Financial Market Report for the week ending January 4, 2013
Sophie Quinton of the National Journal reports Winners and losers from the Fiscal Cliff deal.
Middle and lower-income taxpayers are the main beneficiaries of the Fiscal Cliff deal, but there are other winners, and losers, of the last-minute scramble to avert scheduled tax increases and spending cuts. The gridlock leading up to the deal dimmed the country’s already dim view of Congress. Lawmakers aren’t going to get the grand deficit-reduction bargain they had hoped for. And although an economic crisis may have been averted, the final deal sets the stage for another debt-ceiling showdown.
Fiscal Cliff winners include:
Middle-Class Taxpayers. With the Bush tax cuts set to extend for individuals making less than $400,000, middle- and upper-middle class taxpayers can breathe a sigh of relief. The Alternative Minimum Tax will be permanently lifted to reflect inflation, sparing close to 30 million taxpayers from a tax increase. The tax relief isn’t total, however: The payroll tax cut won’t be extended for another year, meaning that working Americans will see their paychecks reduced in 2013. But it could have been worse.
President Obama and Vice President Biden. President Obama made the fiscal cliff negotiations all about taxes, repeating the call for tax increases on the rich and tax cuts for the middle class that helped him win reelection. Although the final deal is less than the president had hoped for, he gets to say he kept his campaign promise to protect middle-class Americans. He also gets to renew key tax cuts passed as part of his 2009 stimulus package and to extend unemployment insurance. Meanwhile, Vice President Joe Biden can revel in the crucial role he played in last-minute discussions with Senate Minority Leader Mitch McConnell.
Senate Minority Leader Mitch McConnell. The wily legislator who once pledged to block President Obama at every turn has proved, once again, to be a crucial deal-maker between the White House and Congress. Initially sidelined as negotiations focused on President Obama and Speaker John Boehner, McConnell stepped forward at the last minute to help craft legislation that Republicans could support.
AARP. Seniors—and the lobbyists who represent them—won’t be feeling the pain of entitlement cuts come January, despite initial insistence from Republican lawmakers that significant cuts to Medicare or Social Security be part of a fiscal cliff deal. The battle to prevent a switch to chained CPI, a metric that would reduce the growth of Social Security payments, has been won, at least for now.
Fiscal Cliff losers include:
Deficit Hawks. Going over the fiscal cliff would have significantly reduced the deficit, combining cuts to domestic and military spending with tax hikes on pretty much everyone. The last-minute deal reached by Washington negotiators lifted taxes on the wealthiest Americans and didn’t do anything to cut spending.
Speaker Boehner’s Plan B. Speaker Boehner’s attempt to rally his caucus behind an alternate cliff deal, dubbed “Plan B,” failed miserably: a bad sign of the Ohio Republican’s ability to put forward an alternative that his caucus could take seriously. Boehner’s plan included too many tax increases and not enough spending cuts for Republicans to stomach—and it seemed to temporarily stall negotiations.
The U.S. Treasury. The United States hit its borrowing limit on Monday, and lawmakers failed to include raising the limit as part of the cliff deal. The Treasury Department will enact what it calls “extraordinary measures” to avoid a government default, but it can only protect the nation’s credit for so long. Stay tuned in the coming months for another Washington fight over whether, and how, to raise the debt ceiling.
The 1 Percent. Wealthy Americans who make their money from investments, rather than paychecks, were losers in the fiscal-cliff deal. In addition to higher income taxes, those who make above $400,000 will now be subject to a 20 percent tax rate on their capital gains and dividends. The fiscal cliff wasn’t all bad news for the wealthy, however: They can still bequeath up to $5 million tax-free, with any additional money taxed at 40 percent. That’s greater than the current 35 percent estate tax rate, but less than the 55 percent rate on assets over $1 million that would have gone into effect without a deal.
Holiday Cheer. From senators who had to fly back to Washington two days after Christmas to Hill staffers who canceled New Year’s Eve plans in anticipation of a late night hammering out a deal, the fiscal-cliff negotiations cast a pall over the holiday season. And it wasn’t just Washington: Americans spent the holidays wringing their hands over pending tax increases.
The 50 Global Stocks Sectors seen in this Finviz Screener, rose strongly; Liberalism’s most favored stock sectors seen in this Finviz Screener, led the rally; these include
Solar, KWT 6.1%
Copper Mining, COPX 4.4
Networking, IGN 4.3
Biotechnology, XBI 3.8 seen in this Finviz Screener
Gaming, BJK, 3.8 AP reports Macau casino revenue in 2012 rose to $38 Billion
Steel, SLX 3.7
Small Cap Industrial PSCI 3.6
Paper Producers, WOOD 3.3 seen in this Finviz Screener
Nasdaq Biotechnology, IBB 3.2
Global Producers, FXR, 3.2, seen in this Finviz Screener
Metal Manufacturing, XME, 2.8 seen in this Finviz Screener
Airlines, FAA, 2.5
Small Cap Real Estate, ROOF, 2.5
Homebuilding, ITB, 2.4
Vanguard Increasing Dividend, VIG, 2.2
US Infrastructure, PKB, 2.2% seen in this Finviz Screener
World Banks, IXG, 2.1 seen in this Finviz Screener
Global Real Estate, DRW, 1.7%, was near the bottom of the list
Automobiles, CARZ, and Retail, XRT, 0.7 each were at the bottom of the list.
Countries rising strongly included
NKY 2.8 Bloomberg reports Japanese 30-Year Yield is Highest Since 2011. Thirty-year yields climbed to levels unseen since December 2011, tilting the so-called yield curve to the steepest level in 17 months. Japan’s newly installed Prime Minister Shinzo Abe said in a New Year’s statement that “bold” monetary policy is one of the three prongs of his economic measures. The yield on the 30-year bond touched 1.995 percent, the most since December 2, 2012, before trading at 1.99 percent from 1.975 percent on December 28, 2012, according to Japan Bond Trading Co. Japan’s Nikkei 225, NKY, jumped 2.8 percent after the S&P 500 rose reaching its highest close since September. The Yen, FXY, fell lower to its weakest value since July 28, 2010, extending its longest series of weekly declines since 1989. I comment that Abe’s Easing have sent Industrial Producer, KUB, and Japanese Small Cap, MKTAY, soaring in value. Mike Mish Shedlock comments The yield on the 30-year bond is only 2%, which is nothing to get that excited over. For now, the bond market is not treating Abe’s inflation threat that seriously. If and when the bond market does react, Abe will not like the state of affairs one bit
Investors gave strong seigniorage to Liberalism’s Republics of Carry Trade Investing, Investors plowed money heavily into the Emerging Markets, EEM, seen in this Finviz Screener. and seen in the ongoing Yahoo Finance Chart of EEM, TUR, ECNS, THD, EWW, ENZL, SCIN, and EPHE
World Banks, IXG, rose 2.1%; Liberalism’s leading speculative banks seen in the following seen in this Finviz Screener led the way higher.
IRE, DB, SAN, led European Financials, EUFN,and Europe, VGK, higher.
GGAL, BFR, BMA, BBVA led Argentina, ARGT, higher.
IBN, HDB led India, INP, higher.
WF led South Korea, EWY, higher.
NMR, MTU, led Japan, NKY and Japan Small Caps, JSC higher
BAC, C, led the Too Big To Fail Banks, RWW and The US, VTI, higher
UBS, CS led Switzerland, EWL higher
BPOP, BAP, CIB led EMFN, and the Emerging Markets, EEM, higher.
BCS, LYG, led The UK, EWU, higher.
2) … On Friday, January 4, 2013, World Stocks, VT, traded to a new seven month rally high, producing Peak Stock Wealth.
