Archive for October, 2012

Greek Stocks Lead World Stocks, Junk Bonds, World Treasuries, International Corporate Bonds, Commodities And Currencies Lower On The Exhaustion Of The World Central Banks Monetary Authority

October 29, 2012

Financial Market Report for the week ending October 26, 2012

1) … Earnings, Europe pummel the markets, and China’s stocks decline most in five weeks on earnings concerns, and Korea’s growth slows as global cooling caps export demand
On Tuesday, Breakout reports The stock market got smacked as the third quarter earnings season continues to come in even worse than expected. From high tech darlings the selling has moved into Blue Chips often sold as safe alternatives. Gold hits 6-week low as equities weaken, dollar firms; and Oil price below $88 on global growth concerns.

World Stocks, ACWI, traded lower again from their September 14, 2012 high, led by Russia, RSX, Poland, EPOL, Austria, EWO, Norway, NORW, Sweden, EWD, Canada, EWC, Mexico, EWW, Switzerland, EWL, Brazil, EWZ, Taiwan, EWT, and the Emerging Markets, EEM, traded lower, as Germany, EWG, Spain, EWP, and Italy, EWI, led Europe, VGK, lower, reflecting the failure of neoliberal finance, specifically the inability of the world central banks to stimulate global economic growth.

Deutsche Bank, DB, and Banco Santander, STD, led European Financials, EUFN, and World Banks, IXG, lower.

Argentina Banks, GGAL, BBVA, BFR, led Argentina, ARGT, lower.

The high yielding, that is 5% yielding Brazil Financials, BRAF, led Brazil, EWZ, lower.

Copper Miners, COPX, Energy, XLE, Energy Service, OIH, IEZ, Steel, SLX, Metal Manufacturing, XME, Materials, IYM, Small Cap Materials, PSCM, Silver Miners, SIL, Junior Gold Miners, GDXJ, Rare Earth Miners, REMX, Small Cap Energy, PSCE, Smart Grid, GRID, traded lower. Semiconductors, XSD, which had traded sharply lower since September 14, 2012, bounced slightly higher. Networking, IGN, and Cloud Computing, SKYY, are leading the Nasdaq 100, QTEC, lower as is seen in this ongoing Yahoo Finance chart of IGN, SKYY and IGN. Google, GOOG, and Amazon, AMZN, are leading the Internet Retailers, FDN, lower. Nanotechnology, PXN, is leading Technology, MTK, lower. Biotechnology, XBI, IBB, fell sharply.

General Motors, GM, and American Axle, AXL, fell sharply lower.

Ireland Cement manufacturer, CHR, fell lower and Reuters announced Cement maker Cemex to cut jobs in Spain.

On Friday, Dean Food, DF, fell sharply leading food processors, seen in this Finviz Screener, lower.

Dynamic Media, PBS, traded lower, after Bloomberg reports New York Times Co plunges -17% after reporting surprise loss. “A very disappointing third quarter,” Douglas Arthur, an analyst with Evercore Partners Inc. said in an interview of NYT. “Very weak advertising and higher costs than expected,” said Arthur, who has rated the stock the equivalent of buy since August 2010.

Bloomberg reports China’s stocks decline most in five weeks on earnings concerns. China’s stocks fell, CAF, FXI, HAO, CHII, CHIM, CHIQ, CHXX, CHIX, TAO, as is seen in this ongoing Yahoo Finance Chart of CAF, FXI, HAO, CHII, CHIM, CHIQ, CHXX, CHIX and TAO, dragging the benchmark index down the most in five weeks, as companies from Maanshan Iron & Steel (323) Co. to ZTE Corp. reported losses. The market is still worried about the magnitude of the economic recovery and deterioration of corporate earnings,” said Wu Kan, a fund manager at Dazhong Insurance Co. in Shanghai.

Bloomberg reports Korea’s growth slows as global cooling caps export demand. South Korea’s, EWY, economy grew at the slowest pace in three years as Europe’s debt crisis and a slowdown in emerging markets reduced corporate investment and capped demand for exports. Gross domestic product expanded 1.6 percent in the three months through September from a year earlier, the slowest pace since 2009, Bank of Korea data showed today. That compares with the median 1.7 percent estimate of 13 economists surveyed by Bloomberg News. Asia’s fourth-largest economy grew 0.2 percent from a quarter ago.

Bloomberg reports Cliffs misses profit estimate after iron-ore prices decline. Cliffs Natural Resources Inc., CLF, the largest U.S. iron-ore producer, reported third-quarter results that missed analysts’ estimates as the price of the steelmaking raw-material dropped. Net income fell 86 percent to $85.1 million, or 59 cents a share, from $601.2 million, or $4.15, a year earlier, the Cleveland-based company said today in a statement. Profit from continuing operations was 61 cents a share, missing the $1.02 average of 21 estimates compiled by Bloomberg. Sales dropped 30 percent to $1.45 billion. The price of seaborne iron ore fell 36 percent to an average $112 a metric ton in the quarter, compared with $176 a year earlier, according to Steel Business Briefing data compiled by Bloomberg. Cliffs decreased its outlook for the spot price of iron ore this year by 12 percent to $128 a ton from a July forecast of $145 a ton. Cliffs fell 6.9 percent to $39.76 at 6:29 p.m. after the close of regular trading in New York.

In style stocks, the large cap value, JKF, fell the most this week, catching up somewhat with the loss in their peers, the large cap growth, JKE; the value shares now down 0.73 this month, compared with the growth down 4.6% this month.  And in sector stocks, the Biotechnology, XBI, IBB, Homebuilders, ITB, and Energy Service, OIH, IEZ, fell the most this week.

The South African Rand, SZR, Euro, FXE, Swedish Krona, FXS, Canadian Dollar, FXC, Swiss Franc, FXF, Mexico Peso, FXM, and Japanese Yen, FXY, traded lower, this week from recent rally highs; and Emerging Market Currencies, CEW, and Commodity Currencies, CCX, traded lower from their October 4, 2012 high. The US Dollar, $USD, UUP, rose from its September 14, 2012 low, as is seen in this ongoing Yahoo Finance Chart, reflecting that competitive currency devaluation is underway with confirmation of such coming from the currency demand curve, that is the ratio of the small cap revenue shares relative to the small cap growth shares, RZV:RZG, trading lower, as well as the weekly Japanese Yen US Dollar Exchange Rate, JYN, trading lower. The Chinese Yuan, CYB, rose to a new high.

Natural Gas, UNG, and Oil, USO, led Commodities, DBC, USCI, lower, reflecting the inability of the world central banks to inflate fiat asset values.  Bespoke Investment Blog writes Crude oil inventories surge. And Jeff Cox of CNBC asks Bailing on Commodities: ‘Into the Abyss’? 

Bloomberg reports Copper falls to seven week Low. Copper Weekly, JJC, slumped to a seven-week low in thin trading as retreating global equities markets renewed demand concerns for the industrial metal and a stronger U.S. dollar dented sentiment. Copper for December delivery, the most actively traded contract recently traded down 3.70 cents, or 1.1%, at $3.5130 a pound on the Comex division of the New York Mercantile Exchange. Futures fell as low as $3.494 a pound, the lowest intraday price since Sept. 6.

The global government debt trade, underwritten by the world speculative community, that is the banking community, IXG, that has supported Capitalism and European Socialism since the 1980s has failed as Zero Hedge reports Debt driving the economy since 1980. Total Bonds, BND, traded higher this week but below their October 1, 2012 high, on rising US Government Debt, ZROZ, EDV, TLT, BAB, as World Government Treasury Bonds, BWX, Emerging Market Bonds, EMB, International Corporate Bonds, PICB, Junk Bonds, JNK, Leveraged Buyouts, PSP, Senior Bank Loans, BKLN, traded lower, reflecting the loss of monetary authority by the world central banks. Investors, with confirmation coming from the downturn in Pimco’s Income Strategy Fund, PFL.  Fidelity Investments mutual fund FAGIX approximates the trend of the US Federal Reserve’s Balance Sheet, has turned lower to 9.44, causing disinvestment out of sin stocks as is seen in this ongoing Google monthy chart of FAGIX and VICEX.

The failure of seigniorage of the world central banks is seen in the downturn of Silver Mining, Gold Mining,  GDX, Junior Gold Mining, GDXJ, Silver Standard Resources Inc, SSRI, on September 14, 2012, and October 4, 2012, as the Steepner ETF, STPP rose, and the Zeros, ZROZ, trading lower as is seen in this ongoing Yahoo Finance chart of SIL, GDX, GDXJ, SSRI, STPP, and ZROZ. The global risk on trade has exhausted on the failure of neoliberal finance, with confirmation coming from the ratio of Silver Mining, SIL, relative to the Zeroes, ZROS, SIL:ZROZ, trading lower.

The chart of the Steepner ETF, STPP, shows a slight dip in its Elliot 3 Wave 3 rise Up, reflecting a steepening 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, since July 25, 2012, when the Interest Rate on the US 10 Year Note, ^TNX, began to rise from 1.40%, as the US Central Bank began to lose monetary sovereignty to the bond vigilantes as they began to call US Interest Rates higher.

2)  … Eurozone Money Supply contracts.

Mike Mish Shedlock writes Fed and ECB smokescreens to print money.

Ambrose Evans Pritchard writes contracts at sharp pace; Eurozone nears Japan-style trap as money and credit contracts again at sharp pace. Data from the European Central Bank show that the tentative rebound in the money supply over the summer may have stalled again in September. The broad M3 gauge, watched by experts as an early warning signal for the economy a year or so ahead, shrank by €30bn and is now down by €143bn since April. This is highly unusual.  “The message is clear,” said Lars Christensen from Danske Bank. “The ECB needs to stop obsessing about fiscal issues and do real quantitative easing (QE) if it wants to stop the eurozone going the way of Japan.” Loans to firms and households fell 1.3pc as banks continue to shrink their balance sheet to meet tougher rules. Private bank lending has been falling almost continuously since April.  “This credit contraction is what happened in Japan in the early 1990 and we have to be careful not get into deflationary spiral,” said Prof Richard Werner from Southampton University, a Japan expert. “They to need to launch true QE or an expansion in broad credit creation, and it cant be done easily.

Doug Noland reports Fred M2 (narrow) “money” supply jumped $28.9bn to $10.211 TN.

3) … In the news

Gary of Between reports on the developing global manufacturing slump. Reuters reports, DuPont, DD, shares fell sharply as it  reported lower earnings than expected and announced plans to lay off 1,500. And Bloomberg reports Dow Chemical, DOW, shares fell sharply as it plans to eliminate 2,400 jobs and close factories. The largest U.S. chemical maker by sales, will cut about 2,400 jobs and shut 20 manufacturing plants to reduce annual costs by $500 million in the face of slow global economic growth. And Bloomberg reports 3M Co, MMM, shares fell sharply as it cuts full year forecast range as sales fell in Europe. The manufacturer of products including Scotch tape and dental braces, reduced its full-year forecast as a recession in Europe and slowing Asia growth crimped sales. The shares declined the most in 11 months. 3M now sees earnings of $6.27 to $6.35 a share, including 3 cents of an acquisition-related cost, 3M said in a statement. That’s down from a previous target of $6.35 to $6.50, which didn’t include the expense, and lower than the $6.40 average of analysts’ estimates. Bloomberg reports Colgate, CL, Company plans to cut 6% of jobs, layoff 2300, in restructuring program. Industry Week reports Kimberly Clark, KMBCompany to cut 1,500 jobs in Europe. The company announced it would close or sell five manufacturing facilities and some production would be transferred to other plants.

With excess global manufacturing production and demand destruction underway, WSWS reports that carry traded investing in developing Europe is reversing, 3,500 jobs threatened at chemical plant in Romania.  Developing Europe, GUR, as is seen in this ongoing Yahoo Finance Chart, led all of Europe lower this week. Barrons reported back on October 1, that Emerging Europe equity fund inflows hit 77-week high.

Ambrose Evans Pritchard reports Europe ratchets up grip on Madrid. The EU-IMF Troika in charge of Spain’s €60bn (£48bn) bank rescue is to demand much tougher action by the country’s authorities to clean up toxic debts, risking a clash that could deter Madrid from requesting a full sovereign bailout. And Mike Mish Shedlock relates Italy 2013 countdown: rescue me.

CNBC reports US money market funds return to euro zone.

Andre Damon of WSWS reports that UBS Bank, UBS, to  lay off 10,000 employees; the largest bank in Switzerland, plans to lay off one sixth of its global workforce, according to sources cited by the Financial Times.

Daily Ticker asks Do the rich have a moral obligation to pay higher taxes?  California Governor Jerry Brown thinks so.

NBC Chicago reports Chicago ties 2011 mark for homicides with the 435th homicide reported. Wikipedia reports In 2012, Chicago has the highest murder rate in the Alpha world cities with 19.4 murders per 100,000.  The Chicago Police Department Crime Summary Report, relates Census Tracks, 320100, 320500, 320200, and 320400 have the greatest amounts of crime; this is Wards, 42, 2, 28, 27, and 24.

4) … The dawn of Financial Armageddon comes with the failure of neoliberal finance.
With the loss of monetary authority by the world central banks, a world wide credit breakdown and global financial collapse, will be the genesis event for the rise of Regionalism and Totalitarianism to replace Capitalism and European Socialism.

Business Insider reports 8 crucial global regions that were completely ignored in the final debate.

Alex Lantier of WSWS.org writes European Central Bank chief Draghi reassures German parliament: Austerity will continue.  Draghi’s visit aimed to reassure the bourgeoisie that the ECB’s trillion-euro handouts to the banks will not stop attacks on workers’ social rights.

