A European Superstate Will Emerge Out Of A Soon coming Financial Apocalypse

Financial Market report for the week Friday January 11, 2013

1) … On Wednesday, January 9, 2013
Jeremy Warner of The Telegraph writes Central banks must switch off the printing presses before it’s too late. Only a year to go now. Ben Bernanke, chairman of the US Federal Reserve, has let it be known that he won’t be seeking a third term once his present one expires in January 2014, and few can blame him.
It is really quite hard to justify further rounds of money printing given the evident recovery that is now taking place. Even so, Mr Bernanke has indicated he’ll keep the printing presses at full throttle at least until unemployment sinks below 6.5pc. This is a mistake, with some possibly quite malign unintended consequences for both the US and world economies.
Like others, I was a strong supporter of the initial burst of “quantitative easing”, both in the US and the UK, when it seemed a very necessary tool for combating the collapse in the financial system and the accompanying, violent, contraction in credit.
And by targeting the “toxic” loans of failing banks for asset purchases, the Fed seems to have practised a rather more effective form of it than we saw in either Britain or Europe. As Bluford Putnam, chief economist of CME Group, has argued in a paper for the Review of Financial Economics, buying up these assets has helped the US banking system rebuild capital and liquidity much more rapidly than has occurred in either the UK or Europe, enabling a return to balance sheet growth.
In Britain, by contrast, QE has almost exclusively targeted government debt, which has been very helpful to the Government in helping to fund a still burgeoning fiscal deficit at very low interest rates, and in keeping the bankers in bonuses, but has failed to restore health to the banking system and seems increasingly ineffective in stimulating demand in the real economy. We’ll reserve judgment on “funding for lending”.
Meanwhile, the European Central Bank largely spurned asset purchases altogether and instead focused on long-term liquidity facilities. Solvency issues in the European banking system have therefore remained substantially unaddressed, preventing meaningful economic recovery.
Even so, the injection of central bank liquidity seems to have done a relatively good job in preventing catastrophe. Yet whether QE can continue to be justified after the financial system has been stabilised is much more questionable. The trouble is that today the purpose of QE is no longer really that of depressing interest rates or preventing a collapse in the money supply, but that of attempting to support aggregate demand.
Growing concern over mountainous public debt has left governments increasingly reliant on the supposed miracle remedies of monetary policy to restore economic growth. Monetary policy has become the only game in town, so much so here in Britain that the Government has elevated faith in the easy money policies of the Bank of England to cult-like status. Britain has blazed the trail, the Prime Minister once boasted, as “fiscal conservatives but monetary activists”. Regrettably, and perhaps predictably, the cult of QE has failed to deliver the goods.  Of course, it is possible that things might have been even worse without it, but the longer it goes on, the less likely this seems, and meanwhile some quite counterproductive long-term consequences are starting to emerge.
Some of the wider adverse consequences of QE have been brilliantly elucidated in a paper for the Dallas Federal Reserve by William White, former economic adviser at the Bank for International Settlements. Since Mr White was one of the few monetary gurus to have accurately highlighted the dangers of the credit bubble when it was still possible to do something about it, his analysis deserves some attention. His main conclusion is that there are limits to what central banks can do, and that monetary stimulus has essentially already hit the buffers. The consequences of persisting are therefore quite likely to be negative from here on in.
These negatives include misallocation of capital likely to prove quite harmful to growth in the long run. For instance, easy money encourages banks to keep existing debtors afloat even though they might be insolvent, thus denying credit to new businesses and younger households. This “evergreening” of long standing debtors creates an army of weak, zombie-like customers.
What’s more, QE results in some very undesirable distributional effects. Those able to afford it are charged higher interest rates than otherwise, while debtors are constantly favoured over creditors. The previously profligate are rewarded, and the thrifty are punished, creating moral hazard on a grand scale. Easy money in response to a crisis can also generate serial bubbles, with each action setting the stage for a later crisis. But perhaps worst of all, it encourages governments to do nothing. One possible defence of QE is that it at least buys time for governments to engage in debt reduction and structural reform to redress imbalances and increase potential growth.
Unfortunately, this time is not being well used. To the contrary, QE has become an excuse for doing nothing and carrying on as before in the Micawber-like hope that something will turn up. By allowing governments to borrow more cheaply, it also positively encourages irresponsible spending. Oh, what a tangled web we weave.

A review of bonds, BND, reveals that its already too late for sound and responsible monetary policy; and that a fincial catastrophe is just around the corner.  US Government Debt across the board, began losing its 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. And in related news Michigan Radio reports 500 layoffs looming for Detroit employees.  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 in December 2012, at 1.76%. The 10 Year US Government Note, TLT, lost 2.7% and The 30 Year US Government Bonds, EDV, lost 4.2%, in December 2102. The Federal Reserve’s monetary policies have crossed the rubicon of sound monetary policy and have resulted in making “money good” investments, unreliable and untrustworthy.

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 highly destructive to dividend paying stocks. Vanguard Appreciating Dividend ETF, VIG, S&P Pharmaceuticals, XPH, S&P International Telecom, IST, and Dow Telecom, IYZ, despite their participation in Liberalism’s blow off rally top, as is seen in their ongoing combined Yahoo Finance chart.

The chart of Mortgage Backed Bonds, MBB, the lynchpin of QE4, shows that they dropped sharply lower in value today, Wednesday, January 9, 2013. This as Distressed Investments, FAGIX, like those taken in by the US Federal Reserve under QE1, Call Write Bonds, CWB, Leveraged Buyouts, PSP, Junk Bonds, JNK, Senior Bank Loans, BKLN, and Spin Offs, CSD, traded higher with World Stocks

Zero Hedge reports Fed now pre- monetizing: Bernanke buys $300 million of Treasuries

Morningstar reports Riskiest subprime auto bonds shift into higher gear.  Santander Consumer USA on Wednesday sold $1.25 billion in asset-backed securities at record low yields for the subprime auto lender, as investors bet eroding loan quality wouldn’t produce losses on their bonds, while paying relatively higher yields. Demand was strongest on some of the lowest-rated debt, where investor orders for more than seven times what was available let dealers cut yields during a two-day marketing period.
(Hat Tip to Gary of Between The Hedges)

Liberalism’s seven month risk-on, global toxic debt based, currency carry trade rally, continued on with World Stocks, VT, and EFA, trading slightly higher today, as the Major World Banks, IXG, traded to a new high, being led higher by many of Liberalism’s most speculative banks, that is those seen in their Finviz Screener, with BCS, LYG, RBS, SAN, DB, IBN, HDB, NMR, MTU, UBS,  CS, GGAL, BMA, BPOP, IRE, BBVA, BAP, and CHIX trading higher; but, BAC, BFR, WF, trading lower.  It has been the City of London banks, BCS, LYG, RBS, that have been leaders underwriting the QE4 and OMT rally, as is seen in their ongoing Yahoo Finance Chart.

Of note, Reuters relates Ex-UBS CEO Rohner says “shocked, ashamed” at Libor rigging. And Bloomberg reports California cities sue banks over Libor rates, law firm says. Eight California counties and public entities sued UBS AG, UBS, Barclays Plc, BCS, and 20 other banks alleging they lost millions of dollars because the financial institutions manipulated the benchmark Libor rate. The plaintiffs claim they were cheated out of higher interest payments on investments such as interest rate swaps and corporate bonds tied to Libor. And the WSJ reports German Bank made huge bet, and profit, on Libor. Deutsche Bank, DB, made at least €500 million in profit in 2008 from trades pegged to the interest rates under investigation by regulators world-wide, internal bank documents show. The German bank’s trading profits resulted from billions of euros in bets related to the London interbank offered rate, or Libor, and other benchmark rates

Most all sectors rose today. Solar, KWT, Gaming, BJK, Home Building, ITB, US Infrastructure, PKB, and Biotechnology, IBB, XBI, seen in their Finviz Screener, rose to a new rally highs. Global Real Estate, DWX, and Real Estate, IYR, traded higher, on a slight flattening in the 10 30 US Treasury Debt Yield Curve, $TNX:$TYX, as the Steepner ETF, STPP, traded lower, and as the Interest Rate on the US Ten Year Note, ^TNX, traded below 1.90% to 1.85%.  Natural Gas, UNG, plummeted, inducing Commodities, DBC, lower. Gold, GLD, traded slightly lower, just below its 200 day moving average, inducing Gold Mining, GDX, slightly lower.

