Financial Market Report for August 20, and August 21, 2012
EuroIntelligence in its for fee newsletter writes Mario Monti says a solution of the eurozone crisis requires more integration. The Eurozone can be saved only by more integration, Mario Monti said at a meeting in Rimini, Il Corriere della Sera reports. “A year ago we thought less than we do today that we were in a crisis but I believe we were in it more,” he said. Monti noted there are many risks. “The biggest tragedy for Italy and for Europe would be to see the euro break up because of our failures, which awakens the prejudices of the north against the south, and vice-versa.” According to Monti, the northern countries should recognize latest reforms of Italy’s economy, such as labor market and pension overhauls, spending review and deregulation.
And Euro Intelligence writes Hans-Jurgen Jacobs in Sueddeutsche argues that most of eurozone’s toxic debt are hidden in bad banks, or other off-balance sheet vehicles and are outside political control. Banco Santander, SAN, led European Financials, EUFN, lower on Monday.
Gary of Between The Hedges writes There still appears to be a fairly high level of complacency among US investors regarding the deteriorating macro backdrop. It still remains unclear to me whether or not Germany will destroy its own balance sheet or allow the ECB to monetize debt in an attempt to “save” the euro even as investors have been pricing this outcome into stocks. Focus Magazine reported recently that a poll by TNS Emnid found that 52% of Germans don’t want European countries to share debt even if the EU takes control over budgets of individual countries, while 31% were in favor of this.
On Monday, Lowes, LOW, Home Depot, HD, and Lumber Liquidators, LL, lead Homebuilders, ITB, Networking Shares, IGN,US Infrastructure, PKB, such as MHK, TREX, FXB, FBHS,, APOG, MAS, USG, GLD, ADS, Retailers, XRT, such as GPS, LTD, PETM, ROST, TJX, DSW, FL, SBH, TGT, TSCO, HIBB, DKS, led World Stocks, VT, lower as Bloomberg reported Apple climbs to record topping $600 Billion market value; the chart of AAPL, shows a vertical three white soldiers rise on Monday; Apple is now the biggest company ever; market cap hits 623 Billion.Calculated Risk writes Gasoline Prices up 30 cents over last 7 weeks. The chart of UGA, shows a strong rise since July.
The investment demand for gold continued today. The chart of Gold, GLD, shows a 0.3% rise on Monday; it has been in breakout since August 1, 2012. And the chart of Silver, SLV, shows a 2.6% rise on Monday. The ongoing Yahoo Finance chart of Silver, for the last month, shows that it has been rising more strongly than Gold: six percent vs three percent.
CNBC Reuters reports Juncker verdict on Greece Euro Exit: ‘It will not happen
Peter Schwarz in WSWS writes How German philosopher Jürgen Habermas proposes to save the EU. In a recent article, Jürgen Habermas and his co-authors make a veiled attempt to fan German nationalism, arguing for a return of European greatness on the world stage. Ambrose Evans Pritchard writes German eurosceptics quietly hope that Finland will become the first creditor state to storm out of monetary union in disgust. “Sweden and Denmark both held referendums on the euro, and both said no. We were never allowed to vote,” said Timo Soini, leader of the True Finns party. That was a mistake. The nation is not locked into ritual assent. Finns obeyed the rules of EU membership with scrupulous care, while others gamed the system. “Our Lutheran morality, if you will,” said foreign minister Erkki Tuomioja. They alone faced the fiscal implications of EMU for small economies out of cyclical alignment. Finland’s budget surplus was 5.3pc of GDP at the top of the boom in 2007. Greece’s was 6.5pc in deficit. There lies the full horror of what has happened. “In Finland, a handshake is final. We thought we had a deal that every country would look after its own finances, only to find the deal was broken,” said Alexander Stubb, Finland’s Europe minister. The Finns survived their own gruelling depression without foreign help in the early 1990s when the Soviet Union collapsed and exposed the fragility of the Finnish banking system. The economy shrank by 13pc. “We had the IMF knocking at our back-door. Unemployment was at 18pc. We said ‘never again’ and yet here we are in a fresh crisis because of somebody else’s fault,” said Mr Stubb. For the True Finns – with 19pc of the vote in the last election – it is an outrage. “We bailed out our own banks, and now after all the lying, dishonesty and malfeasance in Europe, we are being asked to bail out their banks. This is the last straw,” said Mr Soini. There is no doubt that Finland could go it alone. It is the last unsullied AAA state in the Euroland, with a public debt of just 51pc of GDP. The reason why Moody’s did not place the country on negative watch last month along with Germany and Holland is a lack of banking exposure to Club Med debt and “relative insulation from the euro area” in trade. More than two-thirds of Finnish exports go outside the euro bloc, chiefly to Russia, Sweden and the US. In other words, Finland lives in a different economic universe from core-EMU, and is deemed better for it by rating agencies. You could not find a more likely candidate for euro exit.