Spiegel writes Corruption continues virtually unchecked in Greece. While Athens waits for more aid from the European Union, the country continues to be administered in the same old careless manner. Corrupt politicians and the rich continue to help themselves to Greece’s funds, and little is being done about it. How can someone who has declared an annual income of €25,000 ($32,400) transfer €52 million abroad? What kind of supplementary income must an individual have who, according to his tax returns, earned €5,588 in 2010, yet still managed to move €19.8 million abroad? And how can it be that a Greek citizen sequesters €9.7 million abroad although he supposedly earned exactly zero euros? These are the questions that tax fraud investigators will have to ask of a number of individuals whose identity has so far only been made public in the form of initials. For instance, a “G. D.” stands at the top of a list with the names of 54,000 Greek citizens who relocated major assets abroad between 2009 and 2011. The list stems from the Greek central bank and is now in the hands of the Finance Ministry. It is the longest of four lists that are currently circulating in Athens. Each contains the names of people whose financial circumstances — bank balances and real estate holdings — do not correspond at all with what they claimed on their tax returns. But hardly anything is being done about it. The Greek reality is sometimes paradoxical: While the governing coalition was busy squabbling with international creditors over how many hundreds of euros can still be trimmed from teachers’ and nurses’ paychecks, and Athens continued slashing employee pensions, wealthy Greeks moved billions abroad with relative impunity. The odyssey of the “Lagarde list,” as it’s known, exemplifies the typically lax attitude toward tax criminals. For many months, it was thought to be lost, but then it resurfaced in early October. Now, the public prosecutor for financial crimes has a copy. It lists 1,991 Greek owners of Swiss bank accounts, and reportedly includes many prominent individuals from the realms of politics, business and culture.

Eonomic Policy Journal posts YouTube Nigel Fargel Video The Eurozone is in a very dark place.

Chris Rossini in Economic Policy Journal article writes A lesson in empire building: The use of foreign aid. You can’t have a world empire without cooperation. Harry ‘I dropped the big one’ Truman said so in his Inaugural Address, “In addition, we will provide military advice and equipment to free nations which will cooperate with us in the maintenance of peace and security.” And Jacob Hornberger has eloquently written, The objective of the Empire is to impose its will around the world through influence, money, domination, and force. Foreign regimes, including dictatorial ones, who play ball with the Empire and remain loyal to it, inevitably receive foreign aid, which comes in the form of cash or weaponry. Those who remain recalcitrant by refusing to submit to the will of the Empire or who subject the Empire to criticism are subject to being targeted for a regime-change operation, either through the funding of opposition groups, military coups, embargoes, sanctions, assassination, invasions, and occupations. When it comes to the game of global domination, the “Land of The Free” has shown itself to be the champ. But, if there’s one thing that history has taught us, it’s that empires never last. Here’s Ron Paul, Empires always end, not because another military power comes along, but for economic reasons. As each year passes, it becomes ever more visible that economics is finally catching up with The American Empire. Who knows how long it can last? It may be several years; or, if the elites manage to pull more rabbits from their hats, decades. In any case, if you want to help break this sick cycle that keeps repeating itself (only with different faces) then dive in further here on EPJ, and also at Mises.org. Immerse yourself in understanding sound money and how central banking destroys it; paving the way for massive wars and empires.

Markus Salzmann of WSWS writes The consequences of austerity in Latvia. In the midst of deepening social distress, Latvia has been praised by numerous institutions and the media as a role model for the success of austerity policies.

Doug Noland writes of the Perils of bubbles and speculative finance.  Three years ago, Greece could borrow for two years at about 2.0%.  The marketplace recognized that Greece had buried itself in debt, although players were as well confident that Europe would never allow a Greek default.  By May of 2010, Greek two-year yields surpassed 18% and the nation was hopelessly insolvent.  Two and one-half years later, Greece (population – 11 million) has burned through two bailouts – and more than $200bn – and is today trapped in depression and desperate for additional bailout support. It seems inevitable that Greece will exit the euro.  Yet, and especially after the European crisis began spiraling out of control this summer, the marketplace is confident that European officials remain determined to postpone all days of reckoning. I comment that the day of reckoning has arrived as reflected by the downward trading FAGIX, BLK, BX, and VICEX .

Justin Raimondo writes Déjà Vu: Fascism on the Rise.The Golden Dawn party was founded in the early 1990s by Nikolaos Michaloliakos, a fifty-five year old rightist agitator and ex-military man with a long history as a pro-Nazi propagandist. Like Hitler, he served a jail term early in his political career for his violent “activism”: imprisoned in the same facility with the leaders of the 1967 military junta, their example inspired him to create “Golden Dawn,” initially a magazine which featured apologias for Naziism, and Holocaust denial. He and his followers registered Golden Dawn as a political party in 1993. A marginal force initially, the party, which garnered less than 1 percent in previous polls, received a stunning 14 percent of the national vote in Greece’s recent parliamentary elections. Golden Dawn’s message is all too familiar: while the far left, which is also gaining ground,blames “capitalism” for the country’s woes, the Golden Dawners are far more explicit: Jewish bankers, they say, are the cause of Europe’s economic problems and Greece’s plight (oh, and by the way, the Holocaust is a lie). Their response to the “austerity” policies of centrist politicians is to blame foreigners — 2 million of whom currently reside in Greece, for rising crime and “stealing jobs” from natives. Black-shirted toughs patrol the streets, beating up foreigners, attacking immigrant hotels, and even infiltrating the police, who have “out-sourced” law enforcement in large sections of central Athens to Golden Dawn thugs. Like all fascists everywhere, they cite historical fantasies of a “Greater” nation: if Golden Dawn ever came to power, the “lost” lands of Macedonia and portions of the former Yugoslavia would be “reclaimed,” and war with Turkey would only be a matter of time.

Business Insider reports Golden Dawn MPs are taking the Nazi comparisons to a whole new level in Greece.

Robert Wenzel of Economic Policy Journal writes Massive crowd at opening of Golden Dawn offices in Tripoli, Greece.
BBC reports Draghi backs Eurozone super-commissioner plan.
Agence France Presse reports Troika will demand 150 new Greek reforms. And Christoph Dreier of WSWS reports Another EU memorandum for Greece;  the Greek government announced it had reached an agreement with the troika (the European Central Bank, European Commission and International Monetary Fund) on a new austerity package.
The seigniorage, that is the moneyness, provided by sovereign nation states and their central banks is waning as is seen in this ongoing Yahoo Finance Chart of Exxon Mobil, XOM, Chevron, CVX, Consumer Services, IYC, and distressed investment in Fidelity Capital and Income Mutual Fund FAGIX. Even, Mario Draghi’s  LTROs and OMT neoliberal finance schemes are beginning to loose their effectiveness as the Greek Stock market, traded by GREK, has fallen from its October 22, 2012, high of 894.  The failure of seigniorage of the world central will be seen in the failure of money and credit: the fiat money system is dying and will be replaced by the diktat money system where diktat will serve as both money and credit; the debt of Neoliberalism will not be forgiven; rather it will be applied to every man woman and child on planet earth.
The dynamos of corporate profit and global expansion as well as the debt trade in sovereign debt that drove Capitalism and European Socialism are winding down; and the dynamos or regional security, stability, and sustainability are powering up regionalism, where totalitarian collectivism, debt servitude, and austerity will be de rigueur.
Eddy Elfenbein provides the chart article Federal Budget as a percent of GDP, where one can see the widening gap between Federal Outlays versus Federal Receipts, over the last five years.  Despite this tremendous differential, up until August 1, 2012, for the last five years, as seen in this ongoing Yahoo Finance Chart of TLT, VICEX, XOM, EMB, and FAGIX, the US Ten Year Notes, TLT, have outperformed Sin Stocks, VICEX, Exxon Mobil, XOM, Emerging Market Bonds, EMB, and Distressed investments, FAGIX.  It was the flight to safe haven investment in US sovereign that gave seigniorage, that is moneyness, to stock investments, as well as to bond investment, BND, in general.
Yet now, Jesus Christ is at the helm of the economy of God, Ephesians 1:10, pivoting the world from prosperity to ruin, as he release the First Horseman of the Apocalypse, Revelation 6:1-2, to pass the baton of sovereignty from sovereign nation states to sovereign bodies such as the EU ECB and IMF Troika, with the first Greek Bailout in May 2010, so as to introduce His global kingdom, Revelation 11:15, and Revelation 20-4-5, which will last for a thousand years, with Him ruling from Jerusalem.
John the Revelator foretells in Revelation 13:3, that a global credit and financial bust is coming; and in Revelation 13:10-4, that a monster of regional economic and political government, will rise from the Mediterranean nation states of Greece, Italy and Spain, to rule the Eurozone, and serve as a prototype of rule,  for the world’s ten regions and all of mankind’s seven institutions. And the prophet Daniel in Daniel 2:30-33  foretells the iron rule of the twin legs global hegemony of UK and US,  will give way to the rise of a iron diktat and clay democracy of a ten toed kingdom of regional governance, where ten toes of regional governance will dominate in all of the world’s ten regions.

4) … Monster Storm seen barreling down on Northeast US.

Business Insider reports Frankenstorm: The mother of all snowicanes is barreling toward New York City.

Nature economist Elaine Meinel Supkis writes Storm of Century redux and global warming: No candidate is talking about that.  Twenty years ago, I lived through the Perfect Storm—in a tent!  We struggled to tie down an emergency tarp over the whole thing as the winds began to buffet us hard.  A tree came down between the tent and the chicken roost and missed everything but we had to stand outside in the violent storm while the tree swayed back and forth before finally deciding where to fall.  This was a killer storm and was made into a movie and…we are having sequel, Son of the Perfect Storm, again on Halloween this year!

The Washington Post blogs Experts sound alarm on Hurricane Sandy, likely to be worse than 1991 Perfect Storm

5) … Are you looking for a home in Irvine CA?

Are you looking for a home in Irvine, California, for between $500,000, and $550,000. Well then perhaps 3 Woodland Dr, Irvine, CA, 92604, as featured on Refin is for you.

6) … Stock markets likely to be closed for Monday and Tuesday of next week.

Bonds Trade Lower Introducing The Age Of Deflation …. Neoliberal Credit Finally Fails To Inflate Stocks Globally As The Nasdaq 100, Small Cap Value, Large Cap Growth, Semiconductors, And Biotech Lead World Stocks Lower

October 22, 2012

Financial Market report for the week ending October 19, 2012

1) … During the third week of October, 2012, the age of deflation commenced on the failure of neoliberal finance.
Global fiat wealth is now turning lower as not only have world stocks, VT, have turned lower, but also Aggregate Credit, AGG, is trading lower.

The Calamos Total Return Fund, CSQ, shows an evening star chart pattern, highlighting the end of prosperity. Debt deflation is underway worldwide; stocks are unable to leverage debt higher as the major world currencies, DBV, and emerging market currencies, CEW, are trading lower in value, being led lower by the commodity currencies, since the week ending September 14, 2012, as is seen in this ongoing Google Finance Chart of CCX, DBV, and CEW.  Competitive currency devaluation has been underway for two weeks now as the currency demand curve, the ratio of the Small Cap Pure Value Shares, RZV, relative to the Small Cap Growth Shares, RZG, RZV:RZV, has turned lower.

Early in the week, Total Bonds, BND, traded lower, as the 30 10 US Sovereign Debt Yield Curve, $TNX:$TYX, rose, as reflected in the Steepner ETF, STPP rising beginning September 26, 2012, as the Zeroes, ZROS, and the 30 Year US Government Bond, EDV, fell more than the Ten Year US Government Note, TLT, as is seen in this ongoing Google Finance Chart; as Junk Bonds, JNK, World Treasuries, BWX, Emerging Market Bonds, EMB, Corporate Bonds, LQD, and International Corporate Bonds, PICB, rose, as is seen in this ongoing Google Finance chart.  Distressed Investments, FAGIX, containing debt similar to the investment portfolio of the US Federal Reserve, rose to a new high of 9.46.

World Stocks, VT, and Dow Dividend, DVY, traded higher near their recent highs, and the world small cap stocks, VSS, rose to a new high, as JPMorgan, JPM, and Citigroup, C, led the Too Big To Fail Banks, RWW, and European Financials, EUFN, specifically, LYG, RBS, BCS, HBC, SAN, DB, CS, UBS, DB, NBG, seen in this ongoing Yahoo Finance Chart, as well as Argentine Banks, BBVA, BFR, BMA, GGAL, Japanese Banks, NMR, SMFG, MTU, Australia Bank, WBK, traded higher. Leveraged speculative community banks, IXG, rising to new rally highs included Canadian banks, RY, TD, and BMO.  A rising Yuan, CYB, took Chinese Financials, CHIX, and China, YAO, higher. China Real Estate, TAO, led World Real Estate, WPS, to a new high. Insurance, KIE, Pharmaceuticals, IHE, and Sin Stocks, VICEX, as well as Exxon Mobil, XOM, rose to new highs.

US Infrastructure, PKB, rose to a new high on Lumber Producers, LPX, PATK, WY, PCL, Paper Manufacturers, IP, KS, BZ, WPP, SEE, BKI, CLW, GLT, DOM, PKG, BLL, Building Supplies, BECN, MAS, TREX, NTK, APOG, HW, Home Improvement Stores, LOW, SHW, LL, HVT, PIR, Home Fixtures, LZB, AMWD, FBHS, Housewares, JAH, NWL, Textiles, MHK, Cement Manufacturers, JHX, EXP, Appliances, WHR, Business Services,TISI, XWES, FLT, NEWT, DLX, Creditors, V, MA, PRAA, CPSS, DFS, AXP, CSE, SLM, AGM, COF, NNI, EFX., and Manufacturer, GE.

China, FXI, Mexico, EWW, Switzerland, EWL, Australia, EWA, Netherlands, EWN, Turkey, TUR, New Zealand, ENZL, Phillippines, EPHE, Brazil Small Caps, EWZS, Austria, EWO, Israel, EIS, and Greece, GREK, traded to new highs.