Bloomberg reports Iron ore seen set for bear market. Iron ore, which posted the biggest quarterly climb on record in the final three months of 2012, may extend gains from a 14 month high as Chinese mills restock, then tumble into a bear market, according to Deutsche Bank AG.  Ore with 62 percent content delivered to Tianjin rose to $158.50 a dry ton yesterday, the highest since October 2011, according to data from the Steel Index Ltd.  The steelmaking raw material rallied 39 percent in the three months through December, the biggest gain since at least 2009, as demand in China rebounded on optimism the world’s second largest economy is recovering.  Gross domestic product is poised to expand 8.1 percent this year, from 7.7 percent in 2012, according to the median estimate of economists surveyed last month by Bloomberg.  Baoshan Iron & Steel, China’s largest steelmaker, said on January 7, 2013, that it will raise product prices. Iron ore swaps for January fell 0.7 percent to $151 a dry ton, according to GFI Group Inc.  That’s the highest for the coming month since October 2011, according to data from SGX Asiaclear, the largest clearer of the contracts. The forwards anticipate prices retreating to $125.50 a ton by September, GFI’s figures show.  The spike in iron ore prices is likely to be temporary, the Australian newspaper said January 3, 2013, citing Sam Walsh, Rio Tinto Group’s iron ore and Australia chief executive officer.  Rising Chinese demand has created conditions for a last run up in prices, Credit Suisse Group AG said January 3, 2013, forecasting an average $130 a ton in the first quarter and $125 in the second. “The theme for iron ore in 2013 could be a tale of two halves in our view: strength in H1 and weakness in H2,” Deutsche Bank analysts Daniel Brebner and Xiao Fu said in the report dated yesterday.  Inventories of steel and iron ore have fallen “considerably within China over the past two quarters.”  Inventories of ore held in Chinese ports declined for four straight months through to December, touching 70.54 million tons on December 28, 2012,  the lowest level since September 2010, according to data from Beijing Antaike Information Development Co.  The reserves were at 72.97 million tons as of the week to January 4, 2013. Baoshan Iron & Steel said on January 7. 2013, that it will raise hot-rolled product prices by 160 yuan ($25.70) per ton for February delivery.  Jiangsu Shagang Co raised its rebar prices January 1, 2013, according to Shenyin Wanguo Futures Co Further increases in Chinese steel prices are needed to sustain iron ore above $150 a ton,  Commonwealth Bank of Australia said yesterday. Iron ore is measured in dry tons, or metric tons less moisture. At Tianjin port moisture can account for 8 percent to 10 percent of the ore’s weight.

A spectacular blow off top is being made in Major World Currencies, DBV, of which the rise in the US Dollar, $USD, UUP, is a component. Iron ore prices have climbed more than 50% since the beginning of December and that has helped sustain the Australian Dollar, FXA, at a multiple top high. The Brazilian Real, BZF, is at strong resistance.  The Canadian Dollar, FXC, is at strong resistance in a downward channel. The British Pound Sterling, FXB, fell strongly today. The Swedish Krona, FXS, traded lower today. Emerging Market Currencies, CEW, is hitting very strong resistance. The Chinese Yuan, CYB, rose strongly to a new high. The US Dollar, $USD, UUP, traded up; it will be going higher, as investors deleverage out of carry trade investments in stocks, VT, EEM, and EFA; and disinvest out of commodities, DBC, on the soon coming failure of Liberalism’s Central Bank Finance to sustain global growth, corporate profitability and sovereign nation states’ sovereign debt, BWX, EMB. Peak Currency, DBV, CEW, is being achieved.  Competitive currency devaluation is imminent.

US iron ore producer CLF, traded lower and Coal Miners, BTU, and KOL, traded lower today, and China Minerals, CHIM, manifested bearish engulfing, portending a decline.

China Daily Mail reports The danger of Chinese overproduction.  Coal, KOL, iron ore, BHP, steel, SLX, PKX, cotton, BAL, clothing, MHK, heavy equipment, KUB, ship-building, SFL, solar cells, KWT, LEDs, CREE, and property, TAO, all of these commodities at one point or another in the last year have been a hot topic due to overstocks caused by government-influenced overproduction. Falling prices and decreased global demand have crippled many in these industries, and many bankruptcies and collapses have occurred. They are emblematic of the problems that China is going to continue to face in the future.
China’s economic growth has been based significantly on a rapid expansion of government stimulus through monetary expansion over the past several years. This policy has borne fruit. GDP is up, and growth rates, although not always meeting expectations, regularly exceed the growth rates being achieved in the rest of the world. But this growth comes with a price,  an instability in the very markets it seeks to develop and grow.
Monetary stimulus injects liquidity into the markets in an effort to circumvent the natural processes and operation of the markets.
Government stimulus has been great for boosting production rates and GDP growth across the country. All sorts of ore and steel and agricultural products have been produced by the massive expansion of productive capacity of the Chinese economy. But this monetary stimulus has only managed to result in the Chinese economy overproducing in all sorts of sectors, and has not managed to create sufficient demand for these projects to keep the market cleared.
Normally, the markets would penalize overproduction through losses, and production would only be expanded to fit the projected actual needs of the public. But these restrictions have been circumvented by the rules and regulations businesses in China have to face. Instead of cutting back on production in the simulated fields, incentives are given to the industries they feed, the buyers of those products, to expand their own production in order to clear the increased supply. But this only succeeds in pushing the day of reckoning further into the future.
It does not succeed in correcting the initial economic instability, which continues unabated, and, in fact, continues to expand under the previous incentives. Moreover, it succeeds in creating a second instability, in that the newly stimulated production areas eventually face their own problem of overdevelopment.
Overproduction of iron ore leads to stimulation of and overproduction of the steel industries, which lead to stimulation of and overproduction of ships, heavy equipment, and buildings. Overstimulation of cotton leads to stimulation of and overproduction of textiles which leads to the same in clothing.
Overstimulation of solar cells leads to overstimulation of and overproduction of the solar industry. Eventually all sectors of the economy are promoted beyond the ability of the public to consume.
All this stimulation by government leads to a wild euphoria of participants in these industries. People feel liberated with the new incomes they have and the fresh money in their pockets. This leads to wild spending habits and speculation in all sorts of areas. Lately, it has been reported that speculative bubbles in wine, apples, property, and even graves have grown up all over China. Some cities, such as Changsha, are even reporting how people are “releasing their spending power” by borrowing against paychecks in order to keep up their newfound lifestyle. Many of these bubbles have already burst, such as in the mining town of Ordos, while others are showing the early stages of a collapse.
Chinese efforts to contain the oversupply through government buying programs are only going to make things worse. Many such efforts were attempted in the United States during the Great Depression, only to be rejected as failures. Government buying programs only succeed in transferring ownership of the supply to the government without curbing, and even sometimes encouraging, through creation of a guaranteed buyer, the habits of the producers.
Eventually this stock must be liquidated, either by direct destruction and loss by the government, or by dumping programs, which will only succeed in bringing about price swings on the markets as prices are initially depressed from the dumping before rising back to the rate at which the Chinese government continues to buy. All of these policies end up destroying wealth by simultaneously attempting to encourage and discourage production. Clearly, the Chinese government has a serious problem on its hand of what to do with the monster they have created. To let the markets correct is to allow a liquidation and correction to occur, revealing the error of their ways. But to let the process continue is to run a race against reality, with the magnitude of the problem, the size of the economic instabilities, growing greater every day. Related articles include Business Insider report The worst Chinese stimulus projects of 2012 and Business Insider report Can China’s new leader prevent an economic crisis?

