Greece And The European Small Cap Dividends Begin To Lead The Eurozone Stocks Lower On The Failure Of Credit

Financial Market Report for the week ending Thursday April 17, 2014.

This post can be found in Google Documents format here

1)  … Details of this week’s financial market trading

On Monday, April 14, 2014, Greece, The National Bank of Greece, and the Eurozone Small Cap Dividends led the Eurozone Stocks lower, as is seen in the ongoing Yahoo Finance Chart of Greece, GREK, Eurozone Small Cap Dividends, DFE, European Financials, EUFN, and the National Bank of Greece, NBG, communicating the failure of European Credit, EU.

 

Yes, credit is dying in the EU, despite the BusinessWeek report Italy’s Bonds Post Weekly Advance On Stimulus Bets. Zero Hedge reports Bondholder Bail-ins Approved By EU. Said another way, given that equities are no longer leveraging higher over credit, communicating that investors no longer trust that the ECB’s policies will secure investment gains.

 

Investors are deleveraging out of EUR/JPY currency carry trade investments as is seen in the ongoing Yahoo Finance chart of EURJPY and the Eurozone Stocks, EZU, such as ALU, VE, ASMI, RYAAY,  AER, PHG, CRH, SI, LYB, BUD, and the Eurozone Nations, such as EWI, EWG, EFNL, EWN, EWQ, EIRL, EWP, EWO, PGAL, GREK, with the European Financials, EUFN, and the National Bank of Greece, NBG, leading lower.

 

Open Europe relates KathimeriniKathimerini 2Reuters report Paul Thomsen, head of the IMF’s mission to Greece, told Mega TV, “In our view, [Greece’s bailout] is not fully financed the whole way to 2016 and one would need…to find some more money.” Separately, Greek Prime Minister Antonis Samaras wrote in Kathimerini yesterday that “the country’s return to the markets rebuffs [speculation]” about the need for a third bailout.”

 

And credit is dying in the United States. The failure of credit in the US, VTI, is seen in Retail, XRT, US Infrastructure, PKB, Consumer Services, IYC, such as Chiptole Mexican Grill, CMG, Small Cap Consumer Discretionary, PSCD, such as the Automobile Dealers, the Credit Service Companies, MA, V, AXP, DFS, Asset Managers, BLK, AMG, STT, Regional Banks, KRE, Stockbrokers, IAI, Investment Bankers, KCE, the Too Big To Fail Banks, RWW, and the Russell 2000, IWC, trading lower from their highs.

 

The failure of credit worldwide is seen in Global Infrastructure, GII, topping out in value, having been driven higher by Emerging Market Infrastructure, EMIF, in particular, INXX, CHXX, and BRXX.

 

Investors are derisking out of debt trade leader Macquarie Infrastructure Company, MIC, as Infrastructure Municipal Bonds, RVNU, has been trading higher in short sell covering. Reuters reports RVNU focuses exclusively on municipal bonds issued to fund federal, state and local infrastructure projects, including water and sewer systems, public power systems and toll roads and bridges.

 

And, risk-on trading has turned to risk-off trading as the Small Cap Growth, RZG, and the Large Cap Growth, JKE, are leading the Small Cap Value, RZV, and the Large Cap Value, JKF, lower, as is seen in their combined ongoing Yahoo Finance chart.

 

Utilities, PUI, XLU, such as GXP, BKH, NEE, UGI,NI, VVC, MDU, D, and NYLD, are topping out on the trade lower in the Interest Rate on the US Note, ^TNX, to 2.62%, on Friday April 11, 2014,  and its close higher on Monday April 14, 2014 to 2.64%.

 

Eddy Elfenbein reports Best Retail Sales Report in 18 Months. While Atif Mian and Amir Sufiof House of Debt post The Consumer As A Shadow Of Its Former Self. Retail, XRT, bounced only slightly higher today, as did other ETFs, that had sold off most strongly last week. These included the Workplace Equality ETF, EQLT, which is comprised of companies that have a social mission to support workplace equality for lesbian, gay, bisexual and transgender employees; it is comprise of 164 companies that have scored 100% on the Human Rights Campaign Corporate Equality Index. The ETF follows in the line of socially responsible funds that are currently on the market; these products take into account social, environmental, and governance characteristics. The ETF has been a leading loss leader as Intuit relates that it is comprised of a number of large cap consumer discretionary, financial service stocks, and technology stocks such as GME, EA, MGM, WYNN, DIS, AAL.

 

Junk Bonds, JNK, bounced higher, taking Aggregate Credit, AGG, slightly higher to a new rally high as International Treasury Bonds, PICB, traded lower manifesting a massive dark cloud covering candlestick chart pattern in its weekly chart confirming the failure of credit.

 

The failure of credit on Thursday, April 10, 2014, marked an epic pivotal economic change in mankind’s history, as popular currency carry trades unwound trading in Small Cap Nation Investment, IFSM, and Nation Investment, EFA, as the ECB failed to come forward with any new credit stimulus,and turned World Stocks, VT, Global Financials, IXG, lower. The failure of equity investments can be followed with this Finviz Screener of Equity ETFs.

 

The age of investment choice and credit began with the repeal of the Glass Steagall Act and came to full power with the Mario Draghi, Do Whatever It Takes, July 26, 2012 Speech, which produced great investment reward in the Eurozone but as Ed Yardeni posts A Lackluster Recovery In The EU.

 

Spiegel postsCentral Banks’ Ability To Influence Markets Is Waning. Another word for credit is trust. Investors no longer trust in the monetary policies of the world central banks to stimulate global investment growth. Said another way the world central banks’ monetary policies have crossed the rubicon of sound monetary policy and have made “money good” investments bad.