Home Building, ITB, Steel, SLX, Energy Service, OIH, IEZ, Energy, XLE, and Specialized Semiconductors,seen in this Finviz Screener, and in this ongoing Yahoo Finance Chart, rose strongly from an oversold position. Large Cap Nasdaq, QQQ and Japanese Large Cap Growth, JKE, Internet Initiative Japan Inc, IIJI, jumped higher, taking Smartphone, FONE, Cloud Computing, SYKK, Networking, IGN, Software, IGV, and the Nasdaq 100, QTEC, higher. Cable TV Company, CMCSA, LMCA, DISH, VMED, TWC, DISCA, VIAB, jumped higher. Cement manufacturers, TXI, CX, and JHX, jumped higher. Specialty Chemical Manufacturer, WLK, jumped higher. Toy Manufacturer Mattel, MAT, jumped higher. Oil and Gas Pipeline Companies, WMB, SXL, KMP, jumped higher.

On Thursday, Reuters reported Merkel, Hollande clash on EU budget czar before summit.  Germany and France, Europe’s two central powers, clashed over greater European Union control of national budgets and moves towards a single banking supervisor before a summit of the bloc’s leaders began on Thursday.

Yet on Friday, World Stocks, VT, Dow Dividend, DVY, World Real Estate, WPS, Insurance, KIE, and the World Small Caps, VSS, fell lower, as Reuters reports Stocks slide as earnings disappoint. Wall Street trekked lower early Friday following disappointing results from Microsoft, MSFT, (which led technology lower) and McDonald’s, MCD, (which led restaurants lower), while General Electric, GE, (which led US Infrastructure lower), reported revenue that fell short of estimates.

Semiconductors, XSD, Nasdaq Smart Grid, GRID, Biotechnology, XBI, IBB, Coal, KOL, Steel, SLX, Metal Manufacturing, XME, Energy Service, OIH, IEZ, Energy, XLE, fell strongly.

Starbucks, SBUX, Standard Packaging, STAN, Royal Caribbean, RCL, fell strongly, leading Consumer Discretionary, IYC, lower.

Industrial Electrical Equipment, DAKT, ROK, BGC, AME, FELE, fell lower.

Banks, LYG, BCS, RBS, SAN, DB, CS, UBS, led European Financials, EUFN, lower, and WBK, BBVA, BFR, BMA, C, WF, SHG, KB, led World Banks, IXG, lower.

Eurozone countries, Spain, EWP, and Italy, EWI, led Poland, EPOL, Sweden, EWD, and Russia, RSX, lower, lower, while Greece, GREK, rose.

Manufacturers MWA, WTS, MTW, BEAV, CFX, KMT, SNA, MIDD, DXPE, turned Small Cap Industrials, PSCI, lower.

Cloud Computing, SKYY, turned Small Cap Technology, PSCT, lower.

Small Cap Energy, PSCE, fell lower.

Pharmaceuticals, IHE, turned lower.

US Infrastructure, PKB, fell lower on ROG, HW, HVT, GVA, ARII, FLR, BECN, GE, TTEC, EXP, CVG, TSCO, TTSI, TBI, URI, AMWD, BGG, WOR,

General Motors, GM, Tenneco, TEN, Modline, MOD, Dana Holding, DAN, Douglas Dynamics, PLOW, and American Axle, AXL, tured Automobiles, CARZ, lower.

Google, GOOG, Apple, AAPL, and Exxon Mobil, XO, led Large Cap Growth, JKE, lower.

Banks trading lower included CFR, PB, BBT, BKU, UBSI, CBSH, LION, RF, CMA, and CTBI.

India Infrastructure, INXX, India Small Cap, SCIF, India Earnings, EPI, turned India, INP, lower.

South Korea, EWY, and Taiwan, EWT, fell strongly.

Junior Gold Miners, GDXJ, Small Cap Revenue, RWJ, GCA, MGI, Retailers, ANN, TUES, MW, JOSB, GCO, BKE, DSW, ZQK, JOSB, SCS, GII, Rental Company, RCII, Personal Products, BTH, FHCO, Restaurants, FRGI, CHVY, EAT, DIN, CAKE, Small Cap Consumer Discretionary, PSCD, induced Small Cap Value, RZV, to fall more than Small Cap Growth, RZG. WD-40, WDFC, as seen in this one month ongoing Yahoo Finance Chart, has led small cap value shares, RZV, lower.

Neoliberal credit has finally failed to inflate stocks globally as the Nasdaq 100, small cap value, large cap growth, semiconductors, and biotech lead world stocks lower as is seen in this ongoing Yahoo Finance chart of JKE, QTEC, RZV, IBB, XSD.  In the last month, large cap growth, JKE, have fallen faster than the large cap dividend, DLN, and large cap value, JKF, as is seen in this ongoing Yahoo Finance Chart of JKE, DLN and JKF.  CNBC reports Google’s revenue is coming in much worse than anyone thought.
Bespoke Investment Blog reports Nasdaq losing 2012 lead fast.  Up until just recently, the Nasdaq Composite was enjoying a wide lead against the S&P 500 in terms of 2012 performance.  That lead has evaporated over the last two weeks since earnings season began.  Including today’s big decline, the Nasdaq is now outperforming the S&P 500 by just 1.35 percentage points in 2012.

This week, Commodities, DBC, USCI, traded lower..

This week, The US Dollar, $USD, UUP, traded unchanged as the Chinese Yuan, CYB, rose to new high. Doug Noland reports that for the week on the upside, the Swedish krona increased 1.75%, the Australian dollar 1.0%, the Norwegian krone 0.9%, the South African rand 0.8%, the Brazilian real 0.8%, the South Korean won 0.7%, the euro 0.6%, the Danish krone 0.6%, the Swiss franc 0.5%, and the Taiwanese dollar 0.1%.  For the week on the downside, the Canadian dollar, FXC, declined 1.4%, the Japanese yen 1.1%, the British pound 0.4%, the Mexican peso 0.1%, and the New Zealand dollar 0.1%. Chinese stocks, led by Chinese Industrials, CHII, rose 12% in the last month, finishing their rally as is seen in this ongoing Yahoo Finance Chart of chii, chix,chim,chiq,hao,caf, all on a rising Chinese Yuan, CYB.

2) … Neoliberal credit has finally failed to inflate stocks worldwide.
Doug Noland writes Markets seemed to turn more unstable this week; earnings didn’t help. We’re nowadays in the midst of “melt-up” Credit debasement, a “blow-off” top in global speculative excess, and complete policy capitulation in hope of holding the downside of the global Credit cycle at bay.

For a few years now, I’ve referred to the “global government finance Bubble” as the granddaddy of them all.  What started as excesses at the fringes of U.S. bank and junk bond finance back in the late-eighties eventually made its way to terminally infect Treasury and related debt at the core of our entire monetary system.  Global excesses, having fueled precarious Bubbles in Japan, SE Asia, Europe and the emerging economies over the years, afflicted China with its estimated population of 1.3 billion.   Today’s historic Bubble phase risks the loss of market trust in sovereign debt.  The current global “inflationist” policy regime risks being completely discredited.  And the historic Chinese Bubble risks a precarious post-Bubble day of reckoning.

Unlike the 80’s and 90’s, there’s no longer any attempt to fashion a coordinated strategy to deal with global excesses and imbalances.  Policymakers have thrown in the towel – and these days have no strategy beyond reflation and Bubble perpetuation.  U.S. policymakers pay little more than lip service to incredible federal deficits.  This, however, is actually more than is paid to the massive Current Account Deficits that have been the root cause of now deep structural global imbalances and economic impairment.  More than 25 years later, our nation’s policy prescription for unmatched global imbalances is even looser monetary policy and added stimulus for all nations, everywhere, all-the-time.

And the way I see it, the Fed, ECB and global central bankers today fight a losing battle. The mountain of global debt, securities, and derivatives, along with this destabilizing global pool of speculative finance, just inflate larger by the year – and after each policy response.  And the more outrageous the policies implemented to try to resolve each crisis, the more these desperate measures further inflate the global Bubble.  Ironically, the ongoing assurances of central bank liquidity seem to ensure an eventual crisis beyond the liquidity capacity of central banks.  Happy 25th Anniversary, you aged and ornery Credit Bubble.  They’ll be reading, writing about and studying you for at least the next century.

Doug Noland reports M2 (narrow) “money” supply declined $12.5bn to $10.182 TN.  “Narrow money” has expanded 7.2% annualized year-to-date and was up 6.8% from a year ago.

3) … In the news
Alex Kowalski and Prashant Gopal of Bloomberg report,  Housing starts in the U.S. surged 15% in September to the highest level in four years, adding to signs of a revival in the industry at the heart of the financial crisis. Bespoke Investment Blog reports Housing starts and building permits exceed forecasts. The release of Housing Starts and Building Permits for the month of September exceeded forecasts by a wide margin as both indicators rose to their highest levels since July 2008.  At current levels, Housing Starts have risen 82% from their recession lows, while Building Permits have increased by 74%.  Even after these big increases, however, both are still well below their pre-recession levels.  More noteworthy is the fact that Housing Starts are still 40% below the historical average going back to 1959, when the size of the US population was less than two-thirds of what it is now.

CNN reports Average student loan debt [in the US] nears $27,000

Ambrose Evans Pritchard writes EU leaders agree ‘fiscal facility’ plan with eye on budget union. Europe’s leaders agreed on Thursday to plans for a “fiscal facility” to help eurozone countries cope with shocks, opening the door to partial budgetary union.

Ambrose Evans Pritchard writes Germany shocks EU with fiscal overlord demand.  Germany has stated its exorbitant price for keeping Greece in the euro and agreeing to mass bond purchases by the European Central Bank.

CNN reports Euro crisis opens old wounds for Greece, Germany.

Reuters reports Merkel raises new hurdles on EU bank union

Economic Times reports Troubles grow in Spanish banking rescue
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Peter Schwarz of WSWS reports German-French tensions dominate European Union summit.  The public clash between Merkel and Hollande is symptomatic of growing tensions within the European Union.

The Telegraph reports EU leaders agree ‘fiscal facility’ plan with eye on budget union. Europe’s leaders agreed on Thursday to plans for a “fiscal facility” to help eurozone countries cope with shocks, opening the door to partial budgetary union.

Chris Rossini writes in Economic Policy Journal 1971, The year that Nixon chose the US Dollar over gold. The U.S. was now free from the shackles of that barbarous relic. It was high time for gold to get dumped into the dustbin of history. No longer were people supposed to think of it as money. And being that gold’s industrial uses are minimal, its price was supposed to languish until the end of time.

Also of note in 1971, Merrill Lynch went public. It was only the second brokerage firm to do so. That same year, it released its “Merrill Lynch is bullish on America” ad during The World Series.
Oh…and The Nasdaq was also launched in 1971.

So as you can see, Paper Money America was about to be unleashed!

Give government a printing press, and it’ll attempt to take over the world, stick its nose into every conceivable problem that exists, and inevitably destroy the value of the paper that it prints.
And that’s exactly what happened:

  • Merrill Lynch collapsed and would have completely vanished had Bank of America not been forced to purchase it. The Bull ended up being nothing but bull.
  • The Nasdaq experienced an unbelievable boom and bust, bringing financial ruin to millions of Americans.
  • The U.S. has a military empire covering much of the Earth.
  • The government at home has reached so far into our lives that it now monitors our salt and soda ounce intake. Nothingis off limits.
  • And finally, gold did not get thrown into the dustbin of history. Its price has skyrocketed tremendously since the $35/oz. Nixon days

The day may be coming (it’s impossible to predict when) where a post will appear on EPJ titled: The return of gold money.

4) … The  age of fiat asset deflation will see the Beast System of Totalitarianism and Regionalism rise to rule the world as foretold in bible prophecy.

God’s word presents that the two current global empires, ruling with iron hegemony, the UK and the US, will fail and give way to a ten toed kingdom of regional governance, comprised of partly iron diktat and clay democracy, Daniel 2:30-33. Eventually a singular king will conquer three world regions and rise to govern all of the world’s ten regions from Jerusalem, Daniel 7:24, and Daniel 9:24-27, and Revelation 17:12. In Europe, Germany will rise to be preeminent over vassal periphery states, that is the PIIGS.

Seigniorage, that is moneyness, will no longer come from the Neoliberal Milton Friedman Free To Choose floating currency regime debt trade, as the world is passing through Peak Credit, as is seen in the chart of Total Bonds, BND, topping out, as debt deflation, that is currency deflation, is underway, with the major world currencies, DBV,  the Swedish Krona, FXS, Emerging Market Currencies, CEW, and Commodity Currencies, CCX, trading lower from their recent rally highs. Competitive currency devaluation is now underway, as is seen in the currency demand curve, the ratio of small cap value shares relative to small cap growth shares, RZV:RZG, topping out once again and now turning over. Bespoke Investment Group reports Small Caps Lag; the sell off in the Russell IWM, is -3.7% in the last month, compared to the -2.0 in the S&P, SPY, is a result of the Small Cap Revenue, RWJ, falling 4.5%, compared to the Too Big To Fail falling 0.7% in the last month; the small cap stocks are accelerated more easily and sell off more strongly on the provision and extinguishment of credit liquidity.

The recent risk on momentum rally, that came from a rally in world currencies and a fall in the US Dollar, is now off as investors are now short the Swedish Krona, FXS, resulting in derisking out of Autoliv, ALV, and Ericsson Telephone, ERIC, causing Sweden, EWD, to be a major country faller. Doug Noland writes that this week the Swedish krona, FXS, declined 1.4%, the Danish krone 0.8%, the euro, FXE, 0.7%, the Brazilian real, BZF, 0.6%, the Mexican peso, 0.6%, the Norwegian krone 0.5%, the Swiss franc, FXF, 0.5%, the British pound, FXB, 0.4%, the New Zealand dollar 0.2% and the Canadian dollar, FXC, 0.2%.

The failure of Neoliberal Finance is seen in Junk Bonds, JNK, Leveraged Buyouts, PSP, and Pimco’s Closed End Debt Funds, PFL, trading lower as well as the Steepner ETF, STPP, and rising. All currencies, including the Chinese Yuan, CYB, will be trading lower, leading fiat wealth into the Pit of Financial Abandon. Commodities, DBC, and US Commodities, USCI, are trading down from their recent rally highs, confirming that the Age of Deflation is now underway.

