All Forms Of Fiat Money Die On The Rise Of The Interest Rate On The US Ten Year Note … Liberalism’s Sovereignty of Democratic Nation States And Its Seigniorage of Credit And Currency Carry Trades Is Failing … Authoritarianism’s Sovereignty of Regionalism And The Seigniorage Of Ditkat Is Rising To Rule The World

Financial Market Report for the week ending August 17, 2013

 

1) … In this week’s financial market trading

 

On Monday, August 12, 2013, The Interest Rate on the US Ten Year Note, ^TNX, rose to 2.61%, causing Aggregate Credit, AGG, to trade lower.

 

Energy Partnerships, AMJ, seen in this Finviz Screener traded lower 1.0% lower. Tesla, TSLA, led the Automobile sector, CARZ, lower.

 

Silver Miners, SSRI, 10.2%, SILJ, 7.6%, SIL, 6.2%, as Silver, SLV, rose 4.4%  Gold Miners, GDXJ, 8.7%, GDX, 5.7%, as Gold, GLD, rose 1.8%.  China Financials, CHIX, rose, taking China, YAO, higher.

 

The US Dollar, USD, rose 0.4% from the edge of a head and shoulders pattern. I expect the US Dollar, $USD, to rise to about 84, before it once again falls through its broadening top chart pattern, seen in Corey Rosenbloom article August trendlines for the US Dollar Index.  It’s as Street Authority relates, when you see a broadening top, the market will eventually drop.  A higher dollar is not conducive with rising stocks, I believe that the seven week long rally in Nation Investment, EFA, Small Cap Nation Investment, IFSM, World Stocks, VT, and Global Producers, FXR, is over. With a stronger US Dollar, look for the Japanese Yen, FXY, to now trade lower; and look for significant deleveraging out of stocks once the EUR/JPY starts to trade lower.

 

Bloomberg reports Indian Banks to drop on record yield inversion. India’s banking stocks may extend their 26% plunge since mid-May as short-term bond yields exceed long-term rates for the longest period since 2008. The inversion of the bond gauge since May 22 is also the steepest since 2001, when Bloomberg began compiling the data. If the pattern from five years ago repeats, the share index will extend its retreat from the 2013 peak even after the yield curve’s inversion ends.

 

Daily Ticker repoerts Cheap corn means fat wallets for consumers A 40% decrease in in corn prices is hurting farmers who saw their incomes surge to their highest levels since the 1970s.

 

Robert Wenzel of Economic Policy Journal asks If  Friedman is nothing but a Keynesian, why should he be relevant, since Keynes had already advanced that same bad economic theory, decades earlier?

 

I relate that the totality of evidence supports the concept that Friedman was a Keynesian. Milton Friedman was the very linchpin in the Economy of God. Seth Godin communicates that A linchpin is defined as one who invents, leads (regardless of title), connects others, make things happens, and create order out of chaos. They figure out what to do when there’s no rule book.

 

To answer Mr. Wenzel’s question “why should he be relevant, since Keynes had already advanced that same bad economic theory, decades earlier?”  I answer that God was looking for one man, and developed that one man, Milton Friedman, to bring forth the most destructive economic and morally corrupt economic theories that could be developed.

 

Milton Friedman build on John Maynard Keynes concepts to become God’s point man, that is God’s appointed one from eternity past, to bring forth the Free to Choose, floating currency Banker Regime of democratic nation states, for which he received the Nobel Peace Prize.

 

This economic genius encouraged President Nixon to go off the gold standard, and through inflationism create the US Dollar Hegemonic Empire that now rules the world.

 

Milton Friedman’s contribution to liberalism was that bankers, corporations, government, entrepreneurs, and citizens of democracies became the legislators of economic value and the legislators of economic life.

 

Furthermore, Milton Friedman was the Father of liberalism’s policy of investment choice, as well as the Father of its schemes of currency carry trade investing and debt trade investing.

 

Without Milton Friedman, and the Speculative Leveraged Investment Community, consisting of Investment Bankers, KCE, such as JPMorgan, JPM, the Stock Brokers, such as Etrade, ETFC, and Asset Managers, such as Blackrock, BLK, and WisdomTree, WETF, investors could never have profited from Nation Investment, EFA, and Small Cap Nation Investment, IFSM, such the US VTI, IWM, its banks, BAC, and RF, Ireland, EIRL, and its bank IRE, or the UK, EWU,  EWUS, and its banks,  LYG, and RBS, Global Producer Investment, FXR, such as International Paper, IP, Small Cap Pure Value Investing, RZV, such as Pacific Sunware, PSUN, and Investing in Vice Stocks, with Fidelity Investments, VICEX, mutual fund.

 

May God be praised, for it has been Jesus Christ acting in the Economy of God, Ephesians 1:10, developing the most moral hazard based and the most monetary inflationary based economic theories, to build Crony Capitalism, European Socialism, and Greek Socialism, to blow the greatest false, degenerate, and oppressive, prosperity bubble possible, termed the Global Government Finance Bubble by Doug Noland.  

 

Jesus Christ acting in dispensation, which is in the household administration plan of economics and politics, Ephesians 1:10, fulfilled and completed Liberalism by manifesting Peak Nation Investment, EFA, and Peak Small Cap Nation Investment, IFSM, August 9, 2013.  Yahoo Finance chart shows that the nation of Ireland, EIRL, has been a Liberalism investment superstar, this is seen in its Finviz Chart, which shows that it provided a 57% return over the last year.

 

Please consider reading the Dispensation Economics Manifest for more details on the Economy of God, and the ideas of a Dispensationalist, on Dispensationalism.

 

Another Austrian Economist, Mike Mish Shedlock writes  “Hope is an illusion provided by economists who think Greece should stay committed to the Euro”.  

