the customary one. But Socialist aides said Hollande, who has no ministerial experience and is a less accomplished television performer than Sarkozy, had made clear he will accept only one prime-time debate, on May 2.
Polls taken on Sunday by three institutes suggested that between 48 and 60 percent of Le Pen voters planned to switch to the president, while Bayrou’s backers split almost evenly between the two finalists, with one third undecided. Melenchon, whose fiery calls for a “citizens’ revolution” drew tens of thousands to open air rallies, urged his followers to turn out massively on May 6 to defeat Sarkozy, but he could not bring himself to mention Hollande by name, who can also count on the modest votes of two Trotskyist also-rans.”Sarkozy is going to be torn between campaigning in the middle ground and campaigning on the right. He’ll have to reach out to the right between the rounds, so he’ll lose the centre,” said political scientist Stephane Rozes of the CAP think-tank.
If Hollande wins, joining a small minority of left-wing governments in Europe, he has promised to renegotiate a European budget discipline treaty signed by Sarkozy. That could presage tension with German Chancellor Angela Merkel, who made the pact a condition for further assistance to troubled euro zone states.
Open Europe reports Dutch PM resigns after talks to bring deficit in line with EU rules collapse. Dutch Prime Minister Mark Rutte has offered his resignation this morning, after talks over new budget cuts to bring Dutch deficit in line with EU rules broke down on Saturday. After more than seven weeks of negotiations, far-right PVV party led by Geert Wilders withdrew its support for the significant budget cuts, many of which demanded by the EU, and for the minority government itself. Wilders said, “We will not accept having our people bleed at the hands of bureaucrats in Brussels,” adding that the election will be about Europe and the euro.
Early elections may take place after the summer recess, around September. A snap poll by Maurice de Hond released on Sunday showed Wilders’ support steady at 14%. A leader in Handelsblatt notes that “for Germany, new [Dutch] elections bring along further insecurity at the European level”, noting that if Wilders gains greater influence it could become harder for the new government to ratify and implement the ESM treaty and the fiscal compact. Reuters EUobserver Reuters Dutchnews.nl NOS NRC Volkskrant leader Le Figaro EUobserver 2 Expansión FT CityAM WSJ Bloomberg EurActiv Telegraph Welt Handelsblatt leader WSJ Review & Outlook Expansión
Open Europe reports ECB exposure to the PIIGS tops €918bn. Reuters’ MacroScope blog covers updated figures by Open Europe which show that the ECB now has a total exposure to the PIIGS countries of €918bn, up from €444bn a year ago. Of this €704bn comes from the ECB’s lending operations to banks in these countries, while €214bn comes from the ECB’s bond purchasing programme. Open Europe’s Raoul Ruparel is quoted saying, “Given the financial state of these countries – and the banks within them – it is clear that the ECB now owns billions of high risk debt.” Open Europe blog Reuters blogs: MacroScope
Open Europe reports Czech ruling coalition agrees to dissolve after junior member is sentenced for bribery. Czech Prime Minister Petr Necas told the press yesterday that the Czech ruling coalition has agreed to dissolve, most likely leading to early elections in June. The decision came after Public Affairs party leader Vit Barta – a junior coalition member – was given an 18-month sentence for bribing party colleagues and some 90,000 people demonstrated against corruption and austerity measures over the weekend. EUobserver Cesky Noviny Prague Monitor
Zero Hedge reports Spain is about to enter a full-scale collapse
History Squared Brazil’s bubble trouble.