The world central banks ability to inflate fiat assets is over; World Stocks, VT, and World Small Cap Stocks, VSS, with the exception of Greece, GREK, Chinese Stocks, FXI, and Turkey, TUR, are trading down from their recent highs.

The new seigniorage, that is the new moneyness, will come from the diktat of regional monetary bodies, such as the ECB,  and  regional monetary popes such as Mario Draghi, as regionalism rises to replace Crony Capitalism and European Socialism, as the dynamos of global trade and corporate profitability, are winding down Neoliberalism and the dynamos of regional security, stability, and security are powering up Neoauthoritarianism.

Jesus has been at the economy of God, Ephesians, 1:10, achieving the fullness of prosperity, via moneyness which came through the global debt trade; now the global government bond bubble, BWX, is topping out.  One was free to choose, depending on one’s risk profile, to invest in Emerging Market Bonds, EMB, yielding 4.3%, or Corporate Bonds, LQD, earning 3.8%, or Municipal Bond, MUB, providing 3.0%, or the S&P, SPY, making 2.0% interest, as is seen in the ongoing Yahoo Finance Chart of EMB, LQD, MUB, SPY; but now Jesus, is pivoting the world along into austerity and debt servitude, taking the entire world down the Road To Serfdom, as stocks are now longer able to leverage debt as is seen in the Calamos closed end total return fund, CSQ, trading lower. Christ is introducing the ten toed kingdom of regional governance as foretold by the prophet Daniel in Daniel 2:30-33, via releasing the First Horseman of the Apocalypse, Revelation 6:1-2, to effect global economic and political coup d’etat by transferring the baton of sovereignty from former sovereign nation states to sovereign regions such as the Eurozone.

Technology, Precious Metal Mining, And Regional Banks Lead World Stocks Lower As Angela Merkel Assures Greece Of Continued Seigniorage Aid ….. Bible Prophecy Foretells That A World Wide Ten Toed Kingdom Of Regional Governance Will Rise To Replace Capitalism And European Socialism

October 15, 2012

Financial Market Report for the week ending October 12, 2012

1) … Semiconductors, XSD, Steel, SLX, Homebuilding, ITB, Technology, MLK, PSCT, IPK, Precious Metal MIning, SIL, SSRI, GDX, GDXJ, Biotechnology, XBI, IBB, Regional Banks, KRE, led World Stocks, ACWI, lower.
Bespoke Investment Group chart article shows the S&P, SPY, entering a Elliott Wave 3 Down falling 7.9% from its 2007 high relating Netting out those three monster moves, the S&P 500 is currently 85.6% higher today than it was ten years ago; annualizing that gain over ten years works out to 6.38% per year.  For all the talk that the market hasn’t done anything over the last decade, 6.38% is a lot better than many of the options faced by investors today. And Angela Merkel spoke reassuringly that she desires to “make it clear that we members of the eurozone can solve our problems.” “This is all about Spain,” said Mats Persson from Open Europe. “They concluded that it would be too risky to kick Greece out now: contagion would spread to Spain and lead to a euro break-up.”

Mortgage REITS, REM, such as Starwood Property Trust, STWD, and Annaly Capital Management, NLY, traded lower, traded lower on lower Mortgage Backed Bonds, MBB. leading Small Cap Revenue, RWJ, lower. Keycorp, KEY, PNC Financial Services, PNC, Suntrust Banks, STI, and Wells Fargo, WFC, led Money Center Banks, lower as CNBC reports Wells Fargo Shares Drop as Revenue Comes in Light.

City National, CYN, Bank South, BXS, Pinnacle Financial Partners, PNFP, New York Community Bank, NYB, Glacier Bancorp, GBCI, Prosperity Bankshares, PB, FNB Corp, FNB, First Horizon National, FHN, Regions Financial, RF,  BOK Financial, BOKF, UMB Financial, UMBF, Zions Bacorp, ZION, BB&T, BBT, Synovus Financial, SNV, State Street, STT, M&T Bancorp, MTB, Webster Financial, WBS, led Regional Banks, Banks, KRE, as well as Broker Dealers, IAI, led the credit dependent Russell 2000, IWM, lower.

Rare Earth Mining, REMX, Uranium Miners, URA, Aluminum Miners, ALUM, Small Cap Industrial, PSCI, Semiconductors, XSD, and Consumer Services, IYC, traded lower.

Banco Santander, STD, Spain, EWP, Italy, EWI, Germany, EWG, Europe, VGK, Poland, EPOL, PLND, Austria,,EWO,

IRE, led Ireland, EIRL, lower.

BMA, BBVA, GGAL, BFR, led Argentina, ARGT, lower.

ITUB, BBD, BSBR, led Brazil, EWZ, lower.

WF, KB, led South Korea, EWY, lower.

IBN, ITUB, led India Earnings, EPI, and India, INDY, lower

BSBR, and BBD, led Brazil Financials, BRAF, lower

NMR, MTU, MFG, SMFG, led Japan, EWJ, lower.

Home Building, ITB, Biotechnology, XBI, IBB, Semiconductor, XSD, Internet Retailers, FDN, Nanotechnology, PXN, Cloud Computing, SKYY, Smartfone, FONE, Networking, IGN, Technology, MTK, IPK, Small Cap Technology, PSCT,  and US Infrastructure, PKB, traded lower as Market Watch reports Intel falls to 52-week low, leading tech retreat.  Reuters reports AMD Warns Of Revenue Drop As PC Demand Crumbles. Chipmaker Advanced Micro Devices Inc said on Thursday its third-quarter revenue likely fell 10 percent from the previous quarter as a weak global economy and growing preference for tablets slams the PC industry. AMD’s preannouncement is the latest warning about the PC industry. It follows Intel’s warning in September that its quarterly revenue would be much lower than expected

Energy, XLE, traded lower on Chevron, CVX, Sasol of South Africa, SSL, and Exxon Mobil, XOM. CNBC reports Chevron Forecasts Lower Profit Ahead. Chevron, the second-largest U.S. oil company, said on Tuesday that its third-quarter profit would be substantially lower than the previous quarter as a weak performance from its oil and gas production arm got no help from the refining side.

International Utilities, IPU, and International Telecom, IST, traded lower.

India Infrastructure, INXX, India Small Caps, SCIN, India Earnings, EPI, traded lower. Russia, RSX, ERUS, Italy, EWI, Spain, EWP, Poland, EPOL, South Korea, EWY, Taiwan, EWT, traded lower. The dollar carry in Small Cap Country, VSS, Phillippines, EPHE, finally ended as Reuters reports Philippine August Exports Drop -9.0%, Steepest Drop in 8 Months.

Large Cap Growth, JKE, diversified industrial equipment manufacturer, Cummins, CMI, fell strongly lower as Reuters reports Cummins Lowers Sales Forecast, To Cut Up To 1500 jobs. U.S. engine maker Cummins Inc lowered its 2012 forecast for the second time this year, citing delays in customer spending due to a weakening global economy, and said it would cut up to 1500 jobs. Cummins now expects full-year sales of $17 billion, down $1 billion from its prior view. “Investors expected a guidance cut from Cummins this quarter but this does look to be a bit more than expected,” William Blair & Company analyst Lawrence De Maria said. Chief Executive Tom Linebarger said Cummins had lowered its full-year revenue forecast for several markets, with the most significant changes made in the North America heavy duty truck and the international power generation markets. “Demand in China has weakened in most end markets and we have also lowered our forecast for global mining revenues,” Linebarger said.

Small Cap Value, RZV, traded lower more than its Small Cap Growth, RZG, companion, on the rise of  the US Dollar, $USD, UUP, and the fall of the Silver Miners, SIL, SSRI, and Gold Miners, GDX, GDXJ. Small Cap shares falling strongly include Consumer Discretionary, CALL, Credit Services, HPY, GCA, Paper Manufacturer, NP, Apparel Store, GCO, MW, CROX, ASNA, SHOO, and Global Service Company, ITN.

2) … In the news
Mike Mish Shedlock writes Venetian protestors demand independence from Rome.  And Financial Times reports Hostile reception for Merkel in Athens. Angela Merkel flew in to a hostile reception from angry Greeks on Tuesday as security forces took tough measures to restrict or eliminate protests in central Athens, firing tear gas at demonstrators who tried to break through a police barrier. Ms Merkel was given the red carpet treatment and full military honours at Athens airport. But on the streets it was a different matter, with more than 7,000 police officers deployed to keep demonstrators away from the German leader. Sections of the capital were cordoned off and public gatherings in certain areas, including outside the German embassy, were banned. Thousands of Greeks gathered in Syntagma Square in central Athens as Ms Merkel arrived. The demonstration – while vocal – was mostly peaceful but the mood was angry.
Giant banners declared: “Angela, you are not welcome,” and “Out with the Fourth Reich”. One caricature showed the chancellor in a swastika armband, being kicked from behind by Karagiozis, a Greek puppet representing the country’s impoverished past. Public sector unionists holding their second demonstration against the visit in as many days voiced resentment of what many Greeks see as excessive austerity policies imposed by Germany. “She [Ms Merkel] came to tell us that we have to swallow more measures. It’s unacceptable, she has no idea at all what Greeks are going through,” said Lakis Papazoglou, a former local government worker unemployed since his contract ended this year. “She has no idea at all what Greeks are going through” A jeep carrying men dressed in full Nazi regalia, and giving the familiar salute, drew huge cheers when it rolled down Stadiou Street towards the main square. Alexis Tsipras, leader of the radical leftwing Syriza coalition, the main parliamentary opposition, spoke to the defiant mood in Syntagma Square, saying: “The democratic tradition of Europe won’t allow a European people, the Greeks, to become a guinea pig [for harsh reforms] and a giant graveyard.”

Christoph Dreier of WSWS writes Former German foreign minister Joschka Fischer urges dictatorial powers for the EU. Green Party veteran leader Fischer is advocating German domination in Europe and the removal of all democratic constraints over budget policy in the euro zone.

Ambrose Evans Pritchard reports Angela Merkel recoils from Greek showdown on Spain contagion fears.
Angela Merkel, the German chancellor, has stamped her seal of approval on Greece’s austerity plan and vowed to stand by the country as “partner and friend”, signalling almost certain approval for the next tranche of EU-IMF Troika aid.

The Telegraph provides pictures Riot police clash with protesters during Angela Merkel’s Athens visit.  Hat Tip to Gary of Between The Hedges.

Reuters reports Single euro-zone budget gains momentum ahead of summit

Bible prophecy foretells that the two current global empires, ruling with iron hegemony, the UK and the US, will fail and give way to a ten toed kingdom of regional governance, comprised of partly iron diktat and clay democracy, Daniel 2:30-33. Eventually a singular king will conquer three world regions and rise to govern all of the world’s ten regions from Jerusalem, Daniel 7:24, and Daniel 9:24-27, and Revelation 17:12. In Europe, Germany will rise to be preeminent over vassal periphery states, that is the PIIGS.

Matthew Feeney in Reason writes in Reason Greece used to be an economic miracle, then the socialists got in.  I am lucky enough to be writing from the Cato Institute, which is holding a conference on the euro-crisis and the European welfare state today. One of the speakers, Aristides Hatzis, is a Greek lawyer who helps run the Greekcrisis.net blog, which is well worth a visit. During his time to speak Hatzis laid out how extraordinary Greece’s economic achievements were in the years up to and following the brutal Nazi occupation. A copy of the arguments made can be found here. From 1929 to 1980 the Greek economy’s average growth rate was 5.2 percent. In that time period Greece experienced dictatorships, occupation, civil war, and a military junta. It was only in 1974 that Greece began to resemble something like a liberal democracy. Some years later Greece was accepted into the European Community, as Hatzis explains:
Seven years after embracing constitutional democracy the nine (then) members of the European Community (EC) accepted Greece as its tenth member (even before Spain and Portugal). Why? It was mostly a political decision but it was also based on decades of economic growth, despite all the setbacks and obstacles. When Greece entered the EC, the country’s public debt stood at 28 percent of GDP; the budget deficit was less than 3 percent of GDP; and the unemployment rate was 2–3 percent. In 2011 Greece’s public debt reached 165.4 percent of GDP, the budget deficit was 9.1 percent of GDP, and the unemployment rate was 17.7 percent. What happened?

Matina Stevis and Gabriele Steinhauser of Dow Jones reports “Greece’s public debt may be even higher than previously feared in 2020, three senior European officials said.  The officials said debt could be as high as 150% of gross domestic product by 2020 under a distressed economic scenario, up from a projection of 146% GDP in March and way above the 120% GDP mark described as ‘sustainable’ according the International Monetary Fund’s analysis.  The IMF has revised its projections of the crucial figure upwards following a worse-than-expected recession in Greece and despite a EUR100 billion ($130bn) restructuring of Greece’s privately held debt earlier this year. The IMF can’t, by statute, continue funding a program if a country’s debt isn’t deemed ‘sustainable’ based on macroeconomic analysis.”
James G. Neuger and Stephanie Bodoni of Bloomberg report  “European governments set up a full-time 500 billion-euro ($648bn) fund to aid debt-swamped countries and, not for the first time in the three-year crisis, expressed confidence that the extra financial muscle won’t be needed anytime soon.  Finance ministers from the 17 euro countries declared the European Stability Mechanism operational, while saying that Spain, its biggest potential near-term customer, isn’t on the verge of tapping it. Decisions were also put off on Greece’s next aid payment and on an assistance program for Cyprus.  Creation of the ESM ‘makes the strategy of member states credible and equips the euro area with much better tools to appropriately respond to future crises,’ Luxembourg Prime Minister Jean-Claude Juncker told reporters. The ESM will replace the temporary European Financial Stability Facility, which has spent 192 billion euros of its 440 billion euros on loans to Ireland, Portugal and Greece. The two funds will run in parallel until the EFSF is phased out in mid-2013.”