In Thursday overnight trading, Marc Jones of Reuters reports Global shares, oil slip on Fed stimulus nerves. World shares, oil and copper edged lower on Friday and the dollar rose after U.S. Federal Reserve officials raised concerns about possible side effects of its stimulus program. Minutes from the Fed’s December policy meeting unsettled financial markets as some policymakers raised the longer-term impact of its efforts to stimulate the U.S. economy. European shares echoed their Asian peers to open lower. But following a sharp jump on Wednesday after the United States edged back from the “fiscal cliff”, they were on track for weekly gains of almost 2.7 percent.
Euro zone PMI and inflation figures plus the U.S. non-farm payrolls report due through the day will be closely scrutinized by investors looking to assess the health of the global economy.
“The Fed has made it clear that it will keep policy loose until unemployment drops to 6.5 percent or below, so strong jobs data will undoubtedly raise expectations of a more hawkish Fed,” analysts at Tradition brokerage said in a note.
The Fed comments gave fresh momentum to the recent slide by low-risk bonds including U.S. and German debt. Bund futures slipped half a point in early trading to 143.07, having already fallen steeply from last week’s close of 145.64.
Benchmark U.S. Treasury yields continued their climb, hitting an eight-month high around 1.93 percent in Asia, while 10-year Japanese government bond yields touched a 3-1/2-month high of 0.83%.
And Pedro Nicolaci da Costa of Reuters reports Fed becoming worried about stimulus side effects. Federal Reserve officials are increasingly concerned about the potential risks of the U.S. central bank’s asset purchases on financial markets, even if they look set to continue an open-ended stimulus program for now. In a surprise to Wall Street, minutes from the Fed’s December policy meeting, published on Thursday, showed a growing reticence about further increases in the central bank’s $2.9 trillion balance sheet, which it expanded sharply in response to the financial crisis and recession of 2007-2009.
“Several (officials) thought that it would probably be appropriate to slow or to stop purchases well before the end of 2013, citing concerns about financial stability or the size of the balance sheet,” the minutes said, referring to the narrower group of voting Fed members. Investors picked up on the report’s hawkish tone, with stock prices drifting lower after the announcement, while the U.S. dollar extended gains against the euro. Yields on the 30-year Treasury bond hit 3.12 percent, their highest levels since May. “The minutes of the Federal Reserve’s December monetary policy meeting revealed a somewhat surprising level of concern among the ranks of central bankers regarding the long-term impact of the bank’s asset purchase program, or quantitative easing,” said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.
Still, the Fed appeared likely to continue buying assets for the foreseeable future, having announced in December it was extending monthly purchases of $40 billion in mortgage securities and also buying $45 billion in Treasuries each month.
A few of the voting members on the central bank’s policy-setting Federal Open Market Committee thought asset buying would be warranted until about the end of 2013.
A few others highlighted the need for further large-scale stimulus but did not specify an amount or time frame. Fed officials generally agreed that the labor market outlook was not likely to improve without further nudging from the monetary authorities.
The U.S. economy expanded a respectable 3.1 percent in the third quarter on an annualized basis, but growth is believed to have slowed sharply to barely above 1.0% in the last three months of the year.
Data on Thursday showed a solid gain of 215,000 new private sector jobs for December, while analysts polled by Reuters last week were looking for a rise of 150,000 new jobs in the Labor Department’s official survey, due out on Friday. Still, the minutes indicated worries about quantitative easing policies were spreading beyond the usual regional Fed hawks who, like Richmond Fed President Jeffrey Lacker, have opposed additional Fed easing.
“What’s clear from these minutes is that there is little consensus among the members of the FOMC on how long asset purchases should carry on,” said Jason Conibear, trading director at Cambridge Mercantile.
“Some members want more accommodation for as long as it takes, some want more but to start winding it down while others have got the heebie-jeebies about the size of the balance sheet.”
In the December meeting, the Fed also launched a new framework of policy thresholds, numerical guideposts that are supposed to give markets and the public a clearer idea of how policymakers will react to incoming economic data. Officials say they will keep interest rates near zero until the unemployment rate falls to 6.5 percent for as long as estimates of medium-run inflation do not exceed 2.5 percent. The minutes suggested it took officials some time to build a consensus around the idea. U.S. unemployment has come down steadily after hitting a peak of 10 percent in late 2009, but remains elevated at 7.7 percent.
During the day, Friday, January 4, 2013, World Stocks, VT, traded to a new seven month high, producing Peak Stock Wealth. The Currency Demand, RZV:RZG, Risk On, ONN, Distressed Investment, FAGIX, Junk Bonds, JNK, Senior Bank Loans, BKLN, Leveraged Buyouts, PSP, and Spin Offs, CSD, maintained their January 2, 2013 highs.
Rally leaders, Airlines, FAA, Solar, KWT, Gaming, BJK, and Small Cap Industrials, PSCI, seen in their combined chart gave grand finale to the end of the age of credit based prosperity and introduction to the age of debt servitude based austerity. Manufactured Housing, CVCO, traded up near its recent rally high, as is seen in the ongoing Yahoo Finance chart of CVCO, ITB, RZG, RZV, and FXR. Motley Fool reports Here’s why Cavco Industries’ earnings are worse than they look. Regional Banking, KRE, rose, which took the Russell 2000, IWM higher. JP Morgan, JPM, led Investment Bankers, KCE, and Global Economic Producers, FXR, seen in their Finviz Screener, to new rally highs, as global carry trade darlings LPL, MKTAY, TTM, QCOM, BIIB, PHG, traded lower. Transportation, IYT, continued higher. The ongoing Yahoo Finance chart of Creditors, MA, V, DFS, EFX, AXP, COF, and SLM shows a topping out, averaging a six percent gain for the group this week. Peak Retail Credit has been achieved.
The US Dollar, $USD, rose to 80.50 on January 4, 2013, on a plunge down lower in the Yen, FXY. The Dollar’s rise is strikingly seen in the chart of its 200% ETF, UUP, which places an end to its ongoing decline, that has occurred since 1971, when America went off the gold standard and went with the Milton Friedman Free To Choose Floating Currency Regime, which has supported Inflationism under Liberalism, whereby stocks, VT, have leveraged up over credit, AGG, in bouts of risk on momentum rallies.
The cresting rise of the US Dollar, plus the strong rally into fiat stock wealth, created strong short selling of Gold, GLD. Of note, a market reversal Base Metals, DBB, drove commodities, DBC, lower.
The seven month long global debt based, currency carry trade rally, that began in June 2012, has ended. First with Commodities, DBC, trading lower September 14, 2012 and now once again trading lower on January 4, 2013. Confirmation of the end of Liberalism’s final currency carry trade rally comes from the currency demand curve, the ratio of Small Cap Pure Value Shares to Small Cap Pure Growth Shares, RZV:RZG, turning lower, from its December 20, 2012 high.
US Federal Reserve and ECB, unlimited quantitative easing, opened ended policies, have finally turned “money good” US Ten Year Notes, TLT, and German Bunds lower. The Fiscal Cliff Rally, enabled bond vigilantes to call the Benchmark US Ten Year Note Interest Rate, $TNX, higher, from 1.60% to 1.90%, as well as to call a steepening of the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, as is seen in the chart of the steepner ETF, STPP, steepening and breaking out higher.
The combination of the turn lower in the EUR/USD, traded by the ETF FXE, which finished the week lower, the fall lower in Commodities, DBC, from strong resistance, the steepening of the 10 30 US Soveign Debt Yield Curve, $TNS:$TYX, and the strong fall lower in World Treasury Bonds, BWX, as well as International Corporate Bonds, PICB, means an end to Liberalism as an economic paradigm, where Daniel Wagner of the AP, reports US service firms grew by the most in ten months; the most successful service companies being seen in this Finviz Screener. Scott Grannis writes in chart article Service sector looks healthy.
