Archive for July, 2013

Risk-On Turns To Risk-Off …. Stocks Trade Lower From An Elliott Wave 5 High In Front Of Next Weeks Fed Meeting As Japan’s Central Bank Monetary Policy Of Kuroda Abenomics Fails

July 27, 2013

Financial Market report for the week ending July 28, 2013

1) … Steeling oneself is the virtue of growing in endurance and not denying Christ’s Name, that is His presence and authority, as presented in Revelation 3:8

John Rubino writes Bombs going off one level down. In response, I relate that I am preparing myself for anomic breakdown.

The Free Dictionary defines an·o·mie or an·o·my (n-m) n.

1. Social instability caused by erosion of standards and values.

2. Alienation and purposelessness experienced by a person or a class as a result of a lack of standards, values, or ideals: “We must now brace ourselves for disquisitions on peer pressure, adolescent anomie and rage” (Charles Krauthammer).

[French, from Greek anomi, lawlessness, from anomos, lawless : a-, without; see a-1 + nomos, law; see nem- in Indo-European roots.]

Reading of lawless abandon in today’s news, I’m starting to focus on virtue, which I define as the admirable qualities of Christ, and on ethics, which I define as economic, that is oikonomia, which is regard for the property and person of others, whether it be spiritual or philosophic or material, political or monetary.

Living Stream Mininstry and Google Books recommend Wtness Lee on the Economy of God. The central lane of the entire Bible is God’s economy, which is His household administration to dispense Himself in Christ into His chosen people that He may have a house, a household, to express Himself, which household is the church, the Body of Christ (1 Tim. 3:15). The word for economy, oikonomia, is used in the book of Ephesians three times. In 1:10 and 3:9 it is translated as “dispensation,” whereas in 3:2 it is translated as “stewardship.” God’s dispensation is His arrangement, which is His plan or purpose, His household administration.

Elaine Meinel Supkis writes Obama talks only about Trayvon being himself. The right will blame people and the left will ignore people. I comment, yes, this is true. To the left of right, is where most of society exists, and it has no virtue or ethics. Most want to enjoy their moral hazard, debt based prosperity and be left alone; those who reside downtown with me are either libertine or psychopathic.

Ms Supkis relates “When I walk around and spot someone aping the gangsta culture no matter what skin color, I am on full alert.  I expect some criminal action to occur.”

As for me, when I walk around I am alert for psychopaths. For the last thirteen years, I have resided with psychopaths or had psychopathic neighbors; this is a God thing; He continually places me in dens of psychopaths, that I might come to know His virtue and His ethics.

Yesterday I went to the Bellingham’ Farmer’s Market, which is hosted in a modern block long structure whose central building is surrounded by covered market stalls for use during weekend community events, doubling as covered parking during for businesses during the week.

I found a vendor with tree ripend fruit such as cherries and peaches; and waited in line behind a babushka with special summertime food coupons making slow payment for her purchase, it was like she was trying to haggle with the vendor.  While waiting, I was watching that no nut case would come along and purposefully bump into me, causing a disruption.   

On leaving, I had my psychotathic radar on all the way, scoping for trouble makers to avoid. And sure enough when walking by Rumors, the gay and lesbian disco, and Boundary Bay Bistro, the major beer garden, there on the sidewalk dead ahead was a man known to me as a psychopath. He had on a white t-shirt and a green military style baseball cap; appearing very much the exmilitary type.

So what was he doing? He was sitting in a chair that was not his; he didn’t bring a chair; no he doesn’t own one; he sits in chairs that belong to others; this is typical predator animal behavior; simply taking over the property that belongs to another and using it as a perch. He was salivating; watching the whole group of people at market. I simply passed on by; terrified all the time.   

An inquiring mind asks “Like whoabe Obama’s Father?  Obama could not have been Trayvon Martin, as he was raised to be a neoconservative by Jewish Chicago rabbis and Jewish Chicago mentors who fathered him and nurtured him in neoconservativism life.

As for me, I have many fathers of faith in God; these be Noah, Abraham, Moses, and most importantly Jesus, Wonderful, Counselor, Mighty God, Everlasting Father, Prince of Peace.

Benson te writes US part time jobs: Obamacare and regime uncertainty While US government sponsored surveys or the US Federal Reserve of Philadelphia and Minneapolis says that only a small portion has been affected by Obamacare, circumstantial developments (part time jobs and high cash by non-financial corporations due to reluctance to invest) says otherwise.

Nonetheless, Big firms producing most of the GDP growth with little help from small business” has been a common feature in today’s QE-ZIRP based global financial economy where monetary policies have been engineered to buoy asset markets (stocks, real estate) via credit fueled destabilizing speculations (bubbles).

The reality is that the Dr. Bernanke’s policies has substantially been responsible for these. FED easing policies combined with Obamacare and the increased regulatory mandates (the Federal Register is now over 81,000 pages long. Obamacare has 906 pages, Dodd Frank has 849 pages) and aside from a surge in taxes (US tax code now 72,000 pages) all contributes to the uncertainty over the investor’s property rights, hence the lack of commitment to invest and the corresponding changes in the hiring and employment dynamic.

I relate that Liberalism was the epoch of investment choice; authoritarianism is the age of diktat.  The bubbles Benson te writes of came via the world central banks’ moral hazard based monetary policies of investment choice, and all varities of credit schemes.  Christoph Dreier writes in WSWS Greek government bans demonstrations in central Athens. The latest ban on demonstrations is a further step towards authoritarian forms of rule in Europe. Jesus Christ, operating in the Economy of God, Ephesians, 1:10, is now overseeing that Liberalism’s bubbles are resolved via regional governance policies of diktat, and all types of debt servitude schemes.

Sound bible doctrine presents that The Messiah will return before the millennial period (2:31-3; 44-45; 7:13-14). God’s kingdom will literally be established on the earth with the Messiah-King as ruler (2:44-45 -45; 7:26-27). The four metals of Nebuchadnezzar’s dream image symbolize four empires: Babylonian, Medo-Persian, Macedonian-Greek, and Roman (2:37-40); the fourth kingdom, a revived Roman Empire, that is an authoritarian Super State will arise out of the profligacy of European Socialism and Greek Socialism, and their sovereign insolvency and failure of banking seigniorage. After the establishment of the Euro, Antonio Guterres, Portuguese Prime Minister, stated, “As Peter was the rock on which the church was built, so the Euro is the rock on which the European Union will be built.” This fourth kingdom, will exist with the PIGS being hollow moons, revolving about planet Brussels and planet Berlin. It is well on its way to maturity, now that “Woldgang Schäuble rejected proposals for a second restructuring of Greece’s debts. Instead he made clear that austerity policies must continue unabated and expanded via the implementation of structural reforms.”

“The night before Schäuble’s arrival, the Greek Parliament approved the austerity package, the seventh since 2010, to secure payment of its next tranche of credit of €2.5 billion. The package calls for firing 15,000 public employees, with 150,000 to be sacked by the end of 2014. The package was dictated to the Greek government by Schäuble and his European colleagues”.

“The package won the support of 153 of 300 deputies. After the withdrawal of the Democratic Left (DIMAR) from the coalition in June, the Greek government was left with a majority of just 5 seats. All of the opposition parties voted against the law, but DIMAR chairman Fotis Kouvelis stressed that his party agreed in principle to the cuts”

I relate that Dispensationalism presents the concept that National Israel is God’s prophetic time clock for last-day events. CoG writer posts Israel releasing prisoners in order to resume peace talks. Israel has decided to release prisoners, that it has considered to be a threat to its security, as a ‘good faith’ gesture so that ‘peace talks’ with the Palestinians can resume. Israel has agreed to release a “limited” number of Palestinian prisoners, a day after the two governments agreed to head back to negotiations in hopes of settling long-standing differences. Israeli government minister Yuval Steinitz made the announcement Saturday, without giving specific details about the number of prisoners or their identities.

Late Friday, U.S. Secretary of State John Kerry…praised both Israeli Prime Minister Benjamin Netanyahu and Palestinian President Abbas for making some difficult choices.

Peace talks between Israel and the Palestinians collapsed in 2010. White House officials said President Barack Obama called Israeli Prime Minister Benjamin Netanyahu on Thursday to ask him to work with Kerry to “resume negotiations with the Palestinians as soon as possible.”

Earlier this week, in Jordan, Kerry met with representatives of Arab states that support a comprehensive peace plan. He said many of the Arab League ministers told him “the core issue of instability in this region and in many other parts of the world is the Palestinian-Israeli conflict.”

Israel has said it will release “heavyweight” Palestinian prisoners as part of an agreement to enter preliminary talks in Washington, with the aim of an eventual resumption of long-stalled peace negotiations.

Hours after the US secretary of state, John Kerry, announced that the two sides in the conflict had agreed to discuss terms for negotiations, Yuval Steiniz, Israel’s minister for international relations, said a prisoner release would be carried out in stages.

“I don’t want to give numbers but there will be heavyweight prisoners who have been in jail for tens of years,” he told Israel Radio. The release of long-serving prisoners has been a key Palestinian demand.

But Steinitz said Israel would balk at agreeing on the pre-1967 border as the parameter for territorial negotiations. “There is no chance we will agree to enter any negotiations that begin with defining territorial borders or concessions by Israel, nor a [settlement] construction freeze,” he said.

Interesting developments the past few days. On Wednesday, the EU announced that it would pressure Israel and again indicated that wants Israel to basically go back to its pre-1967 borders (see EU to put more pressure on Israel: A prelude to Daniel 9:27?). On Thursday, US President Obama pressures Israel to do something to get the talks resumed. On Friday, US Secretary of State says the talks will resume. On Saturday (today), Israel says it will release prisoners.

It appears that Israel is responding to international pressure, not from the Palestinians, but from its biggest trading partners and military suppliers (Israel, not only trades with both, but also buys certain military items from both the USA and EU).

It has long been my view that Israel will not agree to the type of seven-year covenant what the Bible mentions in Daniel 9:27 without pressure. Though, in my view, Israel will require more pressure than this for that specific deal–but it could make various ‘peace deals’ prior to the prophesied one.

The ‘one week’ has generally been understood by prophecy watchers to mean a seven year deal, that is broken in the middle of it (after 3 1/2 years). More on this deal can be found in the article When Will the Great Tribulation Begin?

As it turns out, because of concerns that Israel has about it own safety and survival, Israel will not likely to agree to this type of deal without additional pressure. This pressure likely will include military and/or economic pressures.

However, there will also likely need to be pressure affecting the Arab/Palestinian side, and this very well may come as the result of a regional war or conflict (likely involving Israel), including possibly a conflict that will result in the prophesied destruction of Damascus, Syria (Isaiah 17:1).

The result of the deal in Daniel 9:27 is that 3 1/2 years after it is confirmed, a military force from Europe will enter Israel (Daniel 11:31). Notice what Jesus said about that: 15 “Therefore when you see the ‘abomination of desolation,’ spoken of by Daniel the prophet, standing in the holy place” (whoever reads, let him understand), 16 “then let those who are in Judea flee to the mountains. 17 Let him who is on the housetop not go down to take anything out of his house. 18 And let him who is in the field not go back to get his clothes. 19 But woe to those who are pregnant and to those who are nursing babies in those days! 20 And pray that your flight may not be in winter or on the Sabbath. 21 For then there will be great tribulation, such as has not been since the beginning of the world until this time, no, nor ever shall be. 22 And unless those days were shortened, no flesh would be saved; but for the elect’s sake those days will be shortened. (Matthew 24:15-22)

A deal that is ‘confirmed’ for seven years by the Europeans is a key event that will result in destruction ultimately coming. The situation is tense in the Middle East, and while peace is good, the coming ‘peace deal’ will disappoint and result in destruction (though there could be, and probably will be, other deals first that are not the deal in Daniel 9:27). Some articles of possibly related interest may include:

When Will the Great Tribulation Begin? 2013, 2014, or 2015? Can the Great Tribulation begin today? What happens before the Great Tribulation in the “beginning of sorrows”? Why do many think that Daniel 9:27 is referring to a peace deal? What happens in the Great Tribulation and the Day of the Lord? Is this the time of the Gentiles? When is the earliest that the Great Tribulation can begin? What is the Day of the Lord? Who are the 144,000? See also the video The Great Tribulation Will Not Begin Before 2017.

Jerusalem: Past, Present, and Future What does the Bible say about Jerusalem and its future? Is Jerusalem going to be divided and eliminated? Is Jesus returning to the area of Jerusalem?

The Future King of the South is Rising Does the Bible teach that there will be a future King of the South in Daniel 11? Is this kingdom rising up now? Did the old Worldwide Church of God (WCG) teach that there would be another one? And who is the King of the South? How will this involve Egypt? Is the final King of the South some type of Arab-Muslim confederation? Can Iran be involved? Is there a group that seems to be supporting the goals of the King of the South? Has the Obama Administration supported the rise of this power? This sermon video answers those questions.

The Muslim Brotherhood and the Rise of the King of the South The Bible tells of the formation of a power of nations that are in the Middle East and North Africa that are part of the final “King of the South” (Daniel 11:40-43) The Muslim Brotherhood wishes to have an Islamic empire with basically the same nations. This YouTube video explains what to expect from such a confederation.

Is There A Future King of the South? Some no longer believe there needs to be. Might Egypt, Islam, Iran, Arabs, or Ethiopia be involved? Might this King be called the Mahdi? What does the Bible say?

The Arab and Islamic World In the Bible, History, and Prophecy The Bible discusses the origins of the Arab world and discusses the Middle East in prophecy. What is ahead for the Middle East and those who follow Islam? What about the Imam Mahdi? What lies ahead for Turkey, Iran, and the other non-Arabic Muslims?

Damascus and Syria in Prophecy Will Bashar Assad hold power as he has it? Does the Bible show that Damascus, the capital of Syria, will be destroyed? What will happen to Syria? Will the Syrians support the final King of the South that the Bible tells will rise up? Which scriptures discuss the rise and fall of an Arabic confederation? Does Islamic prophecy predict the destruction of Syria. This is a YouTube video.

I am a Christian Citizen, I am by birth living in the heavenlies. Revelation by Jesus Christ posts Summary of Daniel 9: The Seventy Weeks. Jack Kelley relates The 70 Weeks Of Daniel.  Pastor Jim writes 3065 – 70 Weeks – An Introduction to the 70 Weeks of Daniel. And CalvinistGuy writes Examining the dispensational parenthesis theory of Daniel’s Seventy Weeks prophecy.   

Englewood, Chicago, IL, is inhabited by the Spirit of Murder as Wikipedia relates Englewood was the home of Dr. H. H. Holmes, one of the first publicized serial murderers in America. I know of such things, because I reside in the Sea Breeze Apartments, in Bellingham; one of the apartments here at one time was a morgue. The Spirit of Morbidity pervades: that is why so many antisocial people live in my building and in “the hood “.  Yet, I like it here because I have a nice ocean view and goda low rent. Wikiepedia further relates Englewood is noted for Rappers Chief Keef, Lil Durk, and Lil Reese. And also relates Englewood has a poverty rate of 44%, which is substantially higher than the overall poverty rate in Chicago of 20%. Natalie Moore reports in WBEZ 91.5 Chicago’s highest murder rate in Englewood. Harvey, a young black male, relates The Englewood police district clocked in more murders in 2011 than any other district. The area’s crime problem is amplified because of other urban ills afflicting the neighborhood. Unemployment in and around Englewood is a whopping 35 percent. The article concludes It’s like what 16-year-old Harvey, the teenager who has had five friends die, says: He’s tired of going to funerals.

2) … Ambrose Evans Pritchard calls for a stop to austerity measures, a defacto debt jubilee, as well a periphery European government union.

Ambrose Evans Pritchard proposes that Europe’s crisis states should fight back with a ‘debtors’ cartel‘. The former head of the IMF’s team in Ireland, Professor Ashoka Mody, has called for “a complete rethinking” of the austerity strategy. He confirmed what the Irish trade unions and others have said along: that fiscal overkill is self-defeating, especially if compounded by tight money. “Given the debt dynamics, if debt levels remain where they are and growth remains where it is, there is never going to be a reduction in the debt ratio the foreseeable future. Moving away from austerity at this stage is a sensible course of action,” he said. Ireland is certainly not a basket case. It has a fat trade surplus. Exports are 105pc of GDP, compared to 30pc or less most for Club Med. It is well able to compete at the current exchange rate. Ireland’s policy of austerity cuts and “internal devaluation” has done wonders for the trade account, but only at the cost of an even deeper debt-deflation crisis. This is the fundamental contradiction of EMU crisis strategy in every high-debt country. The more these economies deflate wages, the more they raise the real cost of debt.

“These countries are walking a very fine line,” said Marchel Alexandrovich from Jeffereies Fixed Income. “Once debt gets to the 130pc level there is a risk that markets will start to wake up. The moment truth could come as soon as political stability is called into question in any one of these countries.” Portugal has been flirting with just such a crisis ever since the finance minister and austerity chief, Vitor Gaspar, stormed out three weeks ago.

Having now imposed the “Cyprus template” of losses on bank depositors above €100,000 as was all bond-holders if lenders get into trouble, how can they hope to contain systemic banking crisis in Portugal if investors start to fear that the situation is getting out of hand again.

The North still refuse to accept its joint responsibility for capital and trade imbalances that lie behind the EMU debacle, and still refuse to recognize that excess northern savings flooded Club Med, with the complicity of the European Central Bank.  

(I comment that this is a pejorative statement coming from a liberal talking head, that is Europe’s version of politically incorrect Paul Krugman, its like Wikipedia which refers to the renaming of French-fried potatoes to “Freedom fries”.[38]  Furthermore such a political line denies the Nordic Latin Divide that is the EMU North South Chasm which has its origins in cultural and natural differences and denies the meritocracy of the industrious North as contrasted with the profligate south. Germany traveled along a line of industry, thrift and Capitalism, while the periphery nations traveled along a line of moral hazard European Socialsm; and worse yet patronage, pork, anticompetitiveness, and clientelsism Greek Socialism. It seems Mr Pritchard doesn’want to pay Liberalism’s EU pied pipers such as Nigel Farage)  

There is condign retort to the creditor cartel. The peoples of southern Europe could at any time choose to form their own debtors cartel and turn the tables. They could confront the creditors with a stern ultimatum. Either you change the entire structure of EMU crisis policy, agree to a reflation strategy, and accept your share of the clean-up costs for this collective disaster, or we repudiate our debts. Either you meet us half way, or we take long overdue steps to protect our societies against mass unemployment, and to prevent our industrial base. It is time for Southern Europe to look after its own interest once again

(I comment that the fallout of the abandonment of the  terms of the Maastricht Treaty means a change in governance is coming, that being national democracies will fall to the governance of regional tyranny.

Bloomberg reports Spanish pension raids spell bad news for bond sales. Spain’s Treasury may find one of its best customers less eager to buy its bonds as budget woes lead Prime Minister Mariano Rajoy to raid a government piggy-bank for a second year. “The fund isn’t in a position to accumulate assets anymore, it may even have to sell,” said Jose Antonio Herce, a partner at consultancy firm Analistas Financieros Internacionales in Madrid. “There are more and more pensions to pay and less and less money coming into the Social Security, the fund will melt quickly no that we’ve started taking money out of it. And Tyler Durden of Zero Hedge writes Euro area government debt rises to new record high.

The EMU’s debts both sovereign and banking reflect the failure of European socialism and Greek Socialism, and the creation of insolvent soeverigns and insolvent financial institutions, whose seigniorage, that is moneyness comes from the diktat of the monetary authority of the ECB, and not from the marketplace trust of investors.  While indeed the debt are one day going to be repudiated, they can never be disannulled, they will be applied to every man woman and child in the Eurozone by nannycrats whose soveignty will come from EU leaders who meet in summits, to renounce national sovereignty and pool soveregnty regionally to establish statist regional governance and totalitarian collectivism for regional security, stability, and sustainability.

The collective disaster was planned in eternity past by God, and announced by the prophet Daniel in Nebuchadnezzar’s Statue of Empires dream of Daniel 2:25-45, where the Eurozone will be the first toe of iron diktat and clay democracy coming out of the failure of iron impression of a company of nations, that being the British Empire, and the US Dollar hegemony of the great nation, the US.  And was foretold by the aposlte John in Revelaton 13:1-4, where the Beast Regime of regional governance and totalitarian collectivism will arise out of the profiligacy of the Mediterranean Sea nations of Portugal, Italy Greece and Spain.)

3) … Financial market activity for this week

On Monday, July 22, 2013, Gold, $GOLD, rose so strongly that it drove the US Dollar, $USD, to trade lower at $82.32. Zero Hedge reported over the weekend that Gold breaks above $1300 as shorts cover most in 4 months. Gold, $GOLD, closed higher at its 50 day moving average at $1,334. The Gold ETF, GLD, closed up 3.0% at 128.84. And the Silver ETF, SLV, closed up 4.7% at 19.77.

Any presentation of the traditional measure of wealth, that being the S&P 500, SPY, should now be presented with a presentation of Gold, GLD, as the very basis of wealth is transitioning from fiat to physical. Bond vigilantes gained control of the credit market calling the Interest Rate on the Ten Year Note, ^TNX, rising to 2.01% on May 24, 2013, and that this was an “extermination event” which terminated Liberalism, ending both its policy of investment choice and its credit schemes, such as, free trade agreements, financial deregulation, leveraged buyouts, nation investment, currency carry trade investing, securitization of debt, dollarization, financialization of stocks and ETFs, such as corporate bonds which convert into stocks, all of which created capital for corporations to operate and revenue for governments to operate. Debt deflation is underway as currency traders are selling Major World Currencies, DBV, and Emerging Market Currencies, CEW, short. In the age of Authoritarianism, wealth can only be preserved by investing in and taking possession of gold bullion either in physical form or by trading on an Internet Platform such as Bullion Vault or Gold is Money.

Swiss Banks, UBS, CS, rose strongly driving European Financials, EUFN, higher.

Bank of America, BAC, and Citigroup, C, rose strongly driving the too Big To Fail Banks, RWW, higher.

Regions Financial, RF, rose strongly, taking Regional Banks, KRE, higher, and the Small Cap Pure Value Stocks, RZV, higher.

Brazil Banks rose strongly taking Brazil, EWZ, EWZS, higher.

Argentina Banks rose strongly taking Argentina, ARGT, higher.  

Celgene, CELG, rose strongly taking Biotechnology, IBB, higher.

A number of stocks are greatly ovevalued. These include Electric Utilities, ITC, BKH, UNS, OGE, NEE, IDA, LNT, seen in this Finviz Screener. And these include Small Cap Pure Growth Companies, RZG, such as the following. Homebuiling supply company PGTI which engages in the manufacture of residential impact resistant windows and doors. US Infrastructure company MWA which engages in the manufacture of products used in the transmission, distribution, and measurement of water. Industrial equipment manufacturer TRS. And industrial equiment rental company HEES which rents aerial work platforms, cranes, earthmoving equipment, and industrial lift trucks. The companies, PGTI, MWA, TRS, HEES, are seen together in this ongoing Yahoo Finance chart.

Zero Hedge reports 25 facts about the fall of Detroit that will leave you shaking your head.

On Tuesday, July 23, 2013, Regional Banks, KRE, Emerging Market Financials, EMFN, Far East Financials, FEFN,  and Chinese Financials, CHIX, rallied, to produce what is likely a grand finale completion of liberalism’s fiat wealth seen in the charts ofWorld Stocks, VT, US Stocks, VTI, Nation Investment, EFA, and Small Cap Nation Investment, IFSM, and as is seen in the combined on going Yahoo Finance Chart of KRE, EMFN, FEFN, CHIX, and EUFN. Banks, BPOP,  SMFG, LYG, all rose to a new rally highs today. Investment Banker, JPM,  and Stockbrokers, IAI, rose to a new rally high.

The slight trade lower seen in the chart of the S&P 500, $SPX, SPY, to $1,692, very likely reflects a market high yesterday Monday, July 22, 2013, at 1696, as an Elliott Wave 5 High, as S&P High Beta, SPBH, traded, 0.3%, lower today, and, S&P Transports, XTN, traded 1.2% lower, today.  Large Cap Financials, JKF, including Life Insurance companies, such as, PRU, seen in this Finviz Screener, rose to new rally highs, suggesting that a market top in the S&P 500 has been attained. S&P overweight Exxon Mobil, XOM, traded to an all time new high of 95.    

Today’s financial rally took the fifty leading Eurozone ADR’s, seen in this Finviz Screener, to a new rally highs. Netherlands’ Life Insurance companies, ING, and AEG, rallied the Netherlands, EWN, to a new all time high. Banco Santander, SAN, rallied Spain, EWP, strongly today. Ireland’s, COV, and IR, traded lower, suggesting that the rally in Ireland, EIRL, to a new high, is now complete.

The Small Cap Countries which have recovered the most in the last month include EPHE, THD, KROO, EWW, EZA, and EGPT, seen in their combined ongoing Yahoo Finance Chart.  The Major Countries which have recovered the most in the last month include, NORW, EWD, EWL, EWT, and EWY, seen in their combined ongoing Yahoo Finance Chart.

The 200% ETF of the US Dollar, $USD, UUP, traded to middle of a massive broadening top pattern at 22.19, suggesting a soon rise once again, before the US Dollar, $USD, falls lower with all of the world currencies into the Pit of Financial Abandon.  Action Forex reports the EUR/JPY closed at 131.59; and Yahoo Finance Chart shows the EURJPY ralling higher at market close, taking the Eurozone, EZU, higher.   

Aerospace, PPA, and Automobiles, CARZ, rose to new highs.

In yield bearing equities, International Telecom, IST, and Leveraged Buyouts, PSP, rose to new rally highs. Global Utilities, DBU, and Electric Utilities, XLU, rose strongly

China recovery, FXI, recovey over the last month is seen in the rallying of the following, CHXX, 9.1, CHII, 6.5, CHIX, 6.4.  

Emerging Market, EEM, recovery over the last month is seen in the rallying of the following:

Emerging Markets, EEM, 8.6%, with EWW, 14.0, EPHE, 13.5, EZA, 11.0, THD, 11.0, KROO, 9.0.

Far East Financials, FEFN, 11.9 %, such as WF, and SHG.  

Emergning Market Financials, EMFN, 7.9

Brazil Financials, BRAF, 7.9

China Financials, CHIX, 6.4

Emerging Market Small Cap Dividend, DGS, 6.1

India Earnings, EPI, 5.9; of note IBN traded 1.7, and HDB, traded 2.2, lower today; the latter is a train wreck waiting to hasppen.

Emerging Market Technical Leaders, PIE, 9.2%

Emerging Market Infrastrcture, EMIF, 9.1

Steel, SLX, 8.8, which has taken practically all of the following US Metal Manufacturing companies,  STLD, RS, NUE, CRS, GTLS, WOR, NWPX, VMI, MLI, GHM, CMC, PCP, ITW, PKOH, seen in this Finviz Screener to rally highs; giving zombie life to BUT, WLT, CLF, as well as SLC..  

Industrial Mining, PICK, 7.3

Emerging Market Mining EMMT, 7.1

A recovery from debt deflation, reflecting somewhat of a recovery in sovereignty, is seen in the rallying of the seigniorage of democratic country governance over the last month.     

World Treasury Bonds, BWX, 2.5  

Emerging Market Bonds, EMB, 6.7

Emerging Market Currencies, CEW, 2.8

Aggregate Credit, AGG, 1.2

And a recovery from debt deflation is seen in the Inverse of the Japanese Bonds, JGBS, trading to a two month low, with Business Week reporting Japan bonds rise to 2-month high after elections, BOJ purchases.

A recovery from interest rate increase shock, specifically the sharp rise in the Interest Rate on the US Ten Year Note, ^TNX, on a Steepening 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, seen in the Steepner ETF, STPP, steepening, is seen in the rallying of the following over the last month,

Small Cap Real Estate, ROOF, 8.4

Residential REITS, REZ, 9.1

Commercial Office REITS, FNIO, 12.1

The short selling opportunity of a lifetime has developed. Look for strong derisking to come out of fiat asset invesment leaders, such as these forty, XIV, FDN, CARZ, PBS, IGV, IBB, RZV, PSCI, PBD, PPA, IAI, SPHB, SMH, XRT, PJP, EWN, PSP, UJB, KRE, TAN, RXI, WOOD, FLM, LNKD, LYG, ,MFG, BPOP, SLM, JPM, NNI, UBS, BLK, NMR, MKTAY, PSUN, DORM, GE, IP, CHTR, and ING, seen in this Finviz Screener. The days of risk on investing, ONN, are over, though, done, and finished. Small Cap Pure Value, RZV, and Biotechnology, IBB, both traded lower today from market highs. And Banks and Creditors such as NMR and SLM are disasters waitning to happen.

Jesus Christ, operating in the economy of God, Ephesians 1:10, that is the political and financial administration plan of completing every age, epoch, era and time period, bringing forth its total fufillment, likely pivoted the world fully out of the era of investment choice and into the age of ditkat, today July 23, 2013; a process which He began on May 24, 2013, when the Interest Rate on the US Ten Year Note, ^TNX, rose strongly to 2.01%, serving as an “extermination event” which terminated Liberalism and introduced Authoritarianism; this rate rose again today from its recent low of 2.49% to 2.52%.    

Volatility, ^VIX, finally rose. The walking dead market, that is the zombie market is likely over. Liberalism’s schemes of credit liquidity, AGG, FLAT, and carry trade, ICI, funded safehaven investing probably came to an end today, Tuesday, July 23, 2013. The safe haven rally in US Based stocks appears to be over, as the premium of Biotechnoloy over Emerging Markets, seen in the chart of IBB:EEM, has exhausted. And the safehaven rally in the Netherlands, EWN, appears over as its Electronic Equipment Manufacturer, PHG, and its Scientific Instrument Manufacturer, ST, traded lower. And the safehaven rally in Design Build Companies, FLM, appears over as its leader,  JEC, traded lower. And the safe haven rally in Leveraged Buyouts, PSP, appears over as two of its leaders, IP, and GE, traded lower.  There now be no more safe haven investments from the terror of bond vigilantes calling interest rates higher globally and the currency traders following suit with competitive currency devaluation, and as Zero Hedge reports SEC warns: prepare for repo defaults.

The rise of Authoritarianism’s schemes of debt servitude, such as Greek Bailout III, and the Cyprus Bank Deposit Bailin, mean that wealth can only be preserved in the physical possession of gold bullion, or in Internet trading vaults such as Gold Is Money or Bullion Vault, which reports Gold prices “driven by short covering”.

Jim Sinclair writes in JS Mineset Comex must change its delivery mechanism soon  The cause of today’s spectacular rise in the gold price is the reality that with Friday continues large drops in the Comex warehouse gold inventory. No cogent argument can be formed against the reality that because of the continued fall in gold inventory that within in 90 days or sooner the Comex must change its delivery mechanism. With manipulation coming to an end the true value of gold will be discovered by the cash exchanges that are now taking birth. The advent of the cash spot exchanges around the world is the natural demise of the Comex set up as convertible and now being converted. As long as one can buy spot, pay insurance, transportation and re-casted by Rand Refinery to Asian products sold profitably, the demands for real gold are ending the hay days or even existence of the futures exchanges. Gold is headed back to be traded as it was before 1973.

 

A genuine statement is that Gold is not Gold Mining Stocks, and Silver is not Silver Mining Stocks. Junior Gold Stocks, GJXJ, such as TRX, Gold Mining Stocks, such as EGO, Junior Silver Mining Stocks, SILJ, such as, SSRI, and Silver Mining Stocks, such as SLW, continued rising strongly, as is seen in their combined ongoing Yahoo Finance Chart.  I have never recommended these types of stocks. and never will; I have always advocated ownership of gold bullion.   

On Wednesday, July 24, 2013, With the Interest Rate on the US Ten Year Note, ^TNX, rising to 2.59%, debt deflation recommenced, turning Aggregate Credit, AGG, lower, as The Zeroes, ZROZ, 30 Year Government Bonds, EDV, The 10 Year Notes, TLT, World Government Bonds, BWX, Emerging Market Bonds, EMB, and Junk bonds, JNK, traded sharply lower.

Inverse Volatility, XIV, traded lower as Volatility, ^VIX, TVIX, VIXY, rose as World Stocks, VT, the S&P 500, SPY, and Global Industrial  Producers, FXR, traded lower. All of these forms of fiat wealth traded lower from an Elliott Wave 5 high, as the monetary policies of the world central banks, are no longer able to support global growth, corporate profitability, and economic trade; and have actually  turned “money good” investments bad.    

Today, the divergence between economic data and investment experience began to narrow as Tyler Durden writes Stocks had their worst day in a month and Treasuries their worst day in 3 weeks. Via Markit: The pace of manufacturing growth nevertheless remains well below that seen at the start of the year, in part reflecting weaker demand from many export markets, notably China and other emerging economies. Employment growth is disappointingly weak as a result, as firm focus on cost-cutting to boost competitiveness.

The Business Insider writes Caterpillar just downgraded the whole world.

And The Business Insider writes China Manufacturing weakens further as slowdown deepens.

Bond vigilantes will increaingly be calling the Interest Rate on the US Ten Year Note, ^TNX, higher, as well as Steepening the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, seen in the Steepner ETF, STPP, steepening, causing debt deflation, that is bond, stock, and competitive currency deflation.

Yield bearing investments trading lower included, Brazil Financials, BRAF, Utilities, XLU, India Earnings, EPI, and Global Utilities, DBU, as well as Residential RETIS, REZ, Mortgage REITS, REM, Industrial Office REITS, and Small Cap Real Estate, ROOF.  

Sectors trading lower included, Solar, TAN, Metal Manufacturing, XME, Coal, KOL, Metal Mining,  PICK, Steel, SLX, Home Building, ITB, and Semiconductors, SMH. Energy sectors trading lower included Small Cap Energy, PSCE, Energy Production, XOP, Energy Service, OIH, IEZ. Gold Miners, GDX, and Silver Miners, SIL, gave back yesterday’s gains.

Banks trading lower included, Chinese Financials, CHIX, Japanese Banks, MTU, SMFG, Bank of America, BAC, and Regions Financial, RF.  

The Emerging Markets, EEM, traded lower, being led so by Turkey, TUR, Egypt, EGPT, Vietnam, VNM, Thailand, THD, Indonesia, IDX, Peru, EPU, Brazil, EWZ, India, INP, and China, FXI.

Emerging Market Currencies, CEW, and Major Currencies, DBV, such as the Australian Dollar, FXA, and the Brazilian Real, BZF, traded lower.

Robert Wenzel posts The best introduction to Austro Libertarianism ever given. Walter Block writes  writes in Lew Rockwell that Tom Woods gave the opening address for Mises University July 21 -27 2013 where he spoke on the subject of “A life changing event”, and conveyed the resource of Mises University as a school of Austrian Economics, providing a cornucopia of material free of charge.

The video helped me to sharpen my understanding that true liberalism is the conviction that Jesus Christ is at the helm of the economy of God, and that He is acting in dispensation, that is the household administration of things, to terminate all empires outside of His Kingdom.         

In May 2010, God started replacing credit with debt servitude with Greek Bailout I, and then more so with the Cyprus Bank Bailin, in May 2013, with the ultimate aim of eliminating the double entry accounting system with the soon coming Advent of Christ, and the establishment of His 1000 year rule and reign of humanity from Jerusalem.  Thus there will never ever be any free market economy as conceived of the Austrian economists. The rise of the Interest Rate on the US Ten Year Note, ^TNX, to 2.1% on May 21, 2013, was an extinction event that terminated Liberalism and introduced Liberalism.       

And the video helped me to sharpen my thinking that ethics is defined as economic regard for the person and property of another, where there is a process of the household administration of things monetary, political, spiritual and physical, involving stewardship and responsibility of action, which is free from intervention and preemince of nonhouse hold parties.  A dispensation based definition of ethics comes from the development of spiritual understanding, and evolution of wisdom, where a person is increasingly receptive to the movement of God’s Spirit in his life, and is based upon the restoration ideas of John Calvin, and the recovery ideas of Witness Lee, whereby one becomes a person of God’s grace, and experiences Christ as one’s all inclusive life experience.