 

The failure of credit, which commenced on Thursday, April 10, 2014, is the most remarkable turning point in all of economic history; and is seen in Call Write Bonds, CWB, trading lower from their March 2014 high, and is defined by the see saw destruction of equity investments (such as World Stocks, VT, Nation Investment, EFA, Small Cap Nation Investment, IFSM, Global Financial Investments, IXG, and Dividends Excluding Financials, DTN) and credit investments, AGG, which began to trade lower in May 2013.

 

Investors no longer trust in the monetary policies of the world central banks to stimulate investment growth, despite TradingFloor reportingGlobal Manufacturing PMI Tracker Shows Growth Robust In March.  One can follow the destruction of credit investments with this Finviz Screener of Credit ETFs.

 

The failure of credit is established by Distressed Investments, such as those traded by Fidelity Investments, FAGIX, and by Junk Bonds, JNK, trading strongly lower on Thursday April 10, 2014 and Friday April 11, 2014. It was the Distressed Investments, that the US Fed took in and traded out “money good” US Treasuries in 2008 and 2009, as part of QE1 to regenerate the US and World Financial System. Regional Banks, KRE, lost 5% of their value last week, and thus document the failure of credit. Look for a strong destruction of Popular Notes And Bonds, such as SHY, EMCD, TLT, ZROZ, FLOT, QLTA, VCLT, PICB, BWX, MBB.

 

Bespoke Investment Group reports Sovereign Yields Continue Lower. Yet, look for Aggregate Credit, AGG, to very soon, once again, trade lower as Corporate Bonds, LQD, Long Duration Corporate Bonds, BLV, International Corporate Bonds, PICB, and World Treasury Bonds, BWX, which are seen peaking out, turn lower, commencing the failure of currencies.

 

Debt Deflation will be driving Major World Currencies, DBV, and Emerging Market Currencies, CEW, lower. Said another way, bond vigilantes calling the Benchmark Interest Rate higher, $TNX, from 2.62% on Friday, April 11. 2014, and on steepening the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, seen in the Steepner ETF, STPP, steepening, from 38.67, on the exhaustion of the world central banks’ monetary authority. Spectacular competitive currency devaluation will cause unwinding liberalism’s currency carry trades and debt trades worldwide. One can follow the destruction of currencies with thisFinviz Screener of Currency ETFs.

 

The pursuit of yield is history as Global ZIRP is history. The failure of credit is terminating risk driven investors, as the centerpiece of economic activity. Such include those invested in High Yield Debt, JNK, VCLT, EU, EMB, HYXU, EMLC, HYMB, QLTB, EMCD, RVNU, and those invested in Biotechnology, IBB, Social Media, SOCL, Small Cap Pure Value, RZV, and Small Cap Pure Growth, RZG, as well as fixed income investors, invested in Dividends Excluding Financials, DTN, and other Popular Yield Bearing ETFs, DFE, GRID, SEA, FIW, PUI, PSP, KBWD, IST, DBU, as well the high yielding Dividend ETF, DVYL, which is 200% leveraged the S&P High Yield Dividend Aristocrats Index.  Look for insurance companies around the world to fall strongly lower in value; these include Insurance Group Australia, ASX:AIG.

 

Credit died on Thursday, April 10, 2014, as evidenced by World Stocks, VT, Nation Investment, EFA, Small Cap Nation Investment, IFSM, Global Financials, IXG, and Dividends Excluding Financials, DTN, trading lower, communicating that  the investor is no longer the centerpiece of economic activity.

 

With the failure of credit, the investor is being replaced by the debt serf, as the centerpiece of economic activity, as Robert Stevens of WSWS reports Greek Parliament Approves New Attacks On Workers. The latest agreement between the European Union led Troika and the Greek government includes measures to limit the right to strike.

 

Out of soon coming economic chaos stemming from derisking out of currency carry trade investments, such as the EUR/JPY, and the GBP/JPY, as well as out of deleveraging out of debt trades, such as Real Estate Company, Blackstone, BX, yield curves such as the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, will be steepening, and short term interests rates will be rising, causing 1 to 3 Year US Government Note, SHY, to plummet.

 

As the Benchmark Interest rate rises from 2.62%, popular real estate investments Global Real Estate, DRW, Office REITS, FNIO, Mortgage REITS, REM, Residential REITS, REZ, and Retail REITS, such as General Growth Properties, GGP, will plummet.

 

There be many who complain about the order of things in the age of investment choice and credit that has produced peak wealth. Duke University Professor David Siegel asks Why Wouldn’t People Want To Reduce Inequality?  I respond, the very one appointed by God to head up the dispensation, that is, the household stewardship, of all things.  Jesus Christ, as is seen in Ephesians,1;10, perfected the age of credit on Thursday April 10, 2014, by turning World Stocks, VT, lower, and then on April 14, 2014, by turning Aggregate Credit, AGG, lower as well. Inequality was the express design and purpose of God’s Son, Jesus Christ. He had no interest in perfecting human talent in general by providing great employment, as Mike Konczal writes Struggling To Find Jobs. Rather, He fully developed the investment talent of the speculative leveraged investment community, to establish peak Global Financial Wealth, IXG, and the managerial talent of global businesses, governments, and institutions around the world through prestigious consulting firms such as McKinsey & Co, to establish the greatest possible investment in Nation Investment, EFA, as is seen in the Robert Wenzel poss Infrastructure Plotters Meet Privately With Treasury Secretary Lew To Divvy Up Tax Dollars. This week US Heavy Construction Companies, DY, ORN, MTRX, AEGN, TPC, GLDD traded higher.