And Scott Grannis writes Jobs and the economy continue to grow. December’s jobs report provides yet more evidence that the economy continues to grow, probably at a 2-2.5% pace. That’s a only little less than its long-term normal growth rate of 3%. The private sector has increased the number of jobs by about 2% over the past year, and that is similar to the growth we saw during the the growth phase of the last economic cycle (2004-2007). The problem with the economy is not a lack of growth, but a lack of recovery to previous levels of activity. It should have been growing much faster.
Full seigniorage, came to Utilities, XLU, on August 1, 2012, Commodities, DBC, on September 14, Bonds, BND, on December 6, 2012, World Currencies, DBC, Emerging Market Currencies, CEW, Stocks, VT, and Distressed Investments, FAGIX, JNK, BKLN, as well as Spin Offs, CSD, and Leveraged Buyouts, PSP, on January 4, 2013, resulting in the climax of the Milton Friedman Free To Choose Floating Currency Regime and Liberalism. One can expect a sharp reversal from the parabolic rise in Emerging Markets, EEM which rose strongly in the seven month risk-on, global debt based, currency carry trade rally.
Leading Sectors And Styles for the week ending January 4, 2013 included
KWT, 18.2%, rose to a new high
FAA, 8.7, rose vertically to a new high, manifesting a three white soldier finale.
BJK, Vice Stocks, traded by VICEX, gained 32% in the last two years.
FXR, 6.4 trades like the Morgan Stanley Cyclical Index, ^CYC, which is a measure of the health of the Milton Friedman Free To Choose Floating Currency Regime.
ITB 6.1 rose to a new rally high
PSCI, 5.4 rose to a new rally high
XRT 4.9 pushed up to a multiple top high
WOOD, 4.7 rose to a new rally high
IYC, 4.7, soared above a double top high
Styles traded as follows
Regions traded as follows
VTI, 4.8, VT, 3.1, VSS, 3.1
EWX, 4.2, EEM 3.0
IYT, 6.2 and IYJ, 5.1
VTI, 4.8% was IWM, 5.7%; DIA 3.9; SPY, 4.5. Reuters reports S&P 500 finishes at 5-year high on economic data. I comment that the reason for the high is found in Scott Grannis’ chart article Check out these rapid growth sectors. The M2 measure of money is up over 8% in the past year, and has jumped at a 12.8% annualized rate in just the past 3 months. On a nominal basis, the M2 money supply has increased by over $3 trillion in the past 5 years. That works out to $1.6 billion per day. Most of the increase in M2 has come from bank savings deposits. Despite the fact that they pay almost nothing in interest, the public has added almost $3 trillion to their bank savings accounts in the past four years. That translates into growth of over 10% per year. The huge increase in savings deposits is the flip side of the public’s confidence in the future: low confidence and extreme risk aversion have persuaded households to sock away massive amounts of money in bank deposits. Banks are lending by the bushel. Commercial & Industrial Loans are a good proxy for bank lending to small and medium-sized businesses. These types of loans are up 13% over the past year, and have now posted a net increase of over $300 billion in just the past two years. Car sales are up at a 13% annualized pace since their recession low. This is now the most incredible recovery in auto sales on record. U.S. crude oil production is up 40% in the past four years and up 20% in just the past year, thanks to new fracking technology. And the boom is just getting underway. These two charts could be the most bullish of all. Natural gas production (top chart) is up by one-third in the past six years. The huge increase in natural gas production has caused the price of natural gas to decline by about two-thirds relative to crude prices (bottom chart). The U.S. now enjoys a huge advantage over other countries because it has easy access to the world’s cheapest source of energy (natural gas). The huge change in relative prices is almost certain to cause monumental changes throughout all the industries that are energy intensive, as companies switch from crude to natural gas. This dramatic change in the type of energy we use and its price could have a major impact on U.S. growth in the coming years.After four years of a devastating collapse, housing starts are now up 58% in just the past two years!
Scott Grannis adds Thanks to three rounds of Quantitative Easing, the Federal Reserve has purchased a net $1.5 trillion of MBS and Treasuries, and has created a similar amount of bank reserves in the process. Almost all of the increase in reserves is still sitting idle at the Fed, which means that banks are content to hold a huge portion of their balance sheets in reserves paying only 0.25%. And Mr Grannis concludes Where there’s a lot of smoke, as these charts show, there is bound to be some unexpected fire. As a supply sider, I am as gloomy as anyone when it comes to the outlook for the economy at this juncture. The fiscal cliff deal will cause taxes to rise on almost everyone, especially risk-takers and small businesses, and that adds up to a drag on growth. Regulatory burdens and costs associated with the implementation of Obamacare are just beginning to have an impact, with much more to come. Higher taxes are in effect validating a higher level of government spending, and that reduces the economy’s overall efficiency, and that in turn translates into slower growth than could otherwise be possible. But when I look at these charts and realize the enormous changes that are occurring beneath the surface of what most believe is a very sluggish and calm economy, I come away thinking that optimism is more likely to be rewarded than pessimism, even though the drumbeat of news is depressing. Special Kudos to Scott Grannis for his chart articles presenting sound economic statistics.
Dividend Payers traded as follows
AMLP 4.8 rose vertically high to a triple top high.
VIG, 4.2 blasted vertically higher pushing through upper channel resistance to a new high.
DTN, 4.2 rose to a double high.
Charts show US Stocks, VTI, rising the week ending January 4, 2013
The Nasdaq 100, $NDX, traded by QTEC, gained 3.7%
The Russell 2000, $RUT, traded by IWM, rallied 3.0%
The Dow Jones Industrial Average, $INDU, traded by DIA, rose 2.6%
The chart S&P 500 Index, $SPX, traded by SPY, shows a 2.6% climb to close the week of January 4, 2013 at 1466, the best level since October 9, 2007.
Nikolaj Gammeltoft & Alexis Xydias of Bloomberg report The S&P 500 rallied 13 percent in 2012, adding almost $1.9 trillion to the value of stocks in the best increase since 2009. Stocks started off 2013 with a bang, as the S&P 500 climbed 4.6 percent to 1,466.47 last week, the highest since December 2007. Equities had the biggest two-day rally in a year on Dec. 31 and Jan. 2 as U.S. lawmakers agreed on a plan that averted tax increases even as Obama fell short of reaching a larger deficit-reduction bargain with Republicans. They extended gains after the Labor Department said the U.S. added 155,000 workers last month, compared with the 152,000 median estimate of 82 economists surveyed by Bloomberg. Estimates of how much American companies earned in 2012 are falling. Combined S&P 500 profits were probably $103.40 a share, according to more than 10,000 forecasts compiled by Bloomberg on Dec. 31. That compares with $105.20 a share on Oct. 15. Alcoa, AA, the largest U.S. aluminum producer, is due to begin the fourth-quarter earnings-reporting season.
Iin December 2012 investors went all in with rally leading stocks. The S&P 500 has formed an Elliott Wave 2 High from its 1,565 on October 9, 2007; it will enter an Elliott Wave 3 Down commencing the week ending January 11, 2013; this 3rd Wave Down, will wipe out virtually all of previously accumulated fiat wealth; one’s only protection is to invest in and take physical possession of gold in bullion coins or in Internet Trading Vaults such as Bullion Vault.