The WSJ reports Bond investors turn to cash. Investors are cashing out of bonds but remain hesitant to plunge into stocks. An inquiring mind asks, will this show up in inflating M2 Money?  

Mike Mish Shedlock writes General Obligation bondholders beware: Detroit bankruptcy affirmed, Governor shielded from lawsuits; Triumph of math over unions. So, pensioners and bondholders both should take it on the chin. Expect a lot of municipal bond downgrades before too long.  I hope to be able to find news sources reporting on the hardships experienced by residents of Detroit as they deal with municipal service cuts.

On Thursday, July 25, 2013, Risk-On, ONN, turned to Risk-Off, OFF, as is seen in the former trading lower, and the latter trading higher, as Japanese Banks, MFG, SMFG, NMR, and Far East Financials, FEFN, traded lower, turning the Nikkei, NKY, and Sony, SNE, Tool Manufacturer, MKTAY, Semiconductor Equipment and Material Provider, ATE, lower, as Japanese Bonds traded lower, as their inverse, JGBS, traded higher, as the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, steepened, as is seen in the Steepner ETF, STPP, steepening, thus documenting the failure of Kuroda Abenomics.  

It is Jesus Christ working in The Economy of God, specifically Dispensation, Ephesians, 1:10, to pivot the world out of Liberalism’s Age of Investment Choice, and into Authoritarianism’s Age of Diktat, by enabling bond vigilantes to call interest rates higher globally, brining forth debt deflation, terminating Inflationism, and starting Destructionism.    

US Homebuilders, ITB, fell 3.2%, as Home Improvement Stores, HD, LL, LOW, traded lower.  And US Infrastructure, PKB, traded 1.0% lower, as the following traded lower,

Industrial Textile Manufacturer, MHK,

Packaging and Container Manufacturer, GPK

Lumber Producer, LPX

Cement Manufacturer, EXP

Contractors, EME,

Building Material Providers, MAS, USG

Appliance Manufacturers, WHR, LII

Home Furninshing And Fixture Provider, FBHS

Specialty Retailer, TSCO

Business Services, CTAS

Producers MHK, GPK, LPX, EXP, EME, MAS, and USG, have been US Infrastructure, PKB, leaders.  

Appliance Manufacturers, WHR, and LII, have been Global Industrial, FXR, leaders.

Home Furnishing and Fixture Provider, FBHS, and Specialty Retailer, TSCO, have been Small Cap Pure Value, RZV, leaders.  

Workplace Uniform Provider, CTAS, has been a Business Services, BUSE, leader.

On the upside, Biotechnology, IBB, seen in this Finviz Screener, traded higher, as well as those in this Finviz Screener, traded higher.  And of note, Netherlands’, EWN, ASMI, fell 15%, while most its Semiconductor Materials And Equipment Manufacturers seen in this Finviz Screener, rose, and while most of the Semiconductors, SMH, led by TNQT, seen in this Finviz Screener rose, after Broadcom’s great fall lower earlier this week.  And Netherlands, EWN, Publisher, ENL, and UK, EWU, Publisher, RUK, blasted higher, taking Media, PBS, higher.

The disconnect between Eurozone stock values and economic conditions grew even greater today. Despite Charles Gave of GaveKal writing in Zero Hedge, Southern Europe walks on thin air, European Banks, SAN, IRE, DB, continued rallying, taking Emerging Market Financials, EMFN, European Financials, EUFN, Netherlands, EWN, Ireland, EIRL, France, EWQ, Germany, EWG, Spain, EWP, Italy, EWI, and Eurozone, EZU, with its ADRs, seen in this Finviz Screener, to new rally highs. Sweden, EWD, rose to a new rally high, Norway, NORW, and Poland, EPOL, rose strongly.

The strong rally in all of the Euro, FXE, centric Nation Investments, EWN, EIRL, EWG, EWQ, EWP, EWI, seen in their combined ongoing Yahoo Finance Chart, and the trade lower in the US Dollar, $USD, UUP, establishes the crack up boom nature of Liberalism’s grand finale boom-bust business cycle that comes via leveraged speculative investment choices under the interventionist world central banks’ monetary policies of easing, in front of next week’s US Federal Reserve policy meeting.

It has been Jesus Christ, operating at the helm of the Economy of God, specifically Dispensation, presented in Ephesians 1:10, producing a moral hazard based prosperity, that has created Liberalism’s Peak Wealth, seen in World Stocks, VT, the S&P 500, SPY, and Global Industrial Producers, FXR, Automobiles, CARZ, and Small Cap Pure Value Stocks, RZV, to name just a few, trading up to and then lower from their recent highs.

It is the interest rate sensitive stocks, ITB, XLU, DBU, REM, ROOF, REZ, FNIO, IYR, and DRW, and the Emerging Markets, EEM, EMFN, EMIF, EMMT, and Mining Stocks, PICK, REMX, KOL, COPX, and Growth Stocks, SLX, that have traded lower since May 21, 2013, when the Interest Rate on the US Ten Year Note, ^TNX, rose to 2.01%, which literally destroyed Nation Investment, EFA, and IFSM, in countries such as ARGT, EPU, ECH, EWZ, INP, EZA, TUR, EWW, CHII, seen in their combined ongoing Yahoo Finance Chart, as well as in Asia Excluding Japan, EPP, FXI, EWA, THD, IDX, EPHE, ENZL, seen in their combined ongoing Yahoo Finance Chart.    

Jesus Christ has commenced the termination of Liberalism beginning with the announcement of Greek Bailout I in May 2013, with the provision of Christ’s “extinction protocol” whereby He released the Four Horsemen of the Apocalypse.  And He intensified His judgment upon mankind’s Banker centric, US Dollar Hegemonic Empire, with His “extinction event” of enabling the bond vigilantes to call the Interest Rate on the US Ten Year Note, ^TNX, higher on May 21, 2013, to 2.1%, and then again higher today July 25, 2013, to 2.6%.  

For more details of how Jesus Christ is in dispensation, terminating the moral hazard based prosperity of Liberalism and introducing the austerity of Authoritarianism, one can read the Dispensation Economics Manifest presented here https://theyenguy.wordpress.com/about/

Facebook, FB, blasted higher, taking IPOS, FPX, to a new rally high.

Juniper Networks, JNPR, Amazon, AMZN, and Priceline, PCLN, traded higher, taking Internet Retail, FDN, to a new high.  

International Paper, IP, rose, taking Paper Producers, WOOD, seen in this Finviz Screener, to a new rally high.  

ETrade, ETFC, rose strongly taking, Stockbrokers, IAI, seen in this Finviz Screener, to a new rally high.

Life Insurance companies, seen in this Finviz Screener, rose to new rally highs.

Apparel Retailers, PSUN, DXLG, BEBE, and GPS, led Retailers, XRT, seen in this Finviz Screener, rose to a new high.

Delphi, DLPH, and others rose, taking Automobiles, CARZ, seen in this Finviz Screener, to a new rally high.

Visa, V, traded to a new rally high.

On Friday, July 26, 2013,   

Volatility, ^VIX, XVZ, TVIX, VIXM, rose during the morning, but closed lower, as the Yen, FXY, continued rising in overnight and day trading, stimulating the Nikkei, NKY, led by the Japanese Small Caps, JSC, such as the Makita, MAKTY, to trade lower, and causing investor angst, stimulating the most currency and carry traded of all investments, the Small Cap Pure Value Stocks, RZV, to manifest massively bearish engulfing, to trade 1.3% lower on the day.  Gary of Between The Hedges relates Bloomberg reports VIX contracts retreat to five year low. The cost of options protecting against U.S. stock swings fell to a five-year low, a sign to Russell Investments and Credit Suisse Group AG that investors are too confident in more equity gains after this year’s rally. Implied volatility for options on the Chicago Board Options Exchange Volatility Index has dropped 37% to 48.4 from a peak on June 20, according to data complied by Bloomberg on three-month contracts with an exercise price near the gauge. It reached 44.8 last week, the lowest since May 2008.

Far East Financials, FEFN, and India Earnings, EPI, as well as Brazil Financials, and European Financials, EUFN, and Regional Banks, KRE, led Global Financials, IXG, lower.   

Semiconductors, SMH, led by MU, TSM, FSL, SMTC, RFMD, ONNN, Semiconductor Materials, ATE, SEMA, TSRA, BRKS, Networking, IGN, Dig And Dirt Moving Stocks, DIDI, led by DRC, HEES, MTW, CR, Aerospace and Defense, PPA, led by BA, Automobiles, CARZ, led by GM, PCP, Design Build, FLM, led by JEC, URS, Paper Producers, WOOD, led by IP, Education Services, EDSE, led by LINC, and Credit Services, CRSE, led by DFS, traded lower.

Japan, EWJ, led Nation Investment, EFA, and Small Cap Naiton Investmetn, IFSM lower; countries trading lower included TUR, EPHE, RSX, EZA, EGPT, EPOL, NORW, ECH, and INP.

Switzerland’s CS and UBS, and Ireland’s IRE, led European Financials, EUFN, the Eurozone, EZU, and the Eurozone ADRs, seen in this Finviz Screener, lower.

Life Insurance Companies, such as PUK, seen in this Finviz Screener, traded lower  

The all time master carry trade, the Euro Yen currency carry trade, traded lower from yesterday’s rally high, as is seen in the chart of the EUR/JPY to close at 130.4; it has given the greatest seigniorage that is the greatest moneyness to the riskiest of assets, these being the Small Cap Pure Value Stocks, RZV, with, US Stocks, VTI, Eurozone Stocks, EZU, the Emerging Markets, EEM,  and lastly, Asia Excluding Japan, EPP, since the collapse of credit beginning in May 2013, as is seen in the combined ongoing chart of EURJPY, EZU, EEM, EPP, VTI, RZV, and AGG.   

Major Airlines, MAAI, seen in this Finviz Screener, rose on a lower price of Oil, USO.

Health Care, PTH, seen in this Finviz Screener, Biotechnology, IBB, seen in this Finviz Screener, and Pharmaceuticals, PJP, traded to a new rally highs.  

Washington Post writes Detroit: Liberalism can’t go on forever.

4) Financial Commentary for the week

Benson te writes governments in the US, Europe, Japan, England, etc. are all too broke to bail out their central banks. These governments are already insolvent. So if the central bank becomes insolvent, there won’t be anyone to bail them out..

I respond that insolvent central banks are unable to maintain control over interest rates (bond vigilantes are now in control of the interest rates, and thus currency treaders, through debt deflation, are in control of currencies), and that the traditional monetary policies of the central banks can no longer be maintained, and as a result corporate profitability, gloal growth and trade are disintegrating.

Inflationism is turning into Destructionism. Furthermore the democracies of  the Eurozone, Japan, the UK, Canada, and the US, being insolvent can no longer provide traditional governance. The very nature of governance and money is changing, all on the rise of the Interest Rate on the US Ten Year Note, ^TNX, as it soared past 2.1% on May 21, 2013, to today’s rate of 2.5% . Through a soon coming global credit bust and financial system breakdown, leaders will meet in summits and workgroups to annul tradtional sovereignty and pool sovereignty regionally to establish regional governance, where nannycrats will form public private partnerships with leaders from banking, industry, commerce and trade to establish regional security, stability, and sustainability.

Benson te continues For a central bank, assets are typically securities or commodities which have value in the international marketplace, such as gold or US Treasuries. Central bank liabilities are all the trillions of currency units floating around… dollars, euros, yen, etc.

I respond that the Assets owned by the Fed are the Distressed Investments taken in under QE1, and trade in value like the Fidelity Mutual Fund FAGIX, which has decreased 5% in value since the beginning of May, thus putting a bind on the balance sheet worth of the US Fed.

And Benson te writes This is one of the strongest indicators of all that the financial system as we know it is finished. When central banks can no longer credibly issue liabilities, and their home government are too broke to bail them out, this paper currency standard can no longer function.

I respond that out of soon coming credit and financial crisis, the fiat money system will be replaced by the diktat money system wherewhere diktat serves as trust, medium of exchange, wealth and power. Liberalism was characterized by full faith and credit in the world central bankers. Revelation 13:3-4, foretells that Authoritaritarianism will characterised by worship of the Beast Regime and its nannycrats. And Revelation 13:5-18, communicates that it will also be characterized by worship of a New Pharaoh and a New Prohpet.   

And Benson te writes As been repeatedly noted here, QEs by major central banks have been meant to shore up asset markets which underpins the assets on the balance sheets of crony banks, and their guardians, the central banks.

I respond the asset markets that have experienced the greatest inflation under QE have been the following ETFs: XIV, FDN, CARZ, PBS, IGV, IBB, RZV, PSCI, FPX, PPA, IAI, SPHB, SMH, XRT, PJP, EWN, PSP, UJB, KRE, TAN, RXI, WOOD, and FLM. And debt in the form of Ultra Junk Bonds, UJB. And individual stocks such as LNKD, LYG, SMFG, BPOP, SLM, JPM, NNI, UBS, BLK, NMR, MKTAY, PSUN, FB, GE, IP, CHTR, and ING, all seen in this Finviz Screener  

The rise of the Interest Rate on the US Ten Year Note, ^TNX, while rewarding investment choice in the above assets has decimated those exericing choice to remain in the interest rate sensitive stocks, ITB, XLU, DBU, REM, ROOF, REZ, FNIO, IYR, and DRW, and the Emerging Markets, EEM, EMFN, EMIF, EMMT, and Mining Stocks, PICK, REMX, KOL, COPX, and Growth Stocks, SLX, that have traded lower since May 21, 2013, when the Interest Rate on the US Ten Year Note, ^TNX, rose to 2.01%, which literally destroyed Nation Investment, EFA, and IFSM, in countries such as ARGT, EPU, ECH, EWZ, INP, EZA, TUR, EWW, CHII, seen in their combined ongoing Yahoo Finance Chart, as well as in Asia Excluding Japan, EPP, FXI, EWA, THD, IDX, EPHE, ENZL, seen in their combined ongoing Yahoo Finance Chart.    

And Benson te writes Of course QEs has fostered a low interest rate environment, which in effect, subsidizes debt financed government spending and the welfare warfare bureaucracy that the banking system, by virtue of Basel regulations, holds mainly as ‘risk free’ collateral.

I respond that the greatest welfare has been to those receiving Social Security Disability, SSD/SSI, as well as free health care, surgery, prescriptions, Section 8 Housing Benefits, or Public Housing Assistance, with of course energy subsidies, and food stamps.  Millions of Americans live in dependency and clientelism, even though I believe they could work, after having going through the disability process of ajudication, and have “worked the system”, rather than work in any meritocracy. The worst offenders from my viewpoint are veterans with antisocial diagnosis as well as time spent in prison and now live as predators with all kinds of preeminent and mischevious behavior and even “make my day” killings.  

And Benson te writes So all these ‘merry-go-around” or ‘cul-de-sac’ or ‘loop-a-loop’ arrangement has been designed to eliminate the threat of insolvencies of the cartelized unsustainable centralized debt-based political economic system.

I respond that I see the day coming when, banks by edict, will be intergrated into the govrnment and be known as the government banks, or gov banks for short.

Doug Noland writes The yen rallied 2.6% this week. The big “macro” players are short the yen and long Japanese equities. The Nikkei was hit for 3.0% Friday. Yen strength seemed to play an important role in what was at the brink of developing into a bout of global market de-risking/de-leveraging back in June. Markets reversed sharply on assurances from the Fed, along with support from global central Banks and Chinese officials. Short covering and the reversal of hedges helped fuel a speculative run in stocks, especially U.S. and Japanese markets favored by the global speculators.

As a whole, the global hedge fund community continues to struggle for performance. The volatile and policy-dominated “risk on, risk off” dynamic is tough on many trading strategies. Global risk markets – currencies, commodities, EM, bonds and equities – remain minefields, particularly for multi-asset class approaches. I believe enormous leverage has been employed by myriad strategies, certainly including global “carry trade,” corporate, MBS and municipal debt. I’ll assume there’s no egregious LTCM-like leveraging, but I still worry a lot about global derivatives markets. I believe the world of speculative finance is full of problematic “crowded trades.”

A few weeks back the markets were again indicating fragility – and the Fed once again demonstrated its market-pleasing low tolerance for market weakness. The flaw in aggressive QE is the notion that the Fed will be able to back away from market intervention without major consequences. Fed stimulus can spur debt issuance, market risk embracement and speculation. But if that debt is mispriced and predominantly non-productive, the system faces unavoidable debt problems. If speculative leverage is playing a prominent role in inflating securities and asset markets, the system face unavoidable de-leveraging problems. If the already vulnerable household sector continues to load up on mispriced stocks and bonds, there will be negative consequences.

If there are major risk misperceptions endemic in the global marketplace – including with ETFs, the hedge funds, derivatives and perceived low-risk strategies – then there is latent market fragility that is only exacerbated by central bank liquidity injections and backstop assurances. I fully expect history to look back at the past year’s Draghi Plan, Fed open-ended QE, and Bank of Japan “Hail Mary” monetary inflation as misguided market interventions that set loose historic market Bubble excess. I will posit that global systemic risk is significantly higher today than it was a year ago. And if the current trajectory of global central bank market intervention continues, systemic risk will be even more problematic one year from now.

The U.S. dollar index declined 1.2% to 81.66 (up 2.4% y-t-d). For the week on the upside, the Japanese yen increased 2.5%, the New Zealand dollar 2.1%, the Swiss franc 1.1%, the Danish krone 1.1%, the South African rand 1.1%, the euro 1.0%, the Australian dollar 1.0%, the South Korean won 0.9%. the Canadian dollar 0.9%, the Swedish krona 0.8%, the British pound 0.8%, the Norwegian krone 0.7%, the Singapore dollar 0.2% and the Taiwanese dollar 0.2%. For the week on the downside, the Mexican peso declined 1.1% and the Brazilian real 0.4%.

Dave Ramsey writes 20 things the rich do every day.  So what do the rich do every day that the poor don’t do? Tom Corley, on his website RichHabits.net, outlines a few of the differences between the habits of the rich and the poor. Of note, 63% of wealthy parents make their children read 2 or more non-fiction books a month vs. 3% for poor, 6% of wealthy say what’s on their mind vs. 69% for poor. And 86% of wealthy love to read vs. 26% for poor. (Hat Tip to AskBlog)

Thank God for what amounts to free bus service here in Bellingham WA. I purchase a disability pass good for 3 months for $45; it enables me to ride the local bus system, which has all the new busses, courtesy of Patty Murray Earmarks; they are hybrid, energy efficient, and have the new comfort-ride braking and suspension system.  The bus system is supported by sales tax approved of by the voters. The wealthy of Bellilngham have gifted the poor with transportation. Not many ride the bus, only the poorest of the poor like me, the disabled, elderly, and Western Washington University students.

Today I was on the 331 bus, coming back from Bellis Fair Mall,  and as it went through Taco Flats, the poorest part of town, where the single moms living on TANF, Section 8 vouchers and Food Stamps reside. One physically fit young Hispanic man, with a tub full of dirty clothes dashed across the street to make the bus driver wait at the bus stop. In tow, was an obese, Hispanic single mom, with a gaggle of two children, who made the traffic stop in both ways. He put cash bus fair in for all. And they slipped into seating at the front of the bus. From my seat in the back, I saw two university coeds, shiver in dread at the sight enfolding in front of all. They both had the cosmetic look, you know, tanned, and oiled bodies, looking like the Liberalism’s Queen of Sheba, fit, trim and all things young and beautiful, adorned with Pacific Sunwear togs.  What a cultural contrast between those at the bottom, and those at the top. I see Liberalism’s upper crust children here in Bellingham, as generally one must have scholastic apptitude to attend WWU with both a high grade point average, high SAT scores, and some outstanding attributes on one’s application.  Bellingham’s economy has been one largely of an ocean tide of students coming to attend WWU; there is a fresh inflow of residents to the Sehome and York neighbors where there is a sea of homes rented out to students, where the upper crust students live; yet only 28% of the students go on to graduate!  Well back to the laundry crew on the bus; they got off at the new laundry, that is Q Laundry,which is near Trader Joe’s, located at 810 Alabama Street in Sunnyland Square, which was formerly the Bank of America lending branch office, which underwrote much of the rental property development and improvement here in Bellingham.

I’ve been poor since 1998, and have economic life, largely by the charity of others; in fact my John McArthur Study Bible, and my Witness Lee Recovery Version of the Bible, the only two forms of physical wealth I own, were both gifted to me!  I have no vehicle and have gotten around by bike and bus; but now I am too old to bicycle, so I have only the bus left.  Yes, thank God, for what amounts to Liberalim’s charity: the bus fare comes out to be about $0.50 a day; and a dollar a day is all the resource I have for transportation.

I appreciate those who have read my blog; I am giving serious thought to stop writing, as the chart of the S&P 500, $SPX, traded by SPY, topped out this week, losing 0.04%, World Stocks, VT, traded 0.26%, lower; the Small Cap Pure Value Stocks, RZV, traded 1.32% lower, and the Nikkei, NKY 2.2%, lower, documenting that the seigniorage, that is the moneyness of Liberalism, that being investment choice has failed. News reports communicate that both the seigniorage of Authoritarianism, that being diktat, and sovereignty of Authoritarianism, that being regional governance is increasing.  Robert Wenzel of Economic Policy Journal reports The EU is planning to ‘own and operate’ spy drones as part of a New Security Agency

Jesus Christ operating in the Economy of God, Ephesians, 1:10, terminating the sovereignty of the US Dollar Hegemonic Banker regime of democratic nation states and introducing the sovereignty of the Beast regime of regional governance where ten horns, that is ten world zones of nannycrat rule will emerge, and totalitarian collectivism will come to occupy in each of mankind’s seven institutions, as foretold by John the Revelator in Revelation 13:1-4.  

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Out Of A Soon Coming Credit Bust And Financial System Breakdown, A Beast Regime, A Pharaoh, And A Prophet Will Rise To Rule First The Eurozone And Then The World

July 20, 2013

Financial Market Report for the week ending Friday July 19, 2013

1) Those of Apocalyptic Vision, perceive that Bible Prophecy of Daniel 2:25-45, foretells of the soon coming of a Ten Toed Kingdom of regional governance, consisting of toes, that is regions, consisting of a miry mixture of iron diktat and clay democracy, which is synonymous with the Beast Regime of diktat and totalitarian collectivism, seen in Revelation 13:1-4, which will arise out of a global credit bust and financial system breakdown, having its origins in the sovereign insolvency and banking insolvency of the Mediterranean Sea PIGS. The Beast Regime, which is replacing the Creature from Jekyll Island, will be popular with many, even to the extent that they will actually worship it, as related in Revelation 13:3-4.

Business Insider relates The next financial crisis will come with a crisis of faith.

Let them eat diktat, is Authoritarianisms call. There will be no populist leader rising to resolve the soon coming economic crisis; rather there will be one familiar with Authoritarianism’s policy of diktat and schemes of debt servitude coming to rule the Eurozone, as foretold in Daniel 8:23-25. This leader is also presented in Revelation 13:5-10, as the New Pharaoh, who will be accompanied by the New Prophet, Revelation 13:11-17, who will together eventually introduce the charagma money system, that is the 666 credit system, where all will be required to take the Mark, in order to buy or sell, Revelation 13:18.

Yes, a Beast Regime, a Pharaoh, and a Prophet are coming to rule the world. Corollary #8 from the Dispensation Economics Manifest is that with the ever increasing failure of Liberalism, the old policy of investment choice and schemes of credit, are being replaced by new policies and new schemes for economic and political action under Authoritarianism.

Under Authoritarianism, the new policy of diktat and new schemes of debt servitude are being developed; these include regional framework agreements, bank deposits bailins, new taxes, privatizations, capital controls, austerity measures, and vitalizations where banks and other corporations are given charter to operate as public private partnerships for regional economic security, regional stability and regional sustainability.

Economic and political movement under Liberalism was based upon ponzi credit, which provided capital and revenue and resulted in a moral hazard based prosperity.  Authoritarianism, on the other hand, is based upon trust which provides vitality for statist underwriting of economic activity.  

Capital perished on May 24, 2013, with the rise in the Interest Rate on the US Government Note to 2.01%, and it is increasingly being replaced by statist vitality, which is defined as diktat establishing oversight by nannycrats, working in public private partnerships and in regional governance, which become the legislators of economic value and the legislators that shape one’s means and one’s ends.  

Gone are the days when liberalism’s bankers, corporations, government, entrepreneurs, and citizens of democracies were the legislators of economic value and the legislators of economic life.  Economic and political movement under Authoritarianism is based upon debt servitude which provides for collective action, and crushing austerity.

2) Bond vigilantes have control of the bond market and will be calling the Interest Rate on the US Ten Year Note higher, causing disinvestment out of stocks, and deleveraging out of the EUR/JPY, as well as currency carry trades globally.

Daniel Kruger & Liz Capo McCormick of Reuters present An interest rate yeld forecast.  “The term premium turned positive June 19 for the first time since October 2011, according to Columbia Management. A negative number showed that investors were willing to own bonds at such expensive levels as long as the Fed was buying”.

“Economists and strategists see little change in yields for the remainder of 2013, ending the year at 2.62 percent, based on the median of 67 estimates in a Bloomberg survey. That’s below the average yield of 5.37 percent over the past 25 years.

“It’s going to be hard to sell-off unless something dramatically changes, which we don’t forecast over the next couple of months,” Ira Jersey, an interest-rate strategist at Credit Suisse Group AG in New York, one of 21 primary dealers that trade with the Fed, said in a July 10 telephone interview.

Treasury 10-year note yields have probably established a new range between 2.40 percent and 2.75 percent, Jersey said.”

I contend that bond vigilantes gained control of the credit market calling the Interest Rate on the Ten Year Note, ^TNX, rising to 2.01% on May 24, 2013, and that this was an “extermination event” which terminated Liberalism, ending both its policy of investment choice and its credit schemes, such as, free trade agreements, financial deregulation, leveraged buyouts, nation investment, currency carry trade investing, securitization of debt,  dollarization, financialization of stocks and ETFs,  such as corporate bonds which convert into stocks, all of which created capital for corporations to operate and revenue for governments to operate.  Debt deflation is underway as currency traders are selling Major World Currencies, DBV, and Emerging Market Currencies, CEW, short.

Investors have taken refuge in US Regional Banks, KRE, and in the Too Big To Fail Banks, RWW, driving up the value of the Russell 2000, IWM, as well as the Small Cap Pure Value Stocks, RZV, and the Small Cap Pure Growth Stocks, RZG. This is reflected in the John Rubino report Oops, we did it again: Banks and houses dominate the recovery. One of the many, many lessons we should have learned from the 2009 crash is that an economy driven by inherently unstable, and completely unproductive, things like rising home prices and bank trading profits can’t be trusted. And yet here we are again. Bloomberg reports that the Manhattan housing boom has spread to the boroughs.

Interest rates are going to being rising much faster and much soon than establishment analysts perceive from their recent July 5, 2013 rally to 2.71%.     

3) US Federal Reserve monetary policy and Banker credit schemes have been highly stimulative to US automobile, home sales, home improvement, discretionary spending, while those of the ECB have only served to increase its sovereignty, which is leading to a One Euro Government, at the expense of the of democratic nation states in Europe, thereby terminating Liberalism

Bespoke Investment Group, reports US and European auto sales are oceans apart In recent years, auto sales in the US have seen a sharp rebound even as sales in Europe have been sliding.  In fact, while the total number of new cars in the US in the twelve months ending 6/30 hit its highest level in five years (15.0 mln), sales in Europe dropped to their lowest levels since December 1995 (12.1 mln). Even more interesting is the fact that while the last five years have seen rebounding US sales while European sales decline, in the ten years prior to that, it was European sales that were rising while US sales declined.  Technology has made the US and Europe more inter-connected than ever, but both literally and figuratively, the two economies are still oceans apart.

In related economic news, Bespoke Investment Group reports Homebuilders diverge from sentiment. And Peter Schwarz of WSWS reports Germany’s Praktiker home improvement chain store declares bankruptcy.  Yet US home improvement retailers, HD, LOW, SHW, LL, and home furnishing stores RH, KIRK, GMAN, BBBY, presented in Finviz Screener, are seeing record stock values.  

The ongoing Yahoo Finance chart of Consumer Discretionary, IYC, Retail, XRT, Automobiles, CARZ, Homebuilding, ITB, together with Biotechnology, IBB, as well as Germany, EWG, documents the transmission, or perhaps better said, movement, of money coming via inflationism of the monetary policy of the US Federal Reserve, while at the same time destructionism of the loss of sovereignty and seigniorage in Germany. This was aided by the sale of Junk Bonds, JNK, as well as by carry trade financing such as the EUR/JPY provided courtesy of Mario Draghi and the ECB’s LTRO 1 and LTRO 2, and OMT, as well as by Kuroda Abenomics. The US stands at peak sovereignty and seigniorage, producing Peak Wealth, seen in the chart of US Stocks, VTI.    

Through anticipation of one last grand finale burst of Inflationism in front of Summer Earnings Season, the most monetary inflationary ETFs and stocks, rose strongly to new rally highs; these being, seen in this Finviz Screener.

With the implementation of the Euro, Europeans centralized money, while the rest of market economic policies were kept at national level, creating an environment in which countries could diverge and did diverge.  Germany used restraint in home building and civic projects and kept unit labor costs low; and thus for all practical purposes operated in capitalism, while the other nations, to differing degrees, embarked on European Socialism, and the Greeks pursued Greek Socialism, where state employment was guaranteed by national constitution, and led to great clientelism which the Economist Magazine described the Greek Economy of one of pork and patronage. Tyler Durden reports the grim statistic of economic failure in Greece, At 27.4%, its unemployment problem is the worst in the world according to Bloomberg’s data, followed closely by Spain and South Africa.

The PIGS are insolvent sovereigns, and have insolvent banks, and all European Financial Institutions, EUFN, are loaded to the gills with European nation Treasury debt that cannot be paid. Under Greece Bailout III, the fiscal needs of Greece are being met by the Troika on a month to month basis in front of the Septemeber 2013 German election. The ECB through its monetary policies are providing ongoing fiscal seigniorage to the periphery nations. This stands in awesome contrast to the US Dollar Hegemonic Empire, know as America The Great, one made so through liberal US Federal Reserve policies of investment choice, and ponzi Banker schemes credit, establishing a moral hazard, and not meritocracy based, prosperity.  Of note the United States of America was destined to become a global kick ass nation, that is the Great Nation in Genesis 35:11, and the second iron leg in Daniel 2:25-45.     

Whether it be on an economic production basis, or on a fiscal basis, European Socialism and more importantly Greek Socialism, are cleary failed economic systems. The EU is defined by failed seigniorage, and failed sovereignty and failed money system. Clearly new sovereignty, new seigniorage, and a new money system will soon emerge.  Needless to say there will be many Angry Byrds.  While liberalism featured what Doug Noland terms wildcat finance, where bankers waived magic wands of credit; authoritarianism features wildcat governance, where nannycrats waive clubs of debt servitude.       

Fiat money died on May 24, 2013, on the rise of the Interest Rate on The US Ten Year Note, ^TNX, with the failure of currency carry-trade investing, ICI, and disinvestment out of Junk bonds, JNK, on the failure of the world central banks’ monetary authority, and especially the Bank of Japan’s Kuroda Abenomics monetary policies, seen in the Nikkei, NKY, falling sharply lower. The monetary stimulus, credit liquidity, and monetization of debt initiatives of the US Federal Reserve and other central banks,  finally crossed the Rubicon of sound monetary policy, and turned “money good” investments  bad, yet moving investment capital to find final safe haven rally in US Stocks, VTI, such as the Russell 2000, and the S&P 500, SPY; yet this rally is only a zombie rally, that will soon produce a parabolic turn lower in a broad range of investment choices.    

 

While the diktat money system was conceived by Herman van Rompuy acting together with the EU Finance Minsters, in early May 2010, with the provision of Greek Bailout I, as well as the more recent Greek Bailouts II and III, and the Cyprus Bank Bailin, the diktat money system was unleashed onto the whole world by the bond vigilantes calling the Interest Rates on the US Ten Year Note, ^TNX, higher, and the currency carry traders calling the Yen, FXY, higher, on May 24, 2013, inducing investors out of currency carry-trade, yield bearing investments, such as Electric Utilities, XLU, Mortgage REITS, Global Real Estate, DRW, and Premium REITS, KBWY, Nation Investment, EFA, Emerging Market Investment, EEM, such as Brazil, EWZ, and Small Cap Nation Investment, IFSM, such as EWZS.

According to bible prophecy of Revelation 13:1-4, out of Eurozone, sovereign insolvency and banking insolvency, there will come a movement by federal nannycrats to renounce national sovereignty and announce pooled sovereignty for regional security, stability and sustainability, thereby creating a Eurozone Super State, which will serve as the model of Authoritarianism’s regional governance in all of the world’s ten regions, and totalitarian collectivism in mankind’s seven institutions.      

FinancialSurvivalNetwork contends Goldman Sachs is the government. As the Interest Rate on the US Ten Year Note, ^TNX, rises, and as the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, steepens, seen in the Steepner ETF, STPP,  steepening, then both the Too Big To Fail Banks, RWW, and the Regional Banks, KRE, will be integrated into the Government and be known as “Government Banks” or “Gov Banks” for short.  The banks will be part and parcel of government; their purpose will not be lending as it has been known, but rather check cashing, monetary control, and provisioning of diktat by statist public private partnerships, where regional nannycrats exericise oversight of the factors of production, commerce and trade.

4) On the killing of Travon Martin by George Zimmerman.

Business Insider reports This case wasn’t about race, juror says. That juror pointed out that Martin was supposedly stopping, turning, and “cutting through the back” yards of the gated community where the teen’s dad lived. She believes Zimmerman would have treated anybody who acted that way in the same manner, regardless of that person’s race. “I think he just profiled him because he was the neighborhood watch, and he profiled anybody who came in and acted strange,” she told Cooper.

I contend that neighborwood watch groups intenstify the ethical hazard that a psychopath will join and then confront and individual and instigate a situation in which that one uses deadly force, in this case, the shooting of Travon Martin by George Zimmerman.

5) Non pharmaceutical treatment available is available for OCD.

Dr Phil and Dr Badley Jabour of Smart Brain and Health discuss Treatment of OCD.

6) CNBC reports Greeks go on strike as layoffs loom.

7) Bible prophecy of Daniel 11:11 and Daniel 11:40-42 foretells that a confederation of North  African and Middle East countries will form an Islamic Empire, which will produce the King of the South, who will eventually go to war against the King of The North, that is Europe’s soon coming sovereign.   

CPI Financial provides the Reuters report Technocratic government installed in Egypt. Egypt’s new military-backed administration has pleased investors by appointing experienced economic policy makers to a cabinet whose cohesion will be sorely tested in the coming months. Ahmed Galal, managing director of the Cairo-based Economic Research Forum since 2007 and for 18 years a researcher at the World Bank, was appointed finance minister on Sunday.New Prime Minister Hazem el-Beblawi, who is to steer Egypt until parliamentary elections planned in about six months, ran Egypt’s Export Development Bank for 12 years and went on to work at regional economic agencies in the Middle East.

Ahmed Galal, managing director of the Cairo-based Economic Research Forum since 2007 and for 18 years a researcher at the World Bank, was appointed finance minister on Sunday.

Ziad Bahaa El-Din, who is a member of the leftist Egyptian Social Democratic Party, will be deputy prime minister; he has a doctorate in banking law from the London School of Economics and ran Egypt’s investment authority between 2004 and 2007.

Egypt’s interim authorities have not been able to ignore ideology and horse-trading in choosing their economic team. In an effort to reduce political tensions, they have had to take care to appear inclusive of a range of opinion.

Ashraf al-Arabi, a U.S.-educated economist who served as planning minister under Mursi, handling unsuccessful negotiations on a $4.8 billion loan from the International Monetary Fund, was given the same post in the new government.

“As individuals I believe the interim government can handle the priorities, but the biggest challenge is how they will deal with the challenges as a team,” said Kotub at Naeem Financial.

Within minutes of his appointment on Monday, Arabi appeared to raise the possibility of disagreement within the cabinet by telling reporters that the time was not right to reopen talks with the IMF, because $12 billion in aid pledged by Egypt’s Gulf allies would carry it through coming months.