 

The world is passing through peak moral hazard.  Libertarian Benson te writes of the Philippine economy “The only ‘inclusivity of economic growth’ here will be a NET transfer of resources from society to politicians and the cronies through ‘foolishly prodigal enterprises’, thereby lifting economic benefits again to a select politically privileged and politically connected few. Woe to the taxpayers and to the politically unconnected peso holders”.

 

It is the genius of Jesus Christ that has produced peak clientelism as Benson te writes quoting Richard Ebeling in EPJ Interventionism: Using Legal Coercion To Get Ahead in Life  When individuals began to ask government to do things for them, rather than merely to secure their individual rights and honestly acquired property, they began asking government to violate other’s rights and property for their benefit. These demands on government have been rationalized by intellectuals and social engineers who have persuaded people that what they wanted but didn’t have was due to the greed, exploitation, and immorality of others. Basic morality and justice has been transcended in the political arena in order to take from the “haves” and give to the “have not’s.” Theft through political means has become the basis of a “higher” morality: “social justice,” which is supposed to remedy the alleged injustices of the free market economy. But once the market becomes politicized in this manner, morality begins to disintegrate. Increasingly, the only way to survive in society is to resort to the same types of political methods for gain as others are using, or to devise ways to evade the controls and regulations. More and more people, therefore, have been drawn into the arena of political intrigue and manipulation or violation of the law for economic gain. Human relationships and the political process have become increasingly corrupted.

 

Now that the failure of credit has commenced, soon, money market funds will break the buck, that is the traditional constant $1 Dollar Value, with the result that capital controls will be implemented and banks everywhere will be integrated into the Government, and be known as Government Banks, and in the US, the Bank’s Excess Reserves will be captured, so as to speak, by the US Fed.

 

Banks everywhere will be integrated into regional governments, with the Eurozone and the US being leading examples of economic fascism. Savings and Loans, Regional Banks, KRE, such as BOFI, SIVB, HBAN, and RF, the Too Big To Fail Banks, RWW, seen in this Finviz Screener, will be integrated into the banks and be known as the Government Banks, or Gov Banks.

 

Money has been in an awesome bubble ever since it was underwritten by credit of the US Fed in taking in Distressed Investments, such as those traded by the Fidelity Mutual Fund,FAGIX, and in trading out money good US Treasuries, TLT, to underwrite faith in Regional Banks, KRE, and the Too Big To Fail Banks, RWW, under the Paulson Gift and Ben Bernake Stimulus of QE1.

 

Bloomberg reports China New Credit Declines as Money-Supply Growth Decelerates. And Ed Yardeni posts China Is Deflating. This is seen in its money, that is its currency, the Yuan, CYB, and its debt, the Dim Sum Bond, DSUM, trading lower in value. Clearly, the money bubble has finally burst and the investor is going extinct. The failure of credit is an extinction event, that pivots the world economy out of liberalism, that is the paradigm and age of credit and investment choice, and into authoritarianism, that is the paradigm and age of diktat and debt servitude, which features the debt serf, is the centerpiece of economic activity.

 

Bloomberg reports Chinese Police Confront Trust Investors Demanding Repayment. Chinese investors demanding their money back from a troubled 973 million-yuan ($156 million) high-yield product in Shanxi province were confronted by police in front of a China Construction Bank Corp. (939) branch. People wearing white masks with the words “despicable bank” and “pay back our money” were among at least 30 investors facing special-forces officers in dark uniforms in Taiyuan city, about 521 kilometers (324 miles) southwest of Beijing. The nation’s second-largest bank is the custodian of the Songhuajiang River No. 77 trust, which missed six payments as of last month, according to the Economic Observer. “We have been cheated by CCB,” said Wang Fengying, 60, a Shanxi resident who said her husband had invested 1 million yuan in the product. “Our parents are very old. We need the money for their medical bills and to buy a home for my child. We are so miserable and they won’t even let us demand our money back.”

 

Gabriel Wildau and Lu Jianxin of Reuters report Chinese companies that have lent money to other companies are facing a potential wave of defaults, with several listed firms already reporting missed loan repayments. Shipbuilder Sainty Marine became the latest listed firm to report that it had failed to receive principal and interest repayments on a 900 million yuan ($144.7 million) loan to a property developer. Chinese companies granted a net 2.55 trillion yuan ($411bn) in so-called entrusted loans in 2013, nearly double the 1.28 trillion yuan total in 2012, making them the second- biggest source of domestic credit behind bank loans, according to Reuters’ calculations based on published central bank data. Entrusted loans require banks to serve as an intermediary, but a company serves as the ultimate lender and records the loan asset on its balance sheet… Entrusted loans require banks to serve as an intermediary, but a company serves as the ultimate lender and records the loan asset on its balance sheet. ‘Companies offering entrusted loans typically want to lend while bypassing official restrictions for credit, such as lending quotas,’ said Zhang Weigang, head of investment at Shanghai Securities. ‘That means they typically lend to risky industries such as property, solar panel manufacturing and non-ferrous metals.’

 

Zero Hedge reports Chinese Yuan (And Copper) Tumbles As Money Supply Growth Plunges.

 

With the trade higher parabolically higher in Nickel, JJN, the rally in Commodities, DBC, DYY, especially Base Metals, DBB, despite the Bloomberg report Oil Climbs to Five-Week High on Ukraine-Russia Tension.

 

Buy and hold stock investing was an economic principle of the bygone era of credit. The greatest bear market of history has commenced: it will totally destroy all fiat investments, whether they be equities such as VT, EFA, IXG or DTN, or credit, AGG, such as JNK, MBB, TLT, their ongoing Yahoo Finance Chart shows that Global Financials, IXG, are now leading all lower.

 

One could use these Inverse Market ETFs as collateral for short selling: STPP, XVZ, JGBS, GLD, EUO, YCS, OFF, HDGE, SAGG, TYBS, PPLT, as well as DNO, KRS, REK, SBB, SBM, DDG, EFZ, YXI, SZK, SDP.