Bloomberg reports China throws Gillard a lifeline as iron ore revives. The determination of China’s new Communist leadership to guard against slower economic growth could throw a political lifeline to Australia’s first female prime minister as she bids for re-election.
China’s growth is forecast to accelerate this year, helping spur a 78 percent rebound in the price of iron ore that led Perth-based Fortescue Metals Group Ltd, FMG,  to resume work at a project suspended four months ago. A revival of the mining boom would boost tax revenue and bring Prime Minister Julia Gillard’s budget surplus goal within reach as she seeks to come from behind in polls in an election later this year.
“It does put a surplus back in play,” said Shane Oliver, head of investment strategy in Sydney at AMP Capital Investors Ltd., which manages more than A$126 billion ($132 billion).“That’s important for the government politically as the debate has come down to ‘in surplus good, in deficit bad,’ which is unfortunate because it ignores the fact that Australian finances are in good shape.”
Gillard’s minority government has been criticized by the opposition after the prime minister reneged on a 2010 election pledge not to introduce a carbon tax and backpedaled last month on a promise to deliver a surplus this year. Her administration trails in opinion polls even as the nation entered its third recession-free decade that’s yielded contained inflation, low unemployment and higher growth than other developed economies.
“Voters would respond very well to the government running a surplus,” said Zareh Ghazarian, a political analyst at Melbourne’s Monash University.
Reflecting the surge in iron-ore prices, the 10-year yield on Australian government bonds is at 3.41 percent, above the central bank cash rate. The local dollar has stayed above parity with the U.S. currency for more than six months, its longest stretch on record. BHP Billiton, BHP, the world’s largest miner, has advanced 21 percent since Sept. 5.
Iron ore is Australia’s biggest export in dollar terms.
Another key commodity  coking coal that’s used in blast furnaces may also rebound from the lowest prices since 2009 as China rebuilds steel supplies, Barclays nvestment-banking unit said in a Jan. 3 report. The destocking of steel has been more pronounced than usual and restocking typically begins in late December, weeks before the Chinese New Year, the London-based bank said.
Treasurer Wayne Swan said last month Australia is unlikely to deliver the surplus this fiscal year as weaker growth and a strong local currency curb tax receipts.
“What we’ve seen is a sledgehammer hit our revenues,”Swan said in a Dec. 20 news conference in Canberra. Rather than find spending cuts that further slow the economy, he said the government would concentrate on supporting job growth.
Gillard had staked her economic credibility partly on delivering the first surplus since the 2009 global recession. The government, in a midyear review released in October, forecast a budget surplus of A$1.08 billion in the 12 months ending June 30. It recorded a A$44 billion deficit last fiscal year.
Returning the federal budget to surplus was rated as a high priority by 35 percent of voters surveyed by Newspoll for the Australian newspaper on Oct. 26-28, while 56 percent said it was either not a priority or a low one. The telephone survey of 1,218 people had a margin of error of plus or minus three percentage points.
Joe Hockey, the opposition’s treasury spokesman, said Swan’s Dec. 20 announcement that a surplus was unlikely vindicated his stance on the government. “They’ve been fudging the numbers and we said they’re never going to deliver a real surplus and we’ve been proven right,” he said in a Dec. 21 interview with Australian Broadcasting Corp. television.
The government relies on the support of Greens and independents to maintain a majority and Gillard’s popularity fell last month. Support for the ruling Labor party dropped four percentage points to 32 percent, with Tony Abbott’s Liberal-National opposition rising three points to 46 percent, according to a Newspoll survey published in the Australian on Dec. 11.
Increased confidence provided by a rebound in prices is reflected in the decision by Fortescue, Australia’s biggest iron ore producer after Rio Tinto Group, RIO, and BHP Billiton, BHP, and a bellwether for the industry, to resume work on its Kings deposit in the Pilbara region
Fortescue announced Dec. 27 it will resume development that will increase production capacity by 40 million metric tons a year once the mine starts in December 2013, taking total capacity to 155 million tons a year. Macquarie Group Ltd, MQG, said last month the company will account for about 50 percent of the growth in global iron ore supply this year.

2) … On Thursday, January 10, 2013
World Stocks, VT, and World Small Caps, VSS, rose to blow off top highs, as Market Watch reported China’s December trade surplus jumped to $31.6 billion, well above economists’ expectations for a $19.6 billion surplus, as exports climbed 14.1% from a year earlier. During the day, Vietnam, VNM, China, YAO, Chinese Industrials, CHII, Chinese Materials, CHIM, Chinese Infrastructure, CHXX, Chinese Small Caps, ECNS, and Shanghai, CAF, traded higher. Taiwan, EWT, and South Korea, EWY, traded higher

Italy, EWI, Spain, EWP, Ireland, EIRL, Germany, EWG, led Europe, VGK, higher. Doug Noland reports Spain’s 10-year yields dropped 16 bps this week to 4.86% (down 34b ps y-t-d) and 10-yr yields fell 13 bps to 4.12% (down 36 bps), low market yields since November 2010 . Angeline Benoit of Bloomberg reports Industrial output in Spain dropped for a 15th straight month in November and almost twice as much as economists predicted as the recession in Europe’s fourth largest economy deepens; output at factories, refineries and mines fell 7.2% from a year earlier.  I relate that it is the ECB’s monetary authority, and not the traditional marketplace acknowledgement of Spain’s national sovereignty and economic capability, which has reduced the yield on Spain’s Treasury Debt and provided seigniorage, that is moneyness, to Spain’s stocks, traded by the ETF EWP.  The reality is that Spain is an insolvent sovereign, and that its banks, such as Banco Santander, SAN, are insolvent financial institutions, which are simply given credit liquidity by Mario Draghi’s LTROs, and OMT. Insolvent sovereigns and insolvent banks cannot sustain Liberalism’s dynamos of economic growth and corporate profitability.  It is clearly evident that Authoritarianism’s dynamos of regional security, stability and sustainability are powering up regional authority.  After a soon coming global financial collapse, EU leaders will meet in summits, renounce national sovereignty, and announce regional framework agreements which pool sovereignty regionally. In this manner, a Federal Eurozone Super State will emerge out of economic crisis, where a Sovereign, that is a European ruler, and his partner, the Seignior, the top dog banker who takes a cut, will provide diktat through regional public private partnerships that oversee economic production and manage the factors of production.

Poland, EPOL, Norway, NORW, Netherlands, EWN, Austria, EWO, Sweden, EWD, and Switzerland, EWL, traded higher.  The United Kingdom, EWU, Mexico, EWW, Australia, EWA, and Canada, EWC, traded higher.  Peru, EPU, Argentina, ARGT, New Zealand, ENZL, and the Emerging Markets, EEM, traded higher.

World Banks, IXG, rose parabolically higher, definitely establishing a blow off top, IRE, DB, NBG, SAN, led EUFN, higher. SMFG, MFG, MTU, NMR, rose higher. RBS, BCS, LYG, rose higher. CS, UBS, rose higher. BBVA, GGAL, rose higher. C, and BAC, led RWW higher.  Kristina Peterson of the Wall Street Journal writes The Federal Reserve sent a record $88.9 billion in profits to the Treasury Department in 2012 as it reaped gains from the unconventional programs it launched to spur economic growth. Last year’s remittance to Treasury topped the previous record of $79.3 billion in 2010. Since the financial crisis and ensuing recession, the Fed has initiated a host of bond-buying programs and other efforts. In the process, the Fed has expanded its portfolio of securities and loans to $2.9 trillion at the end of 2012 from less than $900 billion before the crisis. The stimulus efforts for now are generating large profits as the central bank earns interest on the assets.