Christoph Drier of WSWS writes Former German foreign minister Joschka Fischer urges dictatorial powers for the EU.  Green Party veteran leader Fischer is advocating German domination in Europe and the removal of all democratic constraints over budget policy in the euro zone.

Robert Wenzel of Economic Policy Journal writes The Greek Bankster-Government Revolving Door. This is how they roll in Greece, not much different from the way the crony banksters role in the U.S. Reuters reports, The governor of the Bank of Greece was given a severance payment of 3.4 million euros when he left his former employer, a major bank that he now regulates, documents seen by Reuters show. George Provopoulos was awarded the sum when he stepped down as vice-chairman of Piraeus Bank to become governor of Greece’s central bank and a member of the board of the European Central Bank in 2008. The scale of the pay-off, previously unknown to most Greeks, is likely to prove controversial, amounting to nearly 2.8 million euros ($3.6 million) after tax.

CNBC reports  Greece’s Biggest Company Quits Country.  Greece’s biggest company is leaving the country, drinks bottler Coca Cola Hellenic, CCH, said on Thursday in announcing it will move to Switzerland and list its shares in London, dealing a blow to the debt-crippled Greek economy.  “This transaction makes clear business sense,” chief executive Dimitris Lois told analysts in a conference call. An overwhelming majority of shareholders have already accepted moving a company which has long complained about Greek taxes.

Yomiuri writes IMF Warns Of Growing JGB Risk In Banks.

Alcoa Aluminum reaches public private partnership agreement with the US Federal Government. Business Wire reports aluminum producer, ALUM, Alcoa, AA, today announced that it has reached a tentative agreement on a long-term power contract with Bonneville Power Administration (BPA) for its Intalco Works aluminum smelter in Ferndale, Washington. The proposed contract, which runs through September 2022, will ensure power supply for the smelter and help sustain the economic impact the plant brings to the region. A 90-day extension to the current contract will be in place while a public comment process on the new contract is conducted, followed by a review by BPA

Bob Wenzel of Economic Policy Journal, in article Analyzing Jamie Dimon’s Bear Stearns “Favor” to the Fed communicates that JP Morgan, JPM, Blackrock, BLK, as well as the Regional Banks, KRE, the Too Big To Fail Financial Institutions, RWW, and the Investment Bankers, KCE, profited from the trade in the Bear, Stearns & Co acquisition, as well as all of the distressed investments acquired by the US Federal Reserve under all of its many facilities. The underwriting effect of the US Federal Reserve, that is the seigniorage of the US Federal Reserve as a sovereign authority, can be  seen graphically in the chart of Fidelity Investments, Fidelity Capital and Income Mutual Fund, FAGIX, which is at an all time high of 9.40, combined with JP Morgan, Blackrock, the Banks, and Investment Bankers,  FAGIX, JPM, BLK, KRE, RWW, and KCE.   All of these, today October 12, 2012, finally trading lower, on the exhaustion of the world central banks’ monetary authority. Daily Ticker in article Are JP Morgan’s Revenue Springs Dyring Up? relates JPMorgan stock dropped 1.5% even though the country’s largest bank by assets reported $5.7 billion in third quarter profits, up 34% from a year ago.

Paul McMorrow of the Boston Globe writes Finally, someone goes after mortgage fraud.  There’s nothing new in the blockbuster mortgage fraud case New York’s attorney general filed against JPMorgan Chase last week. But despite being stale, it still counts as a bold, meaningful response to the financial crisis, because it’s more than anyone in Washington has been able to muster. New York is just now going after JPMorgan for the housing bubble excesses of Bear Stearns, the investment bank that JPMorgan absorbed as the economy imploded four years ago. New York’s lawsuit alleges that Bear committed “systemic fraud on thousands of investors.” It claims JPMorgan bought Bear’s crimes along with the bank itself. But the meat of New York’s lawsuit, the bleak mortgage data, the gratuitously expletive-laden internal bank e-mails, and the sordid tales of a bank fleecing its own customers, has been public for years.

The Economist writes A matter of time and Gold Money reports Money printing is the only thing keeping the system afloat and Financial Sense writes Yes, the Fed is printing money and Mike Mish Shedlock writes Currency wars: Bernanke defends Fed policy and Laissez Faire Books relates Paper money = despotism and International Man writes Currencies in a market hooked on stimulus and Ludwig von Mises wrote in Human action: A Treatise on economics  “There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.”

Doug Noland notes the tremendous expansion, that is inflation, or better said leveraging up of the US Federal Reserve Balance Sheet, which I believe is approximated in quality and style of assets held in Fidelity’s FAGIX mutual fund, The Fed’s balance sheet is separate from the Financial Sector.  Federal Reserve Assets ended 2007 at $951bn.  Fed holdings ended Q2 2012 at $2.882 TN, up $1.931 TN, or 203%, in 18 quarters.  The Fed essentially transferred $2 TN of Financial Sector liabilities to a secure new home on its balance sheet.
The Fed’s moves to collapse interest rates and monetize debt (in conjunction with mortgage assistance programs) incited a major wave of mortgage refinancing.  And through the refi process, large quantities of private-label mortgages (previously included in FSCMD as ABS) were essentially transformed into sparkling new GSE-backed mortgage securities – and many then conveniently found their way onto the Federal Reserve’s rapidly inflating balance sheet.  This provided critical liquidity that allowed highly-leveraged Wall Street proprietary trading desks, hedge funds and banks to de-risk/de-leverage.
This bailout accommodated deleveraging for the financial speculators, yet for the real economy the boom in Non-Financial debt ran unabated. As noted above, Total Non-Financial Market debt ended this year’s second quarter at $38.924 TN and 249% of GDP – both all-time records.  Garnering all the focus from the deleveraging crowd, Total Household Debt has indeed declined since 2008 – having dropped $787bn, or 5.8%, to $12.896 TN.
At the same time, Federal debt has increased $4.689 TN to $11.050 TN.  Non-Financial Corporate debt increased $434bn since ’08 to end Q2 2012 at a record $11.990 TN.  State & Local debt has expanded $101bn since ’08, ending Q2 at about $3.0 TN.
The ongoing Credit expansion has inflated incomes, spending, corporate earnings and securities prices, in the process sustaining for now the U.S. economy’s Bubble structure.
And I would argue strongly that the data support the thesis that our system remains dominated by Bubble Dynamics. Also keep in mind that, in contrast to risky mortgage debt, federal debt requires little intermediation.
The marketplace absolutely loves it just the way it is, conspicuous warts and all.  For now, at least, it is “money” and shares money’s dangerous attribute of enjoying virtually insatiable demand.
The only alchemy necessary is to keep those electronic “printing presses” running 24/7.  It is, after all, the massive inflation of federal debt that is inflating incomes, cash-flows and profits, equities and fixed-income securities prices, and government tax receipts and expenditures – in the process validating the “moneyness” of the ever-expanding level of system debt (Ponzi Finance).
The history of money is a sad state of affairs.  Failing to learn from a litany of previous monetary fiascos, “money” is these days being abusively over-issued.  And when the marketplace inevitably decides that over-issuance (in conjunction with only deeper structural maladjustment) has sufficiently impaired the “moneyness” of federal and related debt, there will be no one to step in to backstop Washington’s Creditworthiness.
There will be no entity left with the wherewithal for backstopping system “moneyness,” as the Treasury and Federal Reserve have done for Trillions of intermediated mortgage debt since the bursting of the previous Bubble.  Moreover, in the meantime, outrageous fiscal and monetary policies will continue to foment uncertainties that will impinge the type of sound investment and wealth creation necessary to get our economy on sounder footing.
This week, M2 (narrow) “money” supply surged $74.0bn to a record $10.197 TN.  “Narrow money” has expanded 7.6% annualized year-to-date and was up 6.9% from a year ago.  For the week, Currency increased $2.8bn

Seigniorage, that is moneyness, will no longer come from the Neoliberal Milton Friedman Free To Choose floating currency regime debt trade, as the world is passing through Peak Credit, as is seen in the chart of Total Bonds, BND, topping out, as debt deflation, that is currency deflation, is underway, with the major world currencies, DBV,  the Swedish Krona, FXS, Emerging Market Currencies, CEW, and Commodity Currencies, CCX, trading lower from their recent rally highs. Competitive currency devaluation is now underway, as is seen in the currency demand curve, the ratio of small cap value shares relative to small cap growth shares, RZV:RZG, topping out once again and now turning over. Bespoke Investment Group reports Small Caps Lag; the sell off in the Russell IWM, is -3.7% in the last month, compared to the -2.0 in the S&P, SPY, is a result of the Small Cap Revenue, RWJ, falling 4.5%, compared to the Too Big To Fail falling 0.7% in the last month; the small cap stocks are accelerated more easily and sell off more strongly on the provision and extinguishment of credit liquidity.

The recent risk on momentum rally, that came from a rally in world currencies and a fall in the US Dollar, is now off as investors are now short the Swedish Krona, FXS, resulting in derisking out of Autoliv, ALV, and Ericsson Telephone, ERIC, causing Sweden, EWD, to be a major country faller. Doug Noland writes that this week the Swedish krona, FXS, declined 1.4%, the Danish krone 0.8%, the euro, FXE, 0.7%, the Brazilian real, BZF, 0.6%, the Mexican peso, 0.6%, the Norwegian krone 0.5%, the Swiss franc, FXF, 0.5%, the British pound, FXB, 0.4%, the New Zealand dollar 0.2% and the Canadian dollar, FXC, 0.2%.

The failure of Neoliberal Finance is seen in Junk Bonds, JNK, Leveraged Buyouts, PSP, and Pimco’s Closed End Debt Funds, PFL, trading lower as well as the Steepner ETF, STPP, and rising. All currencies, including the Chinese Yuan, CYB, will be trading lower, leading fiat wealth into the Pit of Financial Abandon. Commodities, DBC, and US Commodities, USCI, are trading down from their recent rally highs, confirming that the Age of Deflation is now underway.

The world central banks ability to inflate fiat assets is over; World Stocks, VT, and World Small Cap Stocks, VSS, with the exception of Chinese Stocks, FXI, Turkey, TUR, and Preferred Financials, PGF, are trading down from their recent highs.  This week’s trade lower in Dow Dividend Shares, DVY, and US Infrastructure, PKB, shows the way is now down for all stocks.

The new seigniorage, that is the new moneyness, will come from the diktat of regional monetary bodies, such as the ECB,  and  regional monetary popes such as Mario Draghi, as regionalism rises to replace Crony Capitalism and European Socialism, as the dynamos of global trade and corporate profitability, are winding down Neoliberalism and the dynamos of regional security, stability, and security are powering up Neoauthoritarianism.

The fiat money system is being replaced by the diktat money system. Neoliberalism featured Milton Friedman who championed the Free To Choose Floating Currency Regime, with its falling US Dollar, and rising currencies. Now the Nobel Prize goes to the European Union, where its monetary leader, Mario Draghi, who has introduced Regionalism, where the word, will and way of regional leaders and sovereign regional bodies, such as the ECB and its OMT, Open Monetary Transactions, rule in Neoauthoritarianism.

Peter Schwars of WSWS writes The European Union’s Nobel Peace Prize. The awarding of the Nobel Peace Prize to the European Union is aimed at providing political support to all those who, in the name of defending the EU, are carrying out the most brutal attacks against working people since the 1930s. I relate that Europe has had unfortunate experience with one man rule, yet, Herman Van Rompuy, president of the European Council, and Jose Barroso, president of the E.U. Commission, could have legitimate claims in receiving the Nobel Prize on behalf of the E.U. itself.  Dr Worden writes Thorbjorn Jagland, the former Norwegian prime minister who was chairman of the panel awarding the prize in October 2012, gave as the rationale for the decision a “deep concern about Europe’s destiny as it faces the debt-driven woes that have placed the future of the single currency in jeopardy. ‘There is a great danger,’ he said in an interview in Oslo. ‘We see already now an increase of extremism and nationalistic attitudes. There is a real danger that Europe will start disintegrating. Therefore, we should focus again on the fundamental aims of the organization.’” Asked if the euro currency would survive, he replied: “That I don’t know. What I know is that if the euro fails, then the danger is that many other things will disintegrate as well, like the internal market and free borders. Then you will get nationalistic policies again. So it may set in motion a process which most Europeans would dislike.” This is exactly what the EC and then the E.U. were intended to obviate.And Peter Schwarz of WSWS writes Daniel Cohn-Bendit’s imperialist “For Europe” manifesto.  Two leading European politicians have written a joint manifesto titled “For Europe”, which argues for a strong European Union and a federal Europe with a powerful central government.

Jesus has been at the economy of God, Ephesians, 1:10, achieving the fullness of prosperity, via moneyness which came through the global debt trade; now the global government bond bubble, BWX, is topping out. One was free to choose, depending on one’s risk profile, to invest in Emerging Market Bonds, EMB, yielding 4.3%, or Corporate Bonds, LQD, earning 3.8%, or Municipal Bond, MUB, providing 3.0%, or the S&P, SPY, making 2.0% interest, as is seen in the ongoing Yahoo Finance Chart of EMB, LQD, MUB, SPY; but now Jesus, is pivoting the world along into austerity and debt servitude, taking the entire world down the Road To Serfdom, as stocks are now longer able to leverage debt as is seen in the Calamos closed end total return fund, CSQ, trading lower. Christ is introducing the ten toed kingdom of regional governance as foretold by the prophet Daniel in Daniel 2:30-33, via releasing the First Horseman of the Apocalypse, Revelation 6:1-2, to effect global economic and political coup d’etat by transferring the baton of sovereignty from former sovereign nation states to sovereign regions such as the Eurozone.