 

Libertarian Richard Eleling writes in EPJ The Free Market vs. the Interventionist State What people call the “free market” in the United States and around the world, is in fact the regulated economy — the Interventionist State. I explain the defining characteristics of a truly free market economy, as defined for example by the Austrian economist, Ludwig von Mises. And I contrast this with the meaning of the Interventionist State under which we all live. The Interventionist State distorts the economic activities of all those in society in various ways.

 

Through dispensation, that is through the economy of God, as seen in Ephesians, 1:10, Jesus Christ perfected what Libertarian Richard Eleling terms the Interventionist State, on Thursday, April 10, 2014, with a trade lower in World Stocks, VT, which featured the Banker Regime, that is the Creature from Jekyll Island, and its cohort, democratic nation state rule, which provided asset inflationism, coming from the three economic dynamos of creditism, corporatism, and globalism, by policies of investment choice and schemes of liberal credit.

 

The EU common currency union came about through the Maastricht Treaty; unification of Europe was made complete with the introduction of the Euro as a currency in January 1999. The Banker regime used the Euro for capital investment in the southern states, that is Portugal, Italy Greece and Spain, and even to greater advantage for debt trade investment in the PIGS treasury debt and in money market investment in municipal debt in France. The debt trade within the common currency produced awesomely lucrative reward as interest rates fell. And with LTRO 1, 2, and OMT, especially lucrative investment in Ireland, Greece and the European Small Cap Dividend Stocks.

 

Mike Mish Shedlock posts Europe Without €: Former EU Commissioner Says Monetary Union Has Failed. From the Italian website L’Anti Diplomatico, former EU Commissioner and and signatory of the Manifesto of European solidarity, Frits Bolkestein proclaims the “Monetary Union has Failed

 

In his conference “Europe Without €” held in Rome on Saturday 12 April, Fred Bolkestein, a former commissioner of the European Union and signatory of the Manifesto of European solidarity quotes former German Chancellor Helmut Kohl in his address to the European Parliament in 1991:

 

“EU policy is the essential counterpart to monetary union.” The political union had to precede the formation of the single currency and a real central bank.

 

The opposite happened. Maastricht policies to create a monetary union have not had an effect integral politics, but the opposite effect as we see today.

 

Economic cultures are different and there is no solidarity. The French view is that imbalances of payments and budgets should be adjusted and jointly funded by the surplus countries to finance the deficit countries. It is a vision not sustainable in the long run.

 

According to Bolkestein, Eurobonds will only dilute the responsibility and “veil” problems. The Germans, moreover, do not want transfers and Eurobonds. Moreover, as history teaches, transfers from rich regions to poor regions do not work.

 

Monetary union has failed, concludes Bolkestein, and the countries in deficit situation can not solve their problems by themselves. Indeed, this is an additional cause of suffering. Alternatives do not exist and “we have to think about a second step: the exit from the euro.”

 

Mr. Shedlock is wearing the blinders of Austrian Economics. When viewed through the lenses of Biblical dispensation economics, as presented by the Apostle Paul in Ephesians 1:10, Jesus Christ has been successful in perfecting the paradigm and age of credit and currency carry trade investing, by driving the Eurozone Stocks up to their rally high on Thursday April 10, 2014, and then pivoting them dramatically lower, on Monday April 14, 2014. With Him at the head of the economy of God, there will be no exit from the Eurozone, by any nation.

 

Under the power of the Rider on the White Horse, as is seen in Revelation 6:1-2, the bond vigilantes are effecting a global economic coup d’etat, transferring sovereignty from democratic nation states to sovereign regional leaders and sovereign regional bodies, such as the ECB, by calling the Interest Rate on the US Ten Year Note, ^TNX, higher from 2.48% on October 23, 2013, and thus are powering up the singular dynamo of regionalism to establish regional security, stability, and sustainability, to deal with the destructionism of unwinding currency carry trades and debt trades, such as those now seen in Eurozone Small Cap Dividends, DFE, and the National Bank of Greece, NBG, trading lower.

 

Out of a soon coming Financial Apocalypse, that is a credit bust and financial system breakdown, the Beast Regime, seen in Revelation 13:1-4, will rise to replace Banker Regime, and by implementing  policies of regional economic governance, and schemes of totalitarian collectivism, will establish regional panopticons of debt servitude, with the Eurozone serving as the ultimate example of regional fascism.

 

Even now, Jesus Christ is developing new sovereigns for a new age. Under liberalism, the speculative investment community provided seigniorage through money manager capitalism, Under authoritarianism, regional leaders provide seigniorage through the word, will and way of their diktat, a case in point being the Troika’s management of the Greek economy.

 

Specifically out of Eurozone sovereign, banking and corporate insolvency, leaders will meet in summits to renounce national sovereignty and announce pooled regional sovereignty, where regional framework agreements will provide the legal basis for regional economic fascism enabling leaders from Brussels and Berlin to rule in diktat establishing Europe as the preeminent world power. Alejandro López writes in WSWS Spanish Government Attacks Democratic Rights  Madrid is escalating its attacks on democratic rights in response to widespread opposition to the social catastrophe produced by its austerity measures. And Johannes Stern posts in WSWS German Government Planning Major Military Build-up. The German government is using the mounting conflict between NATO and Russia to massively rearm the army.

 

As foretold in bible prophecy of Revelation 13:5-10, there is waiting in the wings of Europe stage, the most capable of sovereigns. Out of the European Debt Crisis, the Sovereign will step into the limelight, and through cunning and shrewdness rise in power to rule as is seen in Daniel 8:6-8, and as foretold in Revelation 13:11-18, will be accompanied in power by the Seignior, that is top dog banker, who in coining money, takes a cut. This New Charlemagne and his Monetary High Priest will eventually come to rule the world, in a one world religion, from their capital in Jerusalem, as foretold in Daniel 9:25.