It was not clear whether Arabi was speaking on behalf of the entire cabinet or simply giving his own opinion; Beblawi has not said publicly whether he wants a quick IMF deal, which could help to attract foreign investors back to Egypt.

Many economists think an IMF loan is in any case unlikely before the next parliamentary elections, because it would come with politically explosive commitments to economic reform that an interim government would struggle to provide.

“It would have been extremely difficult anyway to achieve an IMF agreement soon,” said William Jackson, emerging markets economist at Capital Economics in London. Arabi’s comments were “just a realistic assessment”, he added.

The new cabinet will grapple with other tough policy decisions in the next few months. One is how to begin reforming Egypt’s wasteful system of fuel and food subsidies, which is undermining state finances; Egypt needs to find a way to cut overall spending without hurting the poorest people.

Another dilemma is currency policy, which the cabinet is expected to discuss with the central bank. After depreciating nearly 15 percent against the dollar to around 7.0 in the past 18 months, the Egyptian pound has strengthened slightly since last week as the new government has been formed.

With Gulf aid flowing in, authorities may be tempted to spend some of the money to halt further depreciation, to limit inflation and try to restore investor confidence by creating a contrast with the pound’s performance under the Mursi regime.

But such a policy would risk draining Egypt’s foreign reserves, and could hurt the economy by keeping the pound overvalued. Capital Economics estimated a fair value for the pound, which would help Egyptian exports recover, of about 7.50.

Sultan Sooud Al Qassemi for Al-Monitor in Saudi Election reports Gulf States embrace post Brotherhood Egypt. Less than a week after Morsi’s ouster, Saudi Arabia and the UAE on the same day offered Egypt assistance totaling $8 billion. Each would grant Egypt $1 billion and lend it another $2 billion, in the case of the UAE interest free. In addition, the Saudis offered $2 billion worth of oil and gas. Al-Monitor was informed firsthand that the UAE’s assistance to Egypt, announced July 9, is merely the “first step.”

Saudi Arabia’s assistance to Egypt will likely go beyond this individual aid package. The kingdom is a member of the G-20 club, representing the world’s 20 largest economies, and can influence the International Monetary Fund directly as well as via contacts in Washington to finally extend a much-sought $4.8 billion loan for Egypt. This step could not come sooner. Upon former president Hosni Mubarak’s ouster, Egypt had $36 billion in foreign currency reserves. Two and a half years later with Morsi’s ouster, the country has $14.9 billion in reserves. The situation is even more serious when one considers that the previous sum is only sufficient for three months’ worth of imports, with Egypt’s total import bill for 2012 standing at $58.6 billion, according to the country’s Central Bank figures.

Kuwait, among the wealthiest of the Gulf Arab states, steered clear of the Morsi government during the past year due to the Brotherhood’s stance toward the 1990 invasion by Iraqi forces under Saddam Hussein. Back then, according to Wendy Kristianasen of Le Monde Diplomatique, “prominent Brotherhood branches visited Baghdad and issued statements condemning the US presence in Kuwait in language that seemed to support Saddam.” Kuwait, which is no doubt relieved to see the end of the Brotherhood government, announced a major aid package to Egypt on July 10 totaling $4 billion.

Qatar, which had invested a great deal financially, politically and media wise in supporting the Brotherhood, risks having all its investments turn sour. While the Brotherhood was in power, Doha extended Cairo a total of $8 billion in grants and loans as part of an $18 billion financial assistance program. Despite some expectations to the contrary, Qatar issued a press statement the day after the ousting of its close ally “praising the Egyptian army’s role in safeguarding Egypt’s national security” and adding that it “respected the will of the Egyptian people.” The statement also said that Qatar will continue to support Egypt, omitting any reference to the ousted Brotherhood president and government. Qatar is also expected to soon offer Egypt another aid package, in part to quell any assumptions that its only intent had been to assist a Brotherhood government.

While the UAE expressed “satisfaction” over the end of the Brotherhood regime, Saudi King Abdullah lauded the army for saving Egypt from what he called a “dark tunnel.” The Gulf states would be all too happy to see that the Brotherhood never return to power. It would be naïve, however, to assume that Morsi’s ouster is the end of the Brotherhood in Egypt. The world will have to contend with the presence of political Islam in Egypt whether in the form of the Brotherhood or the numerous Salafi parties, at least for the foreseeable future.

Chris Mardsen writes in WSWS Top US official meets with Egyptian junta as crackdown continues. The most significant development yesterday was the nomination of al-Sisi as first deputy prime minister. Al-Sisi also keeps his position as defence minister, making clear just who represents the real power in the land. This means that the government consists of Al-Sisi and the US stooge ElBaradei, sitting alongside.

8) An inquiring mind asks, does the ISON present comet cosmic risk to the earth and its inhabitants?

Alan Boyle, Science Editor NBC News reports Comet ISON gets its day in the sun. Comet ISON, the fuzzy snowball that skywatchers hope will become the “comet of the century” in November, shines in a colorful setting provided by the Hubble Space Telescope and its science team. The actual comet is out of view until next month, due to its current position in relation to the sun. However, the Hubble picture shows ISON as it looked on April 30, against a background of stars and galaxies. This image is an exclusive from the Hubble team’s ISON Blog, which will deliver images and lore about the comet as its approaches the sun. The world’s most loved space telescope, plus the comet of the century? That sounds like a match made in the heavens.

This inquiring mind asks, does the ISON comet present cosmic risks to the earth and its inhabitants?

10) On Tuesday July 16, 2013, a see saw destruction of fiat money as Aggregate Credit, AGG, traded higher, and the Regional Banks, KRE, and  the Too Big To Fail Banks, RWW, led World Stocks, VT, lower, on the miss in retail sales versus expectations.  

Mike Mish Shedlock writes Big miss in retail sales vs. expectations. DXLG has been one of the hot retail stocks of late, it traded down 0.9%, as the Retail Stocks, XRT, traded 0.7% lower.

Destination XL Group, DXLG, annouinced May 6, 2013, in press release Destination XL launches national ad campaign to support major retail expansion.  The TV and radio spots, titled “No Man’s Land”, use humor to underscore the shared and relatable shopping frustrations bigger guys face, and remind them that Destination XL is committed to addressing their fashion needs. The television spot features bigger men standing in a barren wasteland aimlessly searching for quality clothing that fits. In one scene, a grown man in his underwear exclaims, “I found this shirt, but I can’t find any pants that fit” as he sifts through clothes desperately trying to piece together an outfit. This is a common problem for men searching for XL sizes who, more often than not, walk out of stores empty-handed due to the consistent lack of options.

“The symbolism of standing in a vacant wasteland of a shopping center, neglected by retailers, hits home for many bigger guys,” said DXLG Chief Executive Officer David Levin. “Our mission at Destination XL is to fill this void by offering these guys the widest array of styles, brands and selections in the sizes they need to help them look and feel their best.”

The ad campaign launched on May 5 with a national rollout that includes cable TV, radio and outdoor placements. DXLG teamed with Interpublic Agency, Gotham, to create the spot. The new campaign coincides with the accelerated store expansion plan for this rapidly growing men’s XL retailer.  Destination XL, which currently has more than 50 stores across the country, expects to operate between 105 and 112 stores by the end of the fiscal year, and more than 200 stores by 2016.

Stockbrokers, IAI, Investment Bankers, KCE, Regional Banks, KRE, such as RF, the Too Big to Fail Banks, RWW, led World Stocks, VT, lower, as Aggregate Credit, AGG, traded higher, with the longer duration bonds, such as ZROZ, and BLV, trading higher more than their shorter duration peers, as the Interest Rate on the US Ten Year Note, ^TNX, traded lower, to 2.53%, on the miss in retail, XRT, sales versus expectations.  

Automobile Companies and their part manufacturers TSLA, F, AXL, TRW, SMP, MGA, DORM, and DLPH, led Automobiles, CARZ, lower. Biotechnology, IBB, Clean Energy, PBD, Media, PBS, and IPOs, FPX, traded lower as well.   

Energy Partnerships, AMJ, and Utilities, XLU, led the Interest Bearing Equities, lower.  

The Nikkei, NKY, traded lower. from its rally high.

Currency traders took the Major World Currencies, DBV, and the Emerging Market Currencies, CEW, higher, forcing the US Dollar, $USD, lower. Gold, GLD, and Silver, SLV, traded up, taking Gold Miners, GDX, and Silver Miners, SIL, higher.   

11) On Wednesday, July 17, 2013, World  Stocks and US Stocks traded higher, as the bond vigilantes continued calling the Interest Rate on the US Debt, ^TNX,  lower.   

Aggregate Credit, AGG, traded higher again, as bond vigilantes continued calling the Interest Rate on the US Debt, ^TNX, lower to 2.49%; and Bespoke Investment Blog reports Treasury yields fall to test upward trend line.   

World Stocks, VT, traded to a new rally high, and US Stocks, VTI, traded up to its previous high, with Networking, IGN, Internet Retail, FDN, Software, IGV, Small Cap Pure Growth, RZG, and Small Cap Pure Value, RZV, trading higher; the rise in the last two drove the Russell 2000, IWM to a new high. Emerging Market Finanials, EMFN, European Financials, EUFN, Regional Banks, KRE, The Too Big To Fail Banks, RWW, Automobiles, CARZ, Biotechnology, IBB, Media, PBS, S&P High Beta, SPHB, and Semiconductors, SMH, traded higher on the day as well.

In yield bearing investment Telecom Stocks, IST, Global Utilities, DBU, Leveraged Buyouts, PSP, Ultra Yield Bonds, UJB, Junk Bonds, JNK, rallied.

The Nikkei, NKY, traded up to its previous rally high, with Japanese Small Cap Stocks, JSC, such as Makita, MKTAY, moving up to a new rally high.

Thailand, THD, Vietnmam, VNM, The Philippines, EPHE, Indonesia, IDX, Indonesia Small Caps, IDXJ, New Zealand, NZD, Australia Small Caps, KROO, South Korean, EWY, and Australia, EWA, traded higher.

Brazil, EWZ, Brazil Small Caps, EWZA, Russia, RSX, Russia Small Caps, ERUS, Chile, ECH, and Argentina, ARGT, traded higher.

Bloomberg reports Bernanke says Fed bond purchases not on preset course. Federal Reserve Chairman Ben S. Bernanke said the central bank’s asset purchases “are by no means on a preset course” as he sought to tamp down an increase in borrowing costs that threatens to slow the economic expansion. “We’re going to be responding to the data,” Bernanke said today to the House Financial Services Committee. “If the data are stronger than we expect, we’ll move more quickly” to reduce purchases. If data “don’t meet the kinds of expectations we have about where the economy’s going, then we would delay that process or potentially increase purchases for a time.”

Lloyds Broup, LYG, and Bank of America, BAC, both rose to a new high; Zero Hedge reports Bank Of America: From loss to profit thanks to mark-to-unicorn.

The US Dollar, $USD, UUP, traded up from yesterday, and Gold, GLD, and Silver, SLV, traded lower. I am of the opinion that the Dollar will be going up from today’s close and that all of the Individual Currencies will be trading lower, as Risk On, ONN, turns to Risk Off, and as Volatility, ^VIX, pick up.

An inquring mind asks is an Elliott Wave 3 Down about to commence in the S&P 500, $SPX, SPY? Is  Risk-On, ONN, about to turn to Risk Off, OFF? Will Volatility, TVIX, VIXY, VIXM, and XVZ, be rising soon? One can find answers to these questions by watching their ongoing Yahoo Finance Chart.

12) On Thursday, July 18, 2013, Dan Berman of Hot Stock Minute reports Dow, S&P 500 rise to all time highs; Morgan Stanley beats; Dell rises on delayed vote.  Europe, VGK, led World Stock, VT, US Stocks, VTI, Nation Investment, EFA, and Small Cap Nation Investment, IFSM, higher.  Countries rising strongly included the Greece, GREK, Italy, EWI, Ireland, EIRL, Spain, EWP, Nikkei, NKY, Canada, EWC and the UK, EWU.

Oil, USO, rose 1.4%, causing the energy sectors to rise strongly

Small Cap Energy, PSCE 2.2

Energy Production, XOP 1.8

Exxon Mobil, XOM, 1.0, to close at 94.38

Energy Service, OIH 1.2 and IEZ 1.2

Sectors rising strongly included

Health Care Provider, IHF 2.1

Transportation, XTN 1.3

Global Industrial Producer, FXR 1.3

Bevreages, PBJ 1.2

Aerospace, PPA 1.0

Small Cap Industrial, PSCI 1.0

Industrial, XLI 1.0

Small Cap Pure Value, RZV 0.7

Retail, XRT 0.6

Global Consumer Discretionary, RXI 0.6

Yield bearing sectors rising strongly included

Leveraged Buyoust, PSP 1.1

Industrial Office REITS, FNIO, 1.0%, ReaI Estate, IYR 0.6, Small Cap Real Estate, ROOF, 0.7%

Utilities, XLU 0.8

Utilities, DBU 0.5

National Bank of Greece, NBG, soared 9.1%, Deutsche Bank, DB, rose 2.4%, taking European Financials, EUFN 1.8, higher, causing Europe, VGK, to rise 0.8%.

Regional Banks, KRE 1.8

Investment Bankers, KCE 1.5

Too Big To Fail Banks, RWW 1.5

Stock Brokers, IAI 1.3

The National Bank of Greece, NBG, led Global Financials, IXG, higher; banks rising strongly included NBG, BPOP, RF, BAC, RBS, SMFG, DB, BCS, CS and UBS.  

Semiconductors, SMH -2.1%, with FCS, -10.1, -INTC -3.7 and DIOD -2.9. And Taiwan, EWT, dropped 2.7%, as Semiconductor Manufacturer, TSM, dropped 8.9%, and Semiconductor Equipment Manufacturer, ASX, dropped 2.4%

Aggregate Credit, AGG, traded lower, as the Interest Rate on the US Ten Year Note, ^TNX, rose to close at 2.53%. Junk Bonds, JNK, and Ultra Junk Bonds, UJB, traded higher with stocks.

The reason for the strong rise in the National Bank of Greece, NBG, and European Financials, EUFN, was the news that Troika has finally laid down the law so as to speak and demand that Greece annul the constituonal right to state employment and begin some limited level of dismissals, being privitizatons, impose some austerity measures, as well as commence some improvement in tax collection.  

Robet Stevens of WSWS writes The New Democracy (ND)-PASOK government is to vote through cuts agreed after the recent review of Greece’s austerity measures by the “troika” of the European Union, European Central Bank and International Monetary Fund. Receipt of £5.8 billion in further loans from the troika requires the government to pass the legislation, which will enforce the firing of tens of thousands of public sector workers, including teachers, hospital staff and municipal workers.

According to Bloomberg, a European Union official said that senior euro-area financial officials are to hold a discussion July 24 to determine whether Greece qualifies for further loans from the €240 billion ($314 billion) overall loan agreement.

The omnibus legislation, which the troika specified had to become law by July 19, contains 109 articles including privatisations, health sector spending and taxation changes. The legislation centres on the firing of 4,000 state employees this year, including teachers, broadcasting workers, public building caretakers and municipal police officers. A further 15,000 are to be sacked by the end of 2014 and 25,000 placed in a mobility scheme (4,200 of these by the end of July and 12,500 transfers this year).

Those being dumped into the scheme include 1,000 hospital staff,  move that will wreak further havoc on already devastated public health provision. The scheme is a euphemism for firing workers. They will have an eight-month period on 75 percent of their salaries. After that period, they are forced to accept any job offered to them, or, if no place is available for them in another part of the public sector, as is almost certain, they will be made redundant.

The Financial Times welcomed the troika/government proposals, declaring this week, “Greece’s civil service cull heralds break with the past.”

Stating that the “game was up” for public sector workers, the FT said, “While dismissals this year will amount to less than one percent of the civil service payroll, they send a message that a longstanding taboo on firing public sector workers has been broken, according to Kyriakos Mitsotakis, the newly appointed minister for public administration, who worked for the consultants McKinsey before entering politics.”

Even these measures are not enough, with the FT complaining, “Even though jobs for life are no longer guaranteed, procedures for sacking can be long drawn-out. About 6,000 state employees whose temporary contracts have ended, including janitors, cleaners and gardeners, are being paid in full while they contest their dismissal in the courts. The government has agreed to settle all such disputes this year.”

Dhara Ranasinghe of CNBC reports Pimco’s Gross has a post-Bernanke trade for you Federal Reserve Chairman Ben Bernanke’s semi-annual testimony on Wednesday drew swift advice from bond guru Bill Gross: time to buy five to seven-year Treasurys since interest rates are likely to be on hold for some time.

Those Treasuries are traded by IEF, and they will trade lower in value as bond vigilantes have control of the Interest Rate on the US Ten Year Note, ^TNX, and will be calling it significantly higher very soon, its rise on May 24, 2013, constituted an “extinction event” which terminated Liberalism and introduced Authoritarianism. There be no more traditional sovereigns as democratic nation states are being replace by regional sovereign leaders, nannycrats, and regional sovereign bodies. Money died, and the fiat money died on May 24, and just how high interest rates go, is something only God knows. One thing for sure is that a steepening 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, seen in the Steepner ETF, STPP, steepening will duplicate itself across all crecit instruments wiping them out and taking down stocks in the process.   

Zero Hedge reports June restaurant spending plunges by most since February 2008. Restaruants that have traded lower a little of late include BAGR, CHUY, BLMN, TXRH, DNKN, KKD, FRGI, IRG, EAT.

Today’s strong trade lower in EBAY has made Internet Retail, FDN, a very attractive short selling opportunity.

13) On Friday July 19, 2013

Global Industrial Producers, FXR, and World stocks, VT, traded unchanged for the day, yet attained a four week rally high, following some forecast busting U.S. earnings and assurances from the Federal Reserve about its plans for stimulus withdrawal.  Gold, GLD, traded up for the week; but Silver, SLV, traded lower on the week, as the Dollar, $USD, UUP, gave back Thursday’s gains to trade lower for the week. Aggregate Credit, AGG, rose both for the day and the week, as the Interest Rate on the US Sovereign Debt, ^TNX, closed at 2.49%.

Oil rose 0.3%, taking energ sectors higher

XOP, PSCE, 1.3, 0.7

IEZ, OIH 2.0, 1.8

Sectors rising included

IBB 1.6

XLI 1.0

PKB 0.6

ITB 0.7

BJK 0.5

PPA 0.3

PJP 0.9

KRE 0.5

Yield bearing sectors rising included

PSP 0.3

IST 0.5

KBWD 0.3

Countries rising included Norway, NORW, Sweden, EWD, Europe, VGK, Vietnam, VNM.

Of note Gold Miners, GDX, and Silver Miners, SIL, traded up.

Chile, ECH, Peru, EPU, Taiwan, EWT, The Nikkei, NKY, traded lower.

Automobiles, CARZ, traded 1.1% lower. And Microsoft, MSFT, traded 11.7%, lower, turning Software, IGV, 1.1%, lower  

This week’s 7% rise in Bank of America, BAC, completes BAC’s 103% rise over the last year which has created a safe haven rally for now in the Small Cap Pure Value Stocks, RZV, the Russell 2000, IWM, and the S&P 500.  And the rise seen in Glacier Bancorp, GBCI, a multi-bank holding corporation with roughly one-hundred branches in Montana, Idaho, Colorado, Wyoming, Utah, and Washington. The company is headquarterd in Kalispell, MT. And serves as definition and example of US Federal Reserve monetary transmission that has inflated Regional Banks, KRE.         

Leading Banks by Region include the following seen in this ongoing Yahoo Finance Chart; these six banks are amongst the leading banks; these exemplify the best of the Regional Banks, KRE.  

Pacific Bank, GBCI, Kalispel, MT

Mid Atlantic Bank, SNV, Columbus, GA

Southwest Bank, FFIN, Abilene, TX

Southeast Bank, RNST, Tupelo, MS,

Midwest Bank, FITB, Cincinatti, OH

Northeast Bank, SBNY, New York, NY

All of these banks serve communities of industry, and stand in sharp contrast with the National Bank of Greece, NBG, which serves a community of dependency.

Christoph Dreier of WSWS reports Greek government bans demonstrations in central Athens. The Greek government has used the visit on Thursday by German Finance Minister Wolfgang Schäuble to impose a blanket ban on demonstrations in central Athens,

The Greek Parliament approved the austerity package, the seventh since 2010, to secure payment of its next tranche of credit of €2.5 billion. The package calls for firing 15,000 public employees, with 150,000 to be sacked by the end of 2014. The package was dictated to the Greek government by Schäuble and his European colleagues.

The package won the support of 153 of 300 deputies. After the withdrawal of the Democratic Left (DIMAR) from the coalition in June, the Greek government was left with a majority of just 5 seats. All of the opposition parties voted against the law, but DIMAR chairman Fotis Kouvelis stressed that his party agreed in principle to the cuts.

Greek Finance Minister Giannis Stournaras defended the mass layoffs, which he claimed should have taken place much earlier and not merely as a result of pressure from foreign creditors. He added that drastic measures were necessary to achieve Athens’ goal of a primary budget surplus for 2013.

After discussions with Samaras and Stournaras, Schäuble declared that the EU would provide Greece with aid credits beyond 2014, on condition the country respect its previous agreement to implement comprehensive privatization measures and mass layoffs.

Given the catastrophic social situation in Greece, his proposal to provide small and medium enterprises with credits of €100 million is a drop in the ocean. The sum is a fraction of the monies Germany receives in interest payments on its previous loans to Greece.

From the very start of the European crisis, Greece has been the model for the implementation of austerity measures across the continent. With the Greek political establishment and union bureaucracy increasingly discredited in the eyes of the masses, Athens increasingly resorts to police state measures to suppress opposition to its policies.

The Greek government has imposed martial law on striking workers on no less than three separate occasions this year and just a few weeks ago permitted riot police to invade the premises of Athens central university to dispel students. This was the first such police operation since the overthrow of the military junta in 1974.

The latest ban on demonstrations is a further step towards authoritarian forms of rule in Europe.

It is Jesus Christ, operating in the Economy of God, Ephesians, 1:10, who is bringing forth the Beast regime of regional governance and totalitarianism, out of the clientelism of Greek Socialsim, and the moral hazard of Crony Capitalism.  Yes, God’s Son, Jesus Christ, is doing what Ron Paul could not do.  He is terminatiang the Banker regime, beginning first with the financial insolvency and national insolvency of Greece as a means of terminating the age of investment choice and introducing the age of diktat.  

Under Liberalism, the monetary sovereignty of the US Federal Reserve, and the political sovereignty of the United States, gave great seigniorage of credit, that is great moneyness of trust in bankers, to risk assets such as Biotechnology, IBB, and Regional Banks, KRE.

Under Authoritarianism, the sovereignty of regional nannycrats will increasingly grow in power, causing disinvestment out of risk assets; and all banks, everywhere, will be integrated regionaly with government, and will  be known as the government banks, to provide the seigniorage of diktat, that is the moneyness of trust in public private partnerships, for regional security, stability, and sustainability.   

This week, the chart of the S&P 500, $SPX, shows a  0.7% rise to a new all time high.

SPY, 1.0% and IWM, 1.6

VTI , 1.0

VT, 1.2

VGK, 2.0

EPP, 0.9

NKY, 0.7

Financial sectors rising included

EMFN 5.4

EUFN 3.1

KRE 3.1

IXG 2.3

RWW 1.9

Sectors rising  included

GDX 6.1

SIL 4.5

OIH, and IEZ 2.7

XOP 2.6

PSCE 2.3

PSP 2.3

XTN 2.2

XLI 2.1

BJK 2.1

FXR 1.6

PPA 1.5

PSCI 1.3

RZV 1.2

Yield bearing sectors rising included

FNIO 1.9

ROOF 1.4

IYR 1.2

XLU 1.9

DBU 1.7

IST 1.5

KBWD 1.5

Doug Noland reports that the chart of the US Dollar, $USD, shows a decline of 0.5% to 82.61 (up 3.6% y-t-d). For the week on the upside, the Mexican peso increased 2.3%, the Swedish krona 2.0%, the New Zealand dollar 1.8%, the Norwegian krone 1.6%, the Australian dollar 1.4%, the South African rand 1.1%, the British pound 1.1%, the Brazilian real 0.9%, the euro 0.6%, the Danish krone 0.6%, the Swiss franc 0.6%, the Canadian dollar 0.3%, and the South Korean won 0.2%. For the week on the downside, the Japanese yen declined 1.4%, the Singapore dollar 0.3% and the Taiwanese dollar 0.2%.

The weekly chart of Spot Gold, $GOLD, shows a 0.9% rise to close at 1,295. Under Authoritarianism, the two forms of sovereign wealth, and thus sustainable wealth, are diktat and the possession of gold bullion.

Adam Hamilton writes in Safehaven.com Gold short squeeze. The CFTC releases its CoT late every Friday afternoon, current to the preceding Tuesday. So the latest available data when this essay was published was Tuesday July 9th’s. Gold-futures speculators held the short side of an astounding 178.9k contracts that day! This was at least a 12.3-year high, the most-extreme gold-futures spec short position by far in gold’s entire secular bull.

The sheer size of this bearish bet is breathtaking. Each COMEX gold contract controls 100 troy ounces of the yellow metal. So American futures speculators have borrowed and sold 17.9m ounces, or 556.4 metric tons! That even dwarfs the also-outlying record selloff in the holdings of the flagship GLD gold ETF over the past 7 months, which now weighs in at 417.3t. This epic gold short is wildly unprecedented.

The risks of such a big downside bet on gold are mind-boggling. By definition, futures speculators don’t produce or consume the commodities they trade. They aren’t gold miners, so the only way they can repay the 556.4t of gold they’ve borrowed is by buying it in the futures market. But even that won’t be easy. 556.4t is the equivalent of a fifth of total global production from all the world’s gold mines last year!

In order to amass such an enormous collective bet on further gold downside, futures speculators have to be both exceptionally bearish and highly convicted about that worldview. This is especially true given the very high leverage inherent in futures trading. High leverage makes already-unforgiving short selling an extraordinarily risky game, greatly multiplying both the speed and magnitude of losses when gold rallies.

At $1250 gold, a single 100-ounce futures contract controls $125,000 worth of the metal. But traders don’t have to put up the full $125k to play. The minimum maintenance margin on COMEX gold futures contracts these days is just $8k. This means the maximum leverage available to aggressive gold shorts is 15.6 to 1! Stock traders can scarcely comprehend that, as stock margin has been legally limited to 2 to 1 since 1974.

At maximum leverage, a mere 6.4% gold rally would wipe out 100% of the capital risked by gold shorts! While not all futures traders run with minimum margin, plenty do. The faster that gold rallies, the more pressure it puts on these guys to buy offsetting futures longs to cover. Short squeezes are born when just a small fraction of traders are forced to cover, unleashing buying pressure that sucks in many more.

The power of this futures leverage to violently move prices shouldn’t be underestimated. It is actually the dominant factor responsible for most of gold’s extraordinary losses this year. Year-to-date as of its recent late-June low, gold had lost $474. Incredibly $285 of this, or 60%, happened on just 3 trading days. First in mid-April and then in late June, the very high leverage inherent in gold futures fueled selling panics.

Every futures contract is a deal between two traders, the buyer on the long side and seller on the short side. And this is a zero-sum game, every dollar won by one trader is a direct dollar loss for the opposing counterparty. Back in April and to a lesser extent in June, gold plunged so fast that the max-leveraged speculator longs were forced to sell. Their selling greatly exacerbated gold’s selloff, sparking that vicious circle.

This cascading dynamic amplified gold’s down days to 4.7%, 9.6%, and 5.1%, enormous selloffs. The leveraged futures traders didn’t even have a choice. With gold moving so fast, brokerage margin computers stepped in to unilaterally sell longs at any price to protect their firms from having to make good on their customer traders’ losses. High leverage amplifies big moves as trapped futures traders are forced out.

This is true both ways, on exceptional down days and exceptional up days. Just as plunging prices drive forced liquidations of longs, surging prices drive forced buying by shorts. The brokerages unilaterally close these risky positions by buying at any price, and that buying pressure amplifies the rally which forces out more shorts. Today’s bull-record gold-short position among speculators is like short-squeeze rocket fuel.

After plummeting so rapidly in 2013, largely driven by the high gold-futures leverage biting the longs, gold is hyper-oversold and due for a massive rebound rally. If that happens fast enough, the shorts will be forced to buy to cover rapidly and trigger a short squeeze. The US futures markets have a long history of every contract being honored, there are no defaults. So the vast gold shorts can only be closed by offsetting buying.

Obviously speculators willing to run 10-to-1-plus leverage are much more sophisticated than your average long-only stock trader. High leverage is very unforgiving, quickly weeding out the traders who don’t know what they are doing. Nevertheless, as a herd gold-futures speculators have a long track record of making the wrong bets at price extremes. They miss major reversals as they get too fixated chasing momentum.

When gold-futures speculators are the most bearish, as evidenced by relatively high total shorts and relatively low total longs, gold is nearly always in the process of carving a major bottom. I highlighted instances of this in light blue above. These are major gold lows leading into major new uplegs where the futures speculators were utterly convinced gold would continue heading lower. Their track record is dismal.

A great example is the last secular-bull-record short position held by gold-futures speculators in early 2005. With gold near a major low, longs plunged to 145.1k contracts while shorts surged to 108.3k. This extremely bearish bet by the futures traders was dead wrong though. Over the next 15 months or so, gold would blast about 65% higher in its biggest upleg of its secular bull at the time. High spec shorts are a bullish indicator.

And with gold merely near $425 at this bull’s last record high in spec shorts, they were risking far less capital than they are today with gold near $1250. Those 108.3k contracts then controlled $4.6b worth of gold, but the recent outlying-record 178.9k contracts controlled a staggering $22.4b worth of gold! The more extreme the futures speculators’ shorts, the more guaranteed buying exists to catapult gold higher.

At peak bearishness during the stock panic, futures speculators’ long and short gold positions fell and rose to 144.7k and 84.5k contracts. These guys, with nearly everyone else, were utterly convinced gold was dead. If it couldn’t rally during an ultra-rare stock panic with the greatest market fear anyone will see in our lifetimes, then when would gold ever rally? The bearishness in it then was absolutely universal.

Yet nearly all traders, even the sophisticated leveraged futures guys, bet wrong at price extremes. They are the most bearish after long exceptional selloffs when they should be the most bullish. That happened in late 2008, it happened at this secular bull’s other major gold lows, and it is happening again today. These big short positions are actually what fuels the early rallies out of lows, when they’re often the only demand.

Shorts have to cover, they have effectively borrowed gold from other traders that has to be repaid. And the smart ones want to buy after extreme selloffs, to close their successful downside bets and realize their profits. But buying isn’t always easy. Every futures contract requires a willing buyer and willing seller. And as a price starts surging out of major lows, there aren’t many traders looking to sell gold futures.

So as shorts bid on gold futures to cover, in a short-squeeze situation there’s insufficient supply. The shorts dominate the market and a large fraction of them want to buy. But the longs who bought low are not interested in selling to the shorts in a nascent rally likely to run much higher. So in order to buy to cover, the shorts have to keep raising their bids to attract sufficient supply which accelerates the rally higher.

That classic dynamic was very apparent in late 2008’s stock panic, when gold started surging dramatically out of the depths of despair on gold-futures short covering. And compared to today, both the peak speculator shorts and gold price were much lower then. So the shorts then only had $6.6b of forced buying they were legally and institutionally bound to do, compared to the utterly staggering $22.4b today!

If that last episode of extreme bearishness among gold-futures speculators led to gold nearly tripling, how much more bullish is today’s far-greater extreme? In the post-panic years between 2009 and 2012, total spec long and short positions in gold averaged 288.5k contracts and 65.4k contracts. Merely to mean revert to these levels, not even overshoot, will require incredible gold-futures buying in the coming year.

On the long side, speculators would need to buy 91.6k contracts (9.2m ozs or 284.9 metric tons) to just return to post-panic-average long levels. Unlike the shorts who have to buy to repay the gold they’ve borrowed, this buying is optional for the longs. But as we saw after the stock panic, nothing brings back futures longs like rapidly rising prices. In under only a year after late 2008, longs were once again high.

The average futures-speculator short position in gold in the 4 full years after 2008 and before 2013 was 65.4k contracts. That is a long way down from today’s outlying-record 178.9k short position, we are talking 113.5k contracts! This is a mind-boggling 11.4m ozs of gold, or 353.1t. And unlike the longs, this buying is not optional. All this futures gold borrowed and sold short has to be repurchased, full stop.

Add these mean reversions from extreme lows in speculator gold longs and extreme highs in speculator gold shorts, and you get highly-probable buying in the coming year of 20.5m ounces or 638.0t! This is the equivalent of nearly a quarter of total world mine production in 2012! And all this is atypical exceptional demand on top of all the normal gold demand throughout any given year. So much buying is wildly bullish.

And I just can’t see how an exit from such outlying-record gold shorts when gold is at hyper-oversold lows and due to surge can be orderly. At some point, gold is almost certain to rally as fast as it plunged on the down days when the long futures traders were trapped in forced liquidations. And with such massive and highly-leveraged short positions, a short squeeze cascading into a buying panic is highly likely.

The total buying pressure on gold as it rebounds is going to be unprecedented. On top of the futures mean-reversion buying, there is the 417.3t of GLD holdings that had to be liquidated since December as money managers dumped gold. When gold starts rallying decisively again, they will realize they’ve made a mistake in portfolio allocation and migrate back in. GLD holdings should recover to new record highs in a year or two.

On top of all this exceptional buying, with wildly unprecedented 1055.3t potential between gold futures and GLD, is gold’s strong season. Much of gold’s enormous secular-bull run has been driven by huge buying out of Asia. The strong season over there begins with harvest in August, and runs for months on end. And unlike dumb American investors who foolishly like to buy high, Asian investors love bargains.

They are going to buy like never before with gold so extremely oversold and at such incredibly low levels compared to the past couple years. This is going to put even more pressure on the gold-futures speculators to exit their short positions. We are truly set up for a perfect storm of gold buying after 2013’s perfect storm of gold selling. The futures-short-driven component of that selling has to and will reverse.

The bottom line is the record short position futures speculators have amassed in gold is wildly bullish for the yellow metal. These guys have a long track record of betting completely wrong at major gold lows, extrapolating major downtrends continuing indefinitely even when they’ve begun reversing. This grave error leads to forced buying as the rallying gold price forces the shorts to cover their hyper-bearish bets.

And given such extreme spec gold shorts, widespread despair, and gold recently hitting the most oversold levels by far of its secular bull, it is due for a monster upleg. As this accelerates, the leveraged shorts will be forced to buy back the gold they owe at increasing rates. This will feed on itself and likely ignite a buying panic. It will very likely lead to the biggest and fastest upleg of gold’s entire secular bull.

14) Summary

Christoph Dreier of WSWS has it right when he relates “The latest ban on demonstrations is a further step towards authoritarian forms of rule in Europe.”  There will be no populist leader rising to resolve the soon coming regional and global economic crisis; rather there will be one familiar with Authoritarianism’s policy of diktat and schemes of debt servitude coming to rule the Eurozone, as foretold in Daniel 8:23-25. This leader is also presented in Revelation 13:5-10, as the New Pharaoh, who will be accompanied by the New Prophet, Revelation 13:11-17, who will together eventually introduce the charagma money system, that is the 666 credit system, where all will be required to take the Mark, in order to buy or sell, Revelation 13:18.

Revelation 13:4, foretells that people will worship the Dragon, that is Satan, Lucifer, the Devil, and the Beast.  Out of the soon coming Financial Apocalypse, that is a global credit bust and financial breakdown, people will be so amazed of the economic recovery that comes through regional governance and totalitarian collectivism, that the trust engendered in the Beast Regime’s diktat, will be defined as worship.

Worship is one thing Satan has always wanted for himself, and he will receive it through the success of the Beast Regime, the Sovereign and the Segnior, as he imbues, and comes to occupy in all three.  In Revelation 5, the Lamb is declared worthy to take the scroll and to “receive power and riches and wisdom, and strength and honor and glory and blessing.”  But in Revelation 13, it is three Beasts, a Beast Regime, A Beast Ruler, and a Beast Prophet, who take the place of the Lamb and rule over mankind.   