Peak Currencies was achieved early in the week of January, 2, 2013, as World Major Currencies, DBV, and Emerging Market Currencies, CEW, jumped to a seven month rally high,
The US Dollar, $USD, UUP, traded slightly higher to $79.85. as the Indian Rupe, ICN, rose, taking Emerging Market Currencies, CEW, higher. The Australian Dollar, FXA, and the Canadian Dollar, FXC, jumped higher, taking Commodity Currencies, CCX, higher, taking Major World Currencies, DBV, higher. The Swiss Franc, FXF, the Euro, FXE, and the Japanese Yen, FXY, traded lower.
Peak Credit was achieve when Total Bonds, BND, traded lower on December 6, 2012.
The 30 Year US Government Bonds, EDV, US Ten Year Notes, TLT, Build America Bonds, BABS, World Treasury Bonds, BWX, and International Treasury Bonds, PICB, traded lower again January 2, 2013.
Distressed Investments, FAGIX, Leveraged Buyouts, PSP, Junk Bonds, JNK, Bank Loans, BKLN, and Spin Offs, CSD, jumped higher. Emerging Market Bonds, EMB, rose on Emerging Currencies, CEW.
Peak Commodities, DBC, was achieved September 14, 2012; Commodities, DBC, traded unchanged for the week, while its components traded as follows:
Timber, CUT, 4.3%
Copper JJC, 3.3%; it was pulled up by Global Producers, FXR, 6%, and Copper Miners, COPX, 7%
RJA -1.9%, and JJA -2.4%
UNG, -5.3; it fell strongly through trend line support.
A see saw destruction of FIat Wealth is underway.
World Stocks, VT, World Currencies, DBV, and Emerging Market Currencies, CEW, rose to new highs, yet Commodities, DBC, Sovereign Debt, BWX, and Business Credit, PICB, have turned lower in value, leaving the most toxic of credit trading such as Junk Bonds, JNK, trading higher with stocks. The global debt trade bubble, BND, burst earlier on December 2, 2012, while stocks, VT, and the world major currencies, DBV, and emerging market currencies, CEW, rose to a 7 month rally high.
Nationalism and investment choice that underwrote Liberalism, is being replaced by Regionalism and diktat to establish Authoritarianism, as the economic standard bearer.
While Stocks, VT, and Currencies, DBV, CEW, have traded higher, their underlying base of credit, AGG, has been eroded, on the exhaustion of the worlds central banks’ monetary authority, leaving the paradigm of nationalism and investment choice both unstable and unsustainable. The rubicon of sound monetary policy has been crossed with the provision of unlimited Quantitative Easing and OMT; these have made “money good” investments, bad, specifically they have made “money good” debt unreliable. Trust is evaporating in the US Fed and the ECB to continue to be able to stimulate global growth and corporate profitability. MarketWatch reports Prepare for zero real growth in the U.S. in 2013.
A new paradigm of regional economic governance and diktat, is developing in the Eurozone, and will transition the world from Liberalism to Authoritarianism; regional framework agreements will provide economic stability, security and sustainability, establishing true European economic governance.
Investment choice, which was based upon the sovereignty of nation states, is being replaced by diktat of sovereign regional leaders, such as Mario Draghi, and sovereign regional sovereign bodies, such as the ECB.
An oversupply of credit, through the world central banks’ monetary policies of unlimited easing within Liberalism’s Finance and Floating Currency Regime, has resulted in making money bad, with the result that the fiat money system will be replaced with the diktat money system of the Beast Regime of Diktat, Austerity and Debt Servitude, where diktat serves as credit, money, wealth and power.
Bloomberg reports SM Index of U.S. Manufacturing increased to 50.7 in December. Manufacturing picked up in December, reflecting growth in orders.
CNBC reports US Manufacturing beats estimate; but Construction Spending falls. US manufacturing expanded slightly in December, while a separate report showed that U.S. construction spending fell in November for the first time in eight months.
The Elizabeth Zimmermann and Dietmar Henning WSWS report Massive cuts at German steelmaker ThyssenKrupp, documents the end of corporate profitability and global trade. And the Ulrich Rippert WSWS report The German chancellor’s Christmas message, relates that the European welfare state cannot be sustained.
We are witnessing the rise of Authoritarianism as an economic paradigm, which is commencing out of the Greek and European Sovereign and Banking Debt Crisis, where the dynamos of regional security, stability, and sustainability are powering up Regionalism and Totalitarian Collectivism; as the dynamos of corporate profitability and global trade are powering down Crony Capitalism and European Socialism. The Road To Serfdom has now been fully paved with the global debt bubble, AGG, finally bursting on December 6, 2012.
3) … Outlook For 2013 … The peace that came through the world central banks’ monetary easing which began with QE1 will shatter, as a global credit crisis causes competitive currency devaluation and a global financial breakdown. A Financial Apocalypse, that is a credit bust and fianancial system breakdown, is imminent.
The peace that came through the world central banks’ monetary easing which began with QE1 will shatter …. causing national leaders to announce regional framework agreements for regional security, stability, and sustainability … currencies, stocks, and bonds, will tumble as investors lose confidence in the Fed’s Quantitative Easing and the ECB’s OMT … wealth can only be preserved through physical possession of gold, either by investing in bullion or in reserves on Internet trading vaults such as Bullion Vault..
3B)…The world is passing through the very peak of Liberalism’s prosperity and peace … and into Authoritarianism’s austerity and diktat.
In Ephesians 1:10, the Apostle Paul communicates that Jesus Christ is the Global Administrator of all economic cycles, which he calls dispensations, that is epochs, ages, and times. We are witnessing the end of the current Quantitative Easing economic cycle, 2008-2012; the Regional Governance economic cycle is commencing.
Throughout all cycles, it is sovereignty that begets seigniorage, that is moneyness.
JPMorgan CEO James Dimon, profiled in EPJ, recognized the precarious position of global economics after the 2008 to early 2009 stock market collapse and the resulting potential of global conflict as Bloomberg Business News and Conde Nast Portfolio reported on January 26, 2009, “Last year, when JP Morgan chief executive Jamie Dimon spoke at the opening press conference at the World Economic Forum in Davos, he opened with this line: ‘Number one on my list is world peace’. ”
Ben Bernanke at the encouragement of James Dimon saw the challenge to peace, and in mid 2009, and acted to trade out “money good” US Treasury Bonds for the Distressed Investments held by banks, which are traded by the Fidelity mutual fund FAGIX, under the QE1 TARP Program. The Distressed Investments became the backing for the sovereignty of the twin iron legs of US Dollar Hegemony, the first leg being the Wall Street and New York Financial System, and the second leg being the City of London Financial District. US Government military spending now exceeds 1 Trillion Dollars.
The CIA funded World Factbook corroborates reporting To help stabilize financial markets, in October 2008 the US Congress established a $700 billion Troubled Asset Relief Program, TARP. The government used some of these funds to purchase equity in US banks and industrial corporations, much of which had been returned to the government by early 2011. In January 2009 the US Congress passed and President Barack OBAMA signed a bill providing an additional $787 billion fiscal stimulus to be used over 10 years – two-thirds on additional spending and one-third on tax cuts – to create jobs and to help the economy recover. In 2010 and 2011, the federal budget deficit reached nearly 9% of GDP.
Wars in Iraq and Afghanistan required major shifts in national resources from civilian to military purposes and contributed to the growth of the budget deficit and public debt. Through 2011, direct costs of the wars totaled nearly $900 billion, according to US government figures. US revenues from taxes and other sources are lower, as a percentage of GDP, than those of most other countries. In March 2010, President OBAMA signed into law the Patient Protection and Affordable Care Act, a health insurance reform that will extend coverage to an additional 32 million American citizens by 2016, through private health insurance for the general population and Medicaid for the impoverished. Total spending on health care – public plus private – rose from 9.0% of GDP in 1980 to 17.9% in 2010.