 

On Monday April 14, 2014, International Corporate Debt Weekly, PICB Weekly, shows the bearish dark cloud covering candlestick, indicating the failure of credit.

 

On Tuesday, April 15, 2014,deleveraging and arising out of debt trade investing and currency carry trade investments continued reflecting the death of credit.

 

The National Bank of Greece, NBG, Greece, GREK, European Small Cap Dividend, DFE, Germany, EWG, and German Small Caps, GERJ, continued to trade lower on the failure of the ECB to provide any new credit initiative, as well as on a lower Euro, FXE.  

 

Emerging Market Infrastructure, EMIF, PXR, China Industrials, CHII, Russia, RSX, ERUS, China, YAO, ECNS, Brazil, EWZ, EWZS, India, INP, SCIN, Vietnam, VNM, Turkey, TUR, Argentina, ARGT, Chile, ECH, and Peru, EPU, led the Emerging Markets, EEM, lower, on lower Emerging Market Currencies, CEW.  NYT writes Brazil’s Star, Petrobras, Is Hobbled By Scandal And Stagnation

 

Nations Sweden, EWD, traded lower on a lower Swedish Krona, FXS. Australia, EWA, and KROO, traded lower on a lower Australian Dollar, FXA.

 

Yield Bearing Investments, Leveraged Buyouts, PSP, and China Real Estate, TAO, traded lower, on  derisking out of debt trade investments.

 

Global Financials, China Financials, CHIX, Brazil Financials, BRAF, India Earnings, EPI, and European Financials EUFN, traded lower, on unwinding currency carry trade investing.

 

Industrials Miners, PICK, traded lower on lower Base Metal Commodity, DBB, prices, on the traded lower in the Australian Dollar, and the Emerging Market Currencies, CEW.

 

Energy Production, XOP, traded higher, on Ukraine tensions.

 

On Wednesday, April 16, 2014, Solar Energy, TAN, Automobiles, CARZ, Design Build, FLM, Nasdaq Internet, PNQI, Biotechnology, IBB, Media, PBS, Internet Retail, FDN, and Aerospace and Defense, PPA, bounced World Stocks, VT, higher.

 

Japan, NKY, traded higher on a lower Yen, FXY. Thailand, THD, Ephesians, EPHE, Indonesia, IDX, Egypt, EGPT, and Chile, ECH, bounced the Emerging Markets, EEM, and Nation Investment, EFA, higher, as the Emerging Market Currencies, CEW, bounded higher.

 

European Financials, EUFN, bounced higher, bouncing Global Financials, IXG, higher.

 

Defensive Stocks, DEF, Global Consumer Staples, KXI, Utilities, PUI, Global Utilities, DBU, World Real Estate, DRW, US Real Estate, IYR, Industrial Office REITS, FNIO, Residential REITS, REZ, Retail REITS, SLG, and General Growth Properties, GGP, and Dividends Excluding Financials, DTN, traded to new all time highs, as is seen in their combined ongoing Yahoo Finance Chart.

 

Energy Production, XOP, traded higher, on a higher price of Oil, USO.

 

On Thursday, April 17, 2014, Russia, RSX, ERUS, India Small Caps, SCIN, Emerging Middle East and Africa, GAF, Egypt, EGPT, Denmark, EDEN, Singapore, EWS,Indonesia, IDX, Philippines, EPHE, European Small Cap Dividends, DFE, Greece, GREK, Germany Small Caps, GERJ, Italy, EWI, Spain, EWP, and Portugal, PGAL, bouncing Nation Investment EFA, and Small Cap Nation Investment, IFSM, higher.

 

European Financials, EUFN, bounced higher, bouncing Global Financials, IXG, higher

 

World Stocks, VT, bounced higher  as Calculated Risk posts Industrial Production Increased 0.7% In March. Yet, Global Industrial Producers, FXR, are trading lower from their Thursday April 10, 2014 high. Zero Hedge reports Why IBM Is Tumbling: BRIC sales plunge, total revenue lowest since 2009.   US Health Care Providers, IHF, such as WLP, UNH, ESRX, WLP, AET, CI, traded sharply lower.

 

Dividends Excluding Financials, DTN, traded unchanged due to the rise in the Benchmark Interest Rate, $TNX.

 

Energy Production, XOP, Fracking Companies such as RPC Inc, RES, and Refiners, such as VLO, traded higher on a higher price of Oil, USO.

 

The Australian Dollar, FXA, traded lower, leading Major World Currencies, DBV, lower. And the Brazilian Real, BZF, traded lower, leading Emerging Market Currencies, CEW, lower.

 

European Credit, EU, traded to a new all time high as bond vigilantes took the Interest Rate on the US Ten Year Note, ^TNX, higher to 2.72%, causing Aggregate Credit, AGG, to trade lower.

 

Peak M2 Money is being achieved:  M2 Money Supply rose $41.5bn to a record $11.194 TN.

 

2) … The mother of all bear markets has commenced; its epicenter is in the Eurozone.

In the final two years of the age of credit, Ireland’s Bank, IRE, and Ireland, EIRL, provided stellar debt trade and currency carry trade investment rewards to the savvy investor, as is seen in the cominbed  ongoing Yahoo Finance chart of Ireland’s Bank, IRE, Ireland, EIRL, Eurozone Stocks, EZU, Nation Investment, EFA, and the European Financials, EUFN.