Peak Wealth Is Attained On Ben Bernanke’s Comment In NBER Conference That “Highly Acommodative Monetary Policy For The Foreseeable Future Is What’s Needed”

July 14, 2013

Financial market report for the week July 8, 2013 to July 13, 2013

1) … Financial trading for the week.

1A) Monday  July 8, 2013

The Interest Rate on the 10 Year US Note, ^TNX, traded lower to 2.65%. Aggregate Credit, AGG, led by Junk Bonds, JNK, rose, giving impetus to the Interest Rate Sensitive Sectors, Electric Utilities, XLU, Mortgage REITS, REM, and Energy Partnerships, AMJ, to lead the Big Nine, seen in this Finviz Screener, and US Stocks, VTI, and World Stocks, VT, higher. Europe, VGK, and the European Financials, EUFN, rose strongly reflecting overnight trading.

Yield bearing sectors trading higher included AUSE, BRAF, EUFN, and RWW, the latter to a new high, which gave impetus to the Russell 2000, IWM, and the Russell 2000 Growth, IWO, to swell to new highs.  

Stocks rose on the Briefing.com report “According to the Federal Reserve, consumer credit increased by $19.6 billion in May. This followed the prior month’s increase of $10.9 billion, and was higher than the $13.2 billion that had been broadly expected among economists polled by Briefing.com”.  Sectors trading higher included PSCE, XRT, PPA, IHF, RZV, FDN, PBS, IAI, FPX, PJP, PJB, RXI,  IYC, VCR, IGV, IBB, and KRE, all to new rally highs. The Washinton Post Blogs relates. “Anyone who lived through the financial crisis and recession, in which excessive household debt was a major contributing factor, has to feel a little squeamish about how quickly consumer credit is rising

Aerospace Companies, NOC, LMT, GD, BA, Specialty Retailers, LOW, HD, AZO, RH, BBBY, BID, BBBY, and Internet Retailing, FDN, components, AMZN, PCLN, GOOG, traded higher.

Briefing.com reports the largest tech component, Apple, AAPL, shed 0.6% amid reports suggesting the company is reducing its smartphone production. Major Apple suppliers also registered losses as Broadcom, BRCM, and Qualcomm, CCOM, both fell near 1.4%.

      

Intel, INTC, and Taiwan Semiconductors, TSM, led Semiconductors, SMH, lower, and Micron, MU, led Semiconductor Chip Manufacturers, SCMA, lower.  Home Builders, ITB, traded lower. Thailand, THD, Philippines, EPHE, Turkey, TUR, and Indonesia, IDX, traded lower. 

Gold, GLD, Silver, SLV, and Base Metals, DBB. rose. Butt heir mining companions did not. It was a most excellent day to invest in Gold Miners, GDX, such as ABX, ANV, NEM, KCG, and RGLD, as is suggesgted in their bottomin gout seen in ongoing Yahoo Finance Chart and in as much as the Gold Mining Stocks have reached a bottom of seigniorage relative to the US Ten Year Government Note, GDX:TLT.    

Robert Stevens of WSWS writes Greece is billions of euros behind in funds it agreed to hand over to its creditors through a troika agreed privatisation programme. After failing to find a buyer for its natural gas company DEPA, due to Russian firm Gazprom pulling out, and ongoing problems with the €700 million sale of the OPAP state gaming monopoly, the government reportedly asked the troika to reduce its privatisation target of €2.6 billion this year. DEPA and OPAP were selected as the two flagship privatisations, with their revenues expected to raise half of the €2.6 billion. Privatisation income has not even reached €1 billion this year and the target has already been revised downwards twice. A June review by the IMF warned that due to the “slippage” in the privatisation programme, a deep hole would appear in the government’s budget and “additional financing will need to be identified.”

The three news reports presented below, illustrate that Eurozone leaders are only kicking “the can” that is the “Greek fiscal budget crisis” down the road.  Greece is an insolvent nation and thus a failed sovereign nation state that relies upon seigniorage aid for its fiscal spending. Greek socialism is the most extreme form of all socialism as its constitution forbids firing of any state workers; and there are very few private workers in Greece because of massive anticompetitive rules in place. The economy of Greece is the definition of clientelism, which the Economist Magazine described as pork and patronage. In all of the Greek Bailouts, that is in I, II, and III, Greece promised to annul its constitution and dismiss employees from the right to lifetime jobs; but this has not happened.  The only reform presented currently is one of administrative leave and possible dismissal, which is coming up for likely  Parliament approval, which is being met with a general strike set for next week, the WSJ reports. 

The WSJ reports Greece’s economic future uncertain, creditors say.  And The Miami Herald presents the AP report Greek creditors say agreement on reforms reached. The Troika said “Policy implementation is behind in some areas” and that the Greek authorities have said they will do more to ensure delivery of the fiscal targets for 2013-14, noting in particular efforts to restrict overspending in the health sector.

The government has also “committed to take steps to bring public administration reforms back on track,” including pushing through plans to reduce the number of civil servants, one of the required measures that has been among the most contentious, and delayed, in Greece’s reform program.

The government must put 12,500 civil servants on administrative leave by the end of 2013, with the possibility of dismissal. Those targeted include 2,200 school security personnel, 3,500 members of the Athens municipal police, which will be disbanded and most of its members absorbed into Greece’s police force, at least 2,000 local government employees, 1,500 teachers and several employees of various ministries. They will be paid 75 percent of their normal salary and if they aren’t transferred to other state agencies within eight months of being put on leave, they will be subject to dismissal.

The WSJ writes, The coming Greek write off: The EU will never get its money back. Greece’s debt-to-GDP ratio stood at 157% of GDP at the end of last year, even after a restructuring that drastically reduced the value of its privately held sovereign debt. The budget deficit in 2012 was 10% of GDP. And that’s on top of a 26.8% jobless rate, five years of shrinking GDP, and further anticipated shrinking of 4.4% this year.

All this underscores what is slowly becoming clear even in Brussels and Frankfurt: Greece will never repay the money it’s been lent to “save” it. The current debate over whether Greece has done enough by way of reform, tax hikes and spending cuts to have earned the next tranche of bailout funds is largely beside the point. Greece’s external debt position is far worse than when the bailouts began, when its debt stood at a mere 129% of GDP. Any talk of debt sustainability in Greece has become a joke.

Not only in Greece, but in every one of the Eurozone’s periphery states, treasury debt is unsustainable. With the meteoric rise in the Interest Rate on the US 10 Year Government Note, ^TNX, beginning in May 2013, the PIGS Treasury Rate has been skyrocketing, resulting in a boiling over credit crisis. 

And it is not only the PIGS Treasury Debt that is undermining democracy in Europe, it is leadership instability and soaring unit labour costs in Italy which rose by 35 percentage points between 2000 and 2012. In Germany, the equivalent figure was three percentage points. Over the same period, Italian labour productivity gains were 14 points lower than Germany’s. No wonder Italian industrial production is collapsing, to Germany’s benefit writes the Globe and Mail.  “It’s currently very trendy in Italy to blame Angela Merkel, Mario Monti, the euro and austerity measures for the current recession. … [But its persistence] is the legacy of more than a decade of a lack of reforms in credit, product and labour markets, which suffocated innovation and productivity growth and resulted in wage dynamics that were completely decoupled from labour productivity.”    

There is waiting in the stage of Europe’s wings, the most capable of sovereigns. Soon, Jesus Christ as presented in Ephesians 1:1-23, will open the curtains, and into the limelight will step the Sovereign, the Eurozone’s Leader as foretold in Revelation 13:5-10. He will be accompanied by the Seignior, the EU’s Finance and Economic Minister, Revelation 13:11-18.  Out of Eurozone sovereign insolvency and banking insolvency, the word, will, and way of these two will provide the way forward as public private partnerships form to manage the economy of a Eurozone Super State. While Italians and  Greeks cannot be Germans, all will be one, living in a regional gulag of debt servitude and totalitarian collectivism. According to bible prophecy of Daniel 2:25-45 and Revelation 13:1-4, Regionalism will replace European Socialism and Greek Socialism as the engine of economic and political life. 

  

Candidates for the Sovereign include Guido Westerwelle; and candidates for the Seignior include Jens Weidmann and Mario Draghi.

Liberalism’s Banker regime (which was based upon democratic nation states) had a policy of investment choice. The dynamo was one monetary interventionism, consisting of POMO, Quantitative Easing, Central Bank Interest Rate Reductions, Kuroda Abenomics, and Global ZIRP, which powered up corporate profit and global growth …  and came with credit schemes, such as free trade agreements, financial deregulation, leveraged buyouts, nation investment, currency carry trade investing, securitization of debt, dollarization, and financialization of stocks and ETFs, such as corporate bonds which convert into stocks  … where Milton Friedman’s Free To Choose concept of floating currencies and abandonment of the gold standard, established the rule underlying all investing, providing for the fiat money system.

Authoritarianism’s Beast regime (is based upon statist regional governance) has a policy of diktat. The dynamo is one totalitarian collectivism consisting of public private partnerships for oversight of the factors of production, banking, commerce and trade, which powers up regional security, stability and sustainability … and comes with debt servitude schemes, such as regional framework agreements, bank deposits bailins, new taxes, privatizations, capital controls, central bank rulings for capital adequacy consisting of national treasuries, and austerity measures … where Nannycrats establish the rule underlying all diktat, providing for the diktat money system.

Reuters reports Hot money exodus sends currency wars into reverse.

MyBudget 360 in article The consequences of bubblenomics: Fed balance sheet increases to $3.5 trillion, negative interest rates since 2009, and part-time employment at record high, presents a chart of the Fed’s Balance Sheet, which is found here each Thursday. In as much as the Fed’s Balance Sheeet consists of Motbage Backed Bonds, MBB, US Treasuries, TLT, and Distressed Investments, FAGIX,  it will be trending down, much like the combined down in their ngoing Yahoo Finance chart.    

Benson te writes US Stock Markets: The incompatibility of rising stocks and rising bond yields. The lessons of history are that rising yields have largely been incompatible with sustained stock market booms. Both may concomitantly rise but the eventual outcome has been a bear market cycle (2007-2008, dotcom bubble), stock market crash (1987) or a quasi-bear markets (1983-1984 or 1981-1982).

The relationship has hardly been statistical but causal—rising rates eventually prick unsustainable debt financed bubbles.

Yet a stock market boom can be engineered by governments that could destroy historical precedents. Venezuela should be an example. Venezuela’s stock market has been up a stratospheric 160% year to date. This translates to star bound 460% in one and a half years. But Venezuela’s deceiving outperformance comes at a heavy toll: the collapse of her currency the Bolivar which means rising stocks are symptoms of hyperinflation.

Again rioting bond markets as expressed through rising yields (which are indicative of higher policy rates) seems like the proverbial ‘sword of Damocles’[16] which hangs over the heads of the stock markets.

Differently put, unless bond markets stabilize, rising stock markets in the US or elsewhere, looks like an accident waiting to happen. I call rising stock markets, in the face of mounting systemic leverage and rising yields as the Wile E. Coyote moment. When stock markets become objects of rampant and excessive speculation fueled by bubble policies, and whose boom has been financed by leverage, stock markets undergo or endure boom-bust cycles.

1B) Tuesday July 9, 2013

The Interest Rate on the US Ten Year Note, ^TNX, traded lower to 2.63%; Aggregate Credit traded unchanged.

It was a bullish day as XTN, and XLI and PSCI, as well as Global Industrial Producers, FXR, traded strongly higher.  Other sectors trading strongly higher included ITB, PKB, IEZ, OIH, and RZV. Story stocks trading included Cerner, CERN, Micron, MU, Intuitive Surgical, ISRG, LabCorp, LH, traded sharply lower. Yield bearing sectors trading higher include DRW, IYR, FNIO, and REZ, as well as DBU and XLU.

The Russell 2000, IWM, led World Stocks, VT, US Stocks, VTI, higher, as wll as the Too BigTo Fail Banks. RWW, Stockbrodkers, IAI, and RegionalBanks, KRE, higher.  Bespoke investment Blog reports that the chart of the S&P 500, SPX, shows a rise to strong resistance at 1,654; this is seen in also its ETF, SPY.

Commodigties, DBC, traded higher, on higher Oil, USO, Gold, GLD, Silver, SLV, and Agricultural Collodities, RJA.  The correction in the price of gold is over as the chart of Spot Gold, $GOLD, shows a 0.9% rise to strong resistance 1245; this as  the chart of the US Dollar, $USD, shows a 0.5% rise to a frim close at $84.85. 

Tyler Durden of Zero Hedge posts Presenting China’s first too big to fail “lack of liquidity” casualty. China’s biggest private shipbuilder, China Rongsheng Heavy Industries Group, last week filed for a profit warning as it expects a loss in the first half of 2013. That was the good news. The bad news is that Rongsheng appealed for government aid last Friday and said it was cutting staff as it was delaying payments to suppliers to deal with tightened cash flows. It also called on its shareholders for financial help and said it was in talks with banks and other financial institutions to renew existing credit lines. In other words a complete liquidity collapse.

Tyler Durden of Zero Hedge writes The Washington Examiner reports The second largest employer in America is Kelly Services – a temporary work provider. The company, started in 1946, serves 99% of the Fortune 100 and had revenues of $5.5bn in 2012. As The Examiner concludes Echoing our and Mr. Stockman’s previous thoughts, it’s a sad state of affairs for our country that the recovery, or lack thereof, is being fueled by a shift from full-time to part-time work

Benson te reports Turkey will use foreign currency reserves to defend against bond vigilantes. And   provide the Ludwig von Mises quote “the credit expansion … ends in a ‘crack-up boom’, and in a collapse of the money and credit system”.

The collapse of the money system began with the jump on the Interest Rate on the US Ten Year Note, ^TNX, to 2.01% on May 24, 2013, which constituted an “extinction event”, that is a cataclysm, which literally destroyed the investment choice offered by bankers as the way of life, and terminated the paradigm of Liberalism.

The fiat money system has died, as evidenced by Major World Currencies, DBV, and Emerging Market Currencies, CEW, trading lower, and the US Dollar, $USD, UUP, rising strongly higher.

 

The credit system has collapsed, as evidenced by Aggregate Credit, AGG, falling sharply lower.

The diktat money system is rising to replace the fiat money system. And debt servitude is rising to replace credit.

There will be no debt jubilee, as under Authoritarianism, the debts of Liberalism will be applied to every man, woman, and child on planet earth, as the Banker Regime, is replaced by the Beast Regime of Revelation 13:1-4, and by its leader The Sovereign, Revelation 13:5-10, and by its Prophet, the Seignior, Revelation 13:11-18.

The emerging market policymakers tapping of foreign currency reserves as a means of stopping the bond vigilantes attack on their Treasury Debt, BWX, and EMB, can only last so long.    

Jesus Christ is operating at the helm of the Economy of God, Ephesians 1:10, and has pivoting the world into the paradigm of Authoritarianism, where the diktat of nannycrats is the now the way of life. 

Fiat money died, and diktat money has been coming to life.

The “extinction event” of the rise in the Interest Rate on the US Ten Year Note, ^TNX, terminated all of the authority of Liberalism’s policies and schemes, thereby ending Liberalism’s life experience.

Now, Authoritarianism’s policies and schemes, have authority, and ever increasing power, providing monetary and political life experience.

Yes, new policies and new schemes for the new age of Authoritarianism: policies of diktat and schemes of debt servitude schemes, such as, regional framework agreements, bank deposits bailins, privatizations, capital controls, new taxes and austerity measures.

1C) Wednesday July 10, 2013

Zero Hedge reports Monoderailed: Spain’s train station to nowhere.  Tyler Durden writes From exaggerated passenger traffic expectations 40% higher than the current slower route’s traffic to the massive billion-euro debts that have already been accumulated, nothing says epic fail like the City of Villena’s 4,500 square meter gleaming new train station – the only access to thisb building in the middle of nowhere is a dirt track used by local farmers. The reason, simple: while the central government financed the building, the local Valencia regional government was responsible for funding the connection to the local city and freeways – it ran out of money, leaving the station high-and-dry. As Reuters adds Spain’s obsession with high-speed trains runs into budget reality. The disconnect says a lot about both Spain and its current finances, about a love affair with grand projects to showcase its modernity and a diminishing ability to pay for them. 

 

The WSJ reports European Commission seeks sole authority to wind down banks.  The European Commission will propose itself as the single authority for winding down banks in the euro zone, a step that will set the European Union’s executive on a collision course with the bloc’s most powerful member, Germany.

Berlin insists that such an authority, whose actions could force national governments to spend money to help rescue failed banks, would breach EU treaties. That, it says, could lead to legal challenges over bank restructurings and create uncertainty for financial markets at a sensitive time.

Michel Barnier, the EU commissioner responsible for financial-market regulation, was to lay out his final proposal Wednesday for a so-called single resolution mechanism, giving it the authority to restructure or close any of the 6,000 banks in the 17-nation euro zone that hit financial problems.

Bank restructurings currently take place under a patchwork of national rules, which also hinder the winding down of cross-border banks.The euro-zone’s ambitious banking union project, cornerstone of efforts to end the three-year-old debt crisis, aims to break the vicious link between struggling euro-zone banks and their governments.

The WSJ reports Plan reins in biggest banks. Proposal Requiring Extra Capital Would Force Firms to Be More Conservative or Shrink. U.S. regulators took their first big swing at addressing fears that Wall Street’s largest firms remain too risky five years after the financial crisis, unveiling plans to require them to set aside far more capital as protection against future disaster. The Federal Reserve, Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. are effectively trying to force big banks to become more conservative or to shrink. The first step, proposed Tuesday, would require banks to double the amount of capital they hold as protection against every loan, investment, building, security and other asset on their books, not just the risky ones.

Small Cap Pure Value Stocks, RZV, traded higher. Micron, MU, traded lower. Oil, USO, traded strongly higher; Base Metals, DBB, and Gold, GLD, traded higher, while Silver, SLV, traded lower. 

At day’s end Reuters reports About half of the Federal Reserve’s policymakers felt the U.S. central bank’s bond-buying stimulus should be brought to a halt by year end when they met in June, but many wanted reassurance the U.S. jobs recovery was on solid ground before any policy retreat. In the end, most of the U.S. central bank’s 19 policymakers felt it was a good idea to have Fed Chairman Ben Bernanke lay out a road map at a post-meeting news conference on how they likely would wind down the so-called quantitative easing program, minutes from the meeting released on Wednesday showed.

In doing so, Bernanke said the Fed would likely slow the pace of its bond purchases by year end, with an eye to bringing the stimulus program to a close by mid-2014.

Ben Bernanke spoke today Wednesday July, 10, 2013. The ongoing Yahoo Finance Chart  … http://tinyurl.com/m2ue7lg … of EMFN, RWW, FEFN, EUFN, CHIX, EPI, BRAF, AUSE, shows that the Federal Reserve monetary policiy has enabled the Too Big To Fail Banks, RWW to sustained the world’s Banking Regime, as well as World Stocks, VT, especially US Stocks, VTI.

An inquiring mind asks, will investors continue to trust in Ben Bernanke’s and the US Federal Reserve’s liberal monetary policies and credit schemes which have stimulated corporte growth and trade, achieved investment gain, democratic rule, and a moral hazard based prosperity?

Breakout reports worried analysts have cut their earnings growth expectations for the S&P 500 by a stunning 83%. As FactSet earnings analyst John Butters explains in the attached video, the expectations for profits has been lowered to just 0.7%, down from 4.2% on April 1, 2013, and Peak Prosperity relate Global slowdown. 

The words trust and credit are used interchangeably.  Could it be that out of further failure of Credit, AGG, as well as the World Major Currencies, DBV, and Emerging Market Currencies, CEW, that people will come to trust in regional nannycrats, and authoritarian policies of diktat and schemes of debt servitude, such as, regional framework agreements, bank deposits bailins, privatizations, capital controls, new taxes and austerity measures, which establish regional governance and totalitarian collectivism as life experience?

Ambrose Evans Pritchard of the Telegraph relates The wheels are coming off the whole of southern Europe. Europe’s debt-crisis strategy is near collapse. The long-awaited recovery has failed to take wing. Debt ratios across southern Europe are rising at an accelerating pace. Political consent for extreme austerity is breaking down in almost every EMU crisis state. And now the US Federal Reserve has inflicted a full-blown credit shock for good measure.

None of Euroland’s key actors seems willing to admit that the current strategy is untenable. They hope to paper over the cracks until the German elections in September, as if that is going to make any difference. A leaked report from the European Commission confirms that Greece will miss its austerity targets yet again by a wide margin. It alleges that Greece lacks the “willingness and capacity” to collect taxes. In fact, Athens is missing targets because the economy is still in freefall and that is because of austerity overkill.

(I comment that the economy is in free fall because it is amongst the most anticompetitive in the world, it is defined by clientelism, that is what the Economist Magazine says is pork and patronage, has oligarchs who live outside of the nation and contribute nothing to business in the country, and by a culture of tax non payment)

The Greek think-tank IOBE expects GDP to fall 5pc this year. It has told journalists privately that the final figure may be -7pc. The Greek stabilisation is a mirage. Italy’s slow crisis is again flaring up. Its debt trajectory has punched through the danger line over the past two years. The country’s €2.1 trillion (£1.8 trillion) debt – 129pc of GDP – may already be beyond the point of no return for a country without its own currency.

 

Standard & Poor’s did not say this outright when it downgraded the country to near-junk BBB on Tuesday. But if you read between the lines, it is close to saying the game is up for Italy.

Spain’s crisis has a new twist. The ruling Partido Popular is caught in a slush-fund scandal of such gravity that it cannot plausibly brazen out the allegations any longer, let alone rally the nation behind another year of scorched-earth cuts. El Mundo says a “pre-revolutionary” mood is taking hold.

A magistrate has obtained the original “smoking gun” alleging that Premier Mariano Rajoy accepted illegal payments as a minister. The Left is calling for his head but so are members of the Consejo General del Poder Judicial, the justice watchdog.

“Citizens cannot tolerate a situation where the prime minister has received undeclared payments,” said José Manuel Gómez, a Consejo member. Much of the ruling party appears tainted by a network of covert funding. If proved, said Mr Gomez, it poses a “very grave” threat to Spanish democracy.

What is new is that Vitor Gaspar, the high priest of Portugal’s shock therapy, has thrown in the towel. He blames the fainthearted for refusing to slash with greater vigour. Needless to say, he still refuses to accept that a strategy of wage cuts and deflation in a country with total debt of 370pc of GDP was always likely to fail.  If Portugal does pull off an “internal devaluation” within EMU it will shrink the economic base. Yet the debt burden remains. This is the dreaded denominator effect. Public debt has jumped from 93pc to 123pc since 2010 alone. The Gaspar exit has closed a chapter. The junior coalition partners are demanding a change of course. I write before knowing whether President Anibal Cavaco Silva will call a snap election, opening the way for a Left-leaning anti-austerity government.

The Portuguese press is already reporting that the European Commission is working secretly on a second bail-out, an admission that the wheels are coming off the original €78bn EU-IMF troika rescue.

This is a political minefield. Any fresh rescue would require a vote in the German Bundestag, certain to demand ferocious conditions if this occurs before the elections.

Europe’s leaders have given a solemn pledge that they will never repeat the error made in Greece of forcing an EMU state into default, with haircuts for banks and pension funds. If Portugal needs debt relief, these leaders will face an ugly choice.

Do they violate this pledge, and shatter market confidence? Or do they admit for the first time that taxpayers will have to foot the bill for holding EMU together? All rescue packages have been loans so far. German, Dutch, Finnish and other creditor parliaments have never yet had to crystallize a single euro in losses.

(I comment that the closest friend of Christ, the Apostle John, was exiled to the Isle of Patmos, and while in his 90s, was given a dream by angels in Revelation 13:1-4, which foretold of the times in which we live, where a Beast Regime would arise out of Mediterranean Sea waves of turmoil to govern in the world’s ten regions and rule in all of mankind’s seven institutions, replacing all nation state rule and economic experience.)

 

1D) Thursday July 11, 2013

Gold, GLD, Silver, SLV, Base Metals, DBB, Emerging Markets, EEM, Asia Excluding Japan, EPP, Europe, VGK, The Nikkei, NKY, Small Cap Nation Investment, IFSM, Nation Investment, EFA, World Stocks, VT, US Stocks, VTI, Global Producers, FXR, rallied, with the US Dollar, $USD, droping, as Reuters reports Ben Bernanke saying at NBER Conference Highly accommodative monetary policy for the foreseeable future is what’s needed.  Bernanke’s Comment provided a green light for yet another risk-on margin, ONN, fueled day of speculative investing, a case in point is seen in the chart of Florida real estate developer, St. Joe Corporation, JOE

The chart of the Dollar’s 200% ETF, UUP, manifested in the middle of a broadening top pattern, of which Street Authority relates, “when you see the broadening top, the market will eventually drop”; in this case meaning, that all currencies, including the US Dollar, will collapse into the Pit of Financial Abandon. The Interest Rate on the US Ten Year Note, ^TNX, traded lower to 2.57%.    

The power of this week’s rally is seen in the chart of World Stocks, VT, in relation to Aggregate Credit, AGG, that is VT:AGG, rallying to its highest ever value, suggests that Peak Stock Wealth, VT, was achieved today July 11, 2013, as investors used margin credit to take stocks to their likely peak achievement, on the leverage of the world central banks’ monetary policies of investment choice, and schemes of credit expansion, such as quantitative easing.  CBS Money Watch reports the investors enthusiam relating Stocks hit new high after Bernanke speech buoys investors

In as much as sovereignty begets seigniorage, that is moneyness, this week’s surge of seigniorage likely marks Liberalism peak sovereignty: World Stocks, VT, are at full leverage over Aggegate Credit, AGG, as is seen in VT:AGG. And Nation Investment, EFA, is at full leverage over World Treasury
Bonds, BWX, as is seen in EFA:BWX. The Milton Friedman, Free To Choose, Floating Currency, Banker Regime of democratic nation states has achieved its zenith in terms of political, economic and monetary power.

It is Jesus Christ, working in the economic and political administrative plan of God, Ephesians 1:10, who has produced Liberalism’s greatest, that is most complete, economic and political experience.   Through  “extinction protocol”, He released the Four Horsemen of the Apocalypse beginning in May of 2010 with Greek Bailout I.  As presented in bible prophecy of Revelation 6:1-8, the Rider on the White Horse, who has a bow without any arrows, is transferring the baton of sovereignty, from democratic nation states to regional nannycrats, with a goal of terminating democracy throughout the world, first in Greece, with the provision of Three Greek Bailouts, second, in Cyprus with a Bailin of Cyprus bank depositors, and third in Egypt with a military coup.

When the Bretton Woods system, synonymous with the Milton Friedman Free To Choose floating currency system, really gives way, America’s Dollar Empire, that is the US Dollar Hegemonic Empire, and its globe-spanning archipelago of mililtary bases, will collapse, and the Ten Toed Kingdom of Regional Governance of Daniel 2:25-45, will emerge, where ten regional zones of increasing iron diktat will emerge out of today’s clay democracy.

The Ten Toed Kingdom is synomous with its Beast Regime of regional governance and totalitarian collectivism, seen in Revelation 13:1-4, which presents ten zones of regional governance, as ten horns on a beast, that also has seven heads, suggesting totalitarian collectivism, where the seven heads symbolize mankind’s seven institutions: 1) Education, 2) Banking, Finance, Commerce and Trade, 3) Body Politic, 4) Military, 5) Religion, 6) Media, 7) Science and Technology.

John Rubino of Dollar Collapse writes Variable rate world, part 3: This horror show is just the beginning The big banks own a ton of securities that will plunge in value if interest rates rise.

As the Interest Rate on the US Ten Year Note, ^TNX, rises, and as the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, steepens, seen in the Steepner ETF, STPP,  steepening, then both the Too Big To Fail Banks, RWW, and the Regional Banks, KRE, will be be integrated into the Government and be known as “Government Banks” or “Gov Banks” for short.  The banks will be part and parcel of government; their purpose will not be lending as it has been known, but rather check cashing, monetary control, and provisioning of diktat by statist public private partnerships, where regional nannycrats exericse oversight of the factors of production, commerce and trade.

The “extinction event” of debt deflation, that is destruction of credit via competitive currency devaluation, coming at the hands of the bond vigilantes calling the Interest Rate on the US Treasury Note, ^TNX, higher to 2.01% on May 24, 2013, as well as currency traders successfully selling currencies short, produced Peak Credit, AGG, and Peak Money, that is Peak World Major Currencies, DBV, and Peak Emerging Market Currencies, CEW, in May 2013.  

Authoritarianism is marked by policies of diktat and schemes of debt servitude, such as, regional framework agreements, bank deposits bailins, new taxes, privatizations, capital controls, and austerity measures.

The chart of the S&P 500, $SPX, SPY, rose 1.4%, achieving a new rally high of $1.675.

The equity sectors that had traded off most sharply higher, rose the most strongly today:

Homebuilders, ITB, 5.6%

Industrial Metal Miners,  PICK, 5.4

Copper Mining, COPX, 5.2

China Industrials, CHII, 4.5

Design Build, FLM, 3.6, ie JEC, CBI

Metal Manufacturing, XME, 3.1, ie WOR, VMI, CRS, GTLS, MLI, GHM, PCP, ITW

Paper Producers, WOOD, 2.9, ie IP, LPX, NP, SEE, GPK
Leveraged Buyouts, PSP, 2.7

Clean Energy, PBD, 2.6

Semiconductors, SMH, 2.6, ie ASML, CREE, AMD, INTC, MU, TSM, TXN, AMAT

US Infrastructure, PKB, 2.5, ie WHR, USG, EXP,

Gaming, BJK, 2.2 ie MCRI, MCS,ISLE, LAKO, TRAX, PNK, BYI,

Biotechnology, IBB, 2.1

Networking, IGN, 2.1, ie CSCO, JNPR, JDSU

Software, IGV, 2.1, ie MSFT, BKLB, CA, ADBE, N, 

Global Discretionary, RXI, 2.1

Automobiles, CARZ, 1.6 ie DLPH

Industrial, XLI, 1.6,  ie MMM, GE, HON, ITW, KUB, CNH, GNRC

Food and Beverage, PBJ, 1.6

Internet Retail, FDN, 1.6 ie AMZN, GOOG, PCLN,

Aerospace, PPA, 1.6, ie BA, UTX, GT, GD, NOC, RTN, 

Small Cap Industrial, PSCI, 1.4 ie GNRC, BWC, WTC, LECO, ATU, IEX, B, HEES, CIR, TRS, KAI,

Small Cap Pure Value, RZV, 1.4 ie NLS, BGFV, WOOF, ACRM, EPAM, MDCA, SCOR, III, Z, HCSG, HGR, FNGN, UNTD, CKEC, ENV, LOV, TAXI, ECOL, EEFT,

Media, PBS, 1.4 ie AHC, SIRI, WPO, JRN, NYT, AHC, GCI, GTN

Consumer Services, IYC, 1.4 ie DIS, CMCSA, TWX, DISH, AMCX, CHTR,VIAB, DISCA, DTV,  LBTYA, CMCSA, TWC, STRZA, WWE, LVNTA

Pharmaceuticals, PJP 1.4, ie JNJ,

Media, PBS, 1.4

IPOs, FPX, 1.4

Spin Offs, CSD, 1.3 ie FBHS, HII, POST, LMOS, MCG,

Retail, XRT, 0.8, ie COST, BODY, DEST, DSW, DXLG, EXPR, GES, GAP, JWN, KIRK, KR, M, NWY, MW, PSUN, TGT, TJX, TLYS, ULTA, TUES, WTSL

Advertising Agencies, seen in this Finviz Screener, ie LAMB, IPG, OMC, WPPGY

Industrial Electrical Equipment, seen in this Finviz Screener, ie ETN, MEI, LFUS, APH, SPA, AME,

Credit Services, seen in this Finviz Screener, ie COF, AXP, DFS, CIT, V, MA, PHH

Automobile Dealerships, seen in this Finviz Screener, ie LAD, ABG

Specialty Retail, seen in this Finviz Screener,  ie ODC, LYB, FTK, MTX, ADFC, IFF, ACET,

Apparel Manufacturers, seen in this Finviz Screener, ie OXM, PVH, HBI, VFC,

Education Services, seen in this Finviz Screener, ie CPLA, ESI, LOPE, DV, EDU,

Specialized Health Care Services, seen in this Finviz Screener, ie BEAT, PFSC, HWAy, IPCM

Diversified Communication Services, seen in this Finviz Screener, ie IDT, HCOM, PGI, CCOI, IRDM

Advertising Companies, seen in this Finviz Screener, ie IPG, OMC, LAMR, WPPGY

Stockbrokers, seen in this Finviz Screener, ie FXCM, AMTD, LPLA, SCHW, MKTX,  GFIG,

Restaurants, seen in this Finviz Screener, ie FRGI, KKD, BAGR, CHVY, DAVE, RUTH, NATH,

Industrial Textile Manufactuers, seen in this Finviz Screener, ie DXYN, UFI, AIN, MHK

Consumer Recreational Good Manufacturers, seen in this Finviz Screener, ie JOUT, NLS, POOL,

Medical Device Manufacturers, seen in this Finviz Screener, ie MDT, CFN, OPK, ST

Polution Control Equipment, seen in this Finviz Screener, ie CCC, ADES, MFRI, CECE, ERII

Business Services, seen in this Finviz Screener, ie PAYX, NCR, FIS 

 

Nations rising strongly included:

Poland, EPOL, 5.1%

Rusia, RSX, 5.0

Emerging Markets, EEM, 4.9

South Africa, EZA, 4.6

Singapore, EWS, 4.4

India, INP, 3.8

Brazil, EWZ,

Turkey, TUR, 3.3

Peru, EPU, 3.1

Nikkei, NKY 3.0

Asia Excluding Japan, EPP, traded 3.2% higher; nations trading strongly higher included:

Thailand, THD, 8.2%

Indonesia, IDX 7.5

South Korea, EWY 5.4

Philippines, EPHE 5.2

China, YAO 5.2

China Small Caps, ECNS 4.2

Taiwan, EWT 4.1

World Financials, IXG, rose 2.0% higher; financial sectors ralling strongly included:

CHIX, 5.8%

EMFN, 4.6

FEFN, 3.1

EUFN, 1.8

KCE, 1.3

RWW, 0.8

Yield bearing equity sectors, seen in this Finviz Screener, rising strongly included:

Chinese Real Estate, TAO, 4.5%

Mortgage REITS, REM, 4.5

Global Real Estate, DRW, 3.1

Small Cap Real Estate, ROOF, 2.3

Energy Partnerships, AMJ, 2.7

Shipping, SEA, 2.6

Global Utilities, DBU, 2.0

Electric Utilities, XLU, 1.6

Aggregate Credit, AGG, rallied with Ultra High Yield Junk Bonds, UJB, Junk Bonds, International Corporate Bonds, PICB, Zeroes, ZROZ, Emeging Market Bonds, EMB, and World Treasury Bonds, BWX, rose strongly, as the Interest Rate on the US Ten Year Note, ^TNX, traded lower to 2.57%.

The Swiss Franc, FXS, the British Pound Sterling, FXB, and the Euro, FXE, led Individual Currencies higher.

Gold, GLD, 2.7, Silver, SLV, 5.4, Base Metals, DBB, 1.6, Commodities, DBC, 0.5

Gold Miners, GDX, 7.7%, GDXJ, 8.1, Silver Miners, SIL, 7.4%, SILJ, 11.4, SSRI, 8.5

Catherine Long of WSWS writes Wisconsin budget imposes austerity cuts, clears way for privatizations.  Wisconsin governor Scott Walker signed into law a biennial budget last month that includes deep cuts to social services and public education, and plans for the selloff of prisons, public lands, infrastructure and university buildings.