Nature Economist Elaine Meinel Supkis provides the following insights about The disparity between US Sovereign Power and US Sovereign Wealth. I often check out the global Current account balance:
This entry records a country’s net trade in goods and services, plus net earnings from rents, interest, profits, and dividends, and net transfer payments (such as pension funds and worker remittances) to and from the rest of the world during the period specified. These figures are calculated on an exchange rate basis, i.e., not in purchasing power parity (PPP) terms. Here are the nations with no sovereign wealth and lots and lots of debts and red ink spending in trade, etc:
Nearly all of Europe, much of the South American states like Brazil, India and Turkey and then, by far and away, hugely, far, far greater debt is…the mighty world power, the USA. We are not just dead last in sovereign debt but we owe more than the combined deficit of the worst ten nations!
And the cause of this isn’t government spending, it is trade deficits. Here are the top ten sovereign wealth nations:
We see that Germany has overtaken China in the listings. Last year, China was #1. The EU numbers look better than they really are due to this huge sovereign wealth factor of Germany. China is no slacker, either. They are neck to neck now. Japan is up there but has many severe deficits concealed by previous trade surpluses. They now run deficits and will fall down in the rankings very rapidly now which is why Abe is talking about building more nuclear power plants and is raging at China and South Korea very aggressively and said yesterday, he is spending more on the military now.
All the hollering in DC virtually not a peep is about the loss of sovereign wealth. The poorer our nation, the richer our rich become and this is due to offshoring wealth, offshoring our jobs and cutting their own taxes while running foreign wars for profit. This has made them all very much richer and us collectively very much poorer. And with the loss of union jobs and competition from cheap labor overseas, wages have fallen while the top 1% get richer and richer. Meanwhile, our own government runs these insane multimillion dollar lotteries to raise tax funds. These, in turn, encourage people to support no taxes on windfall wealth and strive to buy tickets rather than work honestly for a good wage. Whenever I go shopping, I have to wait behind people in line who are obviously in distress and desperately buying these silly tickets praying they will be ‘struck by lightning’ and be suddenly hoisted high in the heavens above the rest of us to live a life of idle luxury. This undermines the desire to work hard, do well and be sober and sane. It is crazy thinking. Wild thinking. It worships Lady Luck, and she is very fickle. Meanwhile, tax revenues in the US are not made up by running huge lotteries, the old way of taxing caused people to value labor more, now we value property more and even this is failing us with the recent asset bubble collapse.
Chris Rossini in Economic Policy Journal writes Endless War … And where you fit in.
QE1 stimulated global growth and corporate profitability, and investors funded Global Producers, FXR, and Small Cap Value Companies, RZV, as is seen in the ongoing Yahoo Finance Chart of ACWI, EEM, VGK, EPP,VTI, FRX, RZV. The Small Cap Value Shares, RZV, should be exceptionally fast fallers as they were quickened the most by Federal Reserve and ECB monetary policy; these include general entertainment company, Six Flags, SIX, business services company, FleetCor Technologies, FLT, and rental company, United Rentals, URI.
Through anticipation of Ben Bernanke’s QE 4, and through anticipation of Mario Draghi’s OMT, all forms of fiat wealth expanded dramatically with a risk-on momentum global debt based trade rally from June 1, 2012, through January 4, 2013, which produced Peak Commodities, DBC, September, 14, 2012 … Peak Credit, December 6, 2012 … Peak World Major Currencies, DBV, Peak Emerging Market Currencies, CEW, Peak Stocks, VT, and Peace Peace, January 4, 2013.
The Cement Industry stock Eagle Materials, EXP, has seen a terrific rise from October 2011. And Paper and container manufacturers as well as wood producers, traded by the ETF, WOOD, seen in this Finviz Screener, rose strongly beginning in June of 2012; these included, DEL, WY, LPX, PCL, UFPI, NP, TIS, UFS, PATK, BLL, PKG, KS, BKI, BZ, GLT, CLW, SEE, SWM, MWV, GPK, IP, and FBR on a rising price of Timber, CUT. which rose 28% in 2012.
The American Association of Individual Investors January 3, 2013 AAII Sentiment Survey for the week ending December 26, 2012, relates bullish sentiment slipped a bit off of its near-2012 high, % Bulls 38.7 -12.8% and AAII % Bears 36.2 +19.8%; this suggests that the seven month risk on global debt based momentum rally is over.
The Age Of Leveraging is history; the Age of Deleveraging will likely commence the second week in January 2013, as World Major World Currencies, DBV, Stocks, VT, have topped out, and Bonds, BND, began trading lower in December 2012, as is seen in their combined MSN Finance chart. Beginning September 14, 2012, closed end stock leader CSQ, has been unable to leverage over closed end debt leader PLF, as is seen in combined ongoing Yahoo finance chart … http://tinyurl.com/a3szqc
Both Transports, lYT, and Industrials, IYJ, jumped higher. When both turn lower together, Dow Theory, suggests that a global bear market will have commenced.
The turn from bull market to bear market will be seen in most of the Proshares 200% Inverse ETFs, presented BIS, FXP, SKF, SQQQ, REW, SSG, SMK, SDD, and EEV, seen in this Finviz Screener, and in their Yahoo Finance chart, starting to rise ….. And the rally in Proshares 200% ETFs, SAA, UYG, URTY, TQQQ, EET, UMX, XPP, seen in this Finviz Screener, and in their Yahoo Finance chart, starting to fall …. And the turn from bull market to bear market will see a rise in Gold Mining Stocks, GDX, and GLDX, as the Gold ETF, GLD, rises from its strong support from 160, and as Spot Gold, $GOLD, rises from 200 day moving average of $1650. The investment demand for gold will commence on growing awareness of the exhaustion of the worlds central banks’ monetary authority. In the age of Regionalism, physical possession of gold and diktat will be the only forms of sovereign wealth.
Tulip mania is always present at the end of bull markets. Tyler Durden report Margin Debt Soars To 2008 Levels As Everyone Is “All In”. The NYSE just reported margin debt just soared to a near five year high, with Margin Debt at a whopping $327 billion, surpassing the highest print since the Lehman collapse, and the highest level since February 2008. Not only is everyone all in based on , but they are all in on nearly record amounts of leverage. And, when it comes to high beta, or traditionally the most volatile stocks, those that serves as either leaders or laggards in the market in its year end phases, we take a look at the Russell 2000 Mini speculative exposure as shown by the CFTC’s weekly Commitment of Traders update. The chart needs no explanation: the net non-commercial spec longs in the Russell 2000 have never been more bullish. If the market, which is priced to absolute levered perfection disappoints, the high beta exposure will be annihilated.
Excerpts from The Economic Consequences of the Peace by John Maynard Keynes, 1919. pp. 235-248, as provided by PBS, communicates that debt deflation, coming from soon falling Major Global Currencies, DBV, and Emerging Market Currencies, CEW, will be totally disruptive to peace globally. “Keynes is often viewed as an economist who tolerated and supported mild inflation as an unfortunate byproduct of sustained, managed, economic prosperity. Yet this excerpt from The Economic Consequences of the Peace, written just at the end of World War I, makes clear how fully he understood inflation’s potential to destroy the fabric of society. It is also prophetic regarding the fate of all government attempts to control the price of goods by force of law. Its later passages also illuminate (by analogy) the negative effects on international trade of any currency crisis (such as the devaluation of Thailand’s baht that triggered the Asian economic contagion in 1997). The predicament of the responsible German trader facing rapid fluctuation in international currency values has been reproduced innumerable times across the world in the modern era of floating currency markets.”