 

Greece, GREK, and the European Small Cap Dividends, DFE, as well as the US Small Caps, IWC, are in the process of leading Nation Investment, EFA, lower, on the failure of credit in the US and the EU, as is seen in the ongoing Yahoo Finance Chart of GREK IWC, VTI, EZU, EWZ, EPHE, INP, YAO, EWA.

 

The National Bank of Greece, NBG, the European Financials, EUFN, and the Regional Banks, KRE, are leading Global Financials, IXG, the linchpin of equity investment lower.

 

The week ending April 17, 2014, Aggregate Credit, AGG, traded lower as the bond vigilantes called the Interest Rate on the US Ten Year Note, ^TNX, higher to 2.75.

 

Now all forms of fiat investment, both Equity Investments, and Credit Investments, are trading lower from their April 10, 2014, highs.  Popular Notes and Bonds, SHY, EMCD, TLT, ZROZ, FLOT, QLTA, VCLT, PICB, BWX, MBB, traded lower at the end of the week of April 17, 2014.

 

The bear market of all time has commenced as is evidenced by the trade lower in Covered Call, HFIN, which reflects that the trend is now lower, in Value Shares, such as Large Cap Value, JKF, and Defensive Stocks, DEF.  The Risk Trade in Small Cap Value, RZV, and Small Cap Growth Stocks, RZG, is history. The trade lower in Call Write Bonds, CWB as well as the trade lower in Closed End Funds, JCE, GCE,  CSQ, PTY, AWP, PFL, RCS, and EIM, seen in their combined ongoing Yahoo Finance Chart, establishes that buy and hold investing is not working.  Hedging no longer works, as Hedged Japan, DXJ, Hedged Global Stocks, HEDJ, and Hedged Emerging Markets, DBEM, are trading lower.  Look out below!

 

Eddy Elfenbein asks Is More Inflation Headed Our Way? Those of you old enough to remember the 70s certainly remember inflation. It was the worst thing about that decade. Well, that and disco. Every week, it seemed, prices climbed higher, and the prime rate went up, up, up.

There’s no way to sugarcoat it. Inflation is devastating for investors. It eats away at savings, and it knocks stock prices for a loop. On December 31, 1964, right before inflation became a problem, the Dow closed at 874.13. Exactly seventeen years later, the index stood at 875.00. Stock prices had barely budged, yet the Consumer Price Index had tripled. Then, once inflation got under control, stock prices soared. So much of the 1980s bull market was really making up for lost ground.

Inflation also has an unusual impact on earnings. Not all earnings are the same, and inflation exacts a heavy toll on asset-heavy businesses. Companies with high assets relative to their profits tend to report ersatz earnings.

Let’s look at some recent figures. Last Friday, the Labor Department reported that the Producer Price Index rose by 0.5% last month. That was the biggest increase in nine months. Economists like to track prices at the wholesale level because it’s often an early warning sign of price increases at the consumer level. Digging into the details, the rise in the PPI was driven by a 0.7% increase in wholesale services and a 1.1% rise in food prices. The core rate, which excludes food and energy, rose by 0.6%.

Then on Monday, the Consumer Price Index report showed that consumer prices rose 0.2% last month. That’s still not much, but it was more than the 0.1% economists were expecting. The core consumer rate also rose by 0.2% for its biggest monthly increase in 14 months

I’m not going to try to predict if inflation will come back, but we have to be realistic and watch the data.

 

The ratio of the TIPS To Treasuries, such as Long Term TIPS to Long Term Treasuries, that is LTPZ:EDV, is reversing and communicates that bond market insiders are expecting headline inflation, and debt destruction. The long position in TIPS and short Treasuries is seen in the ongoing Yahoo Finance Chart of INFL, as well as RINF; both of these ETFs are now seeing monthly gains.  Investors have been building positions in the CPI Inflation ETF, CPI.

 

Benson te writes on inflation in Food Prices, FUD. In the US, Food Prices Have Been Rising Fast. The bottom line is that central bank inflationism has been increasingly spilling over to the real economy via rising food prices. And this is being aggravated by supply chain disruptions. This also means incidences of global hunger and poverty will rise. Such also implies of growing risks of a global food crisis.  And importantly this signals why the era of asset inflation boom is bound to reverse soon as sustained pressures on consumer prices will eventually reflect on interest rates (whether in the US, Philippines or elsewhere).

 

Debt deflation, and not so much inflation, will be driving Major World Currencies, DBV, and Emerging Market Currencies, CEW, lower. Said another way, bond vigilantes calling the Benchmark Interest Rate higher, $TNX, from 2.62% on Friday, April 11. 2014, and on steepening the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, seen in the Steepner ETF, STPP, steepening, from 38.67, on the exhaustion of the world central banks’ monetary authority. Spectacular competitive currency devaluation, coming from rising interest rates, will cause unwinding of liberalism’s currency carry trades and debt trades worldwide. One can follow the destruction of currencies with thisFinviz Screener of Currency ETFs.

 

John Rubino posts Bank Of Japan Only Buyer Left  for 10-Year Japanese Government Bonds Here’s something you don’t see very often: For a day and a half this week, the Japanese government’s benchmark 10-year bonds attracted not a single successful private sector bid. At today’s artificially-depressed yields, no one wants this paper, except of course the Bank of Japan, which is buying up the bonds with newly-created yen. As the Gulf Times noted:

 

The Bank of Japan’s massive purchases of government debt hit a milestone this week, sucking liquidity out of the market to such an extent that the benchmark 10-year bond went untraded for more than a day, the first time in 13 years. Data from the BoJ late on Monday showed its holding of Japanese government bonds topped ¥200tn ($1.96tn), or about 20% of outstanding issuance – up by more than half from ¥125tn about a year ago. The fall in market liquidity looks set to intensify as the BoJ has vowed to continue its aggressive buying for at least another year, with market players expecting it to expand its easing some time later this year.