Automobiles, CARZ, Airlines, FAA, and high dividend paying stocks, Shipping, SEA, and International Real Estate, DRW, traded higher.

Cement, EXP, rose higher on Commodities, DBC, Small Cap Energy, PSCE, Energy Service, OIH, IEZ, rose on higher Oil, USO.   Global Miners, PICK, Copper Miners, COPX, rose on higher Copper, JJC.  Gold Miners, GDX, rose on higher Gold, GLD.  Silver Miners, SIL, rose on higher Silver, SLV.  And Global Producers, FXR, seen in this Finviz Screener traded unchanged, at their blow off top high, as NOK, PHG, LYB, LPL, CELG, TSM, IP, CAT, ABB, FMX, SAP, ERIC, FWLT, ITW, ARMH, ASML, EXP, MKTAY, SYT, FBR, PPG, traded higher; and as AA, IP, EMC, ITB, traded lower.

Bonds, BND, traded unchanged as the most toxic of debt, FAGIX, PSP,  BKLN, CWB, JNK, CSD, rose higher, and as all US Government Bonds, that is the 30 Year US Government Bonds, EDV,  the 10 Year US Notes, TLT, Mortgage Backed Bonds, MBB, Municipal Bonds, MUB, Build America Bonds, BABS, traded lower.

Major World Currencies, DBV, Emerging Market Currencies, CEW, and the Chinese Yuan, CYB, traded to  new highs as the Euro, FXE, the Swiss Franc, FXF, the Swedish Krona, FXS, the British Pound Sterling, FXB, the Australian Dollar, FXA, the Brazilian Real, BZF, the Australian Dollar, FXC, traded higher. The Yen, FXY, and the US Dollar, $USD, UUP, traded lower.

Bloomberg reports China Shipyards Set to Spark Price War Among Rigmakers. China’s shipbuilders are set to spark a price war in the oil-rig market. With orders for new ships plunging to an eight-year low in 2012, China Rongsheng Heavy Industries Group Holdings Ltd. (1101) and its local rivals are foraying into the offshore business, lured by a market that will reach about $328 billion in 2017. The new entrants are lowering prices to grab contracts, hurting margins at Singapore-based Keppel Corp. (KEP) and Sembcorp Marine Ltd. (SMM), the world’s two-biggest rig makers. “It’s like moving from one bottomless pit to another,” said Park Moo Hyun, an analyst at E*Trade Securities Co. in Seoul. “Chinese shipyards are competitively trying to get into what they see as a lucrative business. But the consequence of that is they could end up distorting the whole market.”

Bloomberg reports China’s inflation accelerated more than forecast to a seven-month high as the nation’s coldest winter in 28 years pushed up vegetable prices, a pickup that may limit room for easing to support an economic recovery. The consumer price index rose 2.5% in December from a year earlier. That compares with the 2.3% median estimate. ‘With growth momentum firming up and inflation picking up, the likelihood of any further easing has disappeared and the next interest-rate move will probably be an increase,’ which could come as early as the fourth quarter, Zhu Haibin, chief China economist at JPMorgan in Hong Kong, said  Inflation may temporarily accelerate to more than 3 percent next month, Zhu said, reflecting the impact of cold weather on food prices and the weeklong Chinese Lunar New Year holiday, which fell in January last year.  Food prices rose 4.2% in December from a year earlier, the most since May. Vegetable prices increased 14.8% from a year earlier.

3) … On Friday, January 11, 2013,
World Shares, VT, and VSS, DLS, EFA, and Closed End Equity, CSQ, TY, traded unchanged, at their new blow off top highs; while Emerging Markets, EEM, and Emerging Market leaders, EWX, and Emerging Market Financials, EMFN, traded lower, producing Peak Stock Wealth.
Coal, KOL, traded lower and Steel, SLX, which induced China Infrastructure, CHXX, and India Infrastructure, INXX, lower.
Global Miners, PICK, such as BHP, CCJ, WLT, CENX, KALU, ACH, AA, ZINC, GMO, Rare Earth Miners, REMX, and Uranium Miners, URA, traded lower on lower Base Metal, DBB, prices.  Copper Miners, COPX, traded lower on a lower price of Copper, JJC.
Biotechnology, IBB, seen in this Finviz Screener, traded lower
Regional Banks, KRE, seen in this Finviz Screener traded lower.
Boeing, BA, turned Aerospace Companies, PPA, lower.
Gaming Stocks, BJK, and VICEX, traded lower.
Pipelines, EMLP, and Automobiles, CARZ, F, GM, TTM, rose to new highs.
US, VTI, traded unchanged, Europe; VGK, traded higher; but Asia, EPP, traded lower, with Vietnam, VNM, China Industrials, CHII, China Small Caps, ECNS, Shanghai, CAF, China Financials, CHIX, China Real Estate, TAO, and India Small Caps, SCIN, leading lower. Brazil, EWZ, traded lower.

South Africa, EZA, is a market place burse of investments, that as a whole serve as a  weathervane indicating stock market direction.  It’s weekly chart, suggests that a market top has been achieved.  It’s daily chart, shows a parabolic trade lower, suggesting that the seven month risk-on global debt based currency carry trade rally is history.  The rally in Transportation Shares, IYT, especially R, United Parcel Service, UPS, Union Pacific, and Fedex, FDX, seen in their combined chart to outperform the  Global Producers, FXR, also suggests that a market top has been achieve. Specifically, the strong performance of Ryder, R, is another canary in the stock market coal mine warning investors to get out! Zacks reports Ryder Is Bull of the Day.  Pragmatic Capitalism relates Rail Traffic Starting to Show Signs of Weakness.

Bonds, BND, with the exception of Emerging Market Bonds, EMB, rose. The most toxic of debt, Distressed Investments, FAGIX, Leveraged Buyouts, PSP, Bank Loans, BKLN, Call Write Bonds, CWB, and Junk bonds, JNK, rose parabolically higher.  Liberalism’s Global Debt Bubble burst December 6, 2012, when Bonds, BND,  traded lower; it the most toxic of debt that has been the basis for Liberalism’s final risk on stock rally.

The US Federal Reserve’s policies of Quantitative Easing, the ECB’s policies of LTROs and OMT, and now Abe’s Easing as reported by the New York Times in article, Japan approves $116 billion for urgent economic stimulus, have expanded global economic production, and driven International Corporate Bond rates to the lowest on record, and inversely driving the value of International Corporate Bonds, PICB, to their highest level  on record. Scott Grannis gives insight to the amount of Credit injected by the US, Federal debt held by the public (including the debt that has been “purchased” by the Fed, but excluding the debt that is owed to social security and other trust funds) is now $11.6 trillion, or about 72.5% of GDP. Total debt is now $16.4 trillion, about 103% of GDP. At the current rate, the burden of federal debt held by the public (i.e., debt as a % of GDP) will have increased by almost 25% of GDP during President Obama’s first term. That handily eclipses the increased debt burden under the two terms of President G.W. Bush (15.3%) and the two terms of President Reagan (15%).

The Euro, FXE, jumped higher to close at 132.36, in what is likely to be a evening star chart pattern. Mike Mish Shedlock writes Yen falls to lowest level since 2010. The US Dollar, $USD, UUP, traded lower, to 79.56, near 200 day support, which took Major World Currencies, DBV, lower from its rally high; and Emerging Market Currencies, CEW, traded unchanged, at its rally high: the world is passing through Peak Currencies.  Competitive currency devaluation, and a rise in the US Dollar, is imminent.