Japan declares economic war agenda. Japan plans ‘nationalisation’ of factories to save industry. Japan’s government is to take the unprecedented step of buying factories and machinery directly with taxpayer funds, the latest in a series of radical steps to lift the country out of its deep slump. Finance minister Taro Aso brushed aside warnings that naked intervention would anger trade partners and damage Japan’s strategic alliance with the US. “Foreign countries have no right to lecture us,” he said, accusing the West of failing to abide by a G20 pledge in 2009 to forgo competitive devaluations.
The plan to buy plant involves leasing back the assets to firms in trouble. Analysts say it is a means of funnelling industrial aid, a move sure to raise the hackles of global rivals. It may violate World Trade Organisation rules on subsidies … Yen devaluation is a more complex story. It appreciated by over 25pc against the dollar between mid–2009 and late–2012, causing a slow “hollowing–out” of Japan’s manufacturing base as companies shift plant abroad. The currency has since slid 10pc to 86.4 yen on the “Abe effect”, the weakest in 27 months. But Renault–Nissan chief Carlos Ghosn said it still had further to go. “We are way long from what I consider a neutral territory,” he said. Stephen Jen, from SLJ Macro Partners, said Japan was playing with fire by trying to reflate, warning that this could decimate the bond portfolio of Japanese lenders and set off a banking crisis. The banks hold government bonds worth 900pc of their Tier 1 capital. Mr Jen said the country would be the focus of attention this year as political fireworks shifted from the US and Europe to Asia. “There will be dramatic events in Japan,” he said. And Zero Hedge writes Japan’s patriotic war agenda.
Global competitive currency devaluation will rapidly occur, with the Major World Currencies, DBV, and Emerging Market Currencies, CEW, tumbling, introducing worldwide economic and political chaos. Unfortunately, humanity is unaware that the dissolution of peace is at hand. Investors will be derisking and deleveraging out of both Bonds, BND, and stocks, ACWI, on the exhaustion of the world central banks’ monetary authority and inability to sustain global growth and corporate profitability.
US Government Debt began losing it value on the exhaustion of the world central banks’ monetary authority beginning in December 2012. The monthly chart of Municipal Bonds, MUB, shows a loss of 2.6% in December, 2012; and High Yield Municipal Bonds, HYMB, 1.7%. The closed end Michigan Municipal Bond Fund, MIW, is one of the debt investment that is leading Bonds lower; it lost 9.0% in December 2012. Michigan Radio report 500 layoffs looming for Detroit employees. The Detroit News reports More layoffs mean fewer city services, unions says. The 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, steepened in December 2012, as reflected in the Steepner ETF, STPP, steepening 3.5%. The benchmark Interest Rate on the US Ten Year Note, ^TNX, closed at 1.76%. The 10 Year US Government Note, TLT, lost 2.7% and The 30 Year US Government Bonds, EDV, lost 4.2%. Bond vigilantes are calling interest rates higher, beginning with US Government Debt, on the exhaustion of the World Central Banks monetary authority. Rising interest rates are destructive to dividend paying stocks. Vanguard Appreciating Dividend ETF, VIG, S&P Pharmaceuticals, XPH, S&P International Telecom, IST, and Dow Telecom, IYZ, all turned parabolically lower in the last half of December 2012, only to bounce higher January 2, 2013.
Bloomberg in article Egypt to start Dollar auctions as reserves hit critical level communicates the dissolution of peace caused by political and currency turmoil. Egypt’s central bank will start foreign exchange auctions today after appealing to Egyptians to scale back their use of dollars to avert a currency crisis fueled by the country’s political turmoil.
Chuck Watts presents the Ellen Brown, author of Web of Debt, article Fiscal Cliff: Free debt slaves with Jubilee Year American Style, and writes economists Michael Hudson and Steve Keen maintain that the only way out of debt deflation is debt forgiveness. I comment that through unlimited quantitative easing, Liberalism’s Aggregate Credit, AGG, is now a global debt burden that cannot be repaid or forgiven. Inflationism is now pivoting into Destructionism, and peace will evaporate like water in a desert. In Europe, banking insolvency is Spain, is going to be the trigger for more political unrest, this as Pater Tenebrarum writes in Acting Man Bankia shareholders wiped out.
Bible prophecy of Daniel 2:25-45, presents the past, current, and future sovereignty of ruling empires. The sovereignty of the Milton Friedman Free To Choose Floating Currency, Banker and Liberalism Regime, which have supported the US and the UK as twin iron giants of global authority and power, is waning, as the dynamos of corporate profit and global growth are winding down, on rising interest rates, and steeping 10 30 Treasury Debt Yield Curves worldwide. New sovereignty, the sovereignty of the Beast Regime of Regionalism, Totalitarian Collectivism, and Authoritarianism, is rising to form a Ten Toed Kingdom of regional authority and power, where regional kings, and their monetary popes, will provide seigniorage, that is moneyness, through diktat.
3C) … There is no personal sovereignty nor human action as perceived by Libertarians; there is only the Sovereign Lord God, acting sovereignly in the affairs of mankind.
God has been acting behind the scenes for centuries, bringing forth global empires, Daniel 2:25-45.
He has appointed His Son, Jesus Christ, as Sovereign Administrator, and placed him in charge of the economy of God, Ephesians 1:10, to pivot the world from the fullness of prosperity and choice in the Age of Sovereign Nation States and Liberalism, to the completion of austerity and diktat in the Age of Regionalism and Authoritarianism.
Jesus Christ is acting with universal authority, and has unleashed the First Horseman of the Apocalypse to effect global political and economic coup d’etat to transfer the baton of sovereignty from nation states to regional leaders, Revelation 6:1-2. In the coming Age of Crises, Jesus promises peace to his servants, as he said, “Peace I leave with you; My peace I give to you; not as the world gives do I give to you. Do not let your heart be troubled, nor let it be fearful”, John 14:;27.
In Europe, insolvent sovereigns and their insolvent banks have neither sovereign authority, nor monetary authority. All the PIGS, use proxy sovereign and monetary authority; they use that of Mario Draghi to obtain seignorage for their fiscal needs; and in so doing, these have brought about the end Liberalism, through the peaking out of Major World Currencies, DBV, Emerging Market Currencies, CEW, Stocks, VT, and Debt, AGG.
The WSJ reports Spain drains pension fund in borrowing spree Spain has been quietly tapping the country’s richest piggy bank, the Social Security Reserve Fund, as a buyer of last resort for Spanish government bonds – with at least 90% of the €65 billion ($85.7 billion) fund has been invested in increasingly risky Spanish debt. Of course, this is nothing new, the US (and the Irish) have been using quasi-government entities to fund themselves in a mutually-destructive circle-jerk for years – the only difference being there are other buyers in the Treasury market, whereas in Spain the marginal buyer is critical to support the sinking ship. The Spanish defend the use of pension funds to buy bonds as sustainable as long as it can issue bonds – and yet the only way it can actually get the bonds off in the public markets is through using the pension fund assets.
After the crisis began, some of those countries began using the pension reserves for other contingencies, such covering a drop in foreign demand for their government bonds. Since the collapse of Ireland’s property boom, for example, most of its pension fund has been used to buy shares of nationalized banks and real estate for which no foreign buyers could be found.
Spanish officials defend the heavy investment of the Social Security Reserve Fund in their government’s high-risk bonds. They say the practice is sustainable as long as Spain can continue borrowing in financial markets, and they predict the economy will start to recover late in 2013, easing the debt crisis.
“With foreign investors staying away from the Spanish debt market, you’re going to need all the support you can get from domestic players,” said Rubén Segura-Cayuela, an economist with Bank of America-Merrill Lynch.
Spain’s commercial banks already have increased their Spanish government-bond portfolio by a factor of six since the start of the crisis in 2008, and now own one-third of government bonds in circulation.