 

I reply, I’m a dispensationalist economist, which is one who studies, analyses, and presents the Economy of God, presented in Ephesians 1:10, that is the household operation of all things, spiritual, monetary, political, ethical, and virtuous by Jesus Christ. His dispensation, that is stewardship, assures the fulfillment of all things, completing every age.  

 

Greek socialism is one of the most anticompetitive forms of economics ever developed, and it has been well known for decades that its oligarchs have abandoned the country, that its people simply do not pay taxes, and when forced to do so, they appeal and get their assessments reduced to thirty percent of the amount owing, and that it is a stunning example of clientelism, which the Economist Magazine describes as pork and patronage.  Only disaster can come out of such a state of affairs.

 

In 95 AD, angels gave the Apostle John a dream, while he was living in exile on the Isle of Patmos, entitled the Revelation of Jesus Christ, which serves as the basis for the reality that the sovereign and banking insolvency of Greece, and the other Mediterranean Sea nations, will the beachead for the rise of Authoritarianism’s Beast regime of regional governance and totalitarian collectivism, to replace Liberalism’s Banker regime of Free To Choose floating currency nation state, global producer and financialized product investment, Revelation 13:1-4  

 

Wikipedia relates that this scroll, with seven seals, is presented and it is declared that the Lion of the tribe of Judah, from the “Root of David,” is the only one worthy to open this scroll, Revelation 5:1-5.

When the “Lamb having seven horns and seven eyes” took the scroll, the creatures of heaven fell down before the Lamb to give him praise, joined by myriads of angels and the creatures of the earth, Revelation 5:6-14. Seven Seals are opened, and in the First Seal, A white horse appears, whose crowned rider has a bow with which to conquer, Revelation 6:1-2.

 

With the Greek Bailout I in May 2013, the First Horseman of the Apocalypse passed the baton of sovereignty from Greece to the Troika, and from that date Greece will forever more stay committed to the Euro. As it is now, Greece is no longer a sovereign nation state and receives seigniorage aid for its fiscal spending from the Troika. Its former citizens are now residents of a region of economic governance.

 

On Tuesday, August 13, 2013, Despite a rising US Dollar, $USD, UUP, it was on a rising Euro Yen Currency trade, the EUR/JPY, to close at 130.20, (the Euro, FXE, traded lower, and the Yen, FXY, even more strongly lower), that the UK, EWU, UK Small Caps, EWUS, Italy, EWI, Ireland, EIRL, The Eurozone, EZU, and Argentina, ARGT, rose strongly, rallying Small Cap Nation Investment, IFSM, and Nation Investment, EFA, to new highs.  

 

The rally in the Eurozone ADRs, seen in this Finviz Screener, such as ALU, ICLR, TRNX, TOT, BUD, SI, and TS, gave seigniorage to Eurozone debt, as Zero Hedge reports Europe’s riskiest bonds rally most in 3 weeks to 2 year low spreads.

 

The National Bank of Greece, NBG, led Greece, GREK, lower; while Argentina Banks, BMA, GGAL, BFR, BBVA, rallied Argentina strongly higher.

 

South Korea Bank, SHG, WF, and KB, rose, taking South Korea, EWY, to a new rally high.

 

China Financials, CHIX, China Real Estate, TAO, China Industrials, CHII, and China Small Caps, ECNS, rose parabolically, taking China, YAO, vertically higher. The China Real Estate, TAO, to US Real Estate, IYR, difference seen in their combined ongoing Yahoo Finance Chart is quite stunning, as since July 1, 2013, China Real Estate has been rallying.   

 

Automobile Dealerships, PAG, SAH, ABG, KAR, AN, KMX, LAD, seen in this Finviz Screener traded to new rally highs, as did Ireland’s Cement Manufacturer, JHX, and US Drug Store, RAD.

 

Sectors trading higher included Networking, IGN, Energy Service, OIH and IEZ, on higher Oil, USO, Design Build, FLM, Gaming, BJK, and Telecom, IST.

 

Industrial, XLI, rose; but Transportation, XTN, traded lower as Regional Airlines, RJET, JBLU, ALK, ALGT, LUV, SKYW, seen in this Finviz Screener traded lower, as Zero Hedge reports Airline stocks monkey hammered on news DOJ seeks to block American-US Airways merger. Of the Great Nine ETFs, Transportation Stocks, XTN, have been the best performers over the last year; but since August 1, 2013, they have been leading the way lower, as is seen in their combined ongoing Yahoo Finance Chart.  

 

Brazil’s Bank, BSBR, BBDO, and BBD, led Brazil, EWZ, and Brazil Small Caps, EWZS, traded lower.

 

Reuters reports Zombie Banks in India. India’s banks,( IBN and HDB, seen in their combined ongoing Yahoo Finace Chart, having fallen 30% since the rise of the Interest Rate on the US Ten Year Note, ^TNX, on May 21, 2013), are starring into an abyss. Loans are soaring rapidly as the economy stalls. Meanwhile, rising bond yields are making it harder for lenders to absorb credit losses from current earnings

 

Steel, SLX, and the Metal Manufacturing Stocks, XME, have been rallying of late; they manifested bearish engulfing today, suggesting a turn lower; these include STLD, RS, NUE, CRS, GTLS, WOR, SXC, MLI, GHM, CMC, ITW, SID, MT, PKX, CLF, VALE, GSM, ZINC, SLCA, seen in this Finviz Screener.

 

Gold, GLD, traded lower, on the higher US Dollar, turning Gold Miners, GDX, GDXJ, lower. And Silver, SLV, traded unchanged. MarketWatch reports Currency wars driving new gold rush.

 

The Interest Rate on the US Ten Year Note, ^TNX, traded strongly higher to 2.71%, turning Aggregate Credit, AGG, lower, and forcing International Treasury Bonds, BWX, European Debt, EU, and the following interest rate sectors lower: Solar, TAN, Homebuilding, ITB, Energy Partnerships, AMJ, Mortgage REITS, REM, Residential REITS, REZ,  Premium REITS, KBWY, Small Cap Real Estate, ROOF, Real Estate, IYR, and Utility Stocks, XLU, seen in this Finviz Screener, lower.  