Doug Noland writes Today, in the midst of the greatest Financial Bubble in history, most contend there’s no Bubble at all.  Bubble excesses have made it to the heart/foundation of the U.S. and global Credit system, while most analysts fail to see problematic asset-price overvaluation (stocks, bonds, real estate, etc.).
“Money” and “money”-like instruments have at this late-stage of the cycle become the core source of monetary inflation for this crowning Bubble. This is critical, as inflationary impacts have evolved to become deeply systemic – and sufficiently all-encompassing to ensure impacts are not readily evident and of a different ilk from previous Bubble manifestations.
Treasury debt has surreptitiously further inflated incomes throughout the economy, spreading inflationary purchasing power in a more balanced – and seductively much less disruptive/alarming – fashion than the previous tech and mortgage finance Bubbles. This has worked to sustain a problematic economic structure and only exacerbate U.S. and global imbalances. Importantly, Treasury and Fed monetary fuel has inflated financial asset prices across equities, bonds and fixed-income more generally. Monetary inflation has inflated real assets, especially anything providing an income stream (i.e. farm land, rental homes, commercial real estate, etc.) more enticing than depressed cash and bond returns. Moreover, the atypically systemic inflation in securities prices has worked to broadly loosen financial conditions and boost perceived wealth throughout the economy, again limiting the degree of conspicuous inflation and associated excess in particular sectors.
one can identify the root forces behind the “risk on, risk off” (“ro, ro”) dynamic that has increasingly taken command of global markets over the past couple years.
I would argue that “ro, ro” is in some ways a microcosm of the overall Bubble environment. “Ro, Ro” will also naturally gain momentum with each successive round of mini market boom/bust and attendant aggressive policy responses. In 2011 and 2012, “ro, ro” market instabilities grew more powerful following each intervention. Global markets rallied strongly after 2011 policy measures (the ECB’s LTRO, the Fed’s “twist,” etc.). Yet global markets were on the verge of a much more serious crisis in the summer of 2012. Acute financial and economic fragilities ensured even more dramatic policy responses (OMT from the ECB, more “twist” and open-ended QE from the Fed, and various stimulus from the BOJ, SNB, PBOC, “developing” central banks, etc.) that provoked much greater price inflation throughout global equities and fixed-income markets.
I tend to believe it’s helpful to think of 2012 as a defining “capitulation year” in terms of global policymaking. Global Bubble fragilities and an increasingly destabilizing “ro, ro” speculative market backdrop compelled policymakers to “go all in” with their commitment to unlimited market backstops and open-ended quantitative easing programs. The “do whatever it takes” Draghi Plan and the Fed’s open-ended $85bn monthly QE program are the poster children for overwhelming policy responses that took almost complete command over unsettled global markets.
Here’s where I see the problem: The increasingly overpowering and unstable “ro, ro” environment incited the “do whatever it takes” capitulation policy response. Global central bankers and policymakers saw the European crisis spiraling out of control, with potentially catastrophic consequences for the global financial “system” and economy. They responded with the overwhelming power they believed necessary to quash “risk off” – only to motivate a runaway “risk on.”

I relate, that it has been trust in the the sovereignty of nation states, and their central bankers, whose balance sheets are saturated with the most toxic of debt, such as Distressed Investments, FAGIX, like those taken in by the US Federal Reserve, under QE1, and their fiat money system that has given seigniorage to create Peak Commodities, DBC, on September 14, 2012, Peak Credit, AGG, on December 6, 2012, and is now producing Peak Stock Wealth, VT, and Peak Currencies, DBV, and CEW, whose charts show a blow off top pattern … A final global debt based, currency carry trade rally, has produced Liberalism’s Peak Stock Wealth, VT, and EFA, as is communicated in the ongoing Yahoo Finance chart of the currency sensitive Small Cap Value, RZV, together with Small Cap Growth, RZG, Large Cap Growth, JKE, and Large Cap Value, DOO, as well as a rise DLS, DGS, DWM, seen in their combine Yahoo Finance chart, and a rise in Inverse Volatility, ZIV, to a new high.

The ongoing Yahoo Finance combined chart of DBV, CEW, UUP, EFA, EEM, FXR, illustrates that it was a sell of the US Dollar, and a purchase of the World’s Major Currencies, such as the Australian Dollar, FXA, and the Emerging Market Currencies, CEW, that produced Liberalism’s final risk-on momentum rally, and drove up the Global Producers, FXR, whose chart shows this week’s grand finale blow off top.

Doug Noland relates M2 (narrow) “money” supply surged $74.9bn to a record $10.506 TN. “Narrow money” has expanded 7.9% ($772bn) over the past year. I believe that inasmuch as the bond vigilantes have called the Interest Rate on the US Government Note, ^TNX, higher to 1.88%, and the 10 30 US Sovereign Debt yield curve has steepened, as reflected in a steepening of the Steepner ETF, STPP, and Aggregate Credit, AGG, has turned lower, that the monetary of the US Federal Reserve is exhausting and that Peak Money has been attained, and the common metric of money, M2 Money Supply, will be falling lower.

The world is passing through Peak Prosperity. As Major World Currencies, DBV, and Emerging World Currencies, CEW, tumble lower in competitive currency devaluation, as investors deleverage out stocks, the fiat money system, based upon national sovereignty, will literally come apart at the seams. A global credit bust and financial system breakdown known as Financial Apocalypse is imminent.  Soon people will come to trust in regional sovereign authority such as Mario Draghi and the ECB, and live under the diktat money system, where diktat serves as currency, wealth and power.

Jesus Christ is at the helm of the economy of God, Ephesians, 1:10, and pivoting Liberalism’s Banker Regime of Crony Capitalism and European Socialism, to Authoritarianism’s Beast Regime of Regionalism and Totalitarian Collectivism.

A new metric of money, such as number of people living under regional governance, should be established to replace M2 Money.

4) … The short selling opportunity of a lifetime has developed.
Zero Hedge relates Tom DeMark says “sell the world” and soon, the US. For the month of January 2013, I am presenting the Stockcharts.com Chart Site ETFs To Short Sell And Bear Market ETFs To Invest In  … http://stockcharts.com/public/1270699 … Where I present a number of short selling ideas, such as Liberalism’s Rally Leading Sectors, seen in this Finviz Screener.

The only mutual fund I would invest in is UKPSX, which has a minimum investment of $15, 000.

Please keep in mind that I am not a registered or licensed investment professional, and that one should always use caution when investing.  If I did have money, I would dollar-cost-average an investment into the physical possession of gold bullion as well as purchase gold on Internet trading vaults, such as Bullion Vault. I live peacefully, and do not advocate gun ownership. I do as the Lord commands, to pursue peace with all men.

5) … A European Superstate will emerge out of a soon coming Financial Apocalypse which will introduce the Ten Toed Kingdom Of Regional Governance replacing British Hegemony and Dollar Hegemony that has governed the world since the late 1700s.
Mike Mish Shedlock writes A California Hotel Setup. UK prime minister David Cameron has promised to renegotiate terms of its membership in the EU and put the measure to a popular referendum.  In response, the Washington Post writes Business leaders warn UK’s David Cameron that leaving the EU would be bad for economy.  Top business executives have warned U.K. Prime Minister David Cameron that he could damage Britain’s economy if he seeks to renegotiate the terms of its membership in the 27-country European Union.

In a letter published in the Financial Times on Wednesday, Virgin Group’s Richard Branson, London Stock Exchange head Chris Gibson-Smith and eight other business leaders challenged Cameron’s plan to renegotiate the U.K.’s EU membership terms and put the matter to a referendum.