The percentage of Spanish government debt held by the Social Security Reserve Fund stood at 55% in 2008, according to official figures; by the end of 2011 it had risen to 90%. Analysts say the percentage has continued to rise, even as international agencies have lowered Spain’s credit ratings. Spain’s continued use of those reserves to buy its own bonds appears to violate a rule set by government decree that mandates their investment only in securities “of high credit quality and a significant degree of liquidity.”
Steve Matthews of Bloomberg reports Federal Reserve Bank of St. Louis President James Bullard said purchases of sovereign debt by the European Central Bank would amount to fiscal policy that is better conducted by democratically elected governments. ‘This is ‘fiscalization’ of monetary policy: Asking the central bank to take actions far outside the remit of monetary policy,” Bullard said… ‘Assistance like this from a central authority to a region is best brokered through the political process in democratically elected bodies.
The purchase of Spain’s Treasury Debt from Spain’s Pension Agency by the government of Spain creates Eurozone Moral Hazard, a condition where a transaction between two parties, creates a cost that eventually will be born by an unrelated third party, that is, all those who use the Euro currency.
Solving a debt problem with more debt and the creation of moral hazard, makes for a collectivization of debt within the EU, where the ECB, with its monetary authority and sovereignty underwrites the fiscal needs of Spain. In so doing, Spain’s national sovereignty is passing away, and regional sovereignty is coming of age.
Traditional seigniorage, that is moneyness, that has come from global buyers and sellers is history. As a result, regional governance is rising to replace democracy. All those residing in Euroland now live in a debt union and share in Spain’s insolvency, and will share in common austerity and debt servitude to masters in Brussels and Berlin, as foretold by John The Revelator in Revelation 13:1-4, where the Beast Regime of Authoritarianism rises from the profligacy of the Mediterranean nation states.
Greece is no longer a sovereign nation state, rather it is a client state that exists in a region of economic governance overseen by the Troika and the ECB. A European Super State is forming where the ECB is sovereign over all in Euroland. Soon, every one of the PIGS, will be satellite peripheral appendages to Sovereigns in Brussels and Berlin.
Greeks cannot be Germans. There is an ethnic, cultural and historic divide between Nordic and Latin Europe, yet the Greeks and the Germans will be one, all living together in austerity and debt servitude, under true European economic governance, as leaders will be meeting in summits to announce regional framework agreements which waive national sovereignty and pool sovereignty regionally to address a regional banking, credit, and financial system collapse; the accumulated debts of Liberalism will be applied to every man, woman and child in the Eurozone. Most definitely austerity is the way of the future. Alex Lantier of WSWS reports Monti to lead coalition in Italian election. Italian Prime Minister Mario Monti has announced plans to lead an electoral coalition based on a pro-austerity “Agenda Monti for Italy.”
Kathimerini reports Non-performing loans at Greek banks rose 50% in 2012 to EU55b, citing bank officials. NPLs accounted for 23.4% of total loan portfolio at end of Dec. vs. 16% at end of 2011. Out of the Greek and European Sovereign Banking and Debt Crisis, regional constructs will provide diktat, which will establish peace, security, stability and sustainability regionally, and will serve as a model for Regionalism throughout the world. Thus the Beast Regime of Regionalism, Totalitarian Collectivism, and Authoritarianism, will rise to govern mankind in all of the world’s ten regions, and throughout all of mankind’s seven institutions.
As the US Dollar, $USD, closed at $80.50 at its 50 day moving average, it should be understood that the Banker Regime of Floating Currencies, Choice and Liberalism, was simply a means for the completion of the age of prosperity, that commenced shortly after World War II.
With the soon coming trade lower in Major World Currencies, DBV, on the exhaustion of the world central banks’ monetary authority, investors will be derisking out of Stocks, VT, and deleveraging out of Bonds, BND. The world will be entering into the age of austerity, as Liberalism’s final risk-on rally, that began in June, 2012, that has been based upon an expanding global debt trade, and currency carry trade investing, will see a strong reversal. Emerging Market Stocks, EEM, will be falling rapidly in value.
Doug Noland reports Global central bank “international reserve assets” (excluding gold) – as tallied by Bloomberg – were up $631bn y-o-y, or 6.2%, to $10.849 TN. Over two years, reserves were $1.790 TN higher, for 20% growth. M2 (narrow) “money” supply jumped $38.5bn to a record $10.432 TN. “Narrow money” has expanded 8.3% ($795bn) over the past year. The US Federal Reserve money printing machine has had strong economic influence as Julia Leite of Bloomberg reports. A gauge of U.S. corporate credit risk capped the biggest weekly drop in 13 months as employers added more workers in December and the unemployment rate matched a four-year low.
Liberalism’s Fiat Money System is an epitaph on the tombstone of a bygone era. Jesus Christ is most assuredly bringing forth Authoritarianism’s Diktat Money System, where Diktat will serve as credit, currency, and wealth. We are achieving Peak M2 Money; it will be turning lower in January 2013 on the exhaustion of the world’s central bank’s monetary authority, as reflected in the US Ten Year Interest Rate, ^TNX, continuing higher from its December 6, 2012, low of 1.6%, and the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, steepening from its December 6, 2012 low, as is seen in the Steepner ETF, STPP, steepening. A new metric for Money, that is Diktat as Money, should be established. Diktat Money might consist of number of people living under regional governance.
The expansion of the money supply through endless quantitative easing has pushed Ford on track to sell 2.2 million cars in U.S. this year. Ford, F, and the Automobiles, CARS, rose strongly the week ending December 28, 2012. It has been the increase in the money supply that has driven Ford F-Series truck sales to their highest level since 2007.
Some are calling for a Debt Jubilee. Chuck Watts writes “The Empathy Surplus Project has been following the work of the Public Banking Institute and feature it’s work under the meme of Ethical Business. Ellen Brown is an attorney and president of the Public Banking Institute. In Web of Debt, her latest of eleven books, she shows how a private banking oligarchy has usurped the power to create money from the people themselves, and how we the people can get it back. Her websites are http://WebofDebt.com, http://EllenBrown.com, and http://PublicBankingInstitute.org.”
Most assuredly, Jesus Christ, is not going to relinquish His sovereignty to Chuck Watts, Ellen Brown, Steven Keen, Michael Hudson, or any liberal, rather, he is introducing, and will produce all those things that were ordained from eternity past, and which are described in Revelation 1:1, as those things “which must, shortly come to pass”, meaning that once that have been set in motion, they fall like dominoes, one upon another, and thus cannot be restrained or abandoned; these things include the destruction of all existing economic and political life. Jesus Christ has every intention of bringing forth a Beast Regime of Regionalism, Totalitarian Collectivism, and Authoritarianism, Revelation 13:1-4, a Beast Ruler, Revelation 13:5-10, and a Beast Banker, Revelation 13:11-18, to rule the world.
Global Economics which was based upon sovereign nation states, and investment choice is passing away. Regional Economics which is based upon regional sovereign authorities and bodies, and their diktat is rising in its place to govern mankind.
Please contact me via comment, if you are able to help me to be scheduled at and attend the Milken Institute Global Conference, April 28-May 1, 2013, in LA, which purports to provide the insight and expertise to help navigate the troubled waters of global economics, through a unique international agenda and some of the smartest speakers on the planet, the conference will tackle the world’s most difficult challenges in an array of fields, to the environment and education, to government and health.
4) … Dr Housing Bubble writes The disappearing housing inventory – US housing inventory down over 50 percent from 2008. 5 million Americans not paying their mortgage or are in the foreclosure process.