 

What Doug Noland terms the Global Government Finance Bubble has finally and totally popped, on the rise in the US Ten Year Note, from 2.59% to 2.71% on Tuesday August 13, 2013, as is seen in the charts of Aggregate Credit, AGG, World Treasury Bonds, BWX, 30 Year US Government Bonds, EDV, 10 Year US Government Notes, TLT, International Corporate Bonds, PICB, Corporate Bonds, LQD, Mortgage Backed Bonds, MBB, Emerging Market Bonds, EMB, Junk Bonds, JNK, and Ultra Junk Bonds, UJB, trading lower.  Credit broke down on Tuesday August 13, 2013, when the 30 Year US Government Bond, EDV, and the US Ten Year Note, TLT, led all of the world’s credit investments, seen in this Finviz Screener, parabolically lower.

 

Another word for credit is trust. Investors no longer trust in the world central bank’s monetary policies to support profitable investment choice, and to provide stimulus for credit and currency carry trade schemes enabling global growth and trade. Ben Bernanke’s, Haruhiko Kuroda’s and Mario Draghi’s monetary policies have crossed the Rubicon of sound monetary policy and have made “money good” investments bad.     

 

While the closed end stock fund CSQ rose, its peers, PTY, AWP, PFL, RCS, and EIM, as seen in their combined ongoing Yahoo Finance Chart traded lower, communicating that the way is now down in all financial markets.  

 

On May 24, 2013, Jesus Christ, operating at the helm of the economy of God, Ephesians 1:10, enabled the bond vigilantes to call the interest rate on the US Government Note, ^TNX, higher to 2.01%, making for an extinction event that terminated Emerging Market Investment, EEM, and Utility Stock Investment, XLU.  The rise of the interest rate on August 13 2013, to 2.71%, constituted an “apocalyptic event” that has terminated fiat money.

 

With the failure of credit on August 13, 2013, both the sovereignty of democratic nation states, (this being seen in World Treasury Bonds, BWX, collapsing in value), and the seigniorage of the world central banks, has failed. Jesus Christ, has pivoted the world’s economic and political paradigm from Liberalism to Authoritarianism.

 

From August 13, 2013, forward, regional nannycrats will set the rules for the formation of the new money, that being diktat money, which will determine everything else.

 

Diktat money is defined as the compliance required, as well as the trust that is engendered, the debt servitude that is enforced, and the austerity schemes that are experienced, such as heavy losses on large bank deposits via bailins, levying additional taxes, privatizations, sale of a country’s central bank’s gold reserves, fiscal councils, such as those reported on by the IMF, Case studies of fiscal councils and The functions and impact of fiscal councils, and statist public private partnerships, which oversee regional economic commerce, trade, and the factors of production, when sovereign regional leaders such as Jeroen Dijsselbloem, President of the Eurogroup, and Michel Barnier, EU Commissioner responsible for internal market and services, as well as sovereign regional sovereign bodies, such as the ECB, invoke mandates for regional security, stability, and sustainability.

 

Diktat and physical possession of gold bullion will be the only trusted forms of wealth under Authoritarianism.

 

Lance Roberts of Street Talk Live blog, asks in Zero Hedge Are we re-tracing a market peak?  I reply yes, the world has attained Peak Sovereignty, as is seen in Small Cap Nation Investment, IFSM, Nation Investment, EFA, World Producers, FXR, and Small Cap Pure Value Stocks, topping out in value. And, the world has attained Peak Seigniorage, that is Peak Moneyness, as the hoped for end game with Quantitative Easing, read money printing, was done to achieve four purposes, and has proven to be extremely successful.  

 

First, to increase the M2 Money Supply, and thereby goose the economy so much that tax reveunes would increase; this was achieved as Yahoo Finance reports US budget deficit down 37.6 percent through July.  

 

Second, to stimulate the service economy; this was achieved as Steve Slifer of Number Nomics reports ISM Nonmanufacturing remains strong. The Institute for Supply Management not only publishes an index of manufacturing activity each month, they publish one day later a survey of non-manufacturing firms — which largely consists of services.  The July index for business activity jumped 6.7 points from 51.7 to 60.4.  That sounds impressive but in June the index inexplicably fell 4.8 points which did not square with anything else we knew about the economy.  The 60.4 reading sounds more normal and roughly duplicates the high that was reached in the spring of last year, and is only a couple of points shy of the high for the cycle that was set in early 2011.  

 

Third, to create a vast reservoir of safe assets, that would preserve the US Dollar as the world’s reserve currency, whereby there could be currency carry trades and debt trades galore. It’s a well known fact that most of the assets traded out under QE are being held today in the form of “excess reserves.”  This points the way forward, as the Interest Rate on the US Ten Year Note, ^TNX, rises, and investors around the world sell out of US Ten Year Notes, TLT, banks of all types, the Too Big To Fail Banks, RWW, as well as Nasdaq Community Banks, QABA, and the Regional Banks, KRE, will be integrated into the US Federal Reserve, and be known as the Government Banks, or Gov Banks, for short. Evidence of a global selling of US Treasuries is undeway as Daniel Kruger of Bloomberg reports  “Holdings of Treasuries in China, the largest foreign lender to the U.S., fell in June for the first time in five months amid discussion by Federal Reserve officials about slowing the pace their bond purchases. China’s stake dropped by $21.5 billion in June, or 1.7%, to $1.276 trillion. The pullback by China comes as overseas holdings of Treasuries have grown $26.8 billion, or 0.5% this year, the slowest pace since a 2.8% decline in the first six months of 2006. Treasuries have lost 3.1% this year, headed for the worst performance since 2009.”