Jesse Columbo presented The Bubble Bubble article Visualizing the Emerging Market currencies selloff, in early June. At that time, he wrote, “I have not been calling for an immediate popping of the emerging markets bubble yet; on the contrary, I wrote a report in April 2012 in which I discussed why ex-BRIC emerging market equities would likely rise sharply as the global “bubblecovery” or bubble-driven economic recovery continued to progress.”  … “With talk of the Fed starting to withdraw from its more aggressive QE program, the U.S. Dollar has rallied (as I foresaw in early February), while emerging market currencies and bonds, as well as commodities prices have experienced sharp declines in recent months. The health of emerging market economies is tied very closely to commodities prices, and the commodities boom/bubble of the past twelve years is one of the main reasons why emerging market economies have been growing so rapidly. If commodities prices continue to drop, as I expect to happen when China’s resource-hungry bubble eventually pops, emerging market economies will get hit very hard. Citi economist, Ed Morse, has recently declared the end of the “commodities supercycle”, saying “China has reached a new phase, less focused on infrastructure and urbanization, both of which are highly commodity intensive.”  Furthermore, $2.94 billion worth of capital has been pulled from emerging market equities in the week ending May 29, according to analysts at Barclays. Kit Juckes, a macroeconomic strategist at Societe Generale, said “As Fed policy reaches the mildest of turning points, emerging market assets are vulnerable across the board, the [South African] rand being the first of what I suspect will be a series of dominoes to fall.””

The combined ongoing Yahoo Finance Chart of Emerging Market Bonds, EMB, Emerging Market Currencies,  CEW, and the Interest Rate on the US Ten Year Note, ^TNX, illustrates debt deflation, that is currency deflation, causing derisking and deleveraging out of fiat assets, such as Copper Mining Stocks, COPX, and nation investment, such Peru, EPU; which commence at the hand of the bond vigilantes calling interest rates higher; with currency traders following selling currencies short. 

A number of ex-BRIC market sectors have risen, most surprisingly of all, given the fall in Major World Currencies, DBV, and Emerging Market Currencies, CEW, has been the usually currency sensitive Small Cap Pure Value Stocks, RZV; other significant risers have been PSCE, XRT, PPA, IHF, FDN, PBS, IAI, FPX, PJP, PJB, RXI, IYC, VCR, IGV, IBB, and KRE, all to new rally highs; these are nothing more that zombie investment sectors; equities presenting in “death rattle”.

The jump on the Interest Rate on the US Ten Year Note, ^TNX, to 2.01% on May 24, 2013, constituted an “extinction event”, that is a cataclysm, which literally destroyed the investment choice offered by bankers as the way of life, and terminated the paradigm of Liberalism. Jesus Christ is operating at the helm of the Economy of God, Ephesians 1:10, and has pivoting the world into the paradigm of Authoritarianism, where the diktat of nannycrats is the now the way of life. Fiat money died, and diktat money has been coming to life.   

Jesus Christ did what Ron Paul could not do; He terminated the Fed, and not only that, He terminated  fiat money, fiat wealth, and democratic nation state governance in one fell swoop .Acting in dispensation as steward of God’s household of all things political and economic, he fully completed Liberalisms’ crack up boom, which established a moral hazard based prosperity. And is now introducing Authoritarianism’s credit collapse and financial system bust, which will fully provide a debt servitude based austerity.   

Paul Mitchell of WSWS writes Portuguese government continues austerity following ministerial resignations. The governing coalition faced crisis last week with the resignation of the Finance Minister and Foreign Minister.

Tyler Durden of Zero Hedge reports Portugal socialists call for early elections If Portugal had hoped that as a result of this weekend’s political manoeuvering, which preserved the tenuous majority of the Coelho coalition cabinet by granting the previously resigned CDS-PP leader Paulo Portas the vice-premiership, thus “forcing” him to rescind his resignation and prevent a government collapse, it would project a vision of political stability, it may need to reevaluate as moments ago the leader of the Socialist Party (the biggest opposition party) Antonio Jose Seguro reaffirmed a call for Portugal to have early elections. Quote Seguro: “Our country is faced with the need to negotiate a new program, which may be called a precautionary program or anything else. Only a new government would have the democratic legitimacy to negotiate a new aid program for our country.” Seguro spoke to reporters in Lisbon after meeting Portuguese President Anibal Cavaco Silva.

The Financial Times reports Portugal president’s call for national unity backfires President Aníbal Cavaco Silva’s call for a “national salvation” agreement between the ruling coalition and the main opposition party, leading to early elections in June 2014, was intended to restore calm following a government crisis triggered by the resignation of two senior ministers.

But the president’s appeal for a cross-party deal in support of the country’s €78bn bailout programme prompted a fresh increase in bond yields on Thursday. “Portugal is in a deeper crisis than it was a week ago,” said Ricardo Santos, an analyst with BNP Paribas. “The president sought to ease volatility, but he has almost certainly increased it.” Silva ruled out holding an immediate snap election, saying this would significantly increase the risk of Portugal needing a second bailout. But he called on the three parties to agree on holding an early ballot next June, a year ahead of schedule.

Agreeing to Mr Cavaco Silva’s proposal would require António José Seguro, the opposition PS leader, to support €4.7bn in planned spending cuts and the potential laying off of tens of thousands of state workers, measures that he vehemently rejected until now. “It’s difficult to see how the president’s proposal can work given that the concessions involved could end the political careers of both the opposition leader and the prime minister,” said Mr Santos.  Portugal was plunged into crisis last week after Paulo Portas, leader of the junior coalition party, resigned as foreign minister less than 24 hours after Vítor Gaspar also quit as finance minister amid tensions caused by government austerity policies. 

Ambrose Evans Pritchard writes Constitutional crisis pushes Portugal closer to the brink. Yields on 10-year Portuguese bonds jumped more than 100 basis points to 7.85pc in a day of turmoil, kicked off by a government request to delay the next review of the country’s EU-IMF Troika bail-out until August.

President Anibal Cavaco Silva set off a constitutional crisis on Thursday when he vetoed a reshuffle by the two conservative coalition parties, insisting on a red-blue national unity government with greater legitimacy to see through austerity cuts until mid-2014.

Socialist leader Antonio José Seguro has so far refused to take part, demanding fresh elections to clear the air. “We must abandon the politics of austerity, and renegotiate the terms of our adjustment programme. The prime minister must accept that his austerity policies have failed,” he said.

Some Socialist leaders have threatened debt repudiation as a way of fighting back at Germany and the creditor powers, though that is not the party position.

Standard & Poor’s downgraded Banco Comercial, and placed a string of banks on negative watch. The agency appeared to endorse warnings that austerity overkill was making matters worse, saying continued fiscal cuts “are eroding the resilience of the private sector”. It said banks were building up a “high volume of problem assets”.

Ricardo Santos from BNP Paribas said it was unclear whether Portugal could withstand a further €5bn of cuts ordered by the Troika. “The bottom line is that the policy is not reducing the debt ratio. We think public debt will reach 130pc of GDP in 2014. The country is near the tipping point,” he said.

“Everybody has been saying that Portugal is so different from Greece but if this political crisis goes on for long, that won’t be so clear anymore.”

President Cavaco Silva has limited powers to force a deal on recalcitrant parties, but experts say it is hard to see how the current government can soldier on after such a blow to its authority. He may have to resort to the “nuclear option” of snap elections, opening the way for a fragmented parliament.

Sovereign bond strategist Nicholas Spiro said the events of the past 10 days had left premier Pedro Passos Coelho a “political cripple”, and brought reforms to a “screeching halt”. The crisis was prompted by the exit of finance minister Vitor Gaspar, the chief architect of Portugal’s crisis strategy, who stormed out complaining that he had been undercut by the junior CDS party in the coalition.

“Gaspar did make strenuous efforts to curb the budget deficit, but Portugal’s debt ratio kept on rising. There has to be a risk of another macroeconomic calamity on the scale of Greece and Cyprus,” said Tim Congdon from International Monetary Research.

Portugal has until now been held up as a poster-child of EMU austerity, praised for sticking to its bail-out terms. Failure at this stage would be a grave indictment of EU strategy itself. It would also force the eurozone to clarify its own crisis policies, exposing deep rifts. Europe’s leaders have vowed never again to force a sovereign debt haircut on banks and pension funds, deeming the experiment in Greece to have been calamitous.

This means they may have to violate the pledge or impose losses on their own taxpayers for the first time if Portugal needs debt relief. A study by Eric Dor from IESEG business school in Lille says an orderly debt restructuring by Portugal would cost taxpayers €16bn in Germany, €13bn in France, €11bn in Italy and €7bn in Spain, and twice as much in an EMU exit crisis. “There is a big probability that Portugal will need debt relief, unless you believe in fairytales,” he said.

The sheer scale of public and private debt leaves the country acutely vulnerable to deflation. Nominal GDP has fallen in each of the past two years. This has pushed net external debt to a record 230pc of GDP

1E) Friday July 12, 2013

Sectors rising today were limited to just three, Biotechnology, IBB, 2.5%, Internet Retailing, FDEN, 1.2% and Networking, IGN, 1.0%. Today, the Australian Dollar, FXA, the Brazilian Real, BZF, and the British Pound Sterling, FXB, traded lower, which drove Australia, 1.3%, lower, and Brazil, EWZ, 1.5% lower.  European Financials, EUFN, trade 1.1% lower as Spain, EWP, and Italy, EWI, both traded 3.0% lower. Gold Miners, GDX, traded 2.9% lower and Silver Miners, SIL, 2.1%, lower. 

Trading this week was awesomely bullish. The chart of the S&P 500, $SPX, SPY, shows a 2.9% rise to close at 1.680.00; it was the best week in the last six weeks;  it stands at an Elliott Wave 5 High.

US Stocks, VTI, rose 2.9% to a new high; Germany, EWG, recovered 6.1%. Since May 1, 2013, it has been Peru, EPU, Chile, ECH, Turkey, TUR, Indonesia, IDX, Thailand, THD, and Brazil, EWZ, and the Emerging Market Mining, EMMT, leading the Emerging Markets, EEM, lower as is seen in their combine ongoing Yahoo Finance chart.

In the yield bearing equity sectors, Utilities, XLU, recovered 4.7%. Of the yield bearing sectors, Mortgage REITS, REM, together with Emerging Market Financials, EMFN, remain sold off since the “extinction event” of the rise in the Interest Rate on the US Ten Year Note, ^TNX, on May 24, 2013, as is seen in their combined ongoing Yahoo Finance Chart.

Equity sectors recovering included

Home Builders, ITB, 7.3%

US Infrastructure, PKB, 5.2%

Leveraged Buyouts, PSP, 3.8%

Equity sectors rising to new highs included

Biotechnolgy, IBB, 6.0%

Design Build, FLM, 5.2

Internet Retail, FDN, 4.9

Media, PBS, 4.3

Pharmaceutical, PJP, 4.3

Spinoffs, CSD, 4.2

Small Cap Pure Value, RZV, 4.1

IPOs, FPX, 3.8

Software, IGV, 3.8

Networkding, IGN, 3.7

Aerospace, PPA 3.7

Global Consumer Discretionary, RXI, 3.7

Consumer Discretionary, IYC, 3.6

Small Cap Industrial, PSCI, 3.4

Global Industrial Producers, FXR, 3.3

Automobiles, CARZ, 3.2

Food and Beverage, PBJ, 3.2

Semiconductors, SMH, 2.9

Retail, XRT, 2.8

Industrial, XLI, 2.7

The Interest Rate on the US 10 Year Note, $TNX, closed lower at 2.60%, enabling Aggregate Credit, AGG, to rise 0.92% this week.  

Doug Noland reports The U.S. dollar index dropped 1.7% to 82.99 (up 4.0% y-t-d). For the week on the upside, the Norwegian krone increased 3.1%, the South African rand 2.2%, the Swedish krona 2.1%, the Mexican peso 2.0%, the Japanese yen 2.0%, the Danish krone 1.9%, the euro 1.9%, the Swiss franc 1.9%, the Canadian dollar 1.8%, the South Korean won 1.6%, the Singapore dollar 1.5%, the British pound 1.5%, the New Zealand dollar 0.9% and the Taiwanese dollar 0.4%. For the week on the downside, the Brazilian real declined 0.7% and the Australian dollar dipped 0.2%.

This week Commodities, DBC, rose 2.3%; the chart of Unleaded Gasoline, UGA, rose 7.7% and its daily chart shows that it has risen parabolically during July, suggesting that its rally is now complete; the chart of West Texas Intermediate Crude, $WTIC, rose 2.5%, to close at 106.24; the chart of Spot Gold, $GOLD, rose 5.8%, to close at $1,285, its best week in eight months, as the US Dollar, $USD, traded 1.8% lower to close at $83.12.

In the age of Authoritarianism, wealth can only be preserved by investing in and taking possession of gold bullion either in physical form or by trading on an Internet Platform such as Bullion Vault.   

2) … How the Emerging Markets bubble inflated

Jesse Columbo writes in Bubble Bubble How the Emerging Markets bubble inflated. Though emerging market economies and assets had slightly deflated during the most acute phase of the Global Financial Crisis in 2008 and early 2009, they quickly rebounded due to the incredibly stimulative monetary policies of global central banks. China’s $586 billion stimulus program [1], an economic defense measure, led to a sharp surge in economic activity as the country built massive infrastructure “mega projects,” opulent government buildings and scores of entirely empty cities to create economic growth [2, 3, 4].

The combination of stimulative global monetary policies and China’s construction-intensive (and thus natural resource-intensive) economic stimulus program caused commodities prices to roughly double from early-2009 until early-2011.

Soaring commodities prices helped to boost the fortunes of resource-rich emerging market economies and cushioned them from a good portion of the West’s economic suffering. (Note: not all emerging market economies that are currently experiencing bubbles are commodities exporters.)

In 2009 and 2010, emerging market asset bubbles began to strongly reinflate due to global carry trades in which investors borrowed capital from deflation-prone countries with low interest rates (like the U.S. and Japan) and deployed it into higher-yielding investments in non-deflation-prone economies such as those in emerging markets [5]. By late-2010, capital flows to emerging markets had risen to $825 billion – a level that exceeded the last peak in 2006-2007, while inflows to Asian economies rose 60% above their prior peak [6]. Dilma Rousseff, the President of Brazil and a trained economist, has frequently decried the large pool of speculative capital that has sought returns in emerging market assets, calling it a “liquidity tsunami” due to its ability to cause inflation, overheating and asset bubbles in emerging market economies [7]. The economic bubbles in Canada and Australia have inflated for similar reasons (rising commodities prices & carry trades) as the emerging markets bubble.

The U.S. Federal Reserve’s $600 billion Quantitative Easing 2 (QE2) program that began in the fall of 2010 caused commodities prices to surge and resulted in a new wave of fears over emerging market asset bubbles and economic overheating. In early 2011, the Bank of England’s Andrew Haldane warned of emerging market asset bubbles due to capital inflows from advanced economies [8] and the IMF warned of “signs of overheating” in emerging market economies [9]. By the summer of 2011, emerging market economies were red-hot and The Economist magazine published a “temperature gauge” to show which emerging market economies were most overheated, with Argentina, Brazil, Hong Kong and India at the top of the list [10]. Around the same time, Joachim Fels, a top Morgan Stanley economist, warned that the BRIC nations faced an “elevated risk of credit bubbles and rising defaults” [11] and BRIC banks began to show the signs of a credit crisis [12].

Emerging market economies and their equity markets have cooled somewhat since the summer of 2011 due to another flare-up of the Eurozone crisis, the ending of the U.S.’ QE2 program in June 2011, the U.S. debt ceiling debate and credit rating downgrade and China’s ongoing economic slowdown. Despite the slowdown in emerging market economies, their bonds and fixed income assets are still booming (along with their property markets) and attracting massive capital inflows [13], which is helping to fuel their explosive credit growth [14].

And there is an epidemic of Emerging Market property bubbles.  The tsunami of global “hot money” has created an epidemic of international emerging market property bubbles in hubristic defiance of the lessons that should have been learned from the calamitous American and European real estate crashes. Naive emerging market property investors are most likely justifying their investments with the famous last words, “this time is different!”

The Emerging Markets Property Bubble is just one part of the “Post-2009 global housing bubble” or “Housing Bubble 2.0” that I have identified. Other regions with major property bubbles are Australia, Canada and Northern & Western Europe. Please click on the links to learn more about this very important global housing bubble.)

Cheap credit and soaring real estate prices have led to rampant “bubble drunk” behavior in emerging market countries. Singapore seems hell-bent on repeating the mistakes [15] made by Dubai during its mid-2000s bubble as it builds extraordinarily opulent vanity projects such as the Marina Bay Sands, the world’s most expensive standalone resort that looks like a cruise ship (and has a massive pool on top of it) [16], and an artificial forest comprised of 150-foot tall biometric “supertrees.” [17]

Singapore’s bubble economy is fueled by interest rates that are linked to the U.S.’ ultra-low interest rates, which are far too low for Singapore’s fast-growing and inflation-prone economy [18]. South Korea, whose citizens were among the best savers in world as recently as the late-1990s, now has the lowest savings rate in OCED as its consumers have been bringing on debt and spending so much money that they are beating notoriously profligate Americans at their own game. The average South Korean adult has nearly five credit cards and the country’s household debt burden exceeds that of the U.S. before the Global Financial Crisis [19, 20].

Brazilians have recently been on debt-fueled international shopping spree for luxury-goods that has boosted the fortunes of Florida and New York City [21] (which is one of the many reasons why our post-2009 economic recovery is actually a “bubblecovery.”) In India, where nearly 95% of the population lives on less than $2 per day, brand-addicted consumers are causing the luxury sector to boom [22] and Ferrari picked it as the country of choice to unveil its $687,000 FF four-seater [23]. While the West is mired in its worst economic crisis since the Great Depression, the luxury sector has the emerging markets bubble to thank for its exploding sales, including a vigorous start in 2012 [24]. Very few people realize that Europe’s economic situation would be far worse than it already is if it were not for the saving grace of booming luxury goods exports to emerging markets (another “bubblecovery” datapoint). When the emerging markets luxury bubble pops, the severity of Europe’s economic crisis will greatly increase. Emerging market economies and investment assets are experiencing a bubble of enormous proportions as their investors and consumers make the very same mistakes that the West made just a few short years ago. The Emerging Markets Bubble will pop when the bubbles in China and commodities prices pop and may lead to a crisis like the 1997 Asian financial crisis in the best-case scenario and a global depression in the worst-case, but highly likely scenario. Singapore and Hong Kong, with their finance and real estate-heavy island economies, may experience a similar fate to Iceland and Ireland in the 2008 financial meltdown. This time isn’t different.

3) … News of the rise of the King of the South as foretold in Daniel 11:11 and Daniel 11:40.

Egypt PM battle reflects split of Junta backers

US remains comfortable with Egypt’s coup

New Egypt appointments going to advocates of military rule

Muslim Brotherhood: Support for Egypt coup fuels anger at West

Overthrow of Egypt’s Brotherhood sends Islamists across the Mideast scrambling

Egyptian Ambassador to US says no military coup

Ziad Bahaa El-Din likely to be chosen as new Egyptian Prime Minister

Thumbnails of Egypt’s emerging new leaders following military’s ouster of President Morsi

US remains comfortable with Egypt’s coup

US training at the core of Egypt’s coup

White House: US won’t cut Egypt aid

Egypt decree: Parliamentary vote in 2014, Presidential vote later

Egypt’s army chief studied at army war college in the US

Al-Jazeera kicked out of Egypt news conference

Morsi’s ouster a nightmare for Hamas rulers in Gaza Strip

Violent Saudi-backed Egypt Junta massacres many Muslim Brotherhood protestors

Neocons and Democracy: Egypt as a case study by Jim Lobe

Egypt names New Premier amid disarray. Ex-Finance Minister Is Chosen to Lead Interim Government as Arab Nations Pledge Billions, While Divisions Widen. A former finance minister was chosen as Egypt’s interim premier under a six-month timetable for elections, as the country’s emerging post-coup government drew pledges of $8 billion in assistance from Arab supporters, in new attempts to bolster a democratic transition marked so far by divisions and violence.

Mr. Beblawi’s appointment, by the political alliance that supported the Egyptian military coup that forced Mr. Morsi from office on July 3, followed three days of negotiations and the Islamic Al Nour party’s withdrawal from the group. Mr. ElBaradei was given the post of vice president, to manage foreign affairs.

The appointment of Mr. Beblawi, who served as finance minister from July 2011 until December, shifted the emphasis away from political discord and toward the country’s pressing economic concerns.

Later Tuesday, the United Arab Emirates pledged $3 billion for Egypt’s new government, while Saudi Arabia pledged $5 billion in grants and loans “to help the Egyptian economy meet the challenges it currently faces.” Both wealthy Gulf nations were antagonistic to Mr. Morsi and publicly welcomed his downfall. They saw the rise to power of Mr. Morsi’s Muslim Brotherhood as a threat that could empower Islamist political movements at home, and were alarmed by Mr. Morsi’s overtures to Iran.

Egypt orders arrest of Muslim Brotherhood leader as group rejects cabinet offer. Egypt ordered the arrest of the Muslim Brotherhood’s spiritual leader and nine others for allegedly instigating violent clashes with the military this week that left more than 50 Brotherhood supporters dead, hours after the group rejected a plan to be part of the government’s new cabinet. The general prosecutor’s office said in a statement Wednesday that it issued arrest warrants for the general guide of the Muslim Brotherhood, Mohammed Badie, as well as his deputy and strongman, Mahmoud Ezzat. Eight other leading Islamists also were ordered to be taken into custody. The prosecutor’s office says the Islamist leaders are suspected of inciting the violence outside the Republican Guard building in Cairo on Monday that left 54 people dead.

White House effectively denies coup in Egypt with plan to give them 20 F-16 fighter jets.

US bankrolled anti Morsi activists

New coalition splits over granting interim president broad powers

America against democracy

4) … The rise of Global Security State within the Beast Regime

In Secret, court vastly broadens powers of NSA

The secret war

America’s mess in Egypt

Germany’s Merkel: Surveillance essential for democracy

5) An inquiring mind asks, Will excess reserves, now renamed Balances Maintained that exceed the top of the penalty free band, increase or decrease in value?

Robert Wenzel The excess reserve column is gone and replaced with Balances maintained that exceed the top of the penalty-free band. Notice that the new data point has just one data point, all the historical data about excess reserves is gone from the current release. Poof! Fifty four years of history, that show how Bernanke has created an insane excess reserves problem, is now relegated to the dust bins. From here on out, Balances maintained that exceed the top of the penalty- free band (formerly known as excess reserves) will show a starting number of $1.977 trillion, rather than the decades under $1 billion.

As posted earlier in this report, John Rubino of Dollar Collapse writes Variable rate world, part 3: This horror show is just the beginning The big banks own a ton of securities that will plunge in value if interest rates rise.

The Too Big To Fail Banks obtained these “securities” as part of POMO, and as part of QE, which were placed in Excess Reserves with the Fed.

One thing that might make the Balances Maintained increase in value, is more banks transferring their securities to the Fed; yet one thing that will make Balances Maintained decrease in value, is the Interest Rate on the US Ten Year Note , ^TNX, soaring in value as bond vigilantes call the Interest Rate higher, and as foreigners sell US securities to support their own currencies.

Candice Zachariahs of Bloomberg reports U.S. Treasury sales by Japanese investors exceeded purchases by a record in May amid the biggest monthly drop for the securities in more than three years. Money managers in the Asian nation unloaded a net 3 trillion yen ($30bn) of U.S. government bonds in a fifth straight month of overall sales that was the largest in data from 2005… In June, Japanese investors were net sellers of overseas debt valued at a record 2.96 trillion yen, taking the total to 10.6 trillion yen this year. That’s on track for the first net annual sales ever”

 

As the Interest Rate on the US Ten Year Note, ^TNX, rises, and as the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, steepens, seen in the Steepner ETF, STPP, steepening, then both the Too Big To Fail Banks, RWW, and the Regional Banks, KRE, will be be integrated either by diktat or by legislation, into the Government and be known as “Government Banks”.  The banks will be part and parcel of government; their purpose will not be lending as it has been known, but rather check cashing, monetary control, and provisioning of diktat by statist public private partnerships, where regional nannycrats exericse oversight of the factors of production, commerce and trade.

6) Ben Bernanke, the King Of Credit, draws Defense, Aerospace, Consumer, and US Stocks, higher, with call for ongoing accomodative monetary policy.

This week, the chart of the S&P 500, $SPX, SPY, shows a 2.9% rise, to close at 1.680, manifesting an Elliott Wave 2 Up, on July 12, 2013, after having achieved a recent Elliott Wave 5 Up High, on May 21, 2013, as presented in Daneric’s post Elliott Wave Update, suggesting that the S&P 500, will be entering an Elliott Wave 3 Down; these are the most destructive of all economic waves, as they for all practical purposes wipe out all the wealth garnered on the previous five waves up. 

The US Small Caps, IWM, rose 3.2% to a new high, and US Stocks, VTI, rose 2.9% to a new high; Germany, EWG, recovered 6.1%. Since May 1, 2013, it has been Peru, EPU, Chile, ECH, Brazil, EWZ, and the Emerging Market Mining, EMMT, as well as the Emerging Market Financials, EMFN, leading the Emerging Markets, EEM, lower as is seen in their combine ongoing Yahoo Finance chart.

In the yield bearing equity sectors, Utilities, XLU, recovered 4.7%. Of the yield bearing sectors, Mortgage REITS, REM, together with Emerging Market Financials, EMFN, remain sold off since the “extinction event” of the rise in the Interest Rate on the US Ten Year Note, ^TNX, on May 24, 2013, as is seen in their combined ongoing Yahoo Finance Chart

Of note the Elliott Wave Surfer chart of the EUR/JPY shows an Elliott Wave Top on May 24, 2013, when the Interest Rate on the US Ten Year Note, ^TNX, rose to 2.01%. This seen also in the Stockcharts.com chart of FXE:FXY.  It was at this time that the leverage of carry trade investing collapsed, as is seen in the daily chart of the Optomized Carry Trade, ETN, ICI.

The Interest Rate on the US 10 Year Note, $TNX, closed lower at 2.60%, enabling Aggregate Credit, AGG, to rise 0.92% this week.

This week Commodities, DBC, rose 2.3%; the chart of West Texas Intermediate Crude, $WTIC, rose 2.5%, to close at 106.24; the chart of Spot Gold, $GOLD, rose 5.8%,to close at $1,285, as the US Dollar, $USD, traded 1.8% lower to close at $83.12.

The Great Unwind of the quantitative easing and accomodative policies of the US Federal Reserve is about to commence on the failure of credit, AGG, with a continuing rise in the Interest Rate on the US Ten Year, Note, ^TNX, and a continued steepening of the 10 30 US 10 30 Sovereign Debt Yield Curve, $TNX:$TYX, seen in the Steepner ETF, STPP, steepening, as bond vigilantes call Interest Rates higher. Debt deflation will intensify, resulting in an ongoing global currency war of competitive currency devaluation by currency traders successfully selling currencies short, causing derisking out of nation investment, EFA, IFSM, and destabilizing democracies.   

MyBudget 360 writes The era of cheap debt is now reversing and the piper is demanding to be paid. The total US debt markets are now over 3 times our annual GDP. We have largely become a nation built on debt. (I comment, the world economic system has been built on a monetization of that debt). The US is increasingly borrowing money from the world. The world realizes that the Fed is merely bluffing so guess what? Money is now flowing back into US markets to purchase stocks, real estate, and other goods pushing up prices while the middle class is literally living paycheck to paycheck. This is one of the reasons how it is possible to have a booming real estate market, a record in the stock market, while the middle class shrinks, and 47 million Americans are on food stamps. To sum it up, global investors are calling the Fed’s bluff and are now diving into the US market to buy it up on the cheap with a growing erosion of US dollars.

The markets once realizing the Fed was reaching a reckoning when it comes to debt, decided to react as you would imagine. The move in ^TNX, pushes the 10-year Treasury rate to its highest level since 2011.

So you have inflation coming from outside forces while the middle class essentially has watched the Fed assist banks and Wall Street in parceling off pieces of the domestic economy to global buyers. The underlying key to remember is this is happening at the expense of the middle class given that the top echelon of our society has benefitted mightily from this arrangement. The reckoning is here and there is a limit to how much debt you can have while not adding any value domestically.

The combined ongoing Yahoo Finance chart of closed end funds CSQ, PTY, AWP, PFL, RCS, and EIM, communicates that the way is lower for World Stocks, VT, on the failure of Aggregagte Credit, AGG, as well as the World Major Currencies, DBV, and Emerging Market Currencies, CEW, despite this week’s rally in the S&P 500, SPY, and the Russell 2000, IWM.   

The words, will and way of the world’s monetary sovereign, gave strong seigniorage to stock investments. The power of this week’s rally is seen in the chart of World Stocks, VT, in relation to Aggregate Credit, AGG, that is VT:AGG, rallying to its highest ever value, suggests that Liberalism’s moral hazard based, Peak Stock Wealth, VT, was achieved the week ending July 12, 2013, as investors used margin credit to take stocks to their likely peak achievement, on the leverage of the world central banks’ monetary policies of investment choice, and schemes of credit expansion, such as quantitative easing.  CBS reports Stocks hit new high after Bernanke speech buoys investors, where he commented at a NBER event, “So you put that all together, and I think you can only conclude that highly accommodative monetary policy for the foreseeable future is what’s needed in the U.S. economy”.

On August 25, 2011, Victor Sperandeo wrote in American Spctator, The Fed’s Philosopher King. Ben Bernanke is arguably the most powerful man in the world. And he answers to no one. Having one man control the money supply of 311 million Americansis itself a fantastic and unreal notion. When you then consider the effects of the U.S. Dollar on the remaining 6.6 billion people on this planet, the idea becomes unimaginable. Meet Ben Bernanke: the dollar’s whimsical “Philosopher King,”and the Chairman of the U.S. Federal Reserve.He is arguably the most powerful person in the world, with powers far surpassing those imagined when his position was created. Who knew the Fed Chairman could become so influential?

If you think the rest of the FOMC has any oversight on the Chairman, think again. As the anointed “sun king of currency,” no Federal Reserve Chairman can long tolerate discord in his ranks. The pressure for the FOMC members to follow the lead of the Chairman is immense.

Granting the power to print an unlimited amount of paper“money” to one unelected individual is like playing monetary Russian roulette with a Glock. Have we forgotten that Sir Alan Greenspan is now criticized for policies that led to the subprime collapse, including keeping Fed Funds at 1 percentfor over a year at the start of the contagion? But no one saysa harsh word about the current Chairman for keeping Fed Funds at zero for 33 months and promising tomaintain zero Fed Funds for “atleast two more years,” even though the National Bureau of Economic Research (NBER) claims the recession officially ended two years ago (June 2009).

Who wins from this structure? The government of course, because they borrow more money than anyone else, just ahead of the Fortune 500 companies and Wall Street traders and speculators. The losers will be savers —those on fixed incomes, the middle class, and of course the global poor, who will suffer most because of inflationary increases in the cost of basic foods and fuel.

Jean-Baptiste Say (1767-1832) is generally credited with the creation of what is referred to as “Say’s Law”, the original version of what has developed into modern“supply-side” economics. The basic tenet of supply-side economics is that the level and extent of aggregate demand is a function of the long-term trend of innovations and new inventions. That trend is a direct function of the demand for workers and their productivity.

The number of workers demanded, and their productivity, in turn depends on the rate of capital investment by the private sector, which is caused by market demand and the quantity of innovations and inventions. These new products are driven — like almost all human endeavors — by incentives, and by a group of risk takers called entrepreneurs. These entrepreneurs are generally supplied with capital by a similar group of risk takers called venture capitalists, who measure each entrepreneurial opportunity as a ratio of risk to reward. These two groups thrive in direct proportion to the level of economic freedom, tax rates, and regulatory interference found in a nation.

Remember the internet and dot-com boom in the mid-1990s? Say’s Law operated with great results. Supply created demand as eBay, Yahoo, Amazon, Google, and many more great businesses flourished. Huge wealth expansion resulted for all, while the growth in profits and increased tax revenue created by these innovators helped balance the Federal budget. In the same period, Main Street saw 4 percent real GDP growth while employment increased across the board.

Now we need to return to an atmosphere of1990s-style innovation, but be even more vigorous. This can only be done with private investment and an atmosphere of acceptable risk.

It cannot beaccomplished by borrowing 40 cents or more of every dollar spent by the government, maintainingzero interest rates, and devaluing thereal U.S.Dollar by printing massive amounts of fiat paper money via a central bank under the banners of “quantitative easing” and“stimulus.” These government methods always fail because they are temporary and extremely expensive.

In order for America to get back on top, we need to focus on promoting an atmosphere of free markets and economic freedom, not onprinting stimulus dollars. Only free and functioning markets can create wealth. The current Federal Reserve is broken and completely at odds with the principles of a free market and a free people. It is destructive to the free market system to allow the whim of a “king”to rule over monetary policy and interest rates. We can pay now or pay later, but if we want to unleash American capitalism and the engine to turn the debt and the economy around, we must make the Federal Reserve a free market player instead of an imperfect monarch.

In as much as sovereignty begets seigniorage, that is moneyness, this week’s surge of seigniorage likely marks Liberalism peak sovereignty: World Stocks, VT, are at full leverage over Aggregate Credit, AGG, as is seen in VT:AGG. And Nation Investment, EFA, is at full leverage over World Treasury

Bonds, BWX, as is seen in EFA:BWX. The Milton Friedman, Free To Choose, Floating Currency, Banker Regime of democratic nation states has achieved its zenith in terms of political, economic and monetary power.

It is Jesus Christ, working in the economic and political administrative plan of God, Ephesians 1:10, who has produced Liberalism’s greatest, that is most complete, economic and political experience.

Liberalism was defined as the era of dividend investing, as investors trusted in the monetary authority of the world central banks to provide profits from global growth as well as stock buy backs by corporations provided by the cheap credit of Global ZIRP.   Dividends Exluding Financials, DTN, regained its May 24, 2013, high this week. Perhaps the best of all dividend paying stocks have been the Energy Limited Partnerships, AMJ, such as GEL,TLLP, NGLS, WES, MMP, SEMG, TRGP, seen in their ongoing combined Yahoo Finance Chart together with Dividends Excluding Financials, DTN.  Of great warning to Energy Limited Partnership investors, the price of Natural Gas, UNG, has fallen with the rise in Interest Rate on the US Ten Year Government Note, ^TNX.       

Through “extinction protocol”, He released the Four Horsemen of the Apocalypse beginning in May of 2010 with Greek Bailout I.  As presented in bible prophecy of Revelation 6:1-8, the Rider on the White Horse, who has a bow without any arrows, is transferring the baton of sovereignty, from democratic nation states to regional nannycrats, with a goal of terminating democracy throughout the world, first in Greece, with the provision of Three Greek Bailouts, second, in Cyprus with a Bailin of Cyprus bank depositors, and third in Egypt with a military coup.

When the Bretton Woods system, synonymous with the Milton Friedman Free To Choose floating currency system, really gives way, America’s Dollar Empire, that is the US Dollar Hegemonic Empire, and its globe-spanning archipelago of military bases, will collapse, and the Ten Toed Kingdom of Regional Governance seen in Nebuchadnezzar’s Statue of Empires of Daniel 2:25-45, will emerge, where ten regional zones of increasing iron diktat will emerge out of today’s clay democracy.

The Ten Toed Kingdom is synomous with its Beast Regime of regional governance and totalitarian collectivism, seen in Revelation 13:1-4, which presents ten zones of regional governance, as ten horns on a beast, that also has seven heads, suggesting totalitarian collectivism, where the seven heads symbolize mankind’s seven institutions: 1) Education, 2) Banking, Finance, Commerce and Trade, 3) Body Politic, 4) Military, 5) Religion, 6) Media, 7) Science and Technology.

In the age of Authoritarianism, and its policies of diktat and schemes of debt servitude, wealth can only be preserved by investing in and taking possession of gold bullion either in physical form or by trading on an Internet Platform such as Bold Is Money or Bullion Vault. Suggested chart article reading includes Jack Chan’s This Week In Gold posted in Safehaven.com   

7) Bellingham, the city of subdued excitemen, hosts many ecletic service businesses.

There is a great diversity of service businesses in Bellingham, WA; these include Vital Climbing Gym, Fur Ever Friends, and Perch & Play.

8) I reside in a den of libertines and psychopaths; yet live in Christ.

