Financial Market report for April 3, 2012
1) … The recent strong fall in Spain’s Banco Santander, STD, and the National Bank of Greece, NBG, has started a smoldering fire in the World Financial Institutions, IXG.
Today, more combustion to what will turn into a bonfire of the world banks came from a 2% trade lower in Bank of America, BAC, a 5% trade lower in India’s IBN, a 1% trade lower in HDB, and a 1% trade lower in European Financials, EUFN. Their trade lower turned India, INP, and Russia, RSX, lower today. Kranti Kumara, writes in WSWS Storm clouds gather over Indian economy. The head of India’s central bank has suggested that the country could face a balance of payments crisis akin to that in 1991, when it turned to the IMF for emergency loans.
Not only is capital flight from the European Financials, EUFN, causing disinvestment from European shares, VGIK, but disinvestment out of India Earnings, EPI, and Brazil Financials, BRAF, as well as Bank of America, BAC, Argentina Banks, BMA, GGAL, BBVA, BFR, the UK Area Banks, LYG, and RBS, has started a smoldering fire that is leading to spontaneous combustion of the world’s leading financial institutions, IXG.
A trade lower today in Base Metals, DBB, and oil, USO, as well as Silver, SLV, and Gold, GLD, in fact all of commodities, DBC, evidences the exhaustion of the seigniorage, that is the coinage, of the world central banks’ monetary authority to stimulate investment and the global economy.
Inflationism is turning to destructionism; this has been causing disinvesting out of Stocks, VT, which traded 1% lower today; but more notably deleveraging out of commodities, DBC.
Disinvestment has been coming out of Health Care, IHF, Steel, SLX, Small Cap Energy, PSCE, Biotechnology, XBI, Copper Mining, COPX, Small Cap Industrial, PSCI, Small Cap Technology, and most notably small cap pure value, RZV as well as the Semiconductors, XSD, Intel, INTC, and TSM. And today, significant disinvestment came out of US Infrastructure, PKB, and the Russell 2000, IWM.
It is the Small Cap Pure Value shares, RZV, that are the canary in the stock market coal mine, warning the investor that the business, economic and investment cycle has ended, and that it is time to exit stock investments
Argentina, ARGT, traded lower, as its banks BMA, BVA, GGAL, BVR, continued to be capital depleted by the failure of Argentina’s own particular type of neo liberal finance.
Insolvent banks and insolvent nations are sources of investment combustion; the trade lower in the banks mentioned as well as Deutsche Bank, DB, has literally started a smoldering bonfire of the global banks. And today, there was strong disinvestment out of UK area banks, LYG, BCS, and RBS.
Soon, there will be no safe haven investment in any stocks; and soon even US Treasuries, ZROZ, EDV, TLT, IEF, and IEV, will start to fall lower. Soon, the only money good will be physical possession and ownership of gold bullion, gold traded in Internet Vaults, and silver bullion used for bartering.
The trade lower in the Global Banks, IXG, today, and presented in this Finviz Screener, is going to produce Financial Armageddon, that is a global credit bust and financial system collapse.
Ongoing “momentum investing”, that is continuing “risk-on”, and no “risk-off” investing is coming to an end.
The pop or rise higher in stocks, LQDT, ELLI, DXPE, Z, LTD, and LCC, selected from six categories of momentum stocks, represent great short selling opportunities as well as tulip mania at the end of the age of fiat wealth.
these 50 Momentum Stocks, fell 0.7%, as a group, yet Auctioneer LQDT, rose strongly,
these Technology Momentum Stocks, fell 1.6%, as a group, yet ELLi, rose strongly,
these Retail Momentum Stocks, fell 1.0%, as a group, yet Apparel Retailer, LTD, rose strongly,
these Growth Momentum Stocks, fell 0.8% as a group, yet, Idustrial Wholesaler, DXPE, rose strongly,
these US Infrastructure Momentum Stock, fell 1.2% as a group, yet Real Estate Invormation Service, Z, rose strongly,
these Value Momentum Stocks, fell 1.7% as a group, yet Airline, LCC, rose stronly.
The trade lower in world financial institutions, IXG, and the trade lower in momentum stocks, marks that end of the age of leverage and speculative investment; and commences the age of deleveraging. With the investment pivoting there is also a governance pivoting from democracy to diktat as Kumaran Ira writes in WSWS French unions, petty bourgeois groups back bourgeois “left” candidate in May Day rallies. The Age of Democracy and Choice is pivoting into the Age of Regional Global Governance and Diktat.
This ongoing six month Yahoo Finance chart shows that the spread between commodities, DBC, and stocks, VT, has never been greater. Commodities traders have been deleveraging in response to debt deflation, that is currency deflation, as is seen in major world currencies, DBV, and emerging market currencies, CEW, trading lower on the failure of the seigniorage, that is failure of the moneyness, of the world central banks. An inquiring mind asks, given that commodities are trading lower, is it reasonable to believe that stocks will soon be trading lower as well?
The Stockcharts.com chart of commodities relative to stocks presented below (click on chart to enlarge) shows stocks extremely overbought and suggests that momentum investors are at great risk. The massive parabolic rise together with the hanging man candlestick suggests the end momentum investing is at hand.
Today, the US Dollar, $USD, UUP, rose slightly higher again, and the Major World Currencies, DBV, such as, ICN, BZF, and FXA, seen in this Finviz Screener, as well as the Emerging Market Currencies, CEW, traded lower.