3) … Bible prophecy, specifically, the Revelation of Jesus Christ, Revelation 13:1-4, foretells that the Mediterranean nations of Greece, Italy and Spain will be lynchpin of the rise of the beast regime of  regional totalitarian collectivism’s rule, in all of mankind’s even institutions and ten world regions.
Taki Theodoracopulos of Taki’s Magazine writes Dummies Great And Small.  Greece cannot function as a modern economy unless markets are freed, corruption rooted out, and cartels and favoritism eliminated. But who will do this? The crooks that are in Parliament already? Premier Samaras talks a good battle but he has spent his life in politics—Greek politics—and has never had a job outside politics. His hands are as dirty as the rest, and there is not a single person among the 300 in Parliament whose hands are not. Hat Tip to Robert Wenzel of Economic Policy Journal

The Economist writes Greece And Germany Angela’s Athens

Christoph Dreier of WSWS reports German chancellor Angela Merkel visits Greece.  The protests that took place during German Chancellor Angela Merkel’s state visit to Greece on Monday reflect the explosive class tensions in Europe.

Bloomberg reports EADS-BAE Failure Shows Road to Integrated EU Runs Through Berlin. In effectively scuttling the planned merger between European Aeronautic, Defence & Space Co. and BAE Systems Plc (BA/), Germany demonstrated the road to European integration runs through Berlin. As Chancellor Angela Merkel’s government has shown in almost three years of managing the euro-area financial crisis, the interests of German taxpayers trump strategic designs –even in defense, where German spending is about half of Britain’s as a share of its economy.

Business Insider reports The Mafia Still Controls An Incredible Amount Of Southern Italy.

Mike Mish Shedlock writes Nigel Farage hits the nail squarely on the head as interviewed in YouTube Capital Account interview The rise of UKIP, The fall of Europe, And the Parallels for the US.  There is virtually no chance the eurozone will stay intact, but German Chancellor Angel Merkel, European Council president Herman Van Rompuy, and European Commission president José Barroso are all willing to destroy Greece, Spain, and anyone and every country who gets in their way. Farage did not think Greece would still be in the Eurozone by now, and neither did I. In the end, this mess will fall apart anyway, because mathematically it must. In the meantime, every day is additional torture just so bureaucrats get their way.

The objective truth, Ephesians 1:13, and Ephesians 4:21, as well, Colossians 1;17-18, 1:27, 2:8, and 3:11, is that Greece figures prominently in the economy of God, Ephesians 1:10, as Jesus Christ is sovereignly directing that the nations of Mediterranean countries of Greece, Italy and Spain, be the centerpiece of a One Euro Government, that enforces totalitarian collectivism, as the pattern of economic and political governance for the world’s ten regions, Revelation 13:1-4.

Regional Governance was prophesied long ago by the Prophet Daniel as a replacement for UK and US iron rule of global hegemony, Daniel 2:30-33.

Out of a soon coming financial armageddon, that is a global credit bust and economic breakdown, Revelation 13:3, a Sovereign, Revelation 13:5-10, and a Seignior, that is a top dog banker,, Revelation 13:10-11, will rise to rule a Eurozone Super State, with Germany preeminent over vassal periphery states including Ireland. Jordan Shilton of WSWS writes Irish financial elite presses government for deeper austerity.  The impact of the ongoing global economic crisis on Ireland has prompted demands from the financial elite that the government expand its austerity measures. The Little Horn, Daniel 7:8, that is currently one of little authority, will rise to rule Europe in regional framework agreements as foretold in Daniel 8:23.

Bonds Trade Lower ….. The See Saw Destruction Of Fiat Wealth Commences On The Exhaustion Of The World Central Banks’ Monetary Authority

October 8, 2012

Financial Market Report for the week ending October 5, 2012

1) … The world has now passed through peak credit, as Total Bonds, BND, traded lower this week from an Elliott Wave 5 High, as World Stocks, VT, rose, but traded lower than their September 14, 2012 high, on the failure of the World Central Banks’ Monetary Authority to sustain economic growth and corporate profitability. WSWS reports The volume of global trade is expected to grow only 2.5 percent this year, down from a 5.0 percent in 2011 and 14.0 percent in 2010, according to a survey released Monday by the World Trade Organization. A separate report by an agency of the Dutch government estimates that world trade actually contracted in June and July.

Major World Currencies, DBV, are now trading lower as Commodity Currencies, CCX, led by the South African Rand, SZR, Australian Dollar, FXA, the Swedish Krona, FXS, the Euro, FXE, and the Canadian Dollar, FXC. as well as Emerging Market Currencies, CEW, have fallen from recent highs.  Competitive currency devaluation is underway, as the US Dollar, $USD, UUP, is trading up from its recent low.

South Africa, EZA, traded lower on SSL, HMY, GFI,  trading lower. World central bank monetary policies are longer commodity price inflationary, and as a consequence, Russia, RSX, ERUS, Sweden, EWD, Australia, EWA, KROO, Norway, NORW, are amongst the countries, leading world stocks, VT, lower from their September 14, 2012 high.

Global debt deflation, that is world wide currency deflation, is underway on the failure of neoliberal finace, introducing derisking out of stocks, ACWX, and deleveraging out of commodities, DBC, USCI; it is oil, USO, and Agricultural Commodities, RJA, JJA, that is leading Commodities lower. Energy Service, OIH, IEZ, traded lower on a lower price of oil, USO.

The Steepner, ETF, STPP, has now fifnally risen from a triple bottom that began on June 1, 2012, which is seen in the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, rising, communicting that Interest rates are on the rise globally.   The Interest Rate on the 10 Year US Note, ^TNX, closed at 1.72, up from its late July 2012 low. The 10 Year US Government Notes, TLT, have entered an Elliott Wave 3 of 3 down.

The daily charts of High Yield Municipal Bonds, HYD, Long Duration Municipal Bonds, MLN, Municipal Bonds, MUB, California Municipal Bonds, CMF, now show a downturn. US Municipal Debt is no longer a safe haven investment.  Mortgage Backed Bonds, MBB, have also turned lower.

Investors have gone long the India Small Caps, SCIF, India Infrastructure, INXX, India Earnings, EPI, India, INP, on a rising India Rupe, ICN. Mexico, EWW, New Zealand, ENZL, Israel, EIS, Phillippines, EPHE, Thailand, THD, Brazil Small Caps, BRF, and Egypt, EGPT. rose.  China Consumer, CHIQ, China Materials, CHIM, China Small Caps, HAO, China Financials, CHIX, China Infrastructure, CHXX, rose on a high Chinese Yuan, CYB. Switzerland, EWL, rose on PropertyAnd Casualty Insurance, ACE, and Pharmaecutical, NVS. Property And Casualty Insurers, XL, GBLI, Medical Instruments, COV, Information Services, ACN, Cement Manufacturer, JHX. Bloomberg reports India’s NSE Says 59 Erroneous Orders Caused Index Plunge. The National Stock Exchange of India said 59 erroneous orders prompted a plunge in equities that briefly erased about $58 billion in value, underscoring growing global concern about the integrity of financial markets. Trading in the S&P CNX Nifty (NIFTY) Index and some individual companies stopped at 9:49 a.m. in Mumbai for 15 minutes after the 50-stock gauge tumbled as much as 16 percent. The volume of stocks in the benchmark index that were traded today almost doubled from the 100-day average, according to data compiled by Bloomberg. An index of Indian stocks traded in New York slipped as much as 1 percent.

Home Construction, ITB, and Home Retail Stores, HD, LOW, SHW, LL, rose to a new high, as did Nasdaq Bitotech, IBB, Biotechnology, XBI, US Consumer Service, IYC,  Dividend Payers, DVY, Pharmaceuticals, IHE, Media, PBS, US Infrastructure, PKB, Cement Manufacturers, EXP, Paper Producer, IP, Appliance Manufactuer, WHR, Textile Manufacturer, MHK, Housewares Manufacturer, JAH, Building Materials, USG, MAS, OC, BECN, HW, Textile Manufacturer, MWK, Rental Company, SBAC, Appliance Manufacturer, WHR, Business  Services,  TISI,Healthcare Provider, IHF, Silver Miners, SIL, and US Preferreds, PFF. Google, GOOG, rose to a new high of 770. Creditors, such as V, MC, COF, EFX, and CS, rose to a new high.

In summary, the slight rise US Dollar, $USD, UUP, put a cap on the Risk On Momentum Rally, ONN, that ran from June 1, 2012 to September 14, 2012, as seen in the chart of the Risk On ETF, ONN.  The dollar carry trade rally that came from the anticipation of the US Federal Reserve’s QE3 and the ECB’s OMT Program, that carried Large Cap Growth Shares, JKE, and Dow Dividend Shares, DVY, as well a emerging market economies such as Thailand, THD, carry trade nations such as New Zealand, ENZL, Mexico, EWW, Philippines, EPHE, Poland, EPOL, higher and higher, and rallied nations such as Sweden, EWD, Taiwan, EWT, South Korea, EWT, the Netherlands, EWN, is history.

The fiat money system is dying, and the diktat money system is rising.  WSWS reports SYRIZA deepens European Union ties as austerity intensifies in Greece. In an interview with the Argentine newspaper Páginatwo weeks ago, Alexis Tsipras, (a Greek left wing politician, member of the Hellenic parliament, president of the Synaspismos political party since 2008, head of SYRIZA parliamentary group since 2009[2][3] and Leader of the Opposition since June 2012, per Wikipedia), called for closer political union and more powers for the continent’s central bank. He said: “The euro is a unique phenomenon worldwide. We have a common currency, that is, a monetary union, but we lack a political union and a European Central Bank able to provide assistance to every country in Europe.”

Bloomberg reports Merkel’s First Greek Crisis Visit May Mark Turning Point. German Chancellor Angela Merkel will travel to Athens for the first time since Europe’s financial crisis broke out there three years ago, a sign she’s seeking to silence the debate on pushing Greece out of the euro. Merkel’s visit to the Greek capital Oct. 9 to meet with Prime Minister Antonis Samaras underscores the shift in her stance since she held out the prospect last year of Greece exiting the 17-nation currency regime.

Helena Smith of The Guardian reports Antonis Samaras, the Greek Prime Minister warns of societal disintegration without urgent financial aid. Antonis Samaras says Greece’s democracy is in danger, comparing situation to Germany’s pre-war Weimar Republic. Greece is teetering on the edge of collapse with its society at risk of disintegrating unless the country’s near-empty public coffers are shored up with urgent financial aid, the country’s prime minister has warned.Almost three years after the eruption of Europe’s debt drama in Athens, the economic crisis engulfing the nation has become so severe that democracy itself is now imperiled, Antonis Samaras said.Resorting to highly unusual language for a man who weighs his words carefully, the 61-year-old politician evoked the rise of the neo-Nazi Golden Dawn party to highlight the threat that Greece faces, explaining that society “is threatened by growing unemployment, as happened to Germany at the end of the Weimar Republic”. Mounting anti-austerity rage before a new round of sweeping EU-IMF-mandated austerity measures appears to have caught the government off-guard, with officials voicing fears over the ability of Samaras’s fragile coalition to survive. The unprecedented storming of Greece’s defence ministry by hundreds of protesting dockworkers on Thursday – a breach of security not seen in modern times – has especially unnerved officials. On Friday, Samaras lashed out at “those who don’t understand the meaning of law and order”. “The government is waging a battle on all fronts for the nation’s credibility and its future so that the sacrifices made by Greeks aren’t lost,” he said, referring to the spending cuts and tax increases that have sparked record levels of poverty and unemployment. “I will not allow the country to become a free-for-all.” In the interview Samaras emphasised that Greek cash reserves would run dry by the end of November. “The key is liquidity,” said the leader. “That is why the next credit tranche is so important for us.” The high-wire act of placating international lenders while keeping social unrest at bay will be tested as never before when Merkel, the German chancellor, flies into Athens next Tuesday. With anti-EU sentiment at an all-time high, opposition parties and trade unions vowed a baptism of fire. “She should expect demonstrations. Greek society will welcome her with mass protests,” said Panos Skourletis, a spokes man for the radical left main opposition Syriza party. The Independent Greeks party, also vehemently anti-bailout, has said it will make war reparations a major part of its own protest when it stages a “symbolic blockade” outside the German embassy in Athens during Merkel’s visit

Countries,  based upon waning sovereign authority, ie the US, are failing in providing seigniorage, that is moneyness, to their national debt and corporate debt. Seigniorage, that is the moneyness of diktat coming through sovereign bodies, ie the ECB, and sovereign leaders, is increasing.

2) … Commentary from Doug Noland, You Can Intimidate Everyone. Betting on the predictable path of Federal Reserve policy must by now be one of the more lucrative endeavors in history.  In a CBB a decade ago, I made a flippant comment about the financial and economic landscape, writing “The titans of industry run money.”  Never did I imagine back then that hedge fund assets were on their way to $2.2 TN, Pimco to $1.7 TN and Blackrock to $3.6 TN.  Betting successfully on Fed policy has created billionaires .  And, more importantly, those that have played this extraordinary policymaking backdrop most adroitly today control unimaginable sums of financial assets – in the hundreds of billions and even Trillions.  There’s been nothing comparable in terms of the concentration of financial power and speculation since the late-twenties.

ECB President Mario Draghi is clearly a very intelligent man.  He is an MIT trained economist with the most impressive credentials.  He has decades of experience as a professor, World Bank official and governor of the Bank of Italy.  Mr. Draghi was also a vice chairman at Goldman Sachs for several years (2002-2005).  Clearly, Draghi understands markets and the dynamics of speculative finance.  When he warned against betting against the euro and European bonds the marketplace took notice.  Amazingly, the ECB has gone from being adamantly opposed to pre-committing on rates to openly determined to pre-commit to huge open-ended market interventions and price support operations.  After holding out, the ECB finally sold its soul – and the speculators have been giddy.

n the face of alarming economic deterioration, European debt has become a hot commodity.  The euro has become a hot currency.  Reuters reported Thursday that the euro zone is considering a bond insurance plan.  The idea is for the ESM to “guarantee the first 20 to 30% of each new bond issued by Spain.”  Friday from Reuters (Andreas Framke):  “The European Central Bank envisions buying large volumes of sovereign bonds for a period of one to two months once its ‘OMT’ programme is launched…”

From those among us questioning how the euro can trade so resiliently in the face of potential financial and economic calamity, I have this thought:  The Draghi Plan has been in the process of transforming Spanish, Portuguese, Italian and other problematic debt into possibly the most appealing speculative asset in the world today.  After all, all this paper provides a relatively decent yields (especially in comparison to bunds, Treasuries, or securities funding costs), and now at least the 1-3 year debt enjoys a commitment of open-ended liquidity/price support from the ECB.  If the Draghi Plan does transform this debt from a fundamentally attractive short to a must have speculative long in the eyes of the powerful leveraged players, well, then the Draghi Plan truly has been a “game changer.”