  

 

Fourth, to provide a cornucopia of moral hazard based investment choices, for the Speculative Leverage Investment Community to trade, this was achieved as is seen in the topping out of the 30 ETFs, seen in this Finviz Screener, … http://tinyurl.com/kp4aftyXIV, FDN, CARZ, PBS, IGV, IBB, RZV, PSCI, FPX, PPA, IAI, SPHB, SMH, XRT, PJP, PSP, UJB, TAN, RXI, FLM, EIRL, IYC, EUFN, RWW, ITB, FXR, IGN, BJK, PBJ, ING, with the last entry a life insurance company serving as proxy for the Life Insurance sector. If one is looking for short selling opportunities, these should be at the top of the list.   

 

Bond yields are soaring because investors fear that the debtors cannot make good and repay their loans.      

 

Zero Hedge reports US Treasury finally admits the truth: It’s all POMO. So, thanks to the US Treasury, we know that between January 2009 and April 2013, on days in which the Fed POMO was more than $5 billion, the stock market rose a total of 570 points, on days in which the POMO was less than $5 billion, the cumulative stock market gain was “only” 141 points, and when there was no POMO, the S&P gained… -51 points.

 

Ambrose Evans Pritchard of The Telegraph reports Investors euphoric as US margin debt reaches ‘danger’ levels. Fund managers are around the world are gripped by euphoria, convinced that America is in full recovery and Europe has overcome its debt crisis.

 

World Stocks, VT, are tremendously leveraged over Credit, AGG, as is seen in the chart of World Stocks, relative to Credit, AGG, VT:AGG.  The Risk Off ETN, OFF, and Volatility, XVZ, have been rising since August 5, 2013, confirming that a blow off top in the stock market has been achieved.

 

Small Cap Nation Investment, IFSM, Nation Investment, EFA, World Stocks, VT, The BRICs, EEB, Emerging Markets, EEM, European Stocks, VGK, Eurozone Stocks, EZU, US Stocks, VTI, China, YAO, Asia Excluding Japan, EEP, the Nikkei, NKY, have all topped out, as bond vigilantes have control of the bond markets, and are calling Interest Rates higher globally, and will enable currency traders to short sell Major World Currencies, DBV, such as the Euro, FXE, the Swiss Franc, FXF, the British Pound Sterling, FXB, the Swedish Krona, FXS, and the Canadian Dollar, FXC, as well as the  Emerging Market Currencies, CEW, which will result in a tremendous fall lower in the currency and credit sensitive Small Cap Pure Value Stocks, RZV, the Vice Stocks, VICEX, such as the Gaming Stocks, BJK, and Liberalism’s great carry trade nation Ireland, EIRL.  One can use this Finviz Screener of 50 Leading ETFs,  … http://tinyurl.com/lgzgur8 … to follow stock wealth trade lower.

 

Look for an upward explosion in the 200% Proshares Bear Market ETFs, such as BIS, FXP, SQQQ, SDD, EEV, EFU, SMDD, SSG, DUG, EWV, SRS, SKF, SDP, JGBS, seen in this Finviz Screener  … http://tinyurl.com/m9ovk7n  …

 

And look for an upward explosion as well as in the 300% Direxion Bear Market ETFS, EDZ, YANG, RUSS, DPK, MIDZ, ERY, TZA, SOXS, DRV, seen in this Finviz Screenerhttp://tinyurl.com/n6zkatu

 

Benson te of Prudent Investor Newsletter presents the concept that “ Shrinking US trade deficits can signify a symptom of unsustainable imbalances from the current monetary order, the US dollar standard.”

 

The US reportedly posted a substantial 22% reduction in the deficits of her trade balance owing to record exports and to a shrinking oil import bill according to the Wall Street Journal [1].

 

Shrinking US trade deficits can signify a symptom of unsustainable imbalances from the current monetary order, the US dollar standard.

 

Over 50% (right window) of the $12 trillion (left window [3]) of international debt securities has been denominated in US dollars.

 

The point of this exercise is to demonstrate of the world’s continuing dependence on the US dollar as medium of exchange and as reserve currency.

 

Yet the US dollar standard seems to operate on the principle of the Triffin Dilemma, formulated by the late Belgian American economist Robert Triffin.

 

The eponymous theory by Mr. Triffin elucidates of the economic conflict emanating from a world reserve currency particularly on meeting short term-domestic interests as against long term international objectives [4]

 

Under the Triffin dilemma, the issuing reserve currency makes it easy for a nation to consume more goods and services via an overvalued currency.

 

The same overvalued currency easily allows for financing of either budget deficits and or trade deficits, aside from having more latitude in “determining multilateral approaches to either diplomacy or military action” [5].

 

In short, a reserve currency provides the issuer the privilege of an interim “free lunch” or to quote the French economist Jacques Rueff “deficit without tears” [6]                        

 

One of the other side effects of the Triffin dilemma has been the intense deepening of the financialization of the US economy [7].

 

Instead of producing goods, the US economy evolved towards shuffling of financial papers partly required by foreigners to recycle their dollar holdings. As one would note, the gist of expansion of financialization came as the US dollar became unhinged from the Bretton Wood System in August 1971.

 

Of course the other side effect of the Triffin dilemma has been the growing frequency of global bubble cycles as evidenced by the greater incidences of global banking crises since the Nixon Shock of 1971

 

Aside from the massive accumulation of reserve currency by foreigners that would eventually undermine the reserve currency status, a dynamic which the world seems headed for, an equally detrimental factor to a reserve currency status is the proportional devaluation that would shrink these deficits.

 

Mr. Triffin actually articulated the problems of the Bretton Woods System where the failed system seemed to have validated his thesis.