However, popular distrust of the EU has grown in Britain — one of the 10 countries in the region that doesn’t use the euro. The British public shows no interest in the EU’s plans to move closer together. Most can’t even seem to stomach the current level of power of the EU, which many Britons see as meddlesome and inefficient.
Though the business leaders urged EU reform in their letter, they argued “we must be very careful not to call for a wholesale renegotiation of our EU membership, which would almost certainly be rejected.”
“To call for such a move in these circumstances would be to put our membership of the EU at risk and create damaging uncertainty for British business, which are the last things the prime minister would want to do,” they said.
But while Cameron wants Britain to remain in the EU and to retain influence in the body, he is also resisting a push by many member states, like France and Germany, to grant central authorities in Brussels greater powers over financial and legal affairs for the whole of the EU.
In the long run, many EU countries want to turn the bloc into a United States of Europe, an idea British politicians, particularly among Cameron’s Conservatives, abhor.
Note that it is not just UK businesses that want their cake and eat it too. So does Cameron.
The irony is that everyone is tired of the nonsensical nannycrat rules of the EU, and those rules will only get worse as time goes on. For example, the nannycrats in Brussels are hell-bent on financial transaction taxes, high VATs, and onerous corporate income taxes. The bureaucrats also have gone along with absurd crop subsidies demanded by France. The result is everyone in Europe overpays for food (and nearly everything else) on account of tariffs that have not saved a single job.
For now, the EU has backed down on a ridiculous airline carbon tax scheme, but rest assured the subject will come up again. Indeed, all the nannycrats did in November was suspend the proposal for a year, hoping for less opposition next time.
One Million Tiny Miseries.  Bureaucrats never give up on stupid ideas, they just set them aside for a while. Proof is in the pudding. In the EU, inane rules, regulations, and fees are everywhere you look.
In case you think I am exaggerating, Pater Tenebrarum has an excellent writeup in his post One million tiny miseries inflicted by Government policy.

Hotel California Setup.  Cameron sees some of those things and wants to renegotiate special rules for the UK. In effect, he wants to have his cake and eat it too, just like the business leaders. His hope is to keep the nannyrules he likes, and toss out a plethora of rules he doesn’t like.
The problem with his approach is this is a Hotel California setup. As with the Euro, you can check in anytime you like, but it is damn hard to leave.

If Cameron commits (or the referendum passes), sometime down the road, after he is gone as Prime Minister (which could be rather soon), some other prime minister is likely to agree to god-knows-what, and without a referendum giving UK citizens any say in the matter.Note that had it not been for that absurd transaction tax idea last December, Cameron may have signed on the dotted line already.

US Voices Concern.  The Telegraph reports US publicly voices concerns over Britain leaving EU. Philip Gordon, the US assistant secretary responsible for European affairs, said that Britain’s membership of the EU was “in the American interest”.
His remarks came as David Cameron prepares to deliver a speech on Europe later this month. The Prime Minister is expected to promise to renegotiate Britain’s membership and then put the new terms to a referendum. Many Conservatives, including some Cabinet ministers, believe that a ‘No’ vote would mean Britain leaving the EU, although Mr Cameron says he opposes an exit.
One Last Chance to Get this Right.  The UK has one last chance to get this right. The way to get this right is simple: Ignore pleas from the US, put the matter to a vote (including an option to leave the EU as opposed to renegotiate terms), openly campaign to exit, then politely tell the EU to go to hell when the result comes in.
Simply put, it is preposterous to expect one nation out of 27 to have significant leverage over a group of dedicated nannycrats, all wanting some inane rule, regulation, or tax.
In the meantime, expect nannycrat proponents to pound the airwaves with threats of Armageddon sometime before the vote.
It will be interesting to see if common sense secures a victory over the nannycrats, the socialists, and the half-baked conservatives expecting to have their cake and eat it too. Don’t count on it.

There has been two iron legs of global hegemonic power that have underwritten Liberalism since the late 1700s: British Hegemony and Dollar Hegemony

The City of London, is the government and policing services for the financial and commercial heart of Britain, known as the Square Mile. The City of London is the black shrouded reality of British Hegemony. The Washington Post article reveals a truth, the City of London Financial District, is the Sovereign UK, while the Parliamentary UK, is simply a mirage sovereign nation state. The Economist wrote describing the City of London’s global hegemonic power, “In continental Europe, the City is viewed with a mixture of loathing. London, is by many measures the world’s biggest financial centre, and weakening it is in nobody’s interest, least of all Britain’s.  Better regulation of banks is certainly needed, especially to protect British taxpayers. And so far the City bashing has been mainly rhetorical. But running down one of the world’s most successful, and mobile, commercial clusters is folly, and it is surely not the legacy Mr Cameron would wish to leave his successors.”

British Hegemony together with Dollar Hegemony, has governed the world as Two Iron Legs of power since the late 1700s. This is the objective truth foretold by the Prophet Daniel in Daniel 2:25-45, where he interprets Nebuchadnezzar’s Dream as a Statue of Empires that would govern mankind until the arrival of the end times. There has been, and will continue to be a succession of beastly and fearsome world empires or kingdoms; these are

  1. Head of gold – Babylon
  2. Breast and arms of silver- Medo-Persia
  3. Belly and thighs of brass- Hellenistic Greece
  4. Two legs of iron – Rome flowing out into British Hegemony and Dollar Hegemony
  5. Feet partly of iron and partly of molded clay – A Ten Toed Kingdom of Regional Governance, which is presented in Revelation 13:1-4 as the Beast Regime of Regionalism, Totalitarian Collectivism and Authoritarianism, that will come to rule in the world’s ten regions and in mankind’s seven institution, replacing the Banker Regime of Crony Capitalism, European Socialism and Liberalism, that was based upon the sovereignty of nation states.

Jesus Christ is at the helm of the economy of God, Ephesians 1:10, and is pivoting the world from British Hegemony and Dollar Hegemony, and into the End Time, Ten Toed Kingdom of Regional Governance, through the prolificacy and related banking and debt crises of the PIGS, that is the Mediterranean countries of Portugal, Italy, Greece, and Spain.

Credit Liquidity under Liberalism provided prosperity for many.  But as moral hazard has come of age, all of humanity will be booked into Authoritarianisms’ California Hotel of austerity and debt servitude, by country leaders, as they meet in summits to announce regional framework agreements, which renounce national sovereignty and pool sovereign regionally for structural reforms, wage reductions, and the establishment of public private partnerships to manage regional economics, as well as to appoint both a regional political leader, and a regional banking, fiscal and monetary pope to deal with an impending Financial Apocalypse, that is a credit bust and financial system breakdown.

Chris Rossini writes in Economic Policy Journal Nearly every major central bank is buying non traditional assets to resurrect domestic economies in the wake of the worst global recession in 75 years. The U.S. Federal Reserve is buying mortgages; the European Central Bank is making unusually long loans to banks; and the Bank of Japan is buying real-estate investment funds. All risk losing money, but Switzerland’s exposure stands out in character and scale: Its central bank is buying assets from other countries and its holdings of currencies, bonds, stocks and gold,nearly 500 billion Swiss francs, about $541 billion—are nearly the size of the nation’s gross domestic product.  This won’t end well.It’s already obvious that the U.S., Europe, and Japan are headed for financial armageddon. They’re all toast.

God’s Word firmly presents that British Hegemony and Dollar hegemony is coming to an end, and a Ten Toed Kingdom of Regional Governance will rise to govern mankind’s economic transactions.

In this week’s Eurozone News
The Wall Street Journal reports Once lively square is a center of Greek woe. Once the vibrant commercial heart of Athens, the capital’s central Omonia Square now is ringed by shuttered hotels and vacant shops and haunted by drug dealers, addicts and prostitutes, making it a national symbol of despair and social collapse.

Zero Hedge reports 20 facts about the collapse of Europe that everyone should know. And relates, Postponement, Draghi, and accounting.  And writes Zero Hedge Europe’s Scariest Heatmap.