Supply and demand. A basic fundamental point of any course in introductory economics. With housing most people go with what they see. Distressed inventory is a silent issue because you really do not know how deep problems are in a certain area unlike a home that is listed for sale with a big red sign in the front lawn. Yet we know that over 10,000,000+ Americans are currently underwater on their mortgages and another 5,000,000+ have stopped paying their mortgage or are currently in the foreclosure process. What people see however, is prices going up, available inventory going down, and their ability to buy more house expand courtesy of mortgage rates. Today I want to focus on the inventory side of the equation because it has fallen dramatically in the last few years and is causing bidding wars in certain metro areas. (The Dr relates that in Denver, where I use to live; and in Seattle, where I now live, housing prices per square foot have been relatively stable; in Denver they are $149/sq foot and in Seattle $158/sq foot.) What we are really seeing more than anything is the lack of supply on the market plus massively artificial interest rates. Is this healthy? The bulk of people only see two things when they look at the housing market. First, What is my monthly payment, and Secondly, What homes are available for sale.
The mania that is unfolding right now has nothing to do with underlying solid economic fundamentals. In fact, come what may with the fiscal cliff, we will be seeing a combination of cuts and tax increases. We’re reaching another debt ceiling and we still have big issues to contend with like the large number of baby boomers retiring and a much less affluent younger generation. How will this impact housing? Even for the above chart, how will new home sale construction look like? Many younger Americans have no desire for the giant 2,500 square foot McMansion model that seemed to go hand and hand with cheap energy. It is amazing how easily people forget history and the reality that 5,000,000 Americans have been foreclosed on (and we have millions more to go with 5,000,000 right now not paying their mortgage or are in the foreclosure process).
Supply has dwindled to incredibly low levels. Banks have altered the foreclosure process and this has had a short-term gain with a combination of low interest rates. Short of rates going lower or incomes moving up, we will see this momentum slow. Flippers and bidding wars are now back in the game. The lack of new home construction has caused what little inventory that is on the market to increase in price relative to the changes in the interest rate. How much more power does the Fed have in pushing rates lower than where they are today? (Hat Tip to Dollar Collapse for this article)
5) … Oil Price relates The imperial dream of the Muslim Brotherhood
6) … Hedge fund summary for 2012
6A) … Zero Hedge reports 88% of hedge funds, 65% of mutual funds underperformed the market in 2012. The average hedge fund, traded by HDG, gained 8%, while the S&P 500, SPY, notched a 13% gain in 2012.
6B) … Bloomberg reports The top 100 performing large hedge funds. Michael Serrill in the February 2012 issue of Bloomberg Markets magazine presents the best performing hedge funds managing $1 billion or more. My personal favorites include the following:
Third Point, is a Guernsey based investment firm. High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. FT reports One of the world’s most prominent hedge funds is sitting on a $500m profit after making a bet that Greece would not be forced to leave the eurozone, bucking the trend in a difficult year for the industry.
Third Point, headed by the billionaire US investor Dan Loeb, tendered the majority of a $1bn position in Greek government bonds, built up only months earlier, as part of a landmark debt buyback deal by Athens on Monday, according to people familiar with the firm.High quality global journalism requires investment. The windfall marks out the New York-based firm as one of the few hedge fund managers to have profited from the eurozone crisis. Standard & Poor’s, the rating agency, raised its assessment of Greece’s sovereign debt by several notches on Tuesday, citing the eurozone’s “strong determination” to keep the country inside the common currency area. Mr Loeb is one of only a handful of hedge fund titans to have made big returns this year. The $2tn hedge fund industry has struggled to find its confidence after two years of lacklustre returns The Greek government swapped holdings of its own debt for notes issued by one of the eurozone’s rescue facilities at a value of 34 cents on the euro.
Third Point had scooped up holdings of Greek debt earlier this year for just 17 cents on the euro. The firm has also retained a sizeable position in Greek debt because Mr Loeb believes there could still be a long way for the bonds to rally further next year. Analysts at the firm believe the bonds could rally by a further 40 per cent. A spokesperson for Third Point, which manages assets of $10bn, declined to comment on the trade. Third Point has made its investors a 20 per cent return so far this year, compared with 4.9 per cent for the average hedge fund.
Banco BTG Pactual Global Asset Management, is a Sao Paulo, Brazil based investment firm.
Omega Advisors, is a New York, NY, based investment firm
Seer Capital Partners, is a New York, NY, based investment firm.
Tiger Global Management, is a New York, NY, based investment firm.
Jana Partners, is a New York, NY, based investment firm.
Citadel Advisors, is a Chicago, IL, based investment firm
Man Investments, is a London, UK, based investment firm; listed in the FTSE 250 Index as UK:EMG.
Halcyon Asset-Backed Advisors, is a New York, NY, based investment firm
D.E. Shaw & Co, is a Cupertino, CA, based investment firm.
Blue Harbour Group, is a Greenwich, CT, based investment firm.
Viking Global Investors, is a New York, NY, based investment firm.
DoubleLine Capital, is a Los Angeles based investment firm
QVT Financial, is a New York, NY, based investment firm.
Blackrock Alternative Investments, is a New York, NY, based investment firm.
Greenlight Capital, is a New York, NY, based investment firm
Beach Point Capital Management, is a Santa Monica, based investment firm.
New Mountain Capital, is a New York, NY, based investment firm.
Angelo Gordon & Co, is a New York, NY, based investment firm
Elliott Management, is a New York, NY, based investment firm.
Autonomy Capital, is a UK based investment firm
Bridgewater Associates, is a Westport, CT, investment firm
OxFORD Asset Management, is an Oxford, UK, based investment firm
Hudson Bay Capital Management is a New York, NY, based investment firm
Calamos, is a Naperville, IL, based investment firm
Hayman Capital Management, is a Dallas, TX, based investment firm
King Street Capital, is a New York, NY, based investment firm.
Discovery Capital Management, is a Vancouver, BC, based investment firm
SAC Capital Advisors, is a Stamford, CT, based investment firm
Visium Asset Management, is a New York, NY, based investment firm
Elliott Management, is a New York, NY, based investment firm.
Two Sigma Investments, is a New York, NY, based investment firm.
Pimco Investment Management, is a Newport Beach, CA, based investment firm
Highside Capital Management, is a Dallas, TX, based investment firm.
Senator Investment Group, is a New York, NY, based investment firm
Och-Ziff Capital Management Group, is a New York, NY, based investment firm
Carlson Capital, is a New York, NY, based investment firm
The following are mortgage based, distressed investment based, or credit based, investment firms, and were not included as in the highlighted list:
Pine River Capital Management
Structured Portfolio Management
Providence Investment Management
Marathon Asset Management
MKP Capital Management
GoldenTree Asset Management
Fortress Investment Group
York Capital Management
BlueMountain Capital Management
DW Investment Management
GoldenTree Asset Management
Marathon Asset Management
Cerberus Capital Management
Canyon Capital Advisors
Redwood Capital Management
York Capital Management
Vertex One Asset Management
Beach Point Capital Management
GSO Capital Partners
Strategic Value Partners
Avenue Capital Group
Monarch Alternative Capital
7) … Insightful Reading
Zero Hedge Grant’s Interest Rate Observer: Free best articles compilation
Pater Tenebrarum, Acting Man 2013 Outlook, Part One: Global Monetary Conditions
8) …. A personal note.
I am thankful that I have time to reflect and write on the Revelation of Jesus Christ, sovereignty, seigniorage, Liberalism and Authoritarianism.
I reside in Bellingham, the City of Subdued Excitement, and have no financial license, and do not practice financial planning, and that I have no material wealth of any type.
The highlight of the week was a taco from Taco El Tule, and a small thermos of V8 Juice, which I consumed at a park bench at the Marina.
9) … Keywords