 

In a testimony before the US congress in November 1960, Mr Triffin argued that “If the United States stopped running balance of payments deficits, the international community would lose its largest source of additions to reserves. The resulting shortage of liquidity could pull the world economy into a contractionary spiral, leading to instability. [8]”

 

Given the deep reliance by global markets and global economy on the US dollar system, improving US trade deficits are likely to extrapolate to reduced liquidity in the ex-US global system. Such dynamic will only provide more muscle or ammunition for bond vigilantes, and equally, would mean a tightening of a system deeply dependent on the largesse of US dollar steroids from US authorities.

 

In the recent past, a reduction in the deficits of US trade balance coincided with strains in the global ex-US equity markets as measured by the MSCI [9] (lower pane)

 

Diminishing trade deficits here functioned as symptoms to dot.com bubble bust and to the 2008 Lehman bankruptcy. When financial markets collapsed as consequence to a bubble, international trade grinded to a near halt. This led to a substantial reduction of US trade deficits. Thus the narrowing trade balance coincided with recessions.

 

The causal flow may or could be reversed today; perhaps reduced liquidity from US exports of her currency the dollar may incite instability in the global financial markets.

 

The effect of shrinking liquidity on the global system will likewise affect US corporations. With 34% of the revenues of US S&P 500 companies coming from non-US sales [10], the adverse effect is that shrinking global liquidity will eventually land on US shores.

 

And it’s not just trade deficits that has contracted, US budget deficits have also dwindled to 4.2% of the GDP from 7.7% a year ago [11]. So this could be a one-two punch against the global markets and economy. And should the FED taper, such will exacerbate on the effects of the Triffin Paradox.

 

Will the European Central Bank, the Bank of Japan, the Bank of England and the People’s Bank of China fill in the vacuum from improving US twin deficits?

 

Or will Triffin’s ghost haunt the global financial markets?

 

Interesting times indeed.

 


[1] Wall Street Journal Oil Boom Helps to Shrink U.S. Trade Deficit by 22% August 6, 2013

 

[2] The European Central Bank THE INTERNATIONAL ROLE OF THE EURO July 2013 p.19

 

[3] The European Central Bank, op cit., p23

 

[4] Wikipedia.org Triffin dilemma

 

[5] See The Nonsense About Current Account Imbalances And Super-Sovereign Reserve Currency April 20, 2009

 

[6] Jacques Rueff, The Monetary Sin of the West, Mises.org

 

[7] Wikipedia.org Financialization

 

[8] IMF.org The Dollar Glut Money Matters: An IMF Exhibit—The Importance of Global Cooperation System in Crisis (1959-1991)

 

[9] MSCI.com World Ex-US MSCI Index Performance

 

[10] Businessinsider.com CHART: The S&P 500 Is Not The US Economy, May 10, 2013

 

[11] National Forex Calculated Risk; US Deficit is Shrinking August 10, 2013

 

On Wednesday, August 14, 2013, Yield bearing sectors such as those seen in this Finviz Screener, led World Stocks, VT, lower; these included Homebuilders, ITB, Utilities, XLU, Water Resources, PHO, Telecom, IST, and Dividend Growth, VIG. An ever increasing Interest Rate on the US Ten Year Note, ^TNX, is not conducive with sustaining or growing dividends.  Sectors trading lower included Industrial Textile Manufacturers, seen in this Finviz Screener, Apparel Manufacturers, seen in this Finviz Screener, Regional Airlines, seen in this Finviz Screener, Staffing Services, seen in this Finviz Screener, Home Improvement Store, seen in this Finviz Screener, Media Companies, PBS, seen in this Finviz Screener, Printing Companies, seen in this Finviz Screener, Internet Retail, FDN, seen in this Finviz Screener, Semiconductors, SMH, seen in this Finviz Screener, Industrial Stocks, XLI, PSCI, seen in this Finviz Screener, and Consumer Services, IYC, seen in this Finviz Screener.

Gold, GLD, rose 1.0% and Silver, SLV, 1.8%, taking Miners GDX 2.1, GDXJ, 4.5, SIL, 3.7, SILJ, 6.9, SSRI, 5.0, higher.

Corey Rosenbloom, provides an excellent chart article Quick charting August 15 internals ahead of the open showing the topping out and downturn in the S&P 500, $SPX. The Market Vectors Egypt Index ETF, EGPT, fell 3.1% as Egypt’s death toll rose to 95; the country’s interim vice president resigned and a state of emergency was imposed following political clashes in the country. Eurozone Stocks, EZU, traded slightly higher, as the EUR/JPY traded slightly lower to 130.05. The iPath
JPY/USD, JYN, traded lower. US Stocks, VTI, traded, lower, and the Nikkei, NKY, traded lower.  

Zero Hedge reports Europe returns to “growth” after record 6-Quarter long “double dip” recession; Depression continues.

 

I comment that the value of European Stocks, VGK, relative to German Bunds, BUND, are extremely overvalued, as is seen in the chart of VGK:BUND.

 

Likewise Eurozone Stocks, EZU, relative to Eurozone Debt, EU, are extremely overvalued, as is seen in the chart of EZU:EU. Mark Deen of Bloomberg reports “The bond-market calm that has descended on the euro area in the run-up to next month’s German election masks unresolved conflicts that have frustrated the region’s leaders for more than three years. Greece needs more debt relief, the International Monetary Fund says; Portugal is struggling to exit its support program; Spanish Prime Minister Mariano Rajoy is battling corruption allegations and calls to resign; France faces unrest as Socialist President Francois Hollande follows through on his promise to cut pension-system losses. ‘There is a European ability to turn down the volume on problems when elections are looming,’ said Ludovic Subran, chief economist at Euler Hermes, a Paris-based credit insurer. ‘You can feel that the tough questions have been postponed.’”