I reside in downtown Bellingham, in a SRO in the Sea Breeze Apartments, which is owned and operated by a small non profit corporation..

Thirteen years ago, at the time Europe started to use the Euro as a common currency, I moved as far north and west as possible, and still be in a city with public transportation within the US, hence I came to reside in Bellingham.

Beginning at the time of Greek Bailout I, in May 2010, I started to notice that the neighborhood became more poneros, that is not only libertine, but actually evil, and wicked, as people began to manifest with animal spirits, in particular those of bear, lion, and leopard, just as one sees in Revelation 13:1-4: I’ve been mauled emotionally and mentally many times by these psychopaths.

I turn on my psychopathic radar immediatly when leaving my cracker box; and continually sweep for their noticable characteristics: any white clothing, a wollen hat, or a cap, or a cowboy hat, social flare consisting of rudeness, loudness, or busybodyness. Once I spot them, I make every effort to turn away and avoid them.

Please consider that if there be a God, that He by definition would have the quality of Goodness; yes God be Good. And being the Genuine God, He desires to see the quality of goodness developed in His elect. So, He purposes to be active in the Blacksmith Shop, tempering his saints, applying His Hammer, forging them against the anvil of adversity, applying great heat to develop His qualities in those of His choosing, while discarding the reprobate.

It has been God’s providence introducing me to the harshness of many mean and crazy individuals, so as to produce His admirable attributes in me. I know one individual by name, who like George Zimmerman, is a neighborhood Guardian Angel; one who intimidates and emotionally bullies all who he can. He bears the marks of prison in that he has Jesus Christ, written on his knuckles, and has a cross, tattooed on his forearm like a knife: he’s a real killer as far as I am concerned. He lives in the same building and is relentless in confronting me about everything and anything. Yet I have never have spoken to him, nor have I even flipped him off.

I do not know what temptations or trials are coming; but I do know that the monetary authority of Ben Bernanke and the national sovereignty of the US is at its peak. Through dispensation, that is through the administration of Jesus Christ operating to produce the fullness and completion of every age, epoch, era and time period, Ephesians 1:10, inflationism is giving way to destructionism. And as a result regional monetary authority and regional sovereignty will provide the seigniorage of diktat and estblish governance enforcing debt servitude for all.

Just as investors placed their trust in Ben Bernake for profitable return, so resdents in each of the world’s ten regions will trust in a New Prophet for their survival; and according to Revelation 13:1-4, the level of trust will be described as worship, just as in the Apocalypse of the First Century.

John Mark Hicks writes The beast, according to Revelation 13:1-2, is given power, authority, and a throne which the whole world worshipped. John’s readers lived daily with the claims and actions of imperial power. For them it looked as if the whole world worshipped the Emperor and Caesar wielded uncontested power over their lives. For Caesar there was only one throne, and it was his.

John’s visionary experience contests Caesar’s claim. This is foundational for the unfolding drama of Revelation 4-16 (the second vision). God sits on the throne, not Caesar, and God remains on the throne despite Caesar’s attempts to unseat the Creator.

Revelation 4 identifies two sets of “celestial” participants around the throne of God. One set–the four living creatures–probably represents angelic figures while the other set–the twenty-four elders–represents human figures. In sum, angelic and human communities are present before the heavenly throne. They surround the throne with their worship, submission, and obedience.

The description of four living creatures before the throne is drawn from Ezekiel 1:4-21 and Isaiah 6:2-4. We may describe them as cherubim (look like Ezekiel) or seraphim (sing like Isaiah) though they are not so identified by John. Rather, as close to the throne, they may represent a kind of angelic hierarchy. Whatever the case, they represent God’s all-seeing (lots of eyes!) activity in the world who are never inactive in God’s cause or mission. They continuously praise the one “who was and is and is to come.”

I am motivated by Christ in me, the hope of glory. And am growing in spirtual understanding, so I can have wisdom in all things. I purpose to enjoy God’s Spirit, and become the New Man in Christ, forsaking carnality and iniquity, to live in God’s virtue and in His revelation of ethics as presented in the New Testament. I endeavor to keep His word of endurance, and not deny His Name, that is His Presence and Authority. To this end, in February 2013, I told my neighbors, who I have known for the last five years, “I am no longer speaking with anyone in the building in which I live”. I received a variety of responses; and now live by this new constitution, as a mean of protecting my sensibilities and purity.

Possession Of Gold Bullion And The Mandate Of Ditat Are The Only Two Forms Of Sovereign Wealth In The Age Of Diktat

July 7, 2013

Investment report for the week of June 31, 2013 to July 5, 2013

1) … Introduction … Sovereign wealth is found only in the possession of gold bullion and the mandate of diktat.

The jump on the Interest Rate on the US Ten Year Note, ^TNX, to 2.01% on May 24, 2013, constituted an “extinction event”, that is a cataclysm, which literally destroyed the investment choice offered by bankers as the way of life, and terminated the paradigm of Liberalism.  Jesus Christ is operating at the helm of the Economy of God, Ephesians 1:10, and has pivoting the world into the paradigm of Authoritarianism, where the diktat of nannycrats is the now the way of life.  Fiat money died, and diktat money has been coming to life.

Please consider the corollaries from the Dispensation Economics Manifest  … https://theyenguy.wordpress.com/about/ … that flow from the biblical revelation that Jesus Christ, is operating as steward in dispensation, that is the household management plan of God to both complete and fulfill all things in every age, epoch, era and time period.

Benson te writes Quote of the Day: State democracy is a limited monopolistic democracy.  Today’s democracy is a qualified democracy. Let us call it “state democracy”. It is a democracy entirely linked to and emanating from the concept of a single state as the sole sovereign political unit. All the rights just mentioned have to do with the “citizen” of a state and a political system equated with that state and its machinery. A citizen is not a person with free choice of a social-political-legal system. A citizen is a designation of a state-limited and state-defined set of rights that each person finds he has, whether he likes it or not.

State democracy is based on the principle of state sovereignty. The state’s power prevails. The citizens as a group and linked by particular political arrangements are associated with this sovereignty. Whatever the basis of this sovereignty is, nothing can stand in its way when a law or rule is formulated, passed and enforced. There is no check and balance from outside the system. One can only exercise the limited rights of protest, voting, moving and running for office that the state allows. State democracy is a limited democracy. It is a monopolistic democracy.

The incentive for individuals living in state democracy is to gain control over the machinery of government and to use it to one’s personal advantage by forming coalitions that pass laws that one wants. This is from retired finance pofessor Michael Rozeff at the lewrockwell.com

Liberalism’s Banker regime (which was based upon democratic nation states) had a policy of investment choice. The dynamo was one monetary interventionism, consisting of POMO, Quantitative Easing, Central Bank Interest Rate Reductions, Kuroda Abenomics, and Global ZIRP, which powered up corporate profit and global growth …  and came with credit schemes, such as free trade agreements, financial deregulation, leveraged buyouts, nation investment, currency carry trade investing, securitization of debt, financialization of stocks and ETFs, and dollarization … where Milton Friedman’s Free To Choose concept of floating currencies and abandonment of the gold standard, established the rule underlying all investing, providing for the fiat money system.

Authoritarianism’s Beast regime (is based upon statist regional governance) has a policy of diktat. The dynamo is one totalitarian collectivism consisting of public private partnerships for oversight of the factors of production, banking, commerce and trade, which powers up regional security, stability and sustainability … and comes with debt servitude schemes, such as regional framework agreements, bank deposits bailins, new taxes, privatizations, capital controls, central bank rulings for capital adequacy consisting of national treasuries, and austerity measures … where Nannycrats establish the rule underlying all diktat, providing for the diktat money system.

Liberalism’s final currency carry trade invigorated, April 2, 2013, as the Euro, FXE, traded up 127.05, and the Japanese Yen, FXY, traded lower from 104.82, this being seen in the chart of FXE:FXY, and being seen in the Bloomberg chart of the EUR/JPY trading up from 119.79.    

Yet the EUR/JPY devitalized on the jump on the Interest Rate on the US Ten Year Note, ^TNX, to 2.01%, on May 24, 2013, stimulating derisking out of World Stocks, VT, and yet compelled a rise in US Regional Banks, KRE, such as Community Banks, GBCI, FMER, PBCT, RNST, FFIN, and ZION, constituting Liberalism’s last safe haven investment.  The EURJPY will continue to devitalize on a ongoing collapse of Aggregate Credit, AGG, on an ongoing rise in ^TNX, stimulating more derisking and delveraging out of World Stocks. VT.  The debt monetization policies of the world central banks has created a carry trade investment, that is a hot money flow into US Regional Banks, KRE, on the rise of the US Dollar, best seen in its 200% ETF, UUP, and a fall in the all of the world’s currencies.  

Debt deflation is underway, as Jesus Christ set the bond vigilantes and the currency traders loose on the markets; the first to call interest rates higher globally, and the latter to wage a currency war, one of competitive currency devaluation, on the world central banks, with the result of destruction of fiat wealth.

Beginning in November 2012, and then again in April 2013, Gold, GLD, relative to Commodities, DBC, that is GLD:DBC, strongly sold off; and recovered from its great sell off on June 28, 2013.

Now, the soon coming rise of Gold, GLD, from its bottoming out on June 27, 2013, and the fall of stocks, VT, will be seen in the ongoing MSN Finance Chart of Gold, GLD, Stocks VT, the 200% Long Yen, ULE, and the 200% Short Euro, YCS, where the fall in the Euro, FXE, will exceed, any fall in the Yen, FXY.  

Will Gold, $GOLD, be trading higher from its June, 28, 2013, value of  $1,225?  I belive so as investors seek hard assets, that is something tangible, as Credit, AGG, continues to destabilize, causing even more disinvestment out of Stocks, VT.   Zero Hedge reports Citi’s FX Technicals group is biased to believe that the low in this correction may have been posted for Gold

Tyler Durden asks Think gold and silver were the worst performing financial asset in June? Think again: that dubious distinction falls to the Bovespa, EWX, -12.4,  the Shanghai Composite, SSCE, -12.3%, and the Greek stock market index, GREK, -12.2, all of which tumbled more than the precious metal complex did in the past month. Yet what an odd month for hard assets – on one hand WTI, Corn and Brent were the best performing assets, while gold, silver, copper and wheat tumbled. One thing is certain: as already noted, the number of gross shorts in gold is now at an all time high. And just as gold was one of the two worst performing assets of the first half (with silver), all that would require the unwind of this move, now that gold and gold miners are the most universally hated assets by the “expert” community, will be a short-covering catalyst.   

Physical possession of Gold and Diktat will be the only two forms of sovereign wealth and thus sustainable wealth under the paradigm of Authoritarianism, and in the age of diktat.  

An inquiring mind asks will there be improvement in economic fundamentals going forward and will Consumer Confidence, seen in Tyler Durden Chart,  keep growing? 

In as much as Jesus Christ has pivoted the world from Liberalism into Authoritarianism, there can be  no genuine improvement in any economic fundamentals. The ratio of Stocks, VT, to Gold, GLD, that is VT:GLD, will be falling lower.  Said another way the ratio of Gold to Stocks, GLD:VT, will be trading higher, as corporate profit and global growth fails, on the “extinction event” of the Interest Rate on the US Ten Year Note, ^TNX, jumping to 2.01% on May 24, 2013.

Interest rates, all across the yield curve, will continue to jump because of fears, first of credit liquidity, and second, that debtors will be unable to repay creditors, with the knock on fear that the world central banks monetary policies are unable to stimulate eorporate profit and global growth.

The recent growth of Consumer Confidence is consistent with Libersalism’s final inflationism, beginning with QE 1 and ending with QE4, causing a grand finale surge of M2 money, stated by the US Fed, with recent values of 10,594, 10590, 10579, 10557, 10541, as well as a surge in Automobile Stocks, CARZ, Retail Stocks, XRT, up until June 18, 2013, as see in their Yahoo Finance chart. 

New Economic Action has commenced with Jesus Christ pivoting the world from inflationism to destructionism. Soon the M2 Money figures will peak and turn lower. Most of the Retailers, seen in this Finviz Screener, have turned lower as wealth is dissipating, as investors realize that the monetary policies of the world central banks, specifically policies of interventionism, of Quantitative Easing, POMO, Global ZIRP and Kuroda Abenomics, have made  “money good” investments bad.

Shawn Ritenour via the Foundations of Economics blog, asks in Zero Hedge Is it failed capitalism or failed internventionism?  One of the sad narratives, that is sad fallacies, of the financial meltdown of 2008 and its aftermath, is that it was and remains the result of unbridled capitalism.

We must never tire of explaining the fallacies in the thinking of those who think the Great Recession is a clear case of the failure of capitalism. In fact, it is a quintessential example of the failures of interventionism to bring about anything other than economic destruction and relative impoverishment.

In a free market rooted in private property, the only way entrepreneurs are able to sustain profits is by serving customers better than anyone else.  It is only when they receive special privileges through preferential regulation, subsidies, bailouts and the like that they are able to reap profits for which they have not sowed productive activity.  I was struck by how much of what Mises said about the response of many to the Great Depression applies closely to our current situation.  Just like Mises, we must never tire of explaining the fallacies in the thinking of those who think the Great Recession is a clear case of the failure of capitalism.  In fact, it is a quintessential example of the failures of interventionism to bring about anything other than economic destruction and relative impoverishment.

I comment that the dynamo of the Banker regime was one monetary interventionism, consisting of POMO, Quantitative Easing, Central Bank Interest Rate Reductions, Kuroda Abenomics, and Global ZIRP, which powered up corporate profit and global growth. 

Now, the dynamo of the Beast regime is totalitarian collectivism consisting of public private partnerships for oversight of the factors of production, banking, commerce and trade, which powers up regional security, stability and sustainability.

2) … Investment trading for the week of July 1, 2013 to July 5, 2013

July 1, 2013

IVCPOST reports that On Monday, US based stocks began the third quarter with 1% or more gain. Data regarding the kick off indicated United States’ manufacturing improved in June. It also showed that construction costs hit a four-year high. This year’s improvement was brought about by Fed’s bond-buying policy. This further aided in increasing Dow Industrials and S&P 500’s record high conclusion in late May. The recovery was interrupted by worries regarding Fed’s plans about their stimulus project. This sequentially triggered liquidation in stocks. Since October, June was the first negative month for S&P 500. Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh, said “People saw ISM was stronger and slightly higher than consensus and decided to run with it.”  And Bespoke Investment Blog reports ISM manufacturing back above 50

SPHB 1.6

KRE  1.8 to a new high … GBCI, FMER, PBCT, RNST, FFIN, and ZION have been hot traders of late.

IAI 1.6

EUFN 1.6

FEFN 1.3

IBB 2.7

FDN 1.8

FLM 1.6

XLI 1,.6

PSCI 1.4

PBD 1.4

RXI 1.3

PJP 1.3

FXR 1.2

XTN 1.1

CSD 1.1

PBS 1.1 

PBJ 1.1

PKB 1.1

PPA 1.0

XRT 1.0

AMJ 2.9

PSCE 1.6

OIH 1.2

IEZ 1.1

PSCE 1.6

SIL 2.5

GDX 1.6

COPX 1.8

URA 1.6

PICK 2.5

IWM 1.5

VGK 1.2

VIT 1.0

RZV 1.8

RZG 1.4

EWJ 1.2

JSC 1.2

NKY 1.5

EWP 2.0

EWI 1.6

EIRL 1.4

INP 1,.7

EWD 1.6

EWY 1.1

Benson te asks The End of the France’s “bel époque” (beautiful era)

The Beautiful Era indeed did totally and utterly end in 1914, as interventionism began in 1913, as a fulfillment of the Bible Prophecy of Daniel 2:25-45.

Now a global system of regionalism has replaced the interventionism of the two iron legs seen in Nebuchadnezzar’s Statue of Empires; where the first iron leg was the British Empire, and the second iron leg is/was the US Dollar Hegemonic Empire, that commenced with the establishment of the US Fed in 1910 to 1913. Liberalism flourished from 1913 with the passing of the Federal Reserve Act, until May 24, 2013, when the Interest Rate on the US Ten Year Note, ^TNX, quickly rose to 2.13%.

Now Authoritarianism is starting to rule in Europe. The very linchpin in the Economy of God, Ephesians, 1:10, is the nation of Greece, GREK, as the sovereign Lord God, has designed it and a collection of Mediterranean Sea states, known as the PIGS, for their profligacy, to be the beachhead for the rise of the Beast Regime of Revelation 13:1-4. The National Bank of Greece, NBG, continued strongly lower in trading today, as the Troika met with Athens to review progress on compliance of  Bailout III terms.

 

Gold, GLD, traded up 1.7%, Oil, USO, 1.4%, and Base Metals, DBB, 2.5%. 

The Yen, FXY, traded lower to close at 96.24; and all the other major currences, traded higher on today’s higher stocks. Action Forex provides the chart of the EUR/JPY, which rose to close at 129.622; this is also seen in the Stockcharts.com chart of FXE:FXY rising to close at 1.32.

I relate get ready for the great unwind of the EURJPY as Bloomberg report Record sales of foreign bonds by Japanese investors are signaling a bottom for the Yen, FXY, to traders who are trimming bets on further declines in the year’s worst performing major currency. Investors in the Asian nation offloaded 10.6 trillion yen ($106bn) of foreign debt in the first half of 2013, the most since at least 2001. .

Of significant ominous note, Utilities, XLU, which had been leading last’s week’s rally, traded lower. And the ratio of Transports relative Utillities, XTN:XLU, stands in the middle of a broadening top pattern, suggesting that the market expects the Interest Rate on the Ten Year Note, ^TNX, to rise higher from today’s 2.49% to start another bout of interest rate sensitivity selling.  

Chicago Tribune reports Piano maker Steinway to be sold for $438 million. Private equity firm Kohlberg & Co, KCAP, is acquiring 160-year-old piano and musical instrument makerSteinway Musical Instruments Inc. for about $438 million. Private Equity Company, KCAP, traded unchanged on the day; and related Hedge Fund, KKR, rose 2.9% on the day.

Mike Mish Shedlock wrties China manufacturing conditions deteriorate, new export orders fall at fastest rate since March 2009. In what should be no surprise to Mish readers, the HSBC China Manufacturing PMI™ shows Operating conditions deteriorate at quickest pace since last September, and new export orders plunge

Ambrose Evans Pritchard writes France’s triumphant ‘Joan of Arc’ vows to bring back franc and destroy euro. Marine Le Pen, French Presidential candidate of the Front National party, with a precept of Sovereign Peoples vs Technocrats, vows to smash the existing order of Europe, and force the break-up of monetary union, if she wins the next election.

Bloomberg reports Draghi’s one aize fits all rescue fuels northermost debt. The European Central Bank’s attempt to resuscitate the 17-member euro economy with record-low interest rates is fueling a debt boom in its most creditworthy country and exposing a growing disconnect in monetary policy. In Helsinki, about 1,500 kilometers (930 miles) northeast of the Frankfurt offices of ECB President Mario Draghi, household debt has surged to a record as Finns take advantage of the lowest mortgage rates in the euro area to buy property. Citizens of crisis-stricken countries from Greece to Portugal are either unable to get loans or forced to pay much higher rates.

The WSJ reports Canadian Mark Carney takes reins at Bank of England.  And Tyler Durden writes Behold Goldman’s Mark Carney attending his first Monetary Policy briefing (observe Michael Cross, Head of Foreign Exchange, and Executive Director for Markets, of Fleecebook fame sitting on the lower left.

The WSJ reports Gotta love the Keynesian-Monetarist religion: True ‘Bullievers’ are still sweet on Japan.   And Bespoke Investment Blog reports Japan back above 50-DMA. And Zero Hedge writes The relative size of margined buys vs margined sells on the 3 major Japanese stock exchanges was last this high at the very peak of the TOPIX in 1999

Inflationary accomodative policies were cental to the bygone era of Liberalism, which was terminated by Jesus Christ on May 24, 2013, when the Interest Rate on the US Ten Year Note, ^TNX, rose to 2.1%.  Now policies to cope with deflationary pressures, presenting debt servitude schemes, such as, regional framework agreements, bank deposits bailins, new taxes, privatizations, capital controls, and austerity measures, are central to the era of Authoritarianism.

July 2, 2013

Reuters reports Greece has 3 days to deliver or face consequences, EU officials relate. Greece has three days to reassure its lenders it can deliver on conditions attached to its international bailout in order to receive the next tranche of aid, four euro zone officials said on Tuesday.

Five indicators suggest that the direction of the stock market is once again down.

First, closed end funds seen, led by closed end debt, CSQ, seen in this Finviz Screener, traded lower, despite, Community Banks, GBCI, FMER, PBCT, RNST, FFIN, and ZION, taking US Regional Banks, KRE, racing to a new high. 

Second, the US Dollar, $USD, traded higher to 83.76, and the individual world currencies, led by the Japanese Yen, FXY, trading lower, which closed down 1.0% at 97.25. The lower Yen, boosted the Nikkei, NKY, slightly higher. 

Third, the BRICS, EEB, leading the Emerging Markets, EEM, lower. The National Bank of Greece, NBG, led Emerging Markets Financials, EMFN, and the Emerging Markets Dividends, EDIV, lower.  Global Utilities, DBU, Global Industrials Producers, FXR, and Foreign Airlines, traded lower.

Fourth, a resumed downtrend in European Stocks, VGK.

Five Regional Airlines trading lower on a higher price of Oil, USO. 

BRICS, EEB,  trading lower included

EWZ -3.3

RSX -2.2

INP -1.1

YAO -1.1

Emerging Market Nations, EEM, trading lower included,

GREK -2.9

ECH -2.1

IDX -1.9

TUR -1.5

EPU -1.4

EWW -1.4

European Stocks, VGK, trading lower included

GREK -2.9

EWI -1.9

EWG -1.6

EIRL -1.1

EWP -1.0

EWY -1.5

ARGT -1.3

Gold Miners, GDX, and Silver Miners, SIL, traded lower, on today’s higher US Dollar, $USD.

Surprizingly, Egypt, EGPT, traded higher, on strong volume.

Aggregate Credit, AGG, traded unchanged.

July 3, 2013

Reuters reports China slowdown, Portugal tensions spook markets. World shares pulled back on Wednesday as signs of slowing Chinese growth and escalating political tensions in Portugal, one of the euro zone’s crisis hot-spots, spooked investors. European shares opened down 1.2 percent and euro zone periphery bonds tumbled after two high profile government resignations in two days threatened to plunge Portugal into a political crisis. Portugal’s bond yields surged more than 1 percentage point to 8 percent. Spanish, Italian yields jumped too while nervousness over the state of Greece’s next tranche of bail-out money also caused jitters

The Telegraph reports Portuguese government at risk of collapse as foreign minister resigns  Portugal’s political crisis has deepened with the resignation of foreign minister Paulo Portas, in a move which could trigger the collapse of the ruling coalition government.

CNBC reports Portugal throws new curve ball in Euro debt crisis. Portugal faced a full-blown crisis on Tuesday after Foreign Minister Paulo Portas became the second minister to resign from the center-right government in a 24-hour period. Portugal’s Prime Minister Pedro Passos Coelho, speaking live on TV to the nation on Tuesday night said he had not accepted Portas’ resignation and would speak to his coalition partner. The leader of the opposition Socialist party speaking to the nation on TV on Tuesday night called for fresh elections and said the government had lost the confidence of the people.

Tyler Durden writes Things must be getting serious in Portugal, they just announced a short-selling ban on select banking stocks – how long before capital controls? Originally posted at Open Europe. A couple of months ago we asked, ‘Who’s next in line in the eurozone crisis?’. Our top pick was Portugal for a number of political and economic reasons, it now seems that prediction is coming to pass.

The Portuguese government is on the rocks. The junior coalition partner the People’s Party (CDS-PP) will hold a meeting this afternoon to determine whether to support the government, if it withdraws support in parliament, elections seem inevitable, although they could be delayed for some months. Such a move would seriously hamper Portugal’s economic reform programme, which is already off track. Portugal has only met its deficit targets due to one-off measures while competitiveness adjustments have slowed and contingent liabilities remain a hidden risk. With the country on the cusp of an unsustainable debt burden any delays would likely be the final straw which pushes Portugal into needing some form of further assistance.

Contingent liabilities are significant. In many countries, the long-term burden of contingent liabilities such as pensions and healthcare are well known but in Portugal there are more immediate problems. The contingent liabilities of State Owned Enterprises (SOEs) total 9% of GDP but are excluded from government debt levels despite these companies coming under serious pressure. Many have significant debt overhangs and could be forced to turn to the government for assistance if financing conditions worsen once again. Total contingent liabilities could run as high as 15% of GDP according to the IMF. Furthermore, the stock of government arrears is around 2.6% of GDP (€4.3bn) and is owed to domestic firms meaning it remains a drag on growth. 

Easing the reform programme is an option but may help little

Portugal has already seen its targets eased as well as the maturities of its loans extended and the interest rates reduced. There may still be scope to do this further, but not much. It is unlikely the eurozone would agree to such a move until a stable government is once again in control. Furthermore, with maturities and rates already extended and cut almost as far as is feasible further action seems unlikely. Delaying targets may give more room to breathe but Portuguese debt continues to look unsustainable. 

So will Portugal need further financial assistance? Any delays would likely be tantamount to pushing Portugal towards further assistance, be it OMT or some form of debt restructuring, and consigning the country to another few years of tough austerity, which would be both politically and legally difficult to implement. As we previously noted, further assistance always seemed possible, Portugal will now have to work very hard to avoid needing it.

Reuters reports Portugal President qarns of dailure to eeturn to markets

At market open Yahoo Finance and Reuters reports, Market turns attention to jobs, looking for clues to Fed Policy. Breakout Stocks are under pressure this morning on news of a major shake-up in Portugal’s government, escalating turmoil in Egypt, and more softness in Chinese manufacturing data. On the homefront, encouraging jobs data is helping to lift tide.

Benson te writes Ultimately it will be the global bond markets (or an expression of future interest rates) that will determine whether this week’s bear market will morph into a full bear market cycle or will get falsified by more central bank accommodation.

How true as Aggregate Credit, AGG, traded lower. The Interest Rate on the US Ten Year Note, ^TNX, traded slighly higher to close at 2.50%.

World Financials, IXG, and the Interest Rate Sensitive Utilities, XLU, traded lower. 

The National Bank of Greece, NBG, led the European Financials, EUFN, lower. Bloomberg reports Europe banks fall as Portugal stokes debt crisis concern …. And Business Week reports  Portugal leads rise in European bond risk as coalition crumbles ….And Business Weeek reports Commerzbank slumps on sovereign debt concern

 

Brazil Fiancials, BRAF, and India Earnings, EPI, led Emerging Markets Financials, EMFN, lower.

Australia Dividends, led Austrlia, EWA, lower.

Global Utilities, DBU, and Utilities, XLU, traded lower.

Bloomberg reports China Enters Nomura high domestic debt risk danger aone as Fed tapers. China, Hong Kong and India are in a “high-risk danger zone” because their monetary policies have stayed too loose over the past four years, according to Nomura Holdings Inc. A June 28 report by the bank’s economists and strategists showed the average ratio of domestic private debt to gross domestic product across Asia had ballooned to 167 percent in 2012 and most of the region’s property markets are “frothy.” The domestic private debt ratio has increased by over 50 percentage points in Hong Kong and Singapore and between 30 and 40 points in Malaysia, South Korea, China and Thailand. A measure of monetary policy based on output gaps and inflation shows that interest rates have also been persistently below what economic models suggest, and even more so if the financial cycle is accounted for, the report said. That leaves countries financially vulnerable. Indonesia is at the lower end of the high-risk zone, while South Korea, Malaysia, Singapore and Thailand are in the middle-risk range, ahead of Japan. The Philippines and Taiwan seem the least prone to any economic crisis. Hong Kong is a Special Administration Region of China although it pegs its currency to the dollar.

Bloomberg reports One third of China shipyards face closure as orders slump. China, the world’s biggest shipbuilding nation, may see a third of its yards shut down in about five years as they struggle to win orders amid a global vessel glut, an industry group said. The yards in peril of closure have failed to get any orders “for a very long period of time,” Wang Jinlian, secretary general of the China Association of National Shipbuilding Industry, said in an interview yesterday. They may end operations in three to five years if the “gloomy market persists.” The nation has more than 1,600 shipyards

July 4, 2013

The European Commission communicates that the introduction of the Euro beginning in 1999, and in 2001 for Greece, was a means of European integration to facilitate global growth and corporate profitability; make Europe a more powerful voice in the world, and developed the concept of a body of EU citizens, giving them a tangible symbol of their European identity.  In common treaty, and thus in theory, there is to be no bailout of any nation whose Treasury Debt fails. And fiscal policy (public revenue and expenditure) remains in the hands of individual national authorities, although they undertake to adhere to commonly agreed rules on public finances known as the Stability and Growth Pact. And member States also retain overall responsibility for their structural policies (i.e. labour markets, pension and capital markets), but agree to co-ordinate them in order to achieve the common economic goals.

The battle to hold the Euro at 127.46 to 128.00 began on July 4, 2013, with the Finviz Chart of the Euro, FXE, showing a trade at 128.88, as the ECB announces a Forward Guidance Monetary Policy to keep all key ECB rates low for an extended period of time, as tightening in financial conditions will handicap the prospects for economic recovery in the Euro area, where the credit growth remains very weak and fragmented and as the Bank of England hints policy to remain loose.

Tyler Durden Zero Hedge report What the ECB’s Forward Guidance monetary policy means. Confused what the (non) news of today’s “unprecedented” forward guidance announcement by the ECB means? Shocked that the ECB is about as dovish as it has ever been, after having missed the following chart showing the record low European bank lending to the private sector which predicted all of today’s action (Stolper’s long EURUSD reco fade notwithstanding).

Then SocGen is here to explain, if only for all those who are seemingly stunned that the ECB isn’t planning on hiking rates, or even “tapering” any time soon. “Forward Guidance” Introduced, from SocGen

The ECB came out with all dovish guns blazing today to reverse the tightening in money and financial market conditions since June, stoking a rally in euribor futures (lower rates) but causing the EUR to drop nearly 1% vs the USD. The only thing that was missing today was a cut in the refi rate and/or negative deposit rate, but neither has not been ruled out given that downside growth risks continue to exist. Casting better macro data side, the ECB officially introduced ‘forward guidance’ on rates and said exit is “very distant”.

The introduction of ‘forward guidance’ characterises the fact that all key ECB rates will stay low for a longer period. This makes the ECB fall in line with the guidance by the US FOMC on the Fed funds target, the Bank of Canada and most probably, the BoE in August. Put on the spot during the press conference, president Draghi rejected claims the ECB had come off the proverbial fence in response to a changed outlook for US monetary policy given the spill over effect from a steeper US yield curve across the Atlantic and the steepening impact on eurozone core and periphery debt markets.

Taking after the BoE earlier (a coincidence, Draghi said), the ECB is worried that the tightening in financial conditions will handicap the prospects for economic recovery in the euro area where the credit growth remains very weak and fragmented. The move clearly marks an innovative step in the ECB’s communication and policy strategy for a bank that previously had always refused to pre-commit on interest rates.

Draghi did not commit explicitly how long rates would stay low but hinted that there would be no change for at least 12 months (“extended period is not 6 or 12 months”). The decision to introduce forward guidance was unanimous and how long this bias will be observed will depend on the assessment of three variables ie inflation, growth and monetary developments (credit flows, monetary aggregates). The case for a cut in the refi rate was also discussed but there was no agreement.

The retention of ammunition should the economy move back into reverse was important to the ECB and this probably explains why there was no consensus to cut the refit rate from 0.50%. Draghi categorically said that 0.50% is not the “lower bound” for rates. This implies that further stimulus is still possible. For EUR/USD, key support now rests at 1.2877 before selling towards the April 1.2746 low is stepped up.

I comment that the battle to the Euro at 127.46 to 128.00 is the battle to keep the Euro, FXE, as a viable currency, and is a battle for the ECB, and not the credit market to provide credit seigniroage, that is credit moneyness, and credit liquidity flowing to companies, even though higher nation state Treasury rates, are coming at the hand of bond vigilantes, making soverign borrowing more expensive.  While European Financial Institutions, EUFN, and Nation Investment in Portugal, Italy, EWI, Greece, GREK, and Spain, EWP, as well as Ireland, EIRL, and Netherlands, EWN, Finalnd, EFNL, and Germany, EWG, are sinking, the ECB is fighting first, the bond vigilantes to provide low lending rates to companies, and secondly, currency traders to maintain the worth of the Euro through Forward Guidance monetary policy; and the Bank of England hints policy to remain loose.    

Gary of Between The Hedges provides the Handelsblatt report ECB policy results lack legitimacy, Buch says.  Many measures takes by ECB have had asymmetric results on euro-region members, causing redistribution of wealth, Claudia Buch, head of IWH economic institute and member of German govt’s council of economic advisers, says. The ECB isn’t mandated for such redistribution, she said. Buch sees danger that Europe faces situation like Japan, where “zombie banks” have financed “zombie companies”. And Gary of Between The Hedges provides El Confidencial report Spain banks hold $73.4b of Portugal debt. Spanish banks’ exposure to Portuguese sovereign debt represents 52% of total European banks’ exposure, citing Bank For International Settlement Data.

And the Gary of Between The Hedges providion of the Handelsblatt report ECB policy results lack legitimacy, Buch says communicates that the ECB has gone beyond its mandate and has become the Seignior, that is the EU Citizens’ Banker, which provides seigniorage, that is moneyness, with the effect of unifying all residents into a nascent European Super State, that is a EU Super State, as well as redistributing wealth, and as well creating “zombie banks” and “zombie companies”. The ECB’s monetary policies have facilitated sovereign debt, banking debt, and corporate debt moral hazard in the extreme, to the point where systemic risk now exists, and where European Socialism and the more extreme Greek Socialism, with its clientelism, has metastasized, to the point of being most definitely being unsustainable.

Please consider that all things are of God, 2 Corinthians 5:18. And as such, there is no human action as perceived by Austrian Economists. There be only the dispensation, that is the household sterwardship, of Jesus Christ, bringing forth the completion and fulfillment of every age, Ephesians 1:10.   

The introduction of the Euro blossomed the standard of living in the southern nations compared to the northern nations, especially Germany, and enabled Cajas lending to stimulate a tremendous real estate boom and consequential bust, swelled municipal and state employment, and enabled nation state wage legislation to grow labor unions in power to the point where Nation Investment, EFA, has failed because of high unit labor costs, and as the El Confidencial report Spain banks hold $73.4b of Portugal debt, indicates supported a huge debt trade boom, and the Tyler Durden Zero Hedge report What the ECB’s Forward Guidance monetary policy purpose is to establish the ECB, and not the credit market, as provider of credit seigniorage, as well as Seignior, that is top dog banker, establishing the worth of the Eurozone’s currency. 

Where seigniorage exists, that is moneyness exists, sovereignty exists. The ECB, through its monetary policies, has established defacto pooled sovereignty. And it is either out of soon coming EU nation state sovereign default, and or banking default, or out of a global credit bust and financial system breakdown, that is a Financial Apocalypse of Revelation 13:3-4, will occur, and be the genesis event for political leaders to renounce national sovereignty and announce pooled sovereignty, establishing an EU Super State, that is a One Euro Government, with oversight of fiscal spending, banking, manufacturing, commerce and trade, by nannycrats who will govern through statist public private partnerships.

According to bible prophecy of Revelation 13:1-4, Regionalism will replace Crony Capitalism, European Socialism, and Greek Socialism, beginning in Europe, and spread to all of the world’s ten regions, and Totalitarian Collectivism, will become mankind’s social experience, as the Beast Regime replaces the Banker Regime, in all of mankind’s seven institutions.  By Christ’s Sovereignty, Ephisians 1:10, it is out of Eurozone sovereign insolvency and banking insolvency, that regional governance will replace democratic state governance. Liberalism is powering down, as the dynamos of corporate profitability and economic growth are winding down. Authoritarianism is powering up, as the dynamos of regional security, stability, and security, are winding up. 