Bloomberg reports Hollande faces having to force labor revamp as talks splutter. President Francois Hollande may be forced to unilaterally overhaul French labor rules as employers and unions struggle to find common ground in final negotiations today and tomorrow.
Hollande wants the parties to find ways to give employers more flexibility when the economy slows while also improving job security sought by unions.
The Socialist president has said he’ll act on the issue if they fail to reach an accord on their own.
The determination of China’s new Communist leadership to guard against slower economic growth could throw a political lifeline to Australia’s first female prime minister as she bids for re-election.
China’s growth is forecast to accelerate this year, helping spur a 78 percent rebound in the price of iron ore that led Perth-based Fortescue Metals Group Ltd, FMG,  to resume work at a project suspended four months ago. A revival of the mining boom would boost tax revenue and bring Prime Minister Julia Gillard’s budget surplus goal within reach as she seeks to come from behind in polls in an election later this year.
“It does put a surplus back in play,” said Shane Oliver, head of investment strategy in Sydney at AMP Capital Investors Ltd., which manages more than A$126 billion ($132 billion).“That’s important for the government politically as the debate has come down to ‘in surplus good, in deficit bad,’ which is unfortunate because it ignores the fact that Australian finances are in good shape.”
Gillard’s minority government has been criticized by the opposition after the prime minister reneged on a 2010 election pledge not to introduce a carbon tax and backpedaled last month on a promise to deliver a surplus this year.
Her administration trails in opinion polls even as the nation entered its third recession-free decade that’s yielded contained inflation, low unemployment and higher growth than other developed economies. “Voters would respond very well to the government running a surplus,” said Zareh Ghazarian, a political analyst at Melbourne’s Monash University. “It would also take out an important attack tool the opposition had.”
Reflecting the surge in iron-ore prices, the 10-year yield on Australian government bonds is at 3.41 percent, above the central bank cash rate. The local dollar has stayed above parity with the U.S. currency for more than six months, its longest stretch on record.
BHP Billiton, BHP, the world’s largest miner, has advanced 21 percent since Sept. 5. Iron ore is Australia’s biggest export in dollar terms.
Another key commodity — coking coal that’s used in blast furnaces — may also rebound from the lowest prices since 2009 as China rebuilds steel supplies, Barclays Plc’s investment-banking unit said in a Jan. 3 report. The destocking of steel has been more pronounced than usual and restocking typically begins in late December, weeks before the Chinese New Year, the London-based bank said.
Treasurer Wayne Swan said last month Australia is unlikely to deliver the surplus this fiscal year as weaker growth and a strong local currency curb tax receipts.
“What we’ve seen is a sledgehammer hit our revenues,”Swan said in a Dec. 20 news conference in Canberra. Rather than find spending cuts that further slow the economy, he said the government would concentrate on supporting job growth.
Gillard had staked her economic credibility partly on delivering the first surplus since the 2009 global recession. The government, in a midyear review released in October, forecast a budget surplus of A$1.08 billion in the 12 months ending June 30. It recorded a A$44 billion deficit last fiscal year.
Returning the federal budget to surplus was rated as a high priority by 35 percent of voters surveyed by Newspoll for the Australian newspaper on Oct. 26-28, while 56 percent said it was either not a priority or a low one. The telephone survey of 1,218 people had a margin of error of plus or minus three percentage points.
Joe Hockey, the opposition’s treasury spokesman, said Swan’s Dec. 20 announcement that a surplus was unlikely vindicated his stance on the government. “They’ve been fudging the numbers and we said they’re never going to deliver a real surplus and we’ve been proven right,” he said in a Dec. 21 interview with Australian Broadcasting Corp. television.
The government relies on the support of Greens and independents to maintain a majority and Gillard’s popularity fell last month. Support for the ruling Labor party dropped four percentage points to 32 percent, with Tony Abbott’s Liberal-National opposition rising three points to 46 percent, according to a Newspoll survey published in the Australian on Dec. 11.
Increased confidence provided by a rebound in prices is reflected in the decision by Fortescue, Australia’s biggest iron ore producer after Rio Tinto Group and BHP and a bellwether for the industry, to resume work on its Kings deposit in the Pilbara region in the north of Western Australia state.
Fortescue announced Dec. 27 it will resume development that will increase production capacity by 40 million metric tons a year once the mine starts in December 2013, taking total capacity to 155 million tons a year. Macquarie Group Ltd, MQG, said last month the company will account for about 50 percent of the growth in global iron ore supply this year.

6) … Investment charts communicate Peak Wealth has been achieved.
Strong rise in Business Services Cognizant Technology Services,  CTSH,

Strong volume in World Bank JP Morgan JPM
Strong volume in Steel Manufacturer Arcelor Mittal  MT
Strong volume in Drug Manufacturer Pfizer PFE
Strong volume in Gaming Stocks, BJK

Evening Star Chart Pattern Drug Manufacturer Forest Laboratories,  FRX
Risk on blow off market top in North American Pipelines EMLP
Risk on market top seen in Premium REITS  KBWY
Spinning Top in risk on World Real Estate Excluding The US DWX
The Cup and Handle chart pattern in Business Services, FIS

Three White Soldiers, in Automobiles, F and a Spinning Top in Automobiles, GM

A Hammer, a Hanging Man Candlestick, and a Spinning Top candlestick in Building Materials, OC
Three White Soldiers, in Building Materials, MIC

A massive Broadening Top and Consolidation Triangle, in Heavy Construction, AGX

Volatility TVIX, and VIXY, bottoming out in their combined ongoing Yahoo Finance chart

The Speculative Investment Community consisting of Asset Managers, Hedge Funds, and Investment Bankers, APO, AINV, BLK, WDR, EV, SEIC, AMG, AMP, IVZ,  BK, JPM, rallied to outperform the World Banks, IXG, beginning in December 2012, as is seen in their combined ongoing Yahoo Finance chart, which suggests that Peak Wealth is being achieved.  These companies have provided the investment cool aid and investment advice that has given seigniorage, that is moneyness, to produce Liberalism’s Peak Prosperity.

Jesus Christ is at the helm of the economy of God, Ephesians, 1:10, pivoting the world through Peak Leverage.  He has completed Liberalism’s age of investment choice and credit, and through the European Sovereign Debt Crisis, is introducing Authoritarianism’s age of austerity and debt servitude.

Liberalism’s grand finale risk-on, global debt, and currency carry trade rally, has been based upon a buy of commodity currencies, CCX, such as the Euro, FXE, and  the Australian Dollar, FXA, and a sell of the Yen, FXY, which is seen in the the ongoing Yahoo Finance chart of YCL, ULE, EFA, and FXR.  The monetization of debt by the world central banks’ has produced a stunning wave of investment gain for the investment savvy.

The dynamos of corporate profitability and global growth will be winding down Liberalism’s Milton Friedman Free To Choose Floating Currency Regime. The dynamos of regional stability, security and stability, will be powering up the Mario Draghi Beast Regime of Regionalism, Totalitarian Collectivism, and Authoritarianism, as foretold by John The Revelator in bible prophecy of Revelation 13:1-4. The fiat money system will be giving way to the diktat money system.

I totally reject the Bloomberg report Euro Leaders declare worst is over. European leaders declaring they’ve gained the upper hand in the three-year-old debt crisis are sharpening efforts to channel a rebound in financial markets to an economic recovery to chip away at soaring unemployment. Even as euro-area chiefs call for more time to lock in a bailout package for Cyprus and elections loom next month in Italy, German Finance Minister Wolfgang Schaeuble said Jan. 11 that the single currency is “over the worst of the crisis.”

The Mediterranean insolvent sovereigns, of Spain, EWP, Italy, EWI, and Greece, GREK, no longer enjoy any market place seigniorage for their Treasury Debt, BWX. Rather they rely on the ECB’s regional sovereignty to provide for their fiscal spending needs.

Insolvent sovereigns and their insolvent banks cannot provide either seigniorage or economic stability.

Waves of economic and political instability from the European insolvent sovereigns, VGK, and their banks, EUFN, will stimulate a Global Stock, ACWI, sell off and give rise to the Beast Regime of Revelation 13:1-4, to come to rule in all of mankind’s ten regions and seven institutions.