 

Zacks Investment Research reports TSS Grows Debit Processing in Ireland Expanding its debit card portfolio in Ireland, yesterday Total System Services Inc TSS, entered into a strategic alliance with KBC Bank Ireland, which is part of the Europe’s leading global financial services provider, KBC Group. KBC Bank has a history of operations of over 40 years in the fields of banking and business development. This bank is currently armed with over 700 employees across Ireland’s Dublin, Cork, Limerick, Belfast and Galway. As per the deal, Total System will now process KBC Bank’s debit card portfolio through its best-in-class TS2 platform. The partnership also complements the company’s strategy to bolster its relationship with bank’s customers as it plans to offer risk management, fraud avoidance and other support services on these cards. Overall, the alliance is expected to strengthen the card processor’s client base and payment processing network in Ireland. Moreover, the new contract should enhance Total System’s payment volumes and a number of processed transactions, thereby supporting the financials.

 

On Thursday, August 15, 2013, US Stocks, VTI, led World Stocks, VT, Nation Investment, EFA, Small Cap Nation Investment, IFSM, stock sectors and yield bearing stocks sectors lower, as the Interest Rate on the US Ten Year Note, ^TNX, rose to 2.75%, which turned Aggregate Credit, AGG, lower again, and which sent Major World Currencies, DBV, of which the US Dollar, is a component, and Emerging Market Currencies, CEW, lower. The Brazilian Real, BZF, and The US Dollar, $USD, UUP, traded lower at strong support at 81.24; while the  Swiss Franc, FXF, the British Pound Sterling, FXB, the Japanese Yen, FXY, and the Australian Dollar, FXE, traded higher.  The Euro Yen Currency Carry trade, EUR/JPY, traded only slightly lower, which helped maintain the Eurozone, EZU, loss on the day.

 

Jesus Christ acting in the Economy of God, Ephesians, pivoted the world out of Liberalism and into Authoritarianism on Thursday, August 15, 2013, by enabling the bond vigilantes to call the Interest Rate higher on the US Ten Year Note, ^TNX, to 2.75%, which destroyed the sovereignty of the Banker Milton Friedman Free To Choose Floating Currency based regime of investment choice, with its credit and carry trade schemes. The Beast Regime of diktat and its schemes of debt servitude and austerity, is rising to rule the world, out of the collapse of democratic nation state seigniorage of credit.  The world central bank’s monetary policies designed to support and stimulate global growth and trade, have exhausted.  Ben Bernanke’s and The US Fed’s Quantitative Easing, Haruhiko Kuroda’s and the Bank of Japan’s Abenomics, Mervyn King’s and the Bank of England’s Forward Guidance, have not only failed, but have turned toxic, and have made “money good” investments bad.  

 

A higher Interest Rate on the US Ten Year Note, ^TNX, has destroyed the sovereignty of democracy as is seen in World Government Treasury Debt, BWX, trading lower this week, and has destroyed the seigniorage of nation investment. Nations, EFA, trading lower included US, VTI, China Industrials, CHII, and Japan, EWJ.  Small Cap Nations, IFSM, trading lower included Egypt, EGPT, US, IWM, China, ECNS, Brazil, EWZS, India, SCIN, Greece, GREK, Philippines, EPHE, Turkey, TUR, UK, EWUS, Ireland, EIRL, Mexico, EWW, Indonesia, IDXJ, Japan, JSC.

 

Out of the collapse of democratic nation states, new regional authoritarian, political, economic, monetary, fiscal authority, is rising to rule mankind. Leaders will meet in summits to waive national sovereignty and to announce regional framework agreements, which will pool sovereignty regionally, and which will feature nannycrats and public private partnership policies of diktat, and provide the seigniorage of diktat, where moneyness will come from the word, will and way of sovereign regional leaders. Along this line of thought comes the Zero Hedge report India bans all gold coin imports, increases capital controls

 

Sectors trading lower included

XIV, -5.2

TAN, -4.5

IGN, -2.6, such as CSCO, FNSR, JNPR,

PBJ, -2.5, such as KOF, DEO, JSDA, FIZZ, CCH, MNST, PEP, COKE, DPS, CCE,

FDN, -2.4

PBS, -2.4, such as MDP, LVNTA, CMLS, JRN, NXST,

RZV, -2.3, such as UNTD, ECOL, TISI, ADUS, ABG, ANGI, ELI, MCRI, ASR, CSU, BBSI, TRAX

SMH, -2.2

XRT, -2.0, such as PSUN, KIRK, ULTA, PLCE, HSNI, JNY, GES, ANF, ROST, EXPR, COST, M,

IGV, -2.0, such as PLUS, SPSC, IMPV, ADVS, ZIXI, SPLK, TYPE, CRM, SNCR, CTRX, CNQR

IBB, -2.0

IYC, -2.0

PSCI, -2.0

 

Foreign Airlines, seen in this Finviz Screener, traded lower.

 

Consumer Recreational Goods, seen in this Finviz Screener, traded lower.

 

Real Estate Development, seen in this Finviz Screener, traded lower.

 

Educational Services, seen in this Finviz Screener, traded lower.

 

Yield bearing sectors trading lower included

KBWY, -2.8

ROOF, -2.4

REM, -2.0

REZ, -2.1

FNIO, -2.0

PSP, -1.5

VIG -1.5

XLU, -1.3

 

Financials trading lower included the following

Ireland Bank, IRE, led European Financials, EUFN, -.9

Argentina Banks, BRBR, BSBR, BMA, and GGAL, led Emerging Market Financials, EMFN, -.6

China Financials, CHIX, -.7

US Banks, BAC, and C, led Too Big To Fail Banks, RWW, -1.6

Asset Managers, seen in this Finviz Portfolio,  

Regional Banks, KRE, -1.0

Investment Bankers, KCE, -1.9

Stockbrokers, IAI, -1.7

 

Business Insider provides 46 charts that every gold bull will love.

 

Jeff Mackie of Breakout reports that Google is planning to offer its O3b Internet Service, from medium orbit satellites, in Q4 of 2013.