The rise of the interest rate on the US Ten Year Note, ^TNX, to 2.01% on May 24, 2013, at the hands of the bond vigilantes was an “extinction event” that terminated Liberalism’s Banker, Free To Choose, democratic nation state floating currency regime, whereby the fiat money system died.  Under Authoritarianism’s Beast, Diktat, regional governance and totalitarian collectivism regime governs, and the diktat money system underwrites economic action.  

Under Liberaglism, nation state bankers waived credit wands, providing seigniorage of investment choice. But under Authoritarianism, regional nannycrats yield debt servitude clubs of diktat; thus under Authoritarianism, the debts of Liberalism, will be applied to every man, woman, and child on planet earth, beginning first in the EU.     

July 5, 2013

The battle, which began on July 4, 2013, to maintain the Euro, FXE, at 127.46 to 128.00, was the battle to keep the Euro, as a viable currency, and which was a battle for the ECB, and not the credit market to provide credit seigniroage, that is credit moneyness, and keep credit liquidity flowing to companies, lasted only one day, as on July 5, 2013, the Euro, FXE, collapsed to 127.10.

The Action Forex chart of the EUR/JPY shows a close at 129.80; the Stockcharts.com chart of FXE:FXY closed this week at 1.314.

The see saw destruction of wealth that came with the “extinction event” of the rise of the Interest Rate on the US Treasury Debt, ^TNX, to 2.01%, on May 24, 2013, continued today, July 5, 2013, as US Stocks, VTI, led World Stocks, VT, and Global Industrial Producers, FXR, higher.

On July 5, 2013, all hell broke loose in the bond market, as Jack Ewing and Julia Werdigier of the NYT report Answering critics who said they were running out of ways to promote growth and lending, the European Central Bank and the Bank of England on Thursday did something neither had done before, committing themselves to keeping interest rates low indefinitely. The bid to reassure investors brought the two central banks into closer alignment with the Federal Reserve, which, under Chairman Ben S. Bernanke, has adopted a policy of becoming more open about its intentions.  Mario Draghi, the president of the European Central Bank, said that crucial interest rates would ‘remain at present or lower levels for an extended period of time.’  Until Thursday, the central bank had steadfastly refused to pin itself down on future policy.  Only hours earlier, Mark J. Carney, who became governor of the Bank of England on Monday, made a similar break with tradition. The British central bank said that any expectations that interest rates would rise soon from their current record low level were misguided.

Fion Li of Bloomberg reports The cost of borrowing in Hong Kong’s Dim Sum bond market, DSUM, jumped the most on record in June, climbing to an all-time high as China’s worst cash squeeze in at least a decade spurred concern an economic slowdown will worsen. The average yield on the securities surged 153 bps, or 1.53 percentage points, to 5.06%, the most since the Index was introduced at the start of 2011.  ‘The outbreak of one of the worst liquidity crunches in China’s interbank market has spilled over to offshore,’ said Becky Liu, a Hong Kong-based rates strategist at Standard Chartered Plc, the second-largest Dim Sum bond underwriter. ‘A sharp rise in the cost of funding on the back of tight liquidity has pushed up bond yields. Daily Bell reports Now they tell us: China debt levels ‘unknown’.

Credit collapsed, as evidenced in the strong fall lower of Aggregate Credit, AGG. Margaret Collins of Bloomberg reports Fixed-income mutual funds in the U.S. had their biggest weekly redemptions in more than six years as investors fled bonds. Credit trading lower today included the following:

ZROZ -5.3

EDV 05.0

TLT -3.4

LTPZ -3.2.

EMB -2.0

MUB -1.5

BWX -1.3

MBB -1.2

BLV -2.5

PICB  -1,7

LQD -1.2

UJB -1.4

JNK -1.3

Doug Noland writes in Safehaven.com Mispricing risk through Interventionism. Bonds taken out to the woodshed, again. 

Robin Wigglesworth, Michael Mackenzie and Josh Noble of Financial Times report Central banks

sold a record amount of US Treasury debt last week while bond funds suffered the biggest ever investor withdrawals.

Ongoing selling by foreign central banks could be driven by two key dynamics. First, one would think (thinly capitalized) central banks would seek to contain losses on their outsized bond holdings. Keep in mind that the higher bond yields jump, the more individual central banks will need to monitor the scope of losses and the degree of capital impairment. Second, “developing” central banks will most likely be forced to sell Treasuries and other bond holdings to fund investor and “hot money” flows exiting their markets and economies.

A prominent bullish view has held that emerging market (EM) central banks built up robust international reserve positions (including large quantities of Treasuries) that would be available to backstop their systems in the event of global market turbulence. Well, a surge of outflows (and currency market intervention) coupled with a spike in yields is now in the process of depleting reserves much more quickly than anyone had anticipated. There is a clear possibility that we’re early in what could be unprecedented flows seeking to exit the faltering EMs. Recalling the 1997 SE Asian experience, it was a case of “those who panicked first panicked best.” The more reserve positions were depleted, the faster “hot money” ran to the rapidly closing exits.

Importantly, the longer the inevitable day of reckoning is delayed the worse the consequences. Years of aggressive market intervention ensured a most protracted period of unprecedented excess – excesses that encompassed virtually all markets and all risk categories. Perhaps Federal Reserve policymaking ensured that the greatest Bubble excesses and market distortions materialized in perceived low-risk (fixed income and equities) strategies.

“The danger of mispricing risk is that there is no way out without investors taking losses. And the longer the process continues, the bigger those losses could be. That’s why the Fed should start tapering this summer before financial market distortions become even more damaging.” Martin Feldstein, Wall Street Journal op-ed, July 2, 2013

I appreciate Mr. Feldstein’s focus on “the danger of mispricing risk” – I only wish this would have been part of the monetary policy debate starting a few years back (before the damage had been done). I would argue that never has so much mispriced debt been issued on a global basis. Moreover, never have inflated bond prices – artificially low borrowing costs – had such a profound impact on securities and asset pricing around the world. Never have risk perceptions and market risk premiums in general been so distorted by aggressive central bank market intervention.

The mispricing of risk implies market re-pricing risk. And the greater the mispricing, in the volume of securities issuance, price level distortions and risk misperceptions, the greater the scope of Latent Bubble Market Risks. Mispricing also implies wealth redistribution, and this has traditionally been from the less sophisticated to the more sophisticated. Actually, when enormous quantities of non-productive debt are issued at artificially high prices there is initially a perceived increase in wealth (more debt instruments at higher prices). This debt (“bull market”) expansion coupled with perceived wealth creation will spur spending, corporate profits and higher equities and asset prices. But when the Bubble begins to falter, with re-pricing, market losses, risk aversion and tightened financial conditions, the downside of the Credit cycle commences.

I believe we have commenced a “repricing” process that will unfold over weeks, months and years – with vast ramifications and unknown consequences.

Various reports claim the strong market reaction to Bernanke’s policy statement caught the Fed by surprise. Despite attempts by various officials to calm the markets, bond yields have just kept rising. As such, it’s now reasonable to suggest the Fed did not anticipate being on the wrong side of a spike in market yields. How much higher do Treasury bond and MBS yields need to rise before the Fed is held to account – and forced to explain – the large losses suffered in its $3.4 TN (and ballooning) portfolio? At this point, the Federal Reserve is akin to a novice trader that keeps adding to a losing position.

Market players have surely been stunned by how poorly the bond market has traded – especially with the Fed providing $85bn of monthly support. Assuming the Fed cannot keep purchasing Treasuries and MBS forever, perhaps there is now added impetus for investors, hedge funds, foreign central banks, sovereign wealth funds and others to push liquidations forward. If money managers now realize they are holding higher risk exposures than desired, it might be advantageous to make necessary portfolio adjustments prior to the Fed winding down its QE operations. If foreign central banks have begun a process of reducing bond holdings, does this accelerate hedge fund selling? Are the sophisticated players now anxious to reduce holdings before the next wave of bond fund redemptions and ETF-related selling? How does it work when the “Masters of the Universe” – having accumulated Trillions of assets under management by adeptly playing a most-protracted market Bubble – find themselves on the wrong side of rapidly moving markets?

I am intimately familiar with the bull story for U.S. equities. Corporate profits are strong and stock valuations are attractive. Bond yields are rising because of the underlying strength of the U.S. economy. The “great rotation.” The U.S. economy remains the most vibrant in the world. U.S. equities are the preferred asset class for the current environment. (Witness the rally in US Regional Banks, KRE, and the Russell 2000 Growth, and the Small Cap Pure Value Growth, IWO, as is seen in their ongoing combined Yahoo Finance Chart).

Well, the U.S. stock market is an integral facet of the greater Credit Bubble. Massive federal deficits, ultra-loose financial conditions and artificially low borrowing costs have been instrumental in inflating profits. Mispriced debt and meager risk premiums have been instrumental in myriad financial engineering mechanisms that have inflated corporate earnings and inflated stock prices. Abundant cheap finance has fueled a powerful global mergers and acquisition boom. (Witness the rally in IPOs, FPX, and Leveraged Buyouts, as is seen in their ongoing combined Yahoo Finance Chart).

If the Bond Bubble is indeed bursting, the markets are only in the earliest phase of re-pricing risks and asset prices (The Bond Bubble burst in May 2013, causing debt deflation, that is curreny deflation as is seen in the fall lower of Bonds, BND, together with Major World Currencies, DBV, and Emerging Market Currencies, as is seen in their ongoing combined Yahoo Finance Chart).

After leading unsuspecting savers into the wild world of mispriced fixed income instruments, the Fed will apparently ensure the public becomes overly exposed to unappreciated risks in the U.S. equity market. (Unprecedented risk is seen in ongoing Yahoo Finance Chart of Biotechnology, IBB, the Russell 2000 Growth, IWO, the Small Cap Pure Value Growth, RZG, and Aerospace and Defense,  PPA).

I relate that debt deflation is seen in the collapse of individual currencies, and the rise of the US Dollar, $USD, swhose chart show a blast higher to close at 84.71. The Milton Friedman Free to Choose floating currency system, synomous with the Banker Regime of credit was literally destroyed, as bond vigilantes called the Interest Rate on the US Ten Year Note, ^TNX, higher to 2.72%, and as currency traders continued their global currency war on the world central bankers.  The 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, steepend sharply, as is seen in the Steepner ETF, STPP, steepening, better said, blasting vertically higher.  

  

Currency traders were successful in carrying out their currency war of competitive currency devaluation as currencies falling lower included:

British Pound Sterling, FXB -2.4

Swedish Krona, FXS -1,5

Swiss Franc, FXF -1.4

Emergning Market Currencies, CEW, -1.4 …. and Emerging Marketw EEM traded 0.6% lower.

The Euro, FXE, -1.4

The Indian Rupe, ICN -1.2

The Japanes Yen, FXY, -1.1 … and the Nikkei, NKY traded 1.6% higher

The Australian Dollar, FXA, -1.2

The Brazilian Real, BZF, +0.4 … and Brazil, EWZ traded 1.7% lower.

And Doug Noland reports The U.S. dollar index jumped 1.6% to a three-year high 84.45 (up 5.9% y-t-d). For the week on the downside, the South African rand declined 3.2%, the Norwegian krone 2.9%, the British pound 2.1%, the Japanese yen 2.0%, the Swiss franc 2.0%, the Swedish krona 1.5%, the Danish krone 1.4%, the euro 1.4%, the Mexican peso 1.1%, the Singapore dollar 1.1%, the Brazilian real 0.9%, the Australian dollar 0.8%, the Canadian dollar 0.6%, the New Zealand dollar 0.4% and the Taiwanese dollar 0.2%.

US Regional Banks, KRE, continued their rally, blasting a stunning 2.8% higher; which drove the Russell 2000 Growth, IWO, and the Small Cap Pure Value, RZG, to new highs. Other financial sectors trading higher included

IAI 1.9

KCE 1.9

RWW 1.6

IXG 1.0

Laura Marcinek and Donal Griffin of Bloomberg report Barclays Plc, BCS, Deutsche Bank AG, DB,  and Credit Suisse Group AG, CS, had their credit ratings lowered by Standard & Poor’s as new rules and ‘uncertain market conditions’ threaten their business. The four European lenders are among the most exposed to proposed rules that could reduce revenue from trading and investment banking operations, the ratings firm said. ‘We consider that these banks’ debtholders face heightened credit risk owing to the industry’s tighter regulation, fragile global markets, stagnant European economies and rising litigation risk stemming from the financial crisis,’ S&P said. ‘A large number of global regulatory initiatives are increasingly demanding for capital market operations.’

Bloomberg reports Chinese banks’ valuations, CHIX, are close to their lowest on record as the nation’s interbank funding crisis exacerbated investors’ concern that earnings growth will stall and defaults may surge as the economy slows. Industrial & Commercial Bank of China Ltd., the world’s largest lender by market value, ended Hong Kong trading last week at 5.3 times estimated earnings.  Investors’ disenchantment with Chinese banks reflects concern that a crackdown on shadow banking and measures to direct new credit away from repaying old loans and toward boosting economic productivity will undermine earnings and trigger a surge of bad loans.  ‘The golden era of banking is over,’ said Mike Werner, an analyst at Sanford C. Bernstein.  ‘Investors have to recognize that more market discipline is going to be imposed upon the banks.’

Lingling Wei and Bob Davis of WSJ report A rare peek into the actions of China’s leaders in a month when a Chinese cash crunch spooked global investors shows a leadership falling short in its struggle to redirect China’s economy and also faltering in its efforts to communicate its intentions to markets. The People’s Bank of China instigated the cash shortages that catapulted Chinese interest rates to nosebleed highs during the past two weeks because the central bank felt it had no alternative amid what it saw as out-of-control credit growth, according to an internal document.  Since 2009, Chinese domestic debt has been growing so rapidly it approximates credit bubbles in the U.S., Europe, Japan and Korea that precipitated recessions. In the spring of 2013, the central bank and banking regulators tightened regulations but to little avail. For the first five months of 2013, domestic credit, called total social financing in China, rose 52% from 2012. According to a summary of a PBOC internal meeting on June 19, the central bank was especially concerned that in the first 10 days of June, Chinese banks increased lending by 1 trillion yuan ($163bn), an amount the central bank said ‘had never been seen in history.’  About 70% of that amount consisted of short-term notes that mostly don’t show up on banks’ balance sheets, making it easier for the banks to get around regulatory lending restrictions, rather than lending the money to promising companies or projects.

Reuters reports A senior Chinese official said on Friday that the government did not know precisely know how much debt local governments had built up and warned that it could be more than previous estimates. Estimates of local government debt range from Standard Chartered’s 15% of the country’s GDP at end-2012 to Credit Suisse’s 36%. Fitch put the figure at 25% when it downgraded China’s sovereign debt rating in April. Vice Finance Minister Zhu Guangyao said China had not released official figures since a 2010 auditing report that put local government debt at 10.7 trillion yuan. ‘Currently, [according to] nationwide surveys, I think this number will rise,’ Zhu said, defending the debt as mostly geared toward fuelling infrastructure projects. ‘A very important task for this administration is to clearly determine the level of local financing platforms,’ Zhu told reporters.

Kristine Aquino and Rachel Evans of Bloomberg report China’s top-rated dollar-denominated bonds are losing more than any other BRIC nation as a record cash crunch threatens to slow economic growth and strain corporate finances. Chinese notes, the only gainers in March as debt from Brazil, Russia and India slumped, lost 6.1% last quarter, the most in Bank of America Merrill Lynch indexes going back to 1999.  Company debt tumbled as overnight borrowing rates jumped to the highest level since at least 2003.  The surge fueled concerns about nonpayment as People’s Bank of China Governor Zhou Xiaochuan seeks to rein in risky lending while reviving the world’s second-largest economy. The premium investors demand to hold Chinese dollar debt surged to a 10-month high of 225 bps on June 26, 2013.

Bloomberg reports China’s crackdown on shadow banking is backfiring as a plunge in stocks prompts individual investors to pump increasing amounts of cash into wealth management products that offer yields more than double the deposit rate.  A record 1,137 of the investment plans were sold by about 70 banks in the last two weeks, almost 50% more than the similar period ended June 14, according to Benefit Wealth. China Minsheng Banking Corp., the nation’s first privately owned lender, last week sold a 35-day product with an annualized yield of 7%.

China Financials, CHIX, China Industrials, CHIII, and China Small Caps, ECNS, traded lower as Reuters reports China signals will cut off credit to rebalance economy

Energy Service, OIH, rose 1.8%, Small Cap Energy, PSCE, 1.7%, and Energy, XLE, 1.2%, as Oil, USO, blasted 1.8% higher. West Texas Intermediate Crude, $WTIC, rose parabolically to a 14-month high to close at 103.63; futures capped the biggest weekly gain in more than two years.  Oil, USO, joined US Regional banks, KRE, in being a safe haven investment this week.  

Sectors trading higher included

IBB 1.8

XSD 1.7

PJP 1.7

XTN 1.6

PSCI 1.5

XLI 1.5

IGV 1.5

RZV 1.4

PPA 1.4

CSD 1.4

XRT 1.3

IGV 1.2

FXR 1.2

Yield bearing sectors trading lower included

BRAF -1.6

EPI -0.6

DBU -0.6

XLU  -0.3

REM  -3.6

IYR -1.1

ROOF -0.6

Scetors trading lower included

COPX -2.4

ITB -2.0

The Emerging Markets, EEM, traded lower yet again. Alex Frangos and Patrick McGroarty of the WSJ report Countries from Turkey to Brazil to China are getting hit by a brutal combination of events, as economies slow, investors pull out cash, commodity prices tumble and protesters take to the streets. An outflow of funds from so-called emerging markets has picked up pace over the past month, triggered by expectations among some investors that the days of easy money globally are coming to an end. It is a stark turnaround for these countries, whose growth helped offset weakness in the U.S. and Europe during the financial crisis. Seeking better returns, investors poured money into emerging market economies in the past four years. Private capital flows into emerging markets from 2009 to 2012 were $4.2 trillion, according to the Institute of International Finance. While the amount of money leaving these markets hasn’t reached levels seen during the 2008 crisis, the outflows are expected to continue as sentiment sours further.

Gold Miners, GDX -5.2, as GLD, -2.8. And Silver Miners, SIL, -4.5, as SLV -4.7  

Agricultural Commodities, RJA, traded lower, as Commodities, DBC, traded unchanged.

3) … Are we witnessing, the rise of the Bible prophesied, King of The South; who will this  individual be?

3A) … An uprising ocurs in Egypt.

Tyler Durden of Zero Hedge reports Egypt’s Morsi still President as ministers resign, Muslim Brotherhood offices destroyed. With over a million people crowded into the streets of Cairo (and 16 reported dead and 781 injured according to The Jerusalem Post), the situation in Egypt is becoming more unstable. Amid cheers of “the people demand the fall of the regime,” protesters set fire to and ransacked the Muslim Brotherhood’s main offices all over Egypt. Many saw this as another victory towards their goal of Egypt not being ruled under Islamic law noting, that they “feel victorious, but we’ll only have truly won once Morsi leaves.” It seems the pressure is building as five Egyptian ministers have just resigned amid the growing chaos.

Reuters reports Egypt’s Mursi rebuffs army ultimatum, sets own course.

Reuters reports Draft Egypt army roadmap to change constitution and scrap parliament

Times of Israel reports Egypt headed for Civil War, ex-Israeli defense minister warns

Zero Hedge reports Crude cracks $102 as Egyptian army “Ready to die”

Jason Ditz of Antiwar reports Coup in Egypt: Military detains President Morsi

Jason Ditz of Antiwar reports Introducing Egypt’s new rulers: Sisi and Mansour. Egypt’s coup sidelines President Mohammed Morsi and has put two other figures, Army Chief Gen. Abdelfattah El-Sisi and Supreme Constitutional Court Justice Adly Mansour.

Jason Ditz of Antiwar reports Junta arrests Brotherhood leaders as mass protest called

Jason Ditz of Antiwar reports Egypt’s Junta looks to assemble an Interim Govt

USA Today reports Adly Mansour sworn in as Egypt’s President

Jason Ditz of Antiwar reports Egypt’s coup serves as anti-democracy lesson

Jason Ditz of Antiwar reports Egypt coup a major setback for Syria’s rebels

Reuters reports Gulf drive against Hezbollah may hit ordinary shi’ites

Jason Ditz of Antiwar reports Iraq Sunni protest leader calls for Egypt-dtyle protests

Jason Ditz of Antiwar reports 71 killed as Islamists battle over key Somali port

Elaine Meinel Supkis writes There is a lot of other news, of course such as this one which confirms what I said earlier about Saudi Arabia paying the military in Egypt to overthrow the government in a coup:  Head of Egypt’s armed forces tells Saudi king that the country is ‘stable’.  Reporting to the Big Boss!  We see the results:African Union Suspends Egypt Over Coup because even the US and EU have charged Africans for doing these coups and these are ‘illegal’ except when the US, EU and Saudi Arabia want a coup of course.

 

When coups happen, people do not get more socialism, they usually get put down and the old regime status quo is imposed violently.  Opposition parties are eliminated.  Fake elections happen as will happen in Egypt once half of the political spectrum is removed.  The Saudis think this will save them from the fury of the mobs who hate them.  Instead, it will cement the hatred.  As the average Egyptian, unhappy with IMF rules, discovers the military and Elbaradei appointed as Egypt’s interim PM (the loser in the previous election who is put in power today!) the IMF and others praise this claiming ‘technocrats’ (1984 double speak for ruthless enforcers of banker’s whims) will take over.

 

The people will be put on a Gaza Starvation Diet.  They won’t have subsidized fuels or food.  Like in the US, the demand the poor and lower workers pay 100% of the costs of running a country will prevail.  Think the ’47% moochers’ business is what Elbaradei believes?  Of course! 

 

Al Jazeera’s Jamal Elshayyal, reporting from Nasr City, said the reaction from the Morsi’s camp to the appointment of Elbaradei was one of complete rejection and anger.

 

“One of the protesters here said that the appointment of ElBaradei is a move directed at appeasing the United States and that he served them well, allowing for the invasion of Iraq when he was in the IAEA and will now be their puppet again – we all know he is a puppet.

 

Elbaradei called for Bush to be charged with war crimes over the illicit Iraq invasion, for example, so he isn’t a total ‘US puppet’.  The military don’t want him to lead them, they are using him as a front so they can cement power again as the generals, as per usual in the past, work out who is going to be the New Big Boss.  He will be disposed eventually but only after he is blamed for IMF programs just like Morsi.  The effects of the IMF ‘starve the poor’ actions will make anyone unpopular.   The poor UN nuclear inspector is a puppet but not the way the people in the streets know it.  He won’t last long if he defies the bankers.

 

The coup in Egypt just raised world fuel prices which is OK with Russia but this is causing Egypt-style demonstrations and rage in Europe like here: Bulgaria anti-govt protest high fuel bills.

 

Authorities: Armed man arrested in Seattle was planning action in support of Brazil protesters : like all teeming countries with lots of poor people and an attempt at a popular government, when the banks demand punishment for running in the red, this is inflicted on the poor.  So Brazil, trying to get ready for the obscene Olympic ‘sports’ which are mainly pros thanks to changes in the rules, we have the government ‘cleaning up’ the cities which means removal of poor people.

 

This, in turn, causes demonstrations and riots.  The US which was so very supportive of using the military to overthrow a government in Africa due to some demonstrations over IMF rules will do the same to Brazil.  The US has done this repeatedly to Brazil in the past.  The most recent was the 1964 Brazilian coup d’état.  The US CIA has huge reasons for another coup there.  Greenwald, the Guardian reporter who broke the Snowden whistleblower case lives there and is protected there.  They are very anxious to get their paws on him and to Gitmo him.

3B) … Bible prophecy in the Book of Daniel, foretells that one known as the King of the South, will arise out of an Egypt African Islamic power block, only to be defeated by the future World Sovereign, presented in Revelation 13:5-10, known as the King of the North.  

Daniel 11:11 provides into the one who will arise out of and lead the Egypt African Islamic power block.  “And the king of the South shall be moved with rage, and go out and fight with him, with the king of the North, who shall muster a great multitude; but the multitude shall be given into the hand of his enemy”

Daniel 8:23-24 provides details on the future King of the North. “In the latter part of their reign, when rebels have become completely wicked, a fierce-looking king, a master of intrigue, will arise.  He will become very strong, but not by his own power. He will cause astounding devastation and will succeed in whatever he does. He will destroy those who are mighty, the holy people”.

3B1) …Although not of the Church of God, I do believe what The Old WCG taught about the King of the South.

It is easy to demonstrate that HWA’s WCG did teach that there would be a future King of the South and who WCG believed it would be. Here is a quote from the August 1974 Good News article by Raymond McNair titled Watch the Middle East where he stated: he longest prophecy of the Bible, the eleventh chapter of Daniel, specifically concerns the Middle East…verses 40-45 are yet to be fulfilled. They reveal that startling events are yet to take place in the Middle East… (p.12).

Thus, WCG was teaching, under HWA for at least the last 22 1/2 years of his life, that at least from verses 40 and on, that portions of Daniel 11 were yet to be fulfilled (also HWA specifically taught that Daniel 11 had final fulfillment of early verses as well; see the also article on the King of the North). Any who teach that HWA did not teach that there were future fulfillments of Daniel 11 simply have not understood the totality of his writings. Notice specifically one of them: In Daniel 11:21, referring in original, typical fulfillment to Antiochus Epiphanes, there shall stand up a vile person…So once again before the second coming of Christ, a Vile Leader will stop the daily sacrifices being offered…This same prophecy spoken by Jesus is also reported by Luke…21:20-24 (Armstrong HW. Personal, Plain Truth magazine, June 1967).

Thus, Herbert W. Armstrong clearly taught that starting at least from verse 21, that Daniel 11 had a future fulfillment. He understood prophetic duality.

It is clear that HWA’s WCG taught that there would be a future king of the South. Also notice something from 1972: comment Then at least a part of Daniel 11 must also be DUAL! And no wonder, for we find the chapter concludes with the “time of the end” (verse 40) – leading up to the resurrection of the saints (chapter 12 :2). (In the original text, there is no chapter break between Daniel 11 and 12.) (Ambassador College Bible Correspondence Course, Lesson 2, World Peace Coming in Our Time! 1972 edition, p. 14).

Thus, since Daniel 11:40-45 discusses the King of the South, those who are willing to see the truth will realize that as of 1972, the old WCG did teach that there was a coming future King of the South in 1972.

Garner Ted Armstrong in a May 3, 1975 Plain Truth article titled Watch the Middle East wrote

Prophecy says some sort of a ‘shoving match’ precipitated by the ‘King of the South’ will unleash whirlwind lightening-like MILITARY response by a ‘King of the North’.  So these quotes from the literature show that WCG did believe in a future ‘King of the South’, but did not clearly identify who, in a December 1979 Plain Truth article by Keith Stump titled The Arab World in Prophecy it states But who is the “King of the South”?…in verse 40 we skip to “the time of the end”…The verse undoubtedly found partial fulfillment in the offensive of 1896…But Mussolini did not finish the prophecy

Just as there is yet to be a final “king of the north”…there may very well emerge in the same manner a final “King of the South”–an overall leader of an Arab-Moslem confederation, possibly bearing the very title Mahdi…a prophetic psalm (Psalm 83) provides additional insight into the Mideast picture. Germany (Assyria in Bible prophecy) and perhaps the rest of Europe will be in league in the future with a union of Arab nations…But in the end, this European-Arab alliance will prove short-lived…And the  King of the North shall come against him [the King of the South]…Daniel 11:40-41…The Arab-Moslem Confederation will, of course, be thrown into chaotic disarray in the fact of invasion. (Stump K. The Arab World in Prophecy. Plain Truth, December 1979, pp. 11-12).

The above quote clearly shows that the WCG under the late Herbert Armstrong’s leadership taught that there would be a future fulfillment of Daniel 11:40 involving an end-time King of the South. It would seem that the King of the South will employ some type of warfare and terrorism against the descendants of Israel. The Bible specifically warns about “terror” as a curse for the descendants of Jacob (Leviticus 26:16; Jeremiah 15:8) and since terrorism has often been used by Islamists, this may be part of how they will contribute to the destruction of the nation of Israel and the Anglo-descended peoples that Psalm 83 and Daniel 11:39 alludes to. Some Muslims want a leader called the Imam Mahdi, while others call for a Caliph, to lead them and create some type of Islamic empire in the 21st century.

(Note: There is actually a Shiite prophecy that some believe points to Barack Obama as one who will help the final “Mahdi” (Arabic for “the guided one”), please see Obama in Islamic Prophecy?, Prophecies of Barack Obama?, and The Arab World In the Bible, History, and Prophecy.) This leader is sometimes also called the Imam Mahdi or the thirteenth Imam by Muslims.

Though not all Muslims expect the Imam Mahdi, many still seem to long for a leader to unify the Arab World. Some Muslims are looking for a political-spiritual leader, sometimes called the Caliph in English, to rise up (Caliph is a shortened version of “Khalifah rasul Allah” meaning “Successor to the Messenger of God”). The title caliph has been given to the head of state in Muslim-governed countries in the past, though the latter ones lacked the power of the earlier ones: The supreme office of caliph, originally elective, became hereditary…Eventually…caliphs became figurehead or “puppet” leaders…Many Arabs…seek to re-create the political and theological unity of the early Islamic caliphate (Stump K. The Arab World in Prophecy. Plain Truth, December 1979, pp. 9-10).

Today this pattern is repeating itself, as a “third wave” of leaders is sweeping across the Middle East. Rejecting both the capitalism of the West and the discredited Marxism of the former Soviet Union, these would-be “third wave” leaders have emphasized a fundamentalist brand of Islam that leaves no room for compromise. Looking back to the glory days of Arab conquest and dominance in the first centuries after Muhammad, they also dream of a pan-Arab union. This will not be a union under a monarch from one of the old Bedouin dynasties, or a secular-educated army officer turned dictator, but rather a New Caliph who will unify the Faithful under the banner of purified Islam. This, they reason, is the only way that Western influence can be expelled from their region, and that Israel can be subjugated

The yearnings across much of the Middle East for a New Saladin—one who will restore Arab glory by conquering the Jews and expelling Western influence—were foreseen by Bible prophecy. In Daniel 11:40, we read of a future “King of the South” who will ultimately “push at” a coming European superpower at the time of the end. This individual, called in Bible prophecy the King of the South because his center of power is south of Jerusalem, will undoubtedly be a charismatic person who will whip up much of the Muslim Middle East into a frenzy against Israel and Europe. (Ogwyn J. Conflict Over the “City of Peace”. Tomorrow’s World magazine, March-April 2002).

In the Plain Truth of December 1980–the year that HWA often claimed he now had the Church back on track–another article states: Bible prophecy reveals the coming emergence of an Arab-Moslem confederation in the Middle East. It is referred to in prophecy as the ‘King of the South’ (Daniel 11:40). This confederation will play a crucial role in end-time events (Stump, K. Plain Truth. December 1980, p.26).

A related Plain Truth article states: Bible prophecy reveals the coming emergence of an Arab-Moslem confederation in the Middle East. It is referred to in prophecy as “the King of the South” (Dan. 11:40). This confederation will play a crucial role in end-time events. (Stump K. Seeing the World Through Islamic Eyes. Plain Truth, June 1983, p.44).

Thus, the idea of an Islamic confederation has been in COG literature for some time; and its leader is presented in You Tube The Future King of the South is rising.

CoG writer also presents Damascus and Syria in prophecy Will Bashar Assad hold power as he has it? Does the Bible show that Damascus, the capital of Syria, will be destroyed? What will happen to Syria? Will the Syrians support the final King of the South that the Bible tells will rise up? Which scriptures discuss the rise and fall of an Arabic confederation? Does Islamic prophecy predict the destruction of Syria. This is a YouTube video.

What should you know About Turkey in prophecy Do you know the Turkish people descended from? Did the Ottoman Empire possibly fulfill a promise in Genesis? Will Turkey support the European King of the North or Arabic King of the South? Will it betray one of them? Will Turkey be involved in the encouraging the destruction of Israel? Is Turkey going to become Catholic? Is Turkey mentioned in Psalm 83, Daniel 11, and elsewhere in the Bible? This video provides answers.

Prophecy Update relates Egyptian, Israeli military alerts prompted by Islamist mutiny threat from Sinai.  A new Egyptian crisis arena:  the Egyptian and Israeli armies Friday, July 5, raised their alert levels on either side of the Sinai border after the Muslim Brotherhood declared Sinai its center of revolt and revenge for the Egyptian army’s ouster of Mohamed Morsi as president Wednesday, July 3. Following a multiple Islamist attack in northern Sinai, the Egyptian army went on high alert in the Suez and North Sinai provinces. The Sinai border crossings to the Gaza Strip and Israel were closed. The army spokesman in Cairo denied declaring an emergency – only a heightened alert.

Egyptian forces also shut down all three underground passages running from the mainland to Sinai  under the Suez Canal. Egypt’s Third Army was deployed to secure them, under the command of Maj. Gen. Osama Askar.

Further measures imposed for guarding Suez Canal cargo and oil shipping against possible rocket fire from central Sinai included the stationing along its banks of Patriot anti-missile batteries and anti-air weapons systems

Around one-third of the world’s oil supplies from the Persian Gulf pass through the Suez Canal on their way to the Mediterranean and Europe.

These emergency measures were clamped down Friday after the Muslim Brotherhood established a Sinai “War Council” to mount a rebellion against the army in collaboration with the radical Palestinian Hamas and Jihad Islami as well as the al Qaeda-linked Salafist groups in the Gaza Strip and Sinai.

3B2) … Nature economist Elaine Meinel Supkis provides insightful information

From March, 2013:  Islamist political parties form electoral alliance – Politics – Egypt – Ahram Online shows us how the groundwork was prepared exactly like how Chile’s military prepared Santiago for its suppression and military rule, namely, have various entities go on strike like the police:

 

The parties say in a press conference Saturday that what prompted them to form the alliance is the recent political crises in Egypt and the “clear dangers” triggered by the “police [labour] strike… in what seems like a forced summoning of the army” to take power.

 

The Salafi parties have been mentioned in the news so here is some information about them, they are the arm of the Saudi royals and have contested with the Muslim Brotherhood, who the Saudis fear, for power:  Salafi movement – Wikipedia, the free encyclopedia

 

The Salafi methodology, also known as the Salafist movement, is a movement among Sunni Muslims named by its proponents in reference to the Salaf (“predecessors” or “ancestors”), the earliest Muslims considered to be examples of Islamic practice.[1][2]

 

The movement is often described as related to, including, or synonymous with Wahhabism, but this is disputed. Many Salafists consider the term Wahhabi derogatory, and object to being called that.[3] At other times, Salafism is deemed as the hybridation between Wahhabism and other movements which have taken place since the 1960s.[4] Salafism has become associated with literalist, strict and puritanical approaches to Islam and, in the West, with the Salafi Jihadis who espouse violent jihad against civilians as a legitimate expression of Islam.[5] However, leading Salafi scholars have condemned attacks on civilians,[6][7][8][9] and salafi who support such attacks remain a minority.[10]

 

This paragraph is most interesting since it goes totally contrary to US propaganda about how mean Morsi was: Salafi have been notable following insurrections in Egypt, Tunisia and Libya. In the 2011–12 Egypt parliamentary elections, the Islamist Bloc led by Al‑Nour party despite having only “a few months of party politicking experience” managed to received 27.8% of the vote, or 127 of the 498 parliamentary seats contested, to form the second-largest parliamentary bloc.[74] According to Ammar Ali Hassan of al-Ahram, while Salafis and the Muslim Brotherhood agree on many issues such as the need to “Islamise” society and the right to private property restricted by the duty incumbent upon Muslims to give alms, they have clashed over the Brotherhood’s “flexibility” on the issue of whether women and Christians should be entitled to serve in high office, and the brotherhood’s relatively tolerant attitude towards Shia Iran in foreign policy.[75]

 

Doesn’t fit today’s propaganda storyline, does it?  The liberals in Cairo (this is nearly their only base) have this bizarre belief that the fascist military group which serves Egypt’s elite rich, will support the sort of women’s and religious civil rights which Saudi’s rulers forbid.  Note that only the Red Sea separates these two countries and the last thing Saudi rulers want is a counter example to their despotism!  The riots against Christians were not the Brotherhood but mainly the Saudi-supported Salafists.  Ditto, the raping of women all over the place during the demonstrations against Morsi.