There’s a lot that will likely go really wrong in Europe, perhaps even in the short-term.  Greece is an unmitigated disaster, and Spain is running a close second.  There was further dismal economic news this week, most notably from France.

The ECB has similarly opened itself up to blackmail.  “Be ready with the OMT as promised – or we dump.”  “Spanish and Italian politicians, play ball or we’ll dump.”  “Mr. Weidmann and the Bundesbank, fall in line – or we dump!”  “All policymakers everywhere, play or we dump.”  At least in Europe, this is developing into one fascinating multifaceted game of chicken.

Dangerous excesses have gravitated to the core of Credit and monetary systems.  Policymakers are now “all in” in a desperate gambit to hold financial and economic fragility at bay.  And, dangerously, highly speculative markets seem determined to extend their divergent path from economic fundamentals.  It’s frightening how enormous and enormously powerful dysfunctional global markets have become.

I comment that Financial Times reports Greece’s sovereign debt market has enjoyed a quiet but strong rally in recent months, with the country’s benchmark 10-year bond more than doubling in price since its nadir in late May.  The €3bn bond maturing in 2023 still trades at a price of just 28.7 cents in the euro – indicating that investors still think that Greece’s government finances are deeply distressed – but that is up from a trough of 13.9 cents in the euro on May 31. The current price equates to an annual yield of 18.9 per cent, down from almost 30 per cent before the summer, and the lowest since March. A senior government bond trader said that the tentative recovery in the price of Greek government bonds had primarily been caused by hedge funds making a “speculative” bet on the embattled eurozone country. “We’ve seen interest in some parts of the Greek curve, particularly the 2022s and further out,” the trader said. “The activity has grown noticeably in just the last few weeks, but it’s highly speculative money.” And Finviz shows that Greece, GREK, popped to a new high this week, as did Ireland, EIRL, on its airline RYAAY.

An example of money pouring into Greek debt, and European Sovereign Debt, is seen in the closed end debt fund, Pimco Income Fund, PFL, paying 8%, continually rising in value, 49% over the last year.

3) … Jesus Christ is at the helm of all sovereignty, Ephesians, 1:21-23, and is heading up the economy of God, for the fullness of times, Ephesians 1:10.

The recent momentum risk on rally from June 1, 2012, to September 14, 2012, was simply the final rally of stocks on a falling US Dollar.  Now all forms of fiat wealth will be falling lower into the pit of financial abandon with the failure of the fiat money system, which pivots the world from the age of prosperity to the age of deleveraging.

All stocks, VT, Bonds, BND, Commodities, DBC, Major World Currencies, DBV, and Emerging Market Currencies, will be deflating on the exhaustion of the world central bank’s monetary authority, leading to an inability to stimulate global growth and corporate profit.

The dynamos of corporate profit and global growth are winding down, depowering Neoliberalism; and the dynamos of regional security, stability and sustainability are powering up Neoauthoritarianism; the former featured the Milton Friedman Free To Choose paradigm where bankers waved wands of debt creating prosperity; now the latter features despots yielding clubs of austerity and debt servitude.

God has given Jesus Christ all authority, Colossians 1:16-17,  and has placed Him at the helm of economy of God, Ephesians 1:10.  Christ has brought in the fullness of prosperity that has come via choice in the floating currency regime, as well as through the finance of moral hazard via the global debt trade. Now the Lord is introducing the mandate of diktat, which comes out of derisking and deleveraging as global currencies fall on competitive currency devaluation.

Furthermore, Jesus has unleashed the First Horseman of the Apocalypse, Revelation 6:1-2.   This rider on the white horse has a bow without any arrows symbolizing a global economic and political coup d etat, as he passes the baton of sovereignty from nation states to regional bodies, as inflationism turns to deflationism.

In the age of deleveraging and derisking, sovereignty will no longer come from nation states but from regional leaders in Berlin and Brussels as well as the ECB, which is exercising regional monetary authority,  serving as the bedrock for a soon coming EU Super State, which will be based upon regional framework agreements, as leaders meet in summits and waive national sovereignty and pool sovereignty regionally, thus replacing the sovereignty of nation states, and introducing regional sovereignty as foretold in Revelation 13:1-4 and Daniel 2:30-33.

Seigniorage, that is moneyness will no longer come from the securitization of debt instruments such as mortgage based bonds, MBB, securitized by mortgage REITS, REM, such as Starwood Property Trust, STWD, Junk Bonds, JNK, International Corporate Bonds, PICB, International Treasury Bonds, BWX, Emerging Market Bonds, EMB, Municipal Bonds, MUB, US Treasuries, ZROZ, EDV, TLT, or Corporate Bonds, BLV, LQD.  Rather, seigniorage will come from diktat and debt servitude, as the fiat money system is replaced by the diktat money system.

Either one is fiat or one is elect. The fiat have mandate in philosophy, religion or self made rules. The Elect are the chosen and have ordination, predestination, in the like allotted like precious faith of Jesus Christ, 2 Peter 1:1 and partake of God’s divine nature and His virtue, bearing spiritual fruit so as to make their calling and election sure, and so as to be established in the present truth, 2 Peter 1:2-12.

Austrian economists believe themselves to be sovereign individuals living within natural law expressing human action. But the elect are servants of Christ. Romans 6:22, live in Christ, Colossians 3:3, and express Him, Colossians 1:10.  The elect perceive Christ to be sovereign Colossians 1:16-18, and Ephesians 1:20-22; they have a conscience guided by the sacrifice of Christ, which arbitrates speech and conduct Colossians 3:15, and have biblical ethics, that is rules for interacting with others, Colossians 3:18-25.

The fiat have subjective experience in reputed wisdom or even self imposed worship in a set of rules. This “will worship” is arbitrary, and can be sanctimonious and even become psychopathic, Colossians 3:23.

There is no human action, as perceived by Ludwig von Mises. There is only the economy of God, Ephesians 1;10, operating to produce the transitioning from the fullness of prosperity that came with the Milton Friedman Friedman Free To Choose paradigm to the regional governance paradigm, as foretold in Daniel 2:20-23 and Revelation 13:1-4.

World Stocks Enter Elliott Wave 3 Of 3 Down … And The World Passes Through Peak Credit As Total Bonds Rise To New High

October 2, 2012

Financial Market report for the week ending Friday September 28, 2012

1) … Introduction
As world stocks, ACWI, turned down the week ending Friday September 14, 2012, manifesting an Elliott Wave 3 Down, the world passed through through peak credit, as Total Bonds, BND, Municipal Bonds, MUB, Corporate Bonds, LQD, Emerging Market Bonds, EMB, International Treasury Bonds, BWX, International Corporate Bonds, PICB, rose to new weekly highs on September 28, 2012.  Junk Bonds, JNK, Senior Bank Loans, BKLN, Leveraged Buyouts, PSP, and Distressed Investments, FAGIX,  have turned lower from their August 14, 2012 highs. Today, October 1, 2012, the linked daily chart of Municipal Bonds, MUB, shows them manifesting bearish harami at the top of an wedge suggesting that they have indeed topped out.

The Morgan Cyclical Index, ^CYC, is trading down from its recent September 14, 2012, high, which was the start of an Elliott Wave 3 of 3 Down. Residential REITS, RWR, have been leading REITS, RWR, Real Estate, IYR, and Small Cap Real Estate, ROOF, as is seen in this ongoing Yahoo Finance Chart.. And the Large Cap Growth Stocks, JKE, and the Russell 2000 Growth Shares, IWO, have been trading lower from their September 14, 2012 highs, on the failure of the world central bank’s monetary authority to sustain global growth and corporate profits; inflationism is turning to deflationism.

Major World Currencies, DBV, rose, on a higher US Dollar, $USD, UUP. Emerging Market Currencies, CEW, traded near its September 14, 2012 high.  Doug Noland reports fFor the week on the downside, the euro, FXE, declined 0.9%, the Danish krone 0.9%, the Australian dollar, FXA, 0.8%, the Swiss franc, FXF, 0.7%, the Canadian dollar, FXC, 0.7%, the South African rand, SZR,  0.4%, the British pound, FXB, 0.4%, the Singapore dollar 0.2%, the Brazilian real, BZF,  0.2% and the Swedish krona, FXS, 0.1%.

The weekly currency demand curve, RZV:RZG, manifested a bearish harami at the top of an ascending wedge that had risen since June, 1, 2012, communicating that the dollar carry trade, that is the sell of the US Dollar, and the purchase of risk currencies, has ended.  The Euro, FXE, closed at 127.69, down from its 130.40 high on September 14, 2012 as the WSJ reports Slumping Euro dogged by doubts.   After its biggest rally in months, some old doubts about the euro are creeping back in. Investors cheered the European Central Bank’s proposal to buy the debt of troubled euro-zone members, announced on Sept. 6. But the plan already has hit its first potential snag: Spain, the region’s fourth-largest economy, hasn’t yet requested aid, a key condition for setting a bailout in motion. Some euro bears say the ECB’s bond-buying plan, which many took as a sign Europe had turned a corner in addressing its debt problems, is turning out to be just the latest temporary jolt for a currency in the middle of a protracted slide against the dollar. Since hitting a four-month high on Sept. 14, the euro is down in six of the last nine trading days, ending New York trading at $1.2913 Thursday. The euro is still up 7% from a two-year low hit in July. The crisis “is like a long-term illness that flares up periodically, and it’s not over by any stretch of the imagination,” said Nicholas Pifer, who oversees $7 billion as head of Columbia Management’s fixed income group and has bet against the euro. “The history of the euro crisis so far has seen measures announced that looked good but whose implementation proved difficult.”

Doug Noland writes M2 narrow “money” supply increased $13.8bn to a record $10.138 TN.  Narrow money has expanded 7.1% annualized year-to-date and was up 6.9% from a year ago. And Robert Wenzel of Economic Policy Journal provides the FRED chart

2) … Reuters reports the details of this week’s turn lower in stocks Weaker growth and debt concerns send world shares lower.
Markets moved lower as investors looked past recently announced central bank stimulus plans and focused on weak economic fundamentals and the unresolved European debt crisis. The monthly chart of World Stocks, ACWI, shows that stocks world wide have entered an Elliott Wave 3 of 3 Down, as the S&P, SPY, the Dow, DIA, the PowerShares Nasdaq, QQQ, have topped out in an Elliott Wave 5 Up. Total Bonds, BND, put in an Elliott Wave 5 High, Commodities, DBC, have entered an Elliott Wave 3 of 3 of 3 Down on the exhaustion of the world central banks’ monetary authority.

Peak fiat wealth has been achieved as competitive currency devaluation is underway as the weekly chart of the US Dollar, UUP, shows a rise, with Major World Currencies, DBV, and Emerging Market Currencies, CEW, have likely topped out.

Monetization of debt, that is debt debauchery, has been propelling the US Dollar, $USD, lower from its recent June through July 2012 high.  Now it is the rest of the worlds’ currencies turn to follow the Dollar into the Pit of Financial Abandon, as MIke Mish Shedlock writes Bernanke declares war on Canadian economy Rest of the world too. The Canadian Dollar, FXC, fell sharply lower; Canada, EWC, and Canada Small Caps, CNDA, will no longer be a safe haven investment as Mike Mish Shedlock writes, Toronto New home sales plunge 64 percent; lowest August on record.  International Business Times reports Global currency wars in full escalation

The National Bank of Greece, NBG, Bank of Ireland, IRE, Banco Santander, SAN, Deutsche Banks, DB, led European Financials, EUFN, Greece, GREK, Spain, EWP, Italy, EWI, and Europe Shares, VGK, lower as Mike Mish Shedlock writes Spain warns Catalonia separatists of treason charges in Military.  Ambrose Evans Pritchard writes Spain’s crisis flares again as AAA club scuppers bank rescue deal. Spain’s debt crisis has returned with a vengeance after Germany, Holland and Finland reneged on a crucial summit deal and scuppered hopes of direct eurozone help for Spanish banks. Stock Research Portal writes Greek debt report may be delayed for U.S. political reasons.  Mike Mish Shedlock also writes Fire bombs, tear gas, riots near Greek Parliament; 57% say Greece should abandon pledges made to Troika.  Once again things are out of control in Greece. A general strike is underway, and schools, hospitals, and transit are affected. Firebombs and teargas have hit Athens as Greek citizens are protest the latest round of austerity measures. Sentiment in Greece has turned, and likely turned for good. 57% of Greeks have had enough of austerity to the point they would rather default. ….. Turn back the hands of time a bit and think how this might have played out if Greece simply left the euro and defaulted three years ago as it should have. Tourism would likely have increased and if  Greece had implemented true structural reforms rather than tax hikes, its economy would be stable or recovering now. Instead, the country is in ruins, tourism is down, and in an on-again-off-again fashion, absolute chaos breaks out.  If another round of elections were held today, there is no way Samaras would win. Instead, the radical left, and radical right (both of which want to exit the euro), would be fighting over the pieces. The nannycrats in Brussels and Chancellor Merkel are to blame for this sad state of affairs. Finally, please note that the big fear of the nannycrats and Merkel is not that Greece leaves the euro per se, but rather Greece leaves the euro and the Greek economy starts to recover.  Well, here’s the deal and it is something I said years ago: the sooner Greece abandons the euro, tells the Troika to go to hell, and defaults, the better off it will be.