On Tuesday, August 21, 2012, in ongoing competitive currency devaluation, the US Dollar, $USD, UUP, fell strongly, as the Euro, FXE, and the Swiss Franc, FXF, blasted higher. European Financials, EUFN, Financials, Greece, GREK, and Italy, EWI, jumped higher, as did Silver Miners, SIL, such as SSRI, Gold Miners, GDX, such as EGO, and Junior Gold Miners, GDXJ, such as THM. Utility stocks, XLU, such as AEP, DTE, and NEE, Macquarie Infrastructure, MIC, and Global Water Stocks, CGW, such as AWK, Telecom Shares, VOX, IYZ, such as T, and Gas Utilities, such as TRP, CPK, LG, turned lower, turning Dividend Shares, DVY, and SDY, lower. World Stocks, VT, traded unchanged, as Agricultural Commodities, RJA, JJA, Gold, GLD, and Silver, SLV, popped Commodities, DBC, higher. Australia, EWA, and New Zealand, ENZL, and the S&P, SPY, rose to new rally and 52 week highs.
International Treasury Bonds, BWX, rose, taking Bonds, BND, higher; but well below their recent high, from which they have fallen parabolically lower. Of note, International Corporate Bonds, PICB, jumped to a double top high; and Junk Bonds, JNK, and Senior Loans, BKLN, jumped to a new high.
As the US Dollar, $USD, UUP traded lower, Major World Currencies, DBV, traded unchanged, and Emerging Market Currencies, CEW, traded up, but well below their August 8, 2012, high. Global competitive currency devaluation is underway on the failure of neoliberal finance, that is on the failure of the monetary authority of the world central banks.
Ever since the announcement of the first Greek Bailout in May of of 2101, diktat has been rising to replace choice.
The dynamos of Banker Regime of Neoliberalism, corporate profit and global growth, are winding down crony capitalism and European socialism, on fears of Eurozone debt contagion, specifically fears of sovereign insolvency and banking insolvency. Bloomberg reports Japan Swings to Trade Deficit as Europe Drags Down Exports. Japan reported a wider-than-expected trade deficit in July as Europe’s sovereign debt crisis and a slowdown in China dragged down exports and higher oil prices boosted imports. The shortfall was 517.4 billion yen ($6.5 billion), after a revised 60.3 billion yen surplus in June, the Finance Ministry said in Tokyo today. The median forecast in a Bloomberg News survey of 28 analysts was for a 270 billion yen deficit. Exports fell 8.1 percent from a year earlier, compared with an estimated 2.9 percent decline. Imports rose 2.1 percent. Shipments to the European Union fell 25 percent in July from a year earlier, the biggest decline since October 2009, while those to China slipped 12 percent, the ministry said. Business Insider reports Producing zombie companies and they’re eating away at the economy
The dynamos of the Beast Regime of Neoauthoritarianism, specifically regional security, stability, and sustainability are winding up regional governance as part of the economy of God, that is the dispensation for the fullness of times, where Jesus Christ is carrying out his administrative plan to establish the ten toed kingdom of regional governance as foretold in Daniel 2:30-33, which will feature a Beast Regime of totalitarian collectivism rising from the profligate peripheral Mediterranean nation states of Greece, Italy and Spain, as leaders meet in summits to announce regional framework agreements and pool sovereignty regionally, as foretold in Revelation 13:1-4. Germany will be preeminent in a type of revived Roman Empire, where a shrewd leader, Daniel 9:25, will rise to power over vassal peripheral states. This powerful ruler, Revelation 13:5-10, will be accompanied by a keen banker, Revelation 13:11-18, and the word, will and way of these two will will replace constitutional and historical law.
With the US Dollar, $USD, UUP, Major World Currencies, DBV, and Emerging Market Currencies, CEW, trading lower, the fiat money system is failing; and will be replaced by the diktat money system. The Milton Friedman Free To Choose floating currency regime is history; it is being replaced by the diktat money system, where diktat will serve as both money and credit.
Bible prophecy of Ezekiel 38, foretells of a global Eurasia War centered in Syria, Iran, Israel, Turkey, and Lebanon. Johannes Stern, of WSWS reports Obama threatens to invade Syria. Yesterday US and NATO officials discussed plans for a US invasion of Syria to bring down Syrian President Bashar Al-Assad. Reuters reports Russia warns West over Syria after Obama threats. Russia warned the West on Tuesday against unilateral action on Syria, a day after U.S. President Barack Obama threatened “enormous consequences” if his Syrian counterpart used chemical or biological arms or even moved them in a menacing way.