 

As I’ve shared with you, I live in the downtown area of Bellingham, just off skid row, that is Holly Street, in the Sea Breeze Apartments, operated by a nonprofit corporation. It’s a licentiousness part of town. I was at home late in day, I had my door open, and noticed that the hallway light came on; yet strangely I didn’t hear any knocks or any speaking; so I stepped into the doorframe and looked down the hall. There outside the door of the apartment across the way stood two divas; you know, two young hot looking women; not anything like who most of the old and disabled who live here. The first was an enforcer and overlord; she stood supporting herself with her left arm on the hallway; and she gave me a look like she wanted to kill me; I’ve seen the big men here at Sea Breeze, that is the antisocial ones, have given me this look dozens of times. The second was a harlot; when I looked at her, she looked at the door. Well, the apartment across the way is transit station where people do sex and drugs; the landlord, how I hate that term, and the police, know this, and are working to remedy the situation; the only gripe I have, is that the apartment could be rented out to some poor disabled person like myself who really would treasure the place.

 

On Friday, August 16, 2013, The Interest Rate on the US Ten Year Note, ^TNX, rose to 2.83%, a two year high, causing Aggregate Credit, AGG, to trade strongly lower. Market Watch reports Treasurys tank; 10-year yield up 75% since May.

 

Yield bearing sectors trading lower included

REZ, -2.5

KBWY, -2.2

ROOF, -1.8

XLU, -1.2

 

Sectors trading lower included

Gold Miners, GDX- .2.1, GDXJ, -1.6, traded lower on a higher price of Gold,  GLD, which closed in what may a breakout, in a questioning harami.

Metal Manufacturing, XME, -1.3

Uranium Miners, URA, -1.2

 

The EUR/JPY closed the week lower, slightly from last week’s close, at 103.01, sustaining and even enabling the Eurozone Stocks, EZU, to close the week in a questioning harmai. A number of European Nations rose to new rally highs on higher European Financials, EUFN, these included Italy, EWI, and Spain, EWP.    

 

World stocks, VT, US Stocks, VTI, Nation Investment, EFA, and Small Cap Nation Investment, traded lower from their Wednesday August 14, 2013, highs.

 

A rising Interest Rate on the US Ten Year Note, ^TNX, since May 21, 2013, to 2.01%,  has created debt deflation, that is currency deflation, striking the emerging market banks, emerging market currencies, and emerging market bonds hard. Business Standard reports Indian stocks plunge on falling rupee.  India Banks, IBN, HDB, traded lower forcing India, INP, SCIN, lower. And Brazil Banks, ITUB, BBDO, BBD, traded lower forcing Brazil, EWZ, EWZS, lower. Chile Banks, BCH, BCA, BSAC, traded lower forcing Chile, ECH, lower.  Mexico Bank BSMX traded lower, forcing Mexico, EWW, lower.

 

Liberalism’s credit scheme of Dollarization has failed as Rajesh Kumar Singh and Archana Chaudhary of Bloomberg report “Power company bonds are India’s worst performing this year as failures in fuel supply inflate coal-import bills and lengthen project delays. Dollar notes sold by electricity generators and distributors lost an average 5.1% through Aug. 12.”

 

Rogerio Jelmayer and Matthew Cowley of the WSJ report “Brazil’s government-run Banco do Brasil SA is pressing ahead with its rapid increase in lending, urged on by the government, even as the economy slows and its private-sector rivals hold back. President Dilma Rousseff and her administration have pressed government lenders including Banco do Brasil to lend more to help jump-start weak economic growth. Low unemployment, rising salaries and ample credit have fueled strong consumer demand, while industry has contracted. Some investors fear that Banco do Brasil, Latin America’s largest bank by assets, could be storing up trouble for the future. The economy is showing little sign of a strong recovery, and unemployment levels have started to lift off their recent historical lows. That could lead to more defaults on the new loans Banco do Brasil made during the slowdown.”

 

This week sectors leading lower included

Biotechnology, IBB, -3.7

Pharmaceuticals, PJP, -3.2

Consumer Discretionary, IYC, -3.1

Internet Retail, FDN, -2.9

Transportation, XTN, -2.6

Retail, XRT, -2.5;  Major US retailers posted reduced quarterly sales this week

Small Cap Pure Value, RZV, -2.3

Solar, TAN, -2.3

 

And this week yield bearing sectors trading lower included

REZ, -7.1

KBWY, -6.2

ROOF, -5.5

REM, -5.0

FNIO, -4.7

XLU, -4.0  

 

This week the chart of the S&P 500, $SPX, SPY, shows a 2.1%, trade lower.

 

The week ending August 16, 2013, saw all forms of fiat money die on the rise of the Interest Rate On The US Ten Year Note, ^TNX, to 2.83%.  Major World Currencies, DBV, Emerging Market Currencies, CEW, Aggregate Credit, AGG, Nation Investment, EFA, and Small Cap Nation Investment, IFSM,  all traded lower on Friday August 16, 2013, on the exhaustion of the world central banks’ monetary authority.  

 

Jesus Christ acting in dispensation, that is in the household administration plan of economics and politics, Ephesians 1:10, fulfilled and completed Liberalism by manifesting Peak Nation Investment, EFA, and Peak Small Cap Nation Investment, IFSM, the week ending August 16, 2013.  Yahoo Finance chart shows that the nation of Ireland, EIRL, has been a Liberalism investment superstar, this is seen in its Finviz Chart, which shows that it provided a 57% return over the last year.

 

Liberalism’s sovereignty of democratic nation states and its seigniorage of credit and currency carry trades is failing. Bible prophecy of Revelation 13:1-4, communicates that out of Mediterranean Sea nation sovereign insolvency and banking insolvency, that Authoritarianism’s sovereignty of regional governance, producing nannycrat rule, and the seigniorage of ditkat, producing totalitarian collectivism, is rising to rule the world.