Brazil Financials, BRAF, especially ITUB, and BSBR, led Brazil, EWZ, lower. Argentine Bank BBVA, and BBD, led Argentina, ARGT, lower. Credit Suisse, CS, and UBS AG, led Switzerland, EWL, lower. Japanese Banks, NMR, MFG, and SMFG, led Japan, EWJ, lower as Inside Investing Daily asks Is Japan losing its moorings?   Life Insurance company ING Groupe, ING, was one of the stocks which led the Netherlands, EWN, lower.

Mortgage REITS, REM, fell parabolically lower, as is seen in this combined ongoing Yahoo Finance chart of SFI, RAS, HHC, and BDN; taking Small Cap Real Estate, ROOF, and Real Estate, IYR, lower. Bloomberg reports US 30 year mortgage rates fall to record low of 3.4% as the chart of Mortgage Backed Bonds, MMB, trades lower near its all time high

Semiconductors, XSD, Steel, SLX, Metal Manufacturing, XME, and Printed Circuit Boards, JBL, traded lower.

Silver Miners, SIL, SSRI, Gold MIners, GDXJ, GDX, Uranium Miners, URA, Coal MIners, KOL, Rare Earth Miners, REMX, Aluminum Producers, ALUM, led S&P Materials, MXI, lower.

Small Cap Energy, PSCE, Energy Service, OIH, IEZ, and Energy Production, XOP, traded lower as AP reports Oil falls below $92 on gloomy economic outlook.

US Infrastructure, PKB, falling strongly lower included Industrial Electrical Equipment, ETN, ROK, Buildings Material Wholesaler, BECN, Cement Manufacturers, CHR, JHX.

Oracle, ORCL, and Sales Force, CRM, led Cloud Computing, SKYY, lower; it and Smartfone, FONE, led Nasdaq shares lower.

Country stocks, seen in this Finviz Screener, were elevated by the recent bout of neoliberal finance, that is world central banks’ monetary policies, over the last quarter, which provided carry trade financing on the sale of the US Dollar, -1.1%, YTD.  24th Gold writes The Fed is the great enabler. The Money provides An update on the collapse of the dollar. Business Week reports Italy sells bills at lowest rate since March on ECB plan. International Treasury Bonds, BWX, and International Corporate Bonds, PICB, remain near their recent all time highs. Business Week reports Spanish bonds slide on call for bank bailout limits; bunds gain.
EGPT 20%
EWG 20 rose on Telecom Services, SI, Application Software Manufacturer, SAP
NORW 20 rose on Oil Producer, STO
EWP 20
EWI 19
IRL 18 rose on Industrial Equipmentment Manufacturer IR, and Cement Producer CRH
EWD 16 rose on Auto Parts Producer, ALV
EWN 15 rose on Agricultural Equipment Manufacturer CNH, Electronics Manufacture, PHG, Energy Producer, RGS-B, Energy Service Company, CLB.
ENZL 15
EPOL 12
ARGT 12
EWC 12 rose on Drug Manufacturer VRX, Apparel Manufacturer LULU, GIL, Paper Producer MER, Wireless Communications RCI, Telecom Services BCE, Real Estate BAM, Food Producer STLK, Biotech, NVD, Medical Instruments, IMRS, Consumer Services STB, Cable TV SJR, Agricultural Chemicals AGU,
EWS 12
RSX 12
TUR 11 rose on Wireless Communications, TKC,
EWL 11 rose on Industrial Equipment Manufacturer ABB, and Energy Producer NE
EWT 11 rose on Telecom Services CHT, Specialized Semiconductors, HIMX, SPIL, Semiconductor TSM, IMOS,
EWY 10 rose on Telecom Services KT, Wireless Communications, SKM, Electricity Producer KEP, Electronics Manufacturer LPL.
EWW 10 rose on Brewer FMX, Beverage Manufacturer KOF, Television Broadcaster TV, Heavy Construction, ICA, Food Producer IBA, Airline OMA, Steel Producer SIM, Food Producer GMK,  Cement Producer CX,
THD 11
EWA 11
EWZ 11 rose on Chemical Manufacturer BAK, Food Producer BRFS, Confectioners CZZ, Paper Manufacturer FBR, Home Builder BFR

Countries turning lower this week include, EWP, EWI, GREK, EWG, EWO, EWN, EWD, RSX, NOR, EIRL, EWL, EWZ, VNM, and TUR.  Yet, Israel, EIS, Egypt, EGPT, New Zealand, ENZL, India, SCIF, INP, INXX, EPI, traded higher.

Banks, IXG, Credit Suisse, CS, and UBS AG, UBS, Switzerland, ….. ING Groep, ING, Netherlands, ….. Banco Santander, SAN, Spain, ….. Deutsche Bank, DB, Germany, ….. BancoBilbaoa, BBVA, Argentina, ….. Itau, ITUB, and Banco Santander, BSBR, and Banco Bradesco, BBD, Brazil, ….. Bank of Ireland, IRE, ….. National Bank of Greece, NBG, ….. Woon Financial, WF, Australia, Barclays, BCS , and Royal Bank of Scotland, RBS, United Kingdom, Japanese Banks, NMR, SMFG, MFG, traded lower.

Sectors turning strongly lower this week included, Steel, SLX, Metal Manufacturing, XME, Rare Earth Mining, REMX, Semiconductors, XSD, Small Cap Energy, PSCE, Copper Mining, COPX, Uranium Mining, URA, Aluminum Production, ALUM, Coal Miners, KOL, Energy Services, IEZ, OIH, Small Cap Technology, PSCT,  Shipping, SEA, Housing, ITB, US Infrastructure, PKB, Residential REITS, REZ, and Real Estate, IYR.

Both Transports, IYT, and Industrial, IYJ, turned lower. High Dividend Payers, DWX, DOO, and IST traded lower.

All of the Volatility ETFs, TVIX, CVOL, VIXY, VXX, VIIX, TVIZ, VXZ, VIXM seen in this Finviz Screener traded higher.

All of the bear market ETFS, SMN, BZQ, EEV, BIS, FXP, SKF, DUG, SQQQ, REW, RUSS, DPK, SZK, SCC, MZZ, SSG, RXD, SRS, seen in this Finviz Screener traded higher.

Bonds, BND, traded to a new high as International Treasuries, BWX, International Corporate Bonds, PICB, Emerging Market Bonds, EMB, Municipal Bonds, MUB, High Yield Municipal Bonds, HYT, and Corporate Bonds, LQD, traded to new weekly highs; but Long Duration Corporate Bonds, BLV, Leveraged Buyouts, PSP, Junk Bonds, JNK, Senior Banks Loans, BKLN, Mortgage Backed Bonds, MBB, traded lower. US Government Bonds, ZROZ, EDV, TLT, BABS, BAB, rose to resistance.

US Infrastructure, PKB, such as Labor Service Provider, TBI, Building Materials, HW,  MLM, MAS,Design Build Construction Company, USG, Rental & Leasing GMT, Home Improvement Stores, LL, traded lower, while Rubber And Plastic, AEPI, Networking Services, CVLT,  RAX, RDWR, AXCM, CTGX, SYNT, GWAY, NOW, ARUN, Israel, ACN, Diversified Machinery, GE, Industrial Equipment, MWA, traded higher.

Ireland’s Cement Manufacturer, CRH, traded lower.

Diode Manufacturer, CREE, traded lower.

Application Software BYI, SQI, PRO,  traded higher while Application Software, IGV, traded lower.

Restaurants, CHUY, BLMN, SONC, DIN, BKW, AFCE, traded higher.

Cable TV, VMED,  LBTYA, TWC, traded higher.

Communication Services, CCOI, CCI, AMT,  NTS, S, traded higher.

Media, PBS, with Newspaper Publishing components, MNI,  NYT, AHC, SSP, and Periodical Publishing components, United Kingdom, RUK, Netherlands, ENL, and TV Broadcasting components, GTN,  NXST, CBS, SNI, BLC, appear topping out.

Aerospace, TDG, LMT, appear topped out.

The Large Cap Growth Stocks seen in this Finviz Screener appear topped out.

Food Manufacturers seen in this Finviz Screener appear topped out

Credit Providers seen in this Finviz Screener appear topped out.

Long Term Care Facilities, CSU, ADK, ENSG, NHC, FVE, ESC, BKD, appear topped out.

Commodities, DBC, traded unchanged from last week, but below their September 14, 2012 high..

The US Dollar, $USD, UUP, traded higher this week, putting a cap on the rally in World Stocks, VT, that began June 1, and ended September 14, 2012.

3) … In The Week’s News
Jeff Black of Bloomberg reports  “European Central Bank Governing Council member Jens Weidmann said the proposed banking union can’t take responsibility for existing bad debts.  ‘In order to keep liability and control in balance, only risks that have arisen after common supervision is established can be taken under joint liability,’ Weidmann, who heads Germany’s Bundesbank, said… ‘The legacy burdens on bank balance sheets have to be underwritten by the countries under whose supervision they have arisen.’  Weidmann’s comments come after finance chiefs from Germany, the Netherlands and Finland said this week that direct recapitalization of banks by the euro area’s permanent bailout fund should be a last resort and that legacy debts should remain the responsibility of national authorities. European leaders agreed in June that, as part of a prospective banking union, banks would qualify for direct aid once an ECB-led supranational supervisory mechanism has been established.  ‘Mutualization of risks can’t be the primary purpose of a banking union,’ Weidmann said. Allowing the euro-area bailout fund to help ease the existing debts of banks would amount to ‘financial transfers,’ he said… Weidmann, in a speech titled “Trust — Prerequisite for Success of a Stable Currency,” also made veiled criticisms of ECB President Mario Draghi’s bond-purchase plan. Speaking of how the Chinese invented paper money around 1,000 A.D., he said the emperors of the time ‘knew the importance of this invention and used it richly.’  ‘They produced more and more banknotes, but unfortunately without withdrawing the old ones. The result wasn’t surprising:  Inflation.’  Weidmann said central banks mustn’t take on fiscal tasks, and voiced concern about the side-effects of ‘ultra-expansive monetary policy.’”

Tom Fairless and Todd Buell of Dow Jones:  “National authorities should bear the cost of losses in their banking industry suffered prior to the establishment of a European banking regulator, Bundesbank President Jens Weidmann said…, weighing into a debate about the extent to which Europe’s rescue fund should pay for legacy bank debts.   ‘To maintain a balance of liability and control, only risks acquired after the establishment of a common [banking] supervisor can fall under shared liability,’ Mr. Weidmann… said… ‘For legacy debts in banks’ balance sheets, those countries under whose supervision the liabilities were generated’ must still vouch for them, he said.  ‘Anything else would be financial transfers.’  With the comments, Mr. Weidmann appears to be throwing his weight behind… the finance ministers of Germany, the Netherlands and Finland, in which they said the region’s permanent bailout fund, the European Stability Mechanism, should assume only a limited burden in bank recapitalizations.  National governments should retain responsibility for issues arising from banks’ bad lending decisions before they fall under a common supervisor, the ministers said.  Mr. Weidmann stressed that the Bundesbank ‘fundamentally welcomes a European banking regulator,’ and that a banking union can be an ‘important building block’ for a stable currency union.  However, creating a banking union will take time…, adding that its primary purpose mustn’t be to mutualize risks.   Mr. Weidmann also warned that it will be ‘difficult’ for the ECB to separate monetary policy from banking supervision if it becomes Europe’s single banking regulator. The ECB has pledged to keep its monetary policy responsibilities strictly separate from its future regulatory role.”

Rainer Buergin of Bloomgerg:  “German coalition lawmakers called on Chancellor Angela Merkel’s government to ensure that big euro-region banks are compelled to pass checks before coming under European supervision, with any restructuring needed carried out at the home country’s expense.  ‘Banks that pose systemic risks are to be subjected to a stress test and restructured or liquidated at the expense of the national restructuring fund before they are included in the direct supervision mechanism,’ said the motion sponsored by Merkel’s Christian Democratic Union and their Free Democratic Party coalition partner.”

Neil Callanan and Sharon Smyth of Bloomberg report  “Angel Fernandez used to travel to the Netherlands to buy equipment for Spanish homebuilders when they were powering Europe’s third-biggest construction market.  Now he watches as buyers come to take diggers, excavators and trucks to countries where they won’t just gather dust.  Standing in a sunburned field in Ocana, a 90-minute drive south of Madrid, 41-year-old Fernandez looks on as never-used construction equipment is sold at discounts of as much as 20% through Ritchie Bros. Auctioneers Inc. Business is brisk for the world’s largest industrial-equipment auctioneer, a sign that time has run out for Spanish builders that were propped up by banks for years after the machines fell silent…  Almost half of Spain’s 67,000 developers are insolvent but not bankrupt after getting additional financing from banks, according to R.R. de Acuna & Asociados, a property consulting firm.

Mike Mish Shedlock writes What if I am wrong about Europe?  Spain, Greece, Portugal, and Italy are all on the same track and the wrong track. All need work rule reform and lower taxes. Instead, the countries have been short on productivity improvement, short on pension reform, short on work rule reform, and long on tax hikes. It is no wonder their economies are imploding. It is no wonder protests are getting louder. Yet the political class, beholden to the banks and the IMF have taken the wrong track. In the end, I highly doubt I will be wrong. In the meantime, however, Telegraph writer Daniel Hannan appears to be correct in his assessment “the tragedy is that the monetary union will limp on, condemning hundreds of millions to gradual immiseration.” I comment that it is only the Netherlands that might be able to pull out of the Euro Group. The Netherlands ETF, EWN, fell strongly this last Week on Electronics Manufacturing, PHG, Agricultural Equipment, CHN, Enerrgy, RDS-B, and Energy Services, CLB, as is seen in this ongoing Yahoo Finance Chart. ETF Trends reports Netherlands ETF Faces Transition After Election

Robert Wenzel of Economic Policy Journal provides Murray Rothbard on Schumpeter’s Theory of Business Cycles.