There is no human action as seen by the Austrian Economists. Rather there is only the reality foreseen by the prophet Daniel, who in Daniel 2:25-45, communicated that the two iron legs of British Hegemony and Dollar Hegemony would collapse, and that a Ten Toed Kingdom of Regional Governance would rise to govern mankind’s economic and political activity.

Bloomberg reports Hedge-Fund leverage most since 2004 in new year as margin grows. Hedge funds are borrowing more to buy equities just as loans by NYSE brokers reach the highest in four years, signs of increasing confidence after professional investors trailed the market since 2008. Leverage among managers who speculate on rising and falling shares climbed to the highest level to start any year since at least 2004, according to data compiled by Morgan Stanley.

Blackrock, BLK, is the world’s largest multinational asset management company; it pays a 2.7% dividend, and is based in New York; it has risen parabolically in value since June 2012.  Blackrock iShares, specifically the currency carry trade ETFS, such as IXUS, with stocks such as NSRGF, RHHVF, and IEFA, and IEMG, have outperformed the market, as is seen in their combined Yahoo Finance chart together with World Stocks.

Apollo Global Management, AINV, Apollo Investment, APO, are New York based hedge funds, paying a 9% dividend which have been at the lead of successful investment activity. The chart of both AINV and APO show a stunning rise in value.

Waddell & Reed, WDR, is an Overland Park, KS, based asset management company, that pays a 3% dividend. Beginning in June 2012, it started to rise parabolically in value. Wikipedia relates that United Income Fund and United Accumulative Fund, were among the first mutual funds in the United States. Finviz relates that it gained 2% after going ex dividend the week ending January 11, 2013. Its stock value began to soar in November 2012, after BizJournals reported Waddell & Reed joins ranks of companies awarding special dividends.  Of note, Bloomberg reported in October 2012, Canada Pension buys $400 million of Formula Ones Bonds and Moodys cuts Formula One as $1 billion bond sale boosts leverage.

Eaton Vance, EV, is a Boston, MA asset management company which pays a 2.4% dividend; its investment chart shows a blow off market top.  It is one of the oldest asset investment management companies in the United States, with a history dating back to 1924; its chart shows a blow off market top.  It provides two of the most toxic Closed End Municipal Bond Funds, these being, MIW, and EIP, whose values have fallen sharply since Peak Credit was achieved on December 6, 2012, as is seen in their combined ongoing Yahoo Finance chart

SEI Investments, SEIC, is an Oaks, PA asset management company that pays a 1.3% dividend; its chart shows a blow off market top.  Wikipedia relates SEI Investments is a global provider of asset management, investment processing, and investment operations solutions. SEI provides products and services to institutions, private banks, investment advisors, investment managers, and ultra-high-net-worth families.[1] SEI was founded in 1968 by its current CEO and President Alfred P. West. Through its subsidiaries and partnerships in which the company has a significant interest, SEI manages or administers $448 billion in mutual fund and pooled or separately managed assets, including $195 billion in assets under management and $253 billion in client assets under administration.[2] Motley Fool reports SEI Investments declares a Double Dividend and InPlay reports SEI Investments selected by Cornerstone Advisors to provide outsourcing services for new mutual fund family and Marketwire relates
SEI Poll: Liability driven investing strategies grow in complexity and sophistication.
SEI named Best Outsourcing Provider and Best Fund Administrator at Buy-Side Technology Awards.  SEI Expands Long-Term Relationship With SunTrust.
SEI extends ETF relationship with Global X Funds.
SEI selected by C8 Investments to provide hedge fund operations outsourcing
SEI Introduces next generation of investing: Objective-Based Funds

Affiliated Managers Group, AMG, is a Boston, MA based asset management company, that does not provide any dividend; its investment chart shows a stunning ascending wedge pattern. Wikipedia relates that since 1997 AMG has grown to have more than $300 billion in assets under management with stakes in at least 27 money management firms spanning U.S. and international equity including some of the best-known alternative investment financial management shops.[5]  A substantial majority of Aston Asset Management, LP, was acquired by AMG on April 15, 2010.[9] In the 1990s, AMG focused on purchasing midsize money management companies. In a shift of strategy in 1997, they purchased the large mutual fund company Tweedy, Browne for $300 million.[10] In 2010, AMG purchased Pantheon Ventures. Pantheon, a British private equity company, was AMG’s largest acquisition since 1993. The company sold for $775 million. That year, AMG also purchased Artemis Investment Management LLP for $400 million.[11]

Ameriprise Financial, AMP, is a Minneapolis, MN asset management company whose chart shows an ascending wedge pattern; it pays a 2.8% dividend. Wikipedia relates subsidiaries include Ameriprise Financial Services, Inc., Columbia Management Investment Advisers, LLC, and RiverSource Life Insurance Company. Threadneedle Asset Management is Ameriprise Financial’s international asset manager and an award winning provider of investment solutions to institutional and retail clients across the globe. The company’s subsidiary in India, Ameriprise India Private Limited, offers holistic financial planning services to upwardly mobile Indian consumers.[4]  Five Columbia Management funds received Lipper Fund Awards as top performing mutual funds in their respective categories.

Invesco, IVZ, is an Wheaton, IL based asset management company, whose chart shows a blow off market top; it pays a 2.5% dividend. Invesco provides the PowerShares ETFs, that is Equity ETFs, such as Leveraged Buyouts, PSP, and Emerging Market Infrastructure, PXR, as well as Debt ETFs, such as BKLN; the former have leveraged up over the latter since Mid November 2012, as is seen in their ongoing Yahoo Finance chart.

The Bank of New York Mellon, traded by the symbol, BK, is an asset management company, which pays a 1.9% dividend, whose chart shows a blow off market top. Wikipedia relates The Bank of New York is a global financial services company, established in 1784 by the American Founding Father Alexander Hamilton.  It existed until its merger with the Mellon Financial Corporation on July 2, 2007.  The company now continues under the new name of The Bank of New York Mellon.

JP Morgan, JPM, is headed up by Liberalism’s Chief Investment Banker, James Dimon.  Daily Ticker reports London Whale Tail Strikes Jamie Dimon’s Bonus? It was the “tempest in a teapot” that turned into a $6.2B trading loss and public relations storm. Now it may sink at least some of JPMorgan CEO Jamie Dimon’s 2012 compensation.

I hope you have enjoyed my review of the leaders of the speculative investment community. The Apostle John, while in exile, in his 90s, living on the Isle of Patmos. was given a dream by angels, which is known as the Revelation of Jesus Christ, it foretells those things which shortly come to pass, Revelation 1:1, meaning those things that are destined to come, will occur like dominoes toppling one upon another. Liberalism’s Banker Regime of investment bears, lions, and leopards, is about to be replaced by the Beast Regime of Revelation, which is described as having the feet of a bear, the mouth of a lion, and the appearance of a leopard.

I’m headed off to lunch today at StrEAT Food. I have to be careful as I reside in the downtown area; it is chock full of people who I consider to be psychopaths, yes those who I believe are criminally insane. I have been emotionally clawed and mauled by these bears, lions, and leopards many times. The bear is the drunk, who lives with his Babuska; the lion is the preeminent one with a mane, who one can hear coming a long ways off with his loud footsteps and intrusive speech; and the leopard is the one who sits outside the espresso cafe, eyeing those who he would like to devour. As for me, I don’t fear these predator, as I believe that Jesus Christ is operating through God’s Divine Plan, Providence, and Protection in my life. I have developed a psychopathic radar that helps me spot these individuals by their characteristic speech, demeanor and appearance. I take out my mental highlighter, and mark them, and then withdraw; I turn away from all who walk disorderly and not according to moral and ethical living; snakes and frogs cannot play together. I know who the predators are; and I know who I am, baah. Best to all who have visited and read

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