 

The BoJ stepped up its bond buying last April when Haruhiko Kuroda became its governor, vowing to take radical easing steps to end deflation once and for all. The increasing dominance of the BoJ in the market, however, resulted in shortage of tradable bonds in the market, reducing trading flows between market players. The current 10-year cash bonds saw its first trade of the week yesterday afternoon, having gone untraded for more than a day and a half. Trade volume in the benchmark cash bonds so far this month dropped to less than one trillion yen, down about 70% from the same period last year.

 

What exactly does this mean? Well, it’s definitely weird. These are the most important fixed income instruments of the world’s third biggest economy, and the only entity willing to own them is the government that issues them.

 

The rest of the world now refuses to lend money for ten years at 0.6% to a government whose debt is 200% of GDP and rising, which leaves Tokyo with only two choices: monetize virtually all its future borrowing or allow interest rates to rise and pay two or three times as much in interest going forward. The latter choice would hobble, if not cripple, an economy that can only function when borrowed money is nearly free.

 

Google Finance chart shows that the Nikkei, NKY, has been leading Nation Investment EFA, lower, ever since the Benchmark Interest Rate, $TNX, began to trade higher on October 23, 2013.

 

Finviz Chart shows that this week the Weekly Inverse of the Japanese Government Bonds, JGBS, traded decisively higher.

 

Gulf Times reports Japan Bond Market Liquidity Dries Up As BoJ Holding Crosses ¥200tn.

 

Daily News Egypt posts the Joseph Hammond and James Wan, Think Africa Press report Egypt’s Military Economy: Money is power, power is money. In a poll in March, 39% of Egyptians said they were planning to vote for him, while fewer than 1% of respondents said they were planning to vote for any of the other candidates. Anything but an Al-Sisi victory seems highly unlikely, and come May, the military’s hold on power will have become even further entrenched. It was only in January 2011 that Hosni Mubarak, a military man too, like all his predecessors since 1952, was overthrown, but now it seems the Egyptian military is not only back in the seat of power, but perhaps stronger than ever. A look behind the political curtains at the backstage that is the Egyptian economy seems to bear this out.

 

With around 2 million personnel, including 500,000 in the army, the Egyptian military is the biggest in Africa, and one of the largest in the world. Arguably far more striking than the extent of its physical muscle, however, is the size of economic muscle. Its spokespeople consistently try to play down its role in Egypt’s economy, claiming the military is responsible for just 1% of the country’s GDP, but analysts tend to believe the military controls between 5 and 40% of the economy, with most leaning towards the higher end of that spectrum.

 

Exact figures are hard to come by. The military’s budget is kept confidential and its business dealings are typically untaxed and unaudited on apparent grounds of national security. It is known, however, that military is involved in countless different businesses in countless different industries. Military-owned companies engage in ventures from cement to shipbuilding, from fertiliser to fridges, and from tourism to televisions. The Egyptian army owns hospitals and child-care centres, it is a huge player in the country’s agricultural sector, and it has various contracts with foreign investors worth hundreds of millions of dollars. The military also owns vast tracts of land. In 1997, a presidential decree awarded the army the right to manage all of Egypt’s unused land. According to some estimates, that essentially gives the military de facto control of 87% of the entire country’s land mass.

 

3) … Investment gain will turn precipitously into investment loss; wealth can only be preserved by investing in and taking possession of gold bullion.

Defensive Stocks, DEF, Global Consumer Staples, KXI, Utilities, PUI, Global Utilities, DBU, World Real Estate, DRW, US Real Estate, IYR, Industrial Office REITS, FNIO, Residential REITS, REZ, Retail REITS, SLG, and General Growth Properties, GGP, and Dividends Excluding Financials, DTN, traded to new all time highs, as is seen in their combined ongoing Yahoo Finance Chart.  And Energy Production, XOP, traded higher, on a higher price of Oil, USO.

 

Now all forms of fiat investment, both Equity Investments, and Credit Investments, are trading lower from their April 10, 2014, highs.  Popular Notes and Bonds, SHY, EMCD, TLT, ZROZ, FLOT, QLTA, VCLT, PICB, BWX, MBB, traded lower at the end of the week of April 17, 2014.

 

The bear market of all time has commenced as is evidenced by the trade lower in Covered Call, HFIN, which reflects that the trend is now lower, in Value Shares, such as Large Cap Value, JKF, and Defensive Stocks, DEF.  The Risk Trade in Small Cap Value, RZV, and Small Cap Growth Stocks, RZG, is history. The trade lower in Call Write Bonds, CWB as well as the trade lower in Closed End Funds, JCE, GCE,  CSQ, PTY, AWP, PFL, RCS, and EIM, seen in their combined ongoing Yahoo Finance Chart, establishes that buy and hold investing is not working.  Hedging no longer works, as Hedged Japan, DXJ, Hedged Global Stocks, HEDJ, and Hedged Emerging Markets, DBEM, are trading lower.  Look out below!

 

The age of credit produced awesome investment gains for those invested in fiat money and fiat wealth such as stocks and real estate, and produce some global economic growth, via central bank investment inflationism, more specifically through the three dynamos of creditism, globalism and corporatism, which saw the Federal Reserve’s balance sheet inflate from $900bn to $4.5 TN in just six years. Bitcoin is not money and failed because it lacks any known sovereign, and thus is unable to provide seigniorage.

 

The age of debt servitude is one of investment loss and economic deflation, which comes via destructionism, and where the singular dynamo of regionalism prevails to establish regional security stability and sustainability, via regional fascism. Elaine Meinel Supkis writes on this relating Russia Hurt By Economic Warfare But US Is Being Utterly Destroyed By Our Trade Partner Allies.