The world central banks’ monetary authority has finally failed to expand global growth and global trade as reflected in the Google News reports Eurozone Crisis Hits Manufacturing and in the Mike Mish Shedlock report When all else fails, hope for more stimulus.
Alan Greenspan’s and Ben Bernanke’s credit liquidity policies of ZIRP and Mario Draghi’s lending facilities of LTRO, have done all they can to stimulate investment activity. Neo liberal finance has now turned toxic. With the strong sell of Banco Santender. National Bank of Greece, Brazil’s Banks, India’s Banks, Argentina’s Banks, UK area Banks, Bank of America, inflationism has turned to destrucionism. Monetization of the US Debt, has resulted in global debt deflation, that is currency deflation. In fact competitive currency deflation in the Indian Rupe, ICN, and the Brazilian Real, BZF, is part of the reason for the trade lower in India, INP, and Brazil, EWZ, shares, and is especially responsible for the trade lower in India Earnings, EPI, and Brazil Financials, BRAF.
The debt trade, that is the expansion in stock wealth, cuased by the securitization of debt of all type, seen in this chart of Total Bonds, BND, and manifested as Sovereign, BWX, Municipal, MUB, Mortgage, MBB, Junk, JNK, International Corporation, PICB, Corporate, BLV, and LQD, has expanded world stock value, VT, and its components such as Large Cap Stocks, JKE, Vice Stocks, BJK, Small Cap Pure Value Stocks, RZV, Dividend Paying Stocks, DVY, to their fullest potential; and now an inflection point has been reached with the global financial instituions, IXG, trading lower.
Capitalism is dying on the exhaustion of the US Federal Reserve’s monetary policies of ZIRP, QE 1, QE2, Operation Twist, and Dollar FX Swaps, as well as the failure of the ECB to stabilize Banco Santander and National Bank of Greece.
The fiat money system is dying, and the diktat money system will be rising in its place.
It is likely that investment capital collapsed today; political capital will rise to rule the world, as the dynamos of growth and profit that have powered capitalism are winding down, and the dynamos of regional security, stability, and sustainability, are powering up regional global governance.
2) … Open Europe provides today’s news
Osborne rejects ‘idiotic’ EU bank capital rules. Talks between EU finance ministers on implementing Basel III bank capital requirements broke down yesterday, as Chancellor George Osborne refused to sign up to watered-down EU rules that would make him “look like an idiot”. “We are not implementing the Basel agreement, as anyone who will look at this text will be able to tell you,” Mr Osborne told his counterparts. “I represent the largest financial centre in Europe. You have got to allow me to sit down and go through the issues. You have not done that.”
However, Swedish Finance Minister Anders Borg, who has sided with the UK in negotiations so far, claimed that Sweden had achieved a “decisive victory” in the talks, Europaportalen reports. Sweden will now be allowed to set tougher capital requirements for its banks than the 7% demanded by the Commission, he said. The UK still wants to tighten capital definitions, in line with demands from the ECB and the European Banking Authority, and remove EU constraints on decisions to tighten national rules.
Open Europe research Times Irish Times Irish Independent EurActiv FT City AM WSJ Reuters IHT Telegraph EUobserver Expansión Welt Süddeutsche FAZ Spiegel Europaportalen ARD Handelsblatt
European Council President Herman Van Rompuy will organise an additional Council meeting after Sunday’s election to discuss ‘growth’ measures, in an effort to avoid re-negotiation of the fiscal treaty, should Hollande win the elections, European Voice reports, Open Europe press release Open Europe briefing BBC Irish Independent EurActiv European Voice FT WSJ Independent Le Figaro Guardian Telegraph Le Figaro: Aznar Le Figaro: Ferry Süddeutsche FAZ DMN Spiegel
Eurozone unemployment hit its highest levels since the introduction of the euro, reaching 10.9% in March. The initial figures for April showed that seasonally adjusted unemployment increased even in Germany. BBC Irish Independent FT FT 2 WSJ IHT Guardian Telegraph FT 3 Telegraph Telegraph: Warner Welt
Commenting on the ‘anti-German’ tone of election campaigns in France, Greece and other European countries, Süddeutsche’s chief foreign correspondent, Stefan Kornelius, argues that “Germany, which owes its economic strength in part to the relative weakness of its European neighbours, has for far too long lacked any real political competition within the EU. This dominance, although not actively pursued, is unhealthy and promotes antagonising forces.”
Euractiv reports that Turkey has indicated its intention to veto European Council President Herman Van Rompuy and European Commission President José Manuel Barroso’s participation in the upcoming NATO summit. EurActiv
3) … Bible Prophecy foretells that a global leader will arise out chaos, to rule a revived Roman empire, as well as to set his sights on military occupation of Jerusalem. Might that individual be Herman van Rompuy?
The prophet Daniel relates that there is waiting in the wings of Europe’s stage, the most capable of leaders. Soon, this one of seeming little authority, that is the Little Horn, Daniel 7:8, will step into the limelight, and lead Euroland to be a type of revived Roman Empire; and then after a global Eurasia War, Ezekiel 38, set his sights on military occupation of Jerusalem, Daniel 8:9-10. This individual’s power will be so great that he will dramaticaly change our time, and even change the scope of law, replaceing his word, will and way for constitutional and historical law, Daniel 9:25. Bible prophecy of Revelation 13:5-10, presents him as the Sovereign, and Revelation 13:11-18, presents his partner, the Seignior, meaning top dog banker who takes a cut. Eventually these two will establish a one world government, Daniel 7:7, and provide a global money and credit system that will provided world wide seiniorage, that is worldwide moneyness, Revelation 13:17-18.