 

Wall Street Economist Steve Slifer says In our opinion, the current drop is nothing more than typical stock market volatility. Finally, the spread between long-term and short-term interest rates, known as the “yield curve”, is an important indicator of future economic activity. With the 10-year currently at 2.8% and the funds rate at 0.1% the yield curve currently is 2.7%.  It is not going to slow the pace of economic activity.  We do not have to worry about a recession (or a significant growth slowdown) until the yield curve flattens sharply – which will probably not occur until the Fed actually begins to raise the funds rate in mid-2015. We will not become alarmed until the stock market declines by at least 10%, and is confirmed by alarm bells from some of these other leading economic indicators.

 

John Redwood, MP, says US rates have risen on expectations that the Fed will soon end its large Quantitative Easing programme. They have risen despite various attempts to reassure people that the stimulus will not be withdrawn prematurely, to damage recovery. When the UK withdrew or temporarily suspended its QE programme there was no such impact. Central bankers have to try to guide market expectations in the way they wish, to keep enough confidence in an economy without letting inflation race away. So far in his short time as Governor Mr Carney has been lucky, that he arrived just as the UK economy was showing good signs of revival. He was less lucky with the background for launching forward guidance. The US pushing rates up has had more impact on the UK bond markets than the Bank’s statements. It has produced the irony that the Governor’s policy was designed to keep rates down, yet the markets have pushed borrowing rates up rapidly for the government.

 

Doug Noland writes Introducing “Government Finance Quasi-Capitalism”. After much contemplation, I’ve decided it’s again appropriate to update Minsky’s “Stages of development of Capitalist finance.”

 

I’m going to call the new “Minsky Stage” – “Government Finance Quasi-Capitalism” (GFQC). The government now essentially determines market yields throughout the entire Credit system. The government now basically insures system mortgage Credit and sets mortgage borrowing costs. Massive federal deficits and low Fed-dictated borrowing costs sustain inflated corporate earnings and cash-flows. The Fed has come to believe it is within its mandate to inflate securities and asset prices. It has crushed returns on saving instruments. Amazingly, the Fed believes it is within its mandate to dictate that savers flee the safety of deposits and other “money” for the risk markets.

 

“Government Finance Quasi-Capitalism” exacerbates fragilities. It fosters ongoing Credit excesses including a historic expansion of non-productive government debt. GFQC and the resulting flow of finance exacerbate imbalances and economic maladjustment. Accordingly, resulting financial and economic fragilities ensure an even bigger role for Washington in the real economy and for the Federal Reserve in the financial markets.

 

With securities markets near record highs, it has become popular to refer to “enlightened” policymaking. As a student of monetary history, I see the seductive workings of the monetary inflation expedient. Once commenced, it always assumes increasing control. The expansion of government finance ensures dependency on fiscal deficits and central bank “money printing.” Inflating securities prices, highly speculative and distorted financial markets, and economic maladjustment ensure ongoing fragilities. “Government Finance Quasi-Capitalism” ensures the over-issuance of mispriced finance, the misallocation of resources and a deficient real economy. The widening gulf between weak fundamentals and monetary inflation-induced market Bubbles creates a highly unstable, uncertain and precarious backdrop. All seem to ensure only greater government intrusion, control and stagnation.

 

I comment that the chart of Mortgage Backed Bonds, MBB, together with, US Stocks, VTI, Eurozone Stocks, EZU, the Nikkei, NKY, Chinese Stocks, YAO, and Small Cap Pure Value Stocks, RZV, reflects the movement of money to risk assets, and their topping out, that has come through “Government Finance Quasi Capitalism”      

 

This Finviz Screener presents the top 30 Risk Assets of Liberalism’s “Government Finace Quasi Capitalism”; these are XIV, FDN, CARZ, PBS, IGV, IBB, RZV, PSCI, FPX, PPA, IAI, SPHB, SMH, XRT, PJP, PSP, UJB, TAN, RXI, FLM, EIRL, IYC, EUFN, RWW, ITB, FXR ,IGN, BJK, PBJ, ING

 

John Rubino of Dollar Collapse provides this week’s Precious Metals Report

8/17 Hathaway – ‘Paper gold’ short squeeze underway – GotGoldReport

8/17 4 indicators that show gold prices are set to surge – ETF Daily News

8/17 Cannabis revealed: why marijuana is illegal? – Don’t Tread On Me

8/16 Casey’s Louis James warns: “Don’t try to time the market” – Casey Research

8/16 Gold’s new rally begins now – Daily Reckoning

 

Jack Chan of JC’s buy and sell signals, gave his Buy Signal to gold, as is seen in the chart of the Gold, ETF, GLD, this week; this as Mike Mish Shedlock writes Losing faith in gold at the wrong time.

 

2) … Is the stage being set for the rise of a King of the North? … And is the King of the South now rising to power?

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, that is the Prince who is to come, that being the Prince of the people.

 

Daniel 11:11 “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 11:40 “At the time of the end the king of the South shall attack him; and the king of the North shall come against him like a whirlwind, with chariots, horsemen, and with many ships; and he shall enter the countries, overwhelm them, and pass through.”

 

Scott at Prophecy Update writes EU convenes emergency meeting on Egypt: EEAS back in the news.

We know from Daniel 9:27 that the coming antichrist will “confirm” the covenant with the many, and part of any confirmation of a peace deal in the Middle East will include some kind of peace-keeping forces. It requires some degree of speculation, but it seems obvious that any plan will have to consider a combination of border control forces and forces on the streets to maintain peace. The EEAS was formed for this very purpose, and the fact that this group was born in the revived Roman Empire becomes a compelling story for a prophecy watcher.  If the EEAS is considering involvement in Egypt it is very easy to see similar maneuvering whenever the covenant of Daniel 9:27 is confirmed. This story is worth watching closely,

 

Duane and Shelly Muir of Signposts of the Times write It’s official, military chief Sisi is new king of Egypt 

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