 

The current economic deflation in the Eurozone is caused in large part by unemployment. EU Observer posts Regional Unemployment Highest In Spain. The WSJ reports Deflation Threat Becomes More Widespread in Europe. Consumer prices rise at slowest pace for more than four years in Year to March.

 

The week of Monday April 14, 204, through April 17, 2014, provided a short selling opportunity. One where investors could have been short selling as the week proceeded; as in a bear market one sells into pips, just as in a bull market one buys into dips.

 

A number of short selling opportunities arose. Doug Noland reports Ten-year Portuguese yields sank another 23 bps to 3.74% (down 239bps y-t-d). Italian 10-yr yields fell nine bps to 3.12% (down 100bps). Spain’s 10-year yields dropped 10 bps to 3.09% (down 107bps). As a consequence Portugal, PGAL, rose 0.5%, Italy, EWI,  2.3%, and Spain EWP, 1.9%.  Stockbrokers, IAI, led by SCHW, TROW, ITG, rose 5.1%. Large Cap Growth, JKF, Sectors rising included Aerospace And Defense, PPA, 4.2%, Transportation, XTN, 3.7%, led by UNP, DAL. Global Industrial Producers, FXR, 3.4%, led by PPG, QCOM, EMR, ETN, ROK, ITW, GRA, IFF, APH, DOW, SEE, MMM, WLK, JNJ, HON, WHR, Semiconductors, SOXX, 3.1%, led by MU. Energy Production, XOP, rose, 7.1%, manifesting three white soldiers candlestick pattern. Energy Services, OIH, rose 4.2%, led by CLB, manifesting an evening star candlestick.

 

A portfolio of Inverse Market ETFs could have served as collateral; this might have included STPP, XVZ, JGBS, GLD, PPLT, PALL, EUO, YCS, OFF, SAGG, DTYS, DNO, as well as HDGE, SBB, SBM, DDG, EFZ, YXI, SZK, SDP, KRS, REK.

 

Money is the credit and flow from sovereign authority.

 

The age of credit presented was an experience in fiat money, which provided the  opportunity to grow wealth by investing in fiat assets such as stocks, bonds, and real estate.

 

Now, in the age of the failure of credit, coming as bond vigilantes call the Benchmark Interest Rate, $TNX, higher from 2.74%, a new form of money will develop, that being diktat money.

 

Wealth can only be preserved by purchasing and taking possession of and safely storing gold bullion.

 

Those who own gold are economically sovereign and together with emerging regional fascist leaders possess seigniorage; the new money will have its value from the word, will and way of regional sovereign bodies, and regional sovereign leaders, whose authority comes from regional framework agreements. Public private partnerships will coin money as their edicts replace the leveraged speculative investment community’s schemes of credit and currency trade investing.

 

This week, that is the week ending April 17, 2014, Gold, $GOLD, traded lower to $1,293 on a higher US Dollar, $USD, UUP.  The Gold ETF, GLD, is in a area of strong resistance, and being a currency as well as a commodity, traded lower with the commodity currencies the Australian Dollar, FXA, the Brazilian Real, BZF, as well as the Emerging Market Currencies, CEW.

 

The chart of the Gold ETF, GLD, shows that it entered an Elliott Wave 3 of 3 Up in January 2014. Short Side Of Long posts Gold Has Outperformed Other Asset Classes In First Quarter 2014. ETF Daily News reports Phantom Gold Inventories: has the Comex already defaulted?.  It’s hard to justify investment in Gold Mining Companies, such as AEM, given its forward PE of 37.

 

It’s best to find a place where the effects of economic deflation will be felt the least; those with wealth should consider International Living, and begin to maintain a home in Ecuador and in Panama City.

 

In blogging I have come to appreciate that life is an economic journey in sovereignty and the seignorage it provides.

 

The current economic deflation in the Eurozone is caused in large part by unemployment.  The Ed Yardeni post Economic Recovery Is Lackluster communicates Socialist economies have not benefited LTRO 1, LTRO 2, and OMT, as much as the Crony Capitalist US economy, the reason being there is more clientelism in the EU, as The Economist posts, Structural Reform In Southern Europe: Some Patchy Progress, and less home ownership, less natural resources like oil and gas, and less securitization of investment risk.

 

EU Observer posts Regional Unemployment Highest In Spain.  And the WSJ reports Deflation Threat Becomes More Widespread in Europe.  Consumer prices rise at slowest pace for more than four years in Year to March.

 

Future economic deflation will be global in nature and caused mostly by disinvestment from debt trade investing, such as Real Estate Investment, Blackstone, BX, and currency carry trade investing, such as Budweiser, BUD, hitting hardest in the Most Carry Traded Nations, which includes Europe, DFE, Indonesia, IDX, Developing Europe, ESR, The UK, EWUS, Egypt, EGPT, Denmark, EDEN, India, SCIN, the US, IWM, New Zealand, ENZL, China, ECNS, Africa, GAF, Singapore EWS, and the Philippines, EPHE. Yes, look for fast falling currencies such as the Indonesia Rupiah, Egyptian Pound, New Zealand Dollar, Singapore Dollar, and the Philippine Peso.

 

The Apostle Paul in Ephesians 1:10 presents The Great Economic Blesser, that being Jesus Christ, who is now, has been, and always will be in Dispensation, that is in economic stewardship of all things, producing the ultimate economic experience.

 

The world passed through peak prosperity on Thursday April 10 with the failure of credit in the Eurozone.  Humanity has passed from the age of credit, which produced prosperity, into the age of debt servitude, where the new normal is austerity.

 

I appreciate all who have come to visit my blog.

 

This post’s short url is http://tinyurl.com/m5ru6lj

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