 

Here is a good thumbnail history of the relationship of the Muslim Brotherhood and the Saudi Royals which explains why the Saudi Royals fear them: The Muslim Brotherhood and Saudi Arabia – Opinion – Ahram Online

 

The first real shock that hit the relationship between Riyadh and the Brotherhood took place following the Iraqi invasion of Kuwait in 1990. While Saudi Arabia relied on the US to liberate the occupied emirate and to ensure its own security against the threat of Saddam Hussein, the Muslim Brotherhood opposed Western intervention. This position was interpreted as a sign of ingratitude. Following the liberation of Kuwait in 1991, Saudi Arabia witnessed the appearance of the first opposition movement, Al-Sahwa (Awakening), which challenged throughout the 90s the absolute monarchy of Al-Saud and called for political reforms. Some Saudi leaders accused the Brotherhood of being Al-Sahwa’s inspiration.

 

The second shock, more violent, that hit the relationship between the Brotherhood and Saudi Arabia came following the attacks of 11 September 2001 in the United States. Some 15 of the 19 alleged attackers were Saudis. Part of Saudi’s rulers threw the blame for this “deviation” of some young Saudis on the doctrinal activism advocated by the Muslim Brotherhood, particularly their most famous ideologue, Sayed Qutb, hanged by the Nasser regime in 1966. The Saudi interior minister at the time, and the crown prince from October 2011 until his death on 16 June 2012, Nayef Bin Abdel-Aziz, accused the Muslim Brotherhood in 2002 of being the origin of most problems in the Arab world. This doesn’t mention Atta, the ringleader of the successful 9/11 attacks.  He was the son of a top Egyptian Muslim Brotherhood member!  The Egyptian people will not be ‘free’ at all, they will be loaded with even heavier chains by the Saudis.  The farce of the US media celebrating this as some sort of redemption of the revolution is insane.  And worse, the owners of our media know perfectly well.

 

4) … An inquring mind asks, will there be enough liquid assets, amongst the collateral assets, at banks, to provide credit liquidity to avert a liquidity crisis, and a resulting credit crisis?

John Butler of The Amphora Report, takes a closer look at proposed liquidity regulation as a response to the growing use of ‘collateral transformation’ (a topic often discussed here) in the shadow banking system and writes in Zero Hedge that the stability of the financial system is at risk in the event that there was a drop in securitised collateral held by banks.

Time marches on and with lessons learned harshly comes a fresh resolve to somehow get ahead of whatever might cause the next financial crisis. For all the complacent talk about how the “recovery is on track” and “there has been much economic deleveraging” and “the banks are again well capitalized,” the truth behind the scenes is that central bankers and other economic officials the world over remain, in a word, terrified. Of what, you ask? Of the shadow banking system that, I believe, they still fail to properly understand.

In the present instance, so the thinking behind liquidity regulation goes, prior to 2008 the regulators were overly focused on capital adequacy rather than liquidity and, therefore, missed the vastly expanded role played by securitised collateral in the international shadow banking system. In other words, the regulators now realise, as I was arguing back in the mid-2000s, that the vast growth in shadow banking liquidity placed the stability of the financial system at risk in the event that there was a drop in securitised collateral values.

In 2007, house prices began to decline, taking collateral values with them and sucking much of the additional, collateral-based liquidity right back out of the financial system, unleashing a de facto wave of monetary+credit deflation, resulting in the subsequent financial crisis. But none of this was caused by ‘market failure’, as Governor Stein contends. Rather, there is another, simpler explanation for why banks were insufficiently provisioned against the risk of declining collateral values, yet it is not one that the regulators much like to hear, namely, that their own policies were at fault.

In one of my first Amphora Reports back in 2010 I discussed in detail the modern history of financial crises, beginning with the 1980s and concluding with 2008, …

Notwithstanding this prominent pattern of market-distorting interest-rate manipulation, guarantees, subsidies and occasional bailouts, fostering the growth of reckless lending and other forms of moral hazard, the regulators continue their self-serving search for the ‘silver bullet’ to defend against the next ‘market failure’ which, if diagnosed correctly as I do so above is, in fact, regulatory failure.

Were there no moral hazard of guarantees, explicit or implicit, in the system all these years, the shadow banking system could never have grown into the regulatory nightmare it has now become and liquidity regulation would be a non-issue. Poorly capitalised banks would have failed from time to time but, absent the massive systemic linkages that such guarantees have enabled, encouraged even, these failures would have been contained within a more dispersed and better capitalised system.

As it stands, however, the regulators’ modus operandi remains unchanged. They continue to deal with the unintended consequences of ‘misregulation’ with more misregulation, thereby ensuring that yet more unintended consequences lurk in the future.

Might collateral transormation be the crux of the next crisis?  An obvious consequence of such collateral transformation is that it increases rather than decreases the linkages in the financial system and thus in effect replaces firm-specific, idiosyncratic risk with systemic risk, exactly the opposite of what the regulators claim they are trying to do by increasing bank regulatory capital ratios. Liquidity regulation is an attempt to address this accelerating trend and the growing systemic risks it implies.

Those financial institutions engaging in the practice probably don’t see things this way. From the perspective of any one institution swapping collateral in order to meet changing regulatory requirements, they see it as necessary and prudent risk management. But within a closed system, if most actors are behaving in the same way, then the net risk is not, in fact, reduced. The perception that it is, however, can be dangerous and can also contribute to banks unwittingly underprovisioning liquidity and undercapitalizing against risk.

Viewed system-wide, therefore, collateral transformation really just represents a form of financial alchemy rather than financial engineering. It adds no value in aggregate. It might even detract from such value by rendering opaque risks that would otherwise be more immediately apparent. So I do understand the regulators’ concerns with the practice. I don’t, however, subscribe to their proposed self-serving remedies for what they perceive as just another form of market failure.

Already plagued by the ‘Too Big to Fail’ (TBTF) problem back in 2008, the regulators have now succeeded in creating a new, even more dangerous situation I characterise as MAFID, or ‘Mutual Assured Financial Destruction.’ Because all banks are swapping and therefore holding essentially the same collateral, there is now zero diversification or dispersion of financial system risk. It is as if there is one massive global bank with thousands of branches around the world, with one capital base, one liquidity ratio and one risk-management department. If any one branch of this bank fails, the resulting margin call will cascade via collateral transformation through the other branches and into the holding company at the centre, taking down the entire global financial system.

Am I exaggerating here? Well, if Governor Stein and his central banking colleagues in the US, at the BIS and around the world are to be believed, we shouldn’t really worry because, while capital regulation didn’t prevent 2008, liquidity regulation will prevent the scenario described above. All that needs to happen is for the regulators to set the liquidity requirements at the right level and, financial crises will be a thing of the past: never mind that setting interest rates and setting capital requirements didn’t work out so well. Setting liquidity requirements is the silver bullet that will do the trick.

Sarcasm aside, it should be clear that all that is happening here is that the regulators are expanding their role yet again, thereby further shrinking the role that the markets can play in allocating savings, capital and liquidity from where they are relatively inefficiently utilized to where they are relatively more so. This concept of free market allocation of capital is a key characteristic of a theoretical economic system known as ‘capitalism’. But capitalism cannot function properly where capital flows are severely distorted by regulators. Resources will be chronically misallocated, resulting in a low or possibly even negative potential rate of economic growth.

The regulators don’t see it that way of course. Everywhere they look they see market failure. And because Governor Stein and his fellow regulators take this market failure as a given, rather than seeking to understand properly how past regulatory actions have severely distorted perceptions of risk and encouraged moral hazard, they are naturally drawn to regulatory ‘solutions’ that are really just plagiarised copies of an old playbook. What is that definition of insanity again, about doing the same thing over and over but expecting different results?

5) … Some be of pathological altruism and others be of pathological confrontation. 

Liberal economists be those of pathological alturism, and those of patholical confrontation be the psychopaths, that is the antisocial ones.  Barbara Oakley, is Associate Professor in the School of Engineering and Computer Science at Oakland University, and Author of Pathological altruismCold blooded kindness …  Evil genes: Why Rome fell, Hitler rose, Enron failed, and My Sister stole my Mother’s boyfriend.  Special Hat Tip To Robert Wenzel of Economic Policy Journal. 

6) … News of the Global Security State

Mike Mish Shedlock relates New York Times op-ed contributors Jennifer Stisa Granick and Christopher Jon Sprigman make the case that the NSA Actions are both illegal and unconstitutional in their article The Criminal NSA

Mike Mish Shedlock writes Don’t worry it’s only “Alegal“.  Inquiring minds just may be interested in the Meaning of Alegal.  According to the Urban Dictionary … An unambiguously wrong, disruptive and often deliberately committed act for which there is not yet a specific law making that act expressly illegal. (See Extralegal) Financial and white collar crimes, such as offshore banking, misrepresenting the value of investments and temporarily selling ‘junk’ assets to create cashflow are prime examples of “a”legal activities. Alegality is a corollary of the distinction between amoral and imoral reasoning as applied to legality.

Broker#1: We’re putting together a portfolio of failing investments so we can sell it investors then short against it and make a killing … Broker#2: Isn’t that illegal? … Broker#1: Nope, just alegal… Now lets get some lattes.

Mish Definition of Alegal …  A blatantly illegal action conducted with immunity, because perpetraitors understand they will never be prosecuted or held accountable in any way

7) … Banks of all types will be integrated with the government and be known as the “Gov Banks”.

Robert Wenzel reports The nudge that will force banks to put more money Into Treasury Securities.  The Federal Reserve is out with a release today, (The strong capital positions framework ruling of July 2, 2013), announcing that it on Tuesday approved a final rule to help ensure banks maintain strong capital positions that will enable them to continue lending to creditworthy households and businesses even after unforeseen losses and during severe economic downturns […]

“This framework requires banking organizations to hold more and higher quality capital, which acts as a financial cushion to absorb losses, while reducing the incentive for firms to take excessive risks,” Chairman Ben Bernanke said. “With these revisions to our capital rules, banking organizations will be better able to withstand periods of financial stress, thus contributing to the overall health of the U.S. economy.”

Translation: The rules will require banks to purchase more government securities, rather than make loans to the private sector. The nudge is in.

In a May 1 report, Treasury Borrowing Advisory Committee said  banks, over time, will need to buy as much as $5.7 trillion in “safe” assets including government bonds by 2020 to comply with the

2010 Dodd-Frank Act in the U.S., and capital standards set by the Bank for International Settlements in Basel, Switzerlandt.

The Federal Reserve’s strong capital positions framework ruling of July 2, 2013, is diktat in its rawest form. The US central bank ruling for capital adequacy consisting of Federal Government Debt, SHY, IEF, TLT, is a form of diktat money, that replaces fiat money.  Furthermore, today’s diktat, evidences an integration between community banks and government, where community banks will be known as “Government Banks” or “Gov Banks” for short.  The banks will be part and parcel of government; their purpose will not be lending as it has been known, but rather check cashing. 

An inquiring mind asks, will gold stored in the bank’s vault, constitute “higher quality capital” mentioned in the Federal Reserve Board capital framework rule?  

When the Bretton Woods system, synonymous with the Milton Friedman Free To Choose floating currency system, really gives way, America’s Dollar Empire, that is the US Dollar Hegemonic Empire, and its globe-spanning archipelago of mililtary bases, will collapse, and the Ten Toed Kingdom of Regional Governance of Daniel 2:25-45, will emerge, where ten regional zones of increasing iron diktat will emerge out of today’s clay democracy. The additional bible prophecy of Revelation 13:1-4 presents the ten zones of regional governance, as ten horns on a beast, that also has seven heads, suggesting totalitarian collectivism. The seven heads symbolize mankind’s seven institutions: 1) Education, 2) Banking, Finance, Commerce and Trade, 3) Body Politic, 4) Military, 5) Religion, 6) Media, 7) Science and Technology.

 

The jump on the Interest Rate on the US Ten Year Note, ^TNX, to 2.01% on May 24, 2013, constituted an “extinction event”, that is a cataclysm, which literally destroyed the investment choice offered by bankers as the way of life, and terminated the paradigm of Liberalism.  Jesus Christ is operating at the helm of the Economy of God, Ephesians 1:10, and has pivoting the world into the paradigm of Authoritarianism, where the diktat of nannycrats is the now the way of life.  Fiat money died, and diktat money has been coming to life.

Please consider the corollaries from the Dispensation Economics Manifest  … https://theyenguy.wordpress.com/about/ … that flows from the biblical revelation that Jesus Christ, is operating as steward in dispensation, that is the household management plan of God to both complete and fulfill all things in every age, epoch, era and time period.

Liberalism’s Banker regime (which was based upon democratic nation states) had a policy of investment choice. The dynamo was one monetary interventionism, consisting of POMO, Quantitative Easing, Central Bank Interest Rate Reductions, Kuroda Abenomics, and Global ZIRP, which powered up corporate profit and global growth …  and came with credit schemes, such as free trade agreements, financial deregulation, leveraged buyouts, nation investment, currency carry trade investing, securitization of debt, financialization of stocks and ETFs, and dollarization … where Milton Friedman’s Free To Choose concept of floating currencies and abandonment of the gold standard, established the rule underlying all investing, providing for the fiat money system.

Authoritarianism’s Beast regime (is based upon statist regional governance) has a policy of diktat. The dynamo is one totalitarian collectivism consisting of public private partnerships for oversight of the factors of production, banking, commerce and trade, which powers up regional security, stability and sustainability … and comes with debt servitude schemes, such as regional framework agreements, bank deposits bailins, new taxes, privatizations, capital controls, central bank rulings for capital adequacy consisting of Federal Government debt, and austerity measures … where Nannycrats establish the rule underlying all diktat, providing for the diktat money system.

Despite this week’s trade lower in Gold, $GOLD, to $1,211, please consider that possession of gold bullion and the mandate of diktat are the only two forms of sovereign wealth in the age of diktat.

8) … Can legislation mandate or foster virtuous conduct and even a virtuous character?

Dr. Worden writes China: Mandating the virtue of filial piety by law The founders of the United States, most notably Thomas Jefferson, John Adams, and Ben Franklin, held that for a republic to long endure, its citizenry must be virtuous and of a minimum education. Public education would be established, such that the common man could render a reasoned judgment at the ballot box. The dictum that the popular sovereign (i.e., the electorate) should be broadly educated resulted in law and medical schools in the U.S. requiring entering students to have a bachelor degree in another school before beginning the bachelor’s degree in the professional school. In short, public policy is an effective means of providing a people with the opportunity to gain an education, which at least in theory enhances the wisdom of a self-governing people.

Virtue is another story. Law seems ill-equipped to form a virtuous people. It is one thing to outlaw vice in its outward conduct; how can legislation instill virtue within a soul?  Mandating virtuous conduct, such as in Massachusetts’ “Good Samaritan” law, may be possible where the conduct is in public and thus readily enforceable. Virtue within the home is far more difficult for the law to reach and thus foster. Even vice behind closed doors, such as incest as well as physical and emotional abuse more generally, is difficult for police to catch. To an extent, property rights enable such vice and allow people the option of not being virtuous in a family context.  Yet in countries in which an authoritarian state trumps even property rights, the question becomes whether legislation is the sort of thing that can foster or mandate virtuous conduct and even a virtuous character.[i]

On July 1, 2013, the Government of China passed the Protection of the Rights and Interests of Elderly People law.

In contrast, virtue interacts with the idiosyncratic nature of the human psyche to form a unique moral character, which the person then applied to particular social situations. Filial piety in practice might mean one thing to you and something else to me even if we agree on the internal essence of the virtue. Furthermore, how we choose to express the virtue externally involves our own particular histories and situations. You might be obligated morally to visit your parents, while I face a psychological and moral obligation to avoid mine. Law is not such a sufficiently fine-tuned instrument to accommodate both of us, even as we share the same virtue.

Given the nature of human nature, law is both necessary and limited in its capacity. Even in the case of an autocratic state such as in China, the law can only do so much in touching a citizen’s interior life—the life of the soul.  Instead of having issued particular requirements to foster the virtue of filial piety in society, the Chinese government could alternatively have put resources into helping the Chinese adults having living parents assess how to apply the virtue to their particular situations rather than determine one size to fit all.

9) … Trains carrrying rail cars full of oil to be sent through Bellingham Washinton for refining, and then the oil is exported to Asia.

Nature economist Elaine Meinel Supkis writes Oil Train Blows Up Lac-Megnatic Quebec.  A train with lots of oil cars was heading to the US from energy export power, Canada when it exploded in the center of a small city, killing probably over 100 people:  60 reported missing as runaway Canada oil train explosion forces town evacuation (VIDEO) — RT News

The train “somehow got released,” and had no conductor on board, according to the rail company. The convoy of crude oil left the station of its own accord during a shift change in Nantes, west of the affected region. “We’re not sure what happened, but the engineer did everything by the book. He had parked the train and was waiting for his relief,” Montreal, Maine and Atlantic Railway, Inc Vice President Joseph McGonigle said on Saturday.

John Stark of the Bellingham Herald reports Whatcom refineries gear up for crude oil via rail. BP Cherry Point refinery is building a huge rail loop south of Grandview Road to handle crude oil shipments from North Dakota, and the Phillips 66 Ferndale refinery hopes to start building its own crude oil rail terminal later this year.

In regulatory filings with Whatcom County, the oil companies say the projects will help them diversify their sources of supply. Phillips notes that Alaskan oil production is declining, and there are no pipelines capable of bringing large volumes of North American crude to this area.

BP’s project includes a 10,200-foot-long rail loop – almost two miles. BP told county regulators the refinery expects to handle a maximum of one trainload of crude oil per day. In an email, BP spokesman Bill Kidd said the project would be complete late 2013 or early 2014.BP once planned to build a large natural gas-fired generating plant on the same site, and obtained permits to build it. Corporate officials eventually decided not to proceed with that project, but some of the environmental groundwork done for the generating plant helped to clear the way for the rail loop: New wetlands had been installed north of Grandview Road to make up for wetlands that would have been filled for the generating plant, so no new wetlands had to be created for the rail loop.

The Phillips 66 project would be located north of Slater Road and west of Lake Terrell Road, at the end of the existing BNSF Railway Co. spur that serves the two Whatcom County refineries as well as the Alcoa Intalco Works aluminum smelter. Among other things, Phillips 66 plans to build a 7,000-foot siding to park empty oil trains waiting to be dispatched back to the oilfields.

Phillips reported to Whatcom County that it expects to handle one oil train every two days, on average.

The trains are made up of 100 or more tank cars, Phillips reports, with total train lengths of more than one mile. Those trains will travel to and from the refineries on the BNSF line through Bellingham and Ferndale.

Phillips spokesman Jeff Callender said his company is still completing the permitting process with local, state and federal agencies, but hopes to begin construction by the end of this summer. Once the rail terminal is done, Phillips could meet as much as 30 percent of its 100,000-barrel per day demand with rail shipments.

That would eliminate the need for one tanker per week on Puget Sound, Callender said.

Frank Holmes, spokesman for Western States Petroleum Association, noted that oil production from Alaska has been the traditional mainstay for Washington refineries, but that production is falling. At its peak, Alaska produced about 2 million barrels a day, but that has declined to about 500,000 barrels a day. At the same time, the use of fracking technology has generated a boom in North Dakota’s Bakken formation, with production there now estimated at 790,000 barrels a day.

But there are no pipelines to move that oil west.

“Getting that crude to our refineries here in Washington state necessitates rail,” Holmes said.

To the south, the Tesoro refinery in Anacortes is already taking delivery of Bakken crude, and the Shell refinery in Anacortes has announced plans to do so.

While trainloads of crude oil pose some spill hazards, Holmes observed that every form of oil transport proposes risks. Eric de Place, policy director at Sightline Institute in Seattle, said that is true. “I don’t want to be alarmist, because oil spills happen on vessels and they happen on pipelines also,” de Place said.

But de Place said environmentalists and public officials should pay more attention to the sudden boom in crude oil shipments by rail. In a recent report he authored, de Place said that if all existing and planned petroleum rail terminals were built and operated at full capacity, they would put an estimated 20 mile-long trainloads of crude oil per day on the Northwest’s railway system. De Place argues that regulators should be looking at the combined impact those trains would have.

He is also concerned that Northwest ports could eventually be used to export North Dakota crude that would be carried to the coast by rail. Under current law, U.S. crude oil cannot be exported, but the law could be changed. And current law would not prohibit using U.S. ports to ship out Canadian crude oil that also could be sent south by rail.

“I don’t think people understand that it represents a pretty fundamental transition in the region’s energy economy,” de Place said.

The Bakken oil boom is having other local reverberations: Some Whatcom County people have moved to North Dakota to get their share of the boom.

Kelly Pugh, a Lynden High School graduate, made a living on local construction projects before the real estate boom collapsed. Now he lives in Williston, N.D., making good money working for Baker Hughes Inc., a major oilfield services company. Pugh said he knows a number of Whatcom Countians willing to put up with the long winters and hot, sometimes stormy summers in exchange for a steady income. “I don’t honestly know that anybody wants to be here,” he said. “We’d all rather be home, but we can’t say no to the money.”

10) … With corporations having debt owing to foreigners, a lack of foreign currency exchange imperils the nation of India.

Ashish Kumar writes in India Study Channel The dangerous decline of rupee and the worsening economic crisis. Despite the record weakness of rupee, export has not augmented since last two years. The reason of this is not the worldwide slow down. In fact, the increase in investment cost of production has broken the spine of competition in export. The weak rupee, ICN, inflation and pricey credit have all played together the role in increasing investment cost of production. Even when the rampant burgeoning demand in global market, our country’s exporters are falling behind the nations like Thailand, South Africa, and Indonesia even in traditional areas like gems, clothes, engineering etc. The October of 2012 was very decisive when dollar had started the journey ahead of 53 rupees. By then, the cleft of safe vault of foreign exchange reserve had opened up fully. The difference of deficit of current account touched 6.7 % in proportion to GDP, which was 5.6 % during the crisis of 1991 that should have been 3 % in idea condition. Due to the news circulation of dollar reserve of country left only for a period of 7 month’s import, strong instability in rupee set in because, now the strength of Indian currency is not dependent on export or export or investments but on the incoming and withdrawal of dollar in share market.

Reasons for fall of India’s stock market, INP, and SCIN, Foreign investors had descended down in Indian market with the money that was released in market by the Federal Reserve to deal with depression. Now with the return of growth in America, this flow is certain to stop. Hence, from the fresh hints of Federal Reserve, the financial markets are falling and rupee is going down the pit. Its effects are on every emerging market. However, other countries have sufficient foreign exchange reserve whereas India has this at the minimal mark compared to other equivalent nations. Foreign debt has burgeoned. The monetary reserve is worth paying 78 % debt liability. Fundamental economic indicators are giving off weak signals and over 50 big main companies are burdened with foreign debt that would increase their investment cost and squeeze consumers to make up enhanced cost of their own investments. Therefore, Indian currencies among emerging markets ha fallen steeply biting dust.

It would be better had we learnt to live with the tortures of a weak rupee, because our economy has set out on the circuitous long journey depending on import in company of weak nation’s currency.                

11) … Summary financial comment

Jesus Christ, operating at the helm of the Economy of God, Ephesians 1:10, terminated Liberalism, and its Banker regime, by enabling the bond vigilantes to call the Interest Rate on the US Ten Year Note, ^TNX, higher to 2.01%, on May 24, 2013. This “negative key reversal”, that is this “extinction event”, killed the Creature from Jekyll Island, that is the US Fed.  God’s Son did what Ron Paul could not do; he ended the US Fed. 

And now, continuing on, Jesus Christ buried Liberalism, putting its Milton Freidman Free To Choose Floating Currency System, in the grave, on July 5, 2013, by first enabling the bond traders to call the Interest Rate on the US Ten Year Note, ^TNX, higher to 2.72%; of note, the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, steepend sharply, as is seen in the Steepner ETN, STPP, steepening, better said, blasting vertically higher; and secondly by enabling the currency traders to call the US Dollar, $USD, higher to  84.71, and to sell invididual currencies; those sinking included the Indian Rupe, ICN, -1.2%, Emerging Market currencies, CEW, -1.4%, the Swedish Krona, -FXS, 1.5%, the Euro, FXE, -1.5%, and the British Pound Sterling, FXB -2.4%. 

Friday July 5, 2013, was Black Friday for credit, as the bond vigilantes conducted ongoing sluagher in the credit markets.  And Friday July 5, 2013, was Black Friday for currencies worldwide as the currency traders continued their successful currency war of competitive currency devaluation on the world central banks.

Marc to Market writes in Zero Hedge The Dollar Index made new three year highs before the weekend and after the employment data (and has been rising from an April 2011 low of 73).  Although it is flirting with the top of its Bollinger Band, there is no compelling sign that the move is exhausted.  It has rallied over 5% off the low on June 19, when it recorded a key upside reversal.  Our next target is the downtrend line drawn off 2009 and 2010 highs and comes in near 86.00. This environment is not good for the dollar-bloc, which had been the market’s darlings for much of the post-Lehman period.  Both the Canadian and Australian dollar recorded new lows for the year last week and the adjustment is not over.

Arabian Money writes Upward pressure on the US dollar is an extremely serious problem for economic recovery going forward.  Step forward what could very soon be the most overvalued currency in the world. That makes US manufactured goods more expensive overseas, and it means that profits from the subsidiaries of US multinationals are lower when translated back into greenbacks.

Welcome to the mad world of competitive devaluations. Talk that the Fed might be thinking about winding up its QE money printing hardly helps. Higher interest rates would attract even higher inflows into the dollar. Still bond yields have been rising anyway. The bond market is starting to crack up.

For investors fleeing the currencies of depreciating nations this becomes a self-fulfilling prophesy on a mammoth scale. As they shift into the US dollar so the currencies they think are going to fall just have to fall because they are being sold. Besides that is what the central banks running the yen, pound and

euro want anyhow.

Their mad plan is to export their own economic troubles to the United States through currency devaluation and yet at the same time imagine that the US economic recovery will somehow drag the whole world out of its economic depression. No matter that China is also slowing down right now, partly because of its links with the increasingly overvalued US dollar.

How does this situation resolve itself? Badly is the answer. At some point the US bond market, the largest financial market in the world, has to crash under the strain. The Fed has certainly painted itself into a policy corner that requires far more imagination than we can conjure to think of a solution.

Perhaps some of our outstandingly brilliant readers could offer an answer. ArabianMoney can’t solve it, so we think a massive financial crash and rush into precious metals is the final phase of the crisis before a global reset and a new gold-backed currency is issued. That’s a financial crisis much bigger than anything we have seen to date. Politicians and central bankers will really have to get their act together then or we really are all doomed!

I relate that going into July Earnings Season Reporting, World Stocks, VT, Nation Investment, EFA, Small Cap Nation Investment, EFA, Global Industrial Production Investment, FXR, and Sector Investment with those which have seen the least investment derisking, are at great risk for a significant  sell off; these include

Biotechnology, IBB, seen in this Finviz Screener

Semiconductor, XSD, seen in this Finviz Screener

Small Cap Value, RZV, seen in this Finviz Screener

Retail, XRT, seen in this Finviz Screener

and Internet Retail, FDN, and its stocks, AMZN, PCLN, and GOOG, these being the short selling opportunity of a lifetime, as the the global credit carry trade is over through finished and done.

Benson te relates Given the Fed’s accommodative policies, a financial asset boom represents symptom an inflationary boom. Such boom appears to have percolated into the real economy which has been reflected via the ongoing recovery in commercial and industrial loans which approaches the 2008 highs  [3].  Consumer credit has also zoomed beyond 2008 highs [4]. This means that the pressure for higher has been partly a product of greater demand for credit. But treasury yields have been rising since July 2012. Treasury yields have been rising despite the monetary policies designed to suppress interest rates such as the US Federal Reserve’s unlimited QE in September 2012, Kuroda’s Abenomics in April 2013 and the ECB’s interest rate cut last May.

I comment that the world central banks’ global ZIRP monetary policies have crossed the Rubicon of sound monetary policy have crossed the Rubicon of sound monetary policy and have made “money good” investments bad, first with Emerging Markets, EEM, such as Peru, EPU, Brazil, EWZ, EWZS, and India, INP, SCIN,  and then with interest rate sensitive sectors, specifically Utility Stocks, XLU, DBU,  Real Estate, IYR, and REITS, RWR.

Benson te continues, The spike in US Treasury yields has broad based implications. Treasury yields, particularly the 10 year note [5], functions as important benchmark which underpins the interest rates of US credit markets such as fixed mortgages and many longer term bonds.

 

Rising treasury yields means higher interest rates for US credit markets.  Treasury yields also serves as the fundamental financial market guidepost, via yield spreads [6], towards measuring “potential investment opportunities” such as international interest rate “carry trade” arbitrages.

Higher interest rates translate to higher costs of servicing debt for interest rate sensitive global bond and loan markets. Theoretically, 1% increase in the $175 trillion bond and loan markets may mean $1.75 trillion worth of additional interest rate payments. The higher the interest rate, the bigger the debt burden.

Moreover, sharply higher UST yields will likely reconfigure ‘yield spreads’ drastically on a global scale to correspondingly reflect on the actions of the bond markets of the US and the other major developed economies.

Such adjustments may exert amplified volatilities on many global financial markets including the Philippines.

For instance, soaring US bond yields have already been exerting selling strains on the Philippine bond markets as I have been predicting [8].   Philippine 10 year bond yields [9] jumped 35 bps on Friday or 13 bps from a week ago.

And no matter how local officials earnestly proclaim of their intent or goal to preserve the low interest rate environment [10], a sustained rise in local bond yields will eventually compel policymakers to either fight bond vigilantes with a domestic version of bond buying program which amplifies risks of price inflation (which also implies of eventual higher interest rates), or allow policies to reflect on bond market actions.

Worst, a sustained rise in international bond yields, which reduces interest rate arbitrages or carry trades, may exacerbate foreign fund outflows. Such would prompt domestic central banks of emerging market economies, such as the Philippines, to use foreign currency reserves or Gross International Reserves (GIR) to defend their respective currencies; in the case of Philippines, the Peso.

‘Record’ surpluses may be headed for zero bound or even become a deficit depending on the speed, degree and intensity of the unfolding volatilities in the global bond markets.

Yet any delusion that the yield spreads between US and Philippine bonds should narrow towards parity, which would imply of the equivalence of creditworthiness of the largest economy of the world with that of an emerging market, will be met with harsh reality which a tight money environment will

handily reveal.

The new reality from higher bond yields in developed economies are most likely to get reflected on “yield spreads” relative to emerging markets via a similar rise in yields. Yet many banks and financial institutions around the world are proportionally vulnerable to losses based on variability of interest rate risk exposures particularly via fixed-rate lending funded that are funded by variable-rate deposits. Importantly, the balance sheets of public and private financial institutions are highly vulnerable to heavy losses as bond yields rise.

As the Economist observed [11], The immediate threat to banks is a fall in the market value of assets that banks hold. As yields of government bonds and other fixed-income securities rise, their prices fall. Because the amounts of outstanding debt are so large, the effects can be big. In its latest annual report the Bank for International Settlements, the Basel-based bank for central banks, reckons that a hypothetical three-percentage-point increase in yields across all bond maturities could result in losses to all holders of government bonds equivalent to 15-35% of GDP in countries such as France, Italy, Japan and Britain.

What has been categorized as “risk free” now metastasizes into a potential epicenter of a global crisis.

It would be foolish or naïve to shrug at or dismiss the prospects of losses to the tune of 15-35% of GDP. These are not miniscule figures, and my guess is that they are likely to be conservative as these figures seem focused only on bond market losses.

While a sustained increase in the price of credit should translate to eventually lesser demand for credit, as the cost of capital rises that serves to restrict or limit marginal capital or the viability or profitability of projects, what is more worrisome is that “because the amounts of outstanding debt are so large” or where formerly unprofitable projects became seemingly feasible due high debts acquired from the collective credit easing policies by global central banks, the greater risks would be the torrent of margin calls, redemptions, liquidations, defaults, foreclosures, bankruptcies and debt deflation.

And such losses will apply not only to the private sector but to governments as well.

I pointed out last week of a report indicating that many central banks has been hurriedly offloading “record amount of US debt”. As of April 2013, according to US treasury data [12], total foreign official holders of US Treasury papers, led by China and Japan was $5.671 trillion.

This means that the $5.671 trillion foreign official holders (mostly central banks and sovereign funds) of USTs have already been enduring stiff losses. This is likely to encourage or prompt for more selling in order to stem the hemorrhage. I would suspect that the same forces have played a big role in this week’s UST yield surge.

Additionally, the propensity to defend domestic currencies from the re-pricing of risk assets via dramatic adjustments in yield spreads means that the gargantuan pile up of international reserves are likely to get drained for as long as the rout in the global bond markets continues.

I conclude, that beginning in May 2013, Jesus Christ, as steward, acting in the administration plan of God, for the fullness and completion of every age, dispensed debt deflation to destroy Liberalism’s way of life, by first destroying credit, AGG, and second by destroying Major World Currencies, DBV, as well as Emerging Market Currencies, CEW, terminating peoples trust in the elected officials, and world central bank monetary policies of investment choice and their credit schemes, such as, free trade agreements, financial deregulation, leveraged buyouts, nation investment, currency carry trade investing, securitization of debt, financialization of stocks and ETFs, and Forward Guidance. 

Tyler Durden posts Monty Pelerin’s Economic Noise article You are in the ponzi scheme whether you realize it or not.  The reasons for continuing to participate in stock markets are discussed in this video

from Gordon T. Long and John Rubino. It all comes down to liquidity (and little else).

The liquidity fraud is well advanced and likely will continue. This worldwide Ponzi scheme, engineered by governments, provides massive risks and opportunities. For those who don’t understand what is occurring, there is much to be gained from this presentation.

Mr. Rubino describes the problem the Fed’s liquidity has created. Bubbles are re-inflating just as they did prior to the 2008 collapse. Why shouldn’t they? The exact same scam is being perpetrated by government.  Another collapse will eventually occur, but its timing and form can only be speculated.

Rubino does a good job of explaining Ludwig von Mises’  ”crack-up boom” which will ultimately destroy fiat currencies. That end leads to extremely high, probably hyper, inflation. The pieces are already in place for this outcome. All that has to happen is for banks to begin normal lending or for people to understand what is happening (or going to happen) to the value of currency. Something will ignite the timber.

Charles Ponzi and Bernie Madoff had to lure marks into their scams. People joined them by choice. The Ponzi scheme operated by governments is mandatory. You are in it whether you want to be or not. You are in it whether you realize it or not. The only issue is to decide is what the best way is to play this Ponzi scheme. Long and Rubino discuss your options.

EU Observer writes Portugal and Greece highlight eurozone fragility.  Soon out of the PIGS, that is Portugal, Italy, Greece, and Spain, banking and nation state insolvency, Jesus Christ is going to cause a stroke to one of mankind’s seven institutions, specifically, the head of Finance, Commerce, and Trade. This is known as Financial Apocalypse, that is a global credit bust and financial system breakdown, as foretold by John the Revelator in Revelation 13:3-4.  Yet surprisingly, economic capability will recover, this will come through Regionalism, replacing Crony Capitalism, European Socialism, and Greek Socialism, as well as Russian Communism and Chinese Communism, as leaders meet in summits to renounce national sovereignty, and announce pooled sovereignty, this being seen in bible prophecy of Revelation 13:1-4.     

Monetization of debt, was a factor in stimulating global economic growth; now with the world central banks unable to monetize debt, the large sovereign debt loads, seen in the chart of World Treasuries,  BWX, is no longer sustainable.  And with increasing inability to sell debt, fiscal spending will be nipped in the bud, especially for local municipalities, MUB.  The very nature of governance will change over night.

With Liberalism, both terminated and buried, people will come to trust in Authoritarianism’s regional governance, and economic policies of diktat and their debt servitude schemes, such as, regional framework agreements, bank deposits bailins, new taxes, privatizations, capital controls, and austerity measures.

Libertarians and Austrian Economists abhorred Liberalism’s Interventionism; they will abhorre even more Authoritarianism’s Regionalism.