The Failure Of Credit Gets Underway As Commodities Trade Lower On The Failure Of Currencies

Financial Market report for the first two days of May 2014

 This post is presented in Google Documents format here

1) Introduction

The failure of credit is underway as investors no longer trust the monetary policies of the world central banks to stimulate investment gain. The failure of credit came the week ending April 25, 2014, and constitutes the most significant economic event since President Nixon took the US off the gold standard in 1971, and is seen in China, YAO, ECNS, CHIX, TAO, Russia, RSX, ERUS, and the US, IWC, IWM, KRE, trading lower in value.

The failure of credit pivots the world out of the age of credit and into the epoch of debt servitude, and is evidenced by the parabolic turn lower in Chinese Financials, CHIX, China Investments, YAO, China Technology, CQQQ, China Industrials, CHII, China Real Estate, TAO, as well as Regional Banks, KRE, the US small Caps, IWC, IWM, the National Bank of Greece, NBG, Greece, GREK, Ireland’s Bank, IRE, and Ireland, EIRL, as well as Credit  Providers Visa, V, and Mastercard, MA, the nation of Russia, RSX, ERUS, and Debt Trades, such as Blackstone, BX, and Leveraged Buyouts, PSP, and manifests as the death of Major World Currencies, DBV, such as the Australian Dollar, FXA, and Emerging Market Currencies, CEW, such as the Chinese Yuan, CYB. 24hGold reports Contrary To The Media Spin, Greece Keeps On Sinking.

2) Financial activity in the first two days of May 2014.

On Thursday May 1, 2014, Aggregate Credit, AGG, traded unchanged, as the Interest Rate on the US Ten Year Note, ^TNX, traded lower from 2.65% to 2.61%, and the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, flattened, as is seen in the Steepner ETF, STPP, flattening, with the result that the US Treasuries, TLT, the 30 Year US Government Bonds, EDV, and the Zeroes, ZROZ, traded to new rally highs, which took Financial Preferreds, PGF. Mortgage REITS, REM, such as IVR, Residential REITS, REM, Industrial Office REITS, FNIO, and Retail REITS, to rally highs.

The failure of credit is seen in Global Financials, IXG, in particular the National Bank of Greece, NBG, is leading World Stocks, VT, lower from their April 2014, highs. The rally in High Yielding Debt Investments, JNK, VCLT, EU, EMB, HYD, EMLC, QLTB, EMCD, BABS, HYXU, presented in their ongoing Yahoo Finance Chart, is history. Australia Dividends, AUSE, which pays 4.3%, traded lower, and shows the way is now down in the debt behemoths.

On April 16, 2014 Christine Idzelis of Bloomberg reported The US Junk Loan Market Has Never Fueled So Much Dealmaking. A total of $85 billion of Junk Loans, JNK, have been raised this year to finance acquisitions, topping 2007’s record pace.

Bloomberg reports Junk Loans Pulled as Buyers Say No After Fed Raises Concern. The tide is turning in the market for speculative-grade loans as investors refuse to buy some deals deemed too risky. Rocket Software pulled $725 million of loans from the market this week that would have refinanced debt and paid for a dividend to its co-founders and private equity firm Court Square Capital Partners LP, according to data compiled by Bloomberg. The deal is at least the third to be withdrawn in the last month, with cable TV provider WideOpenWest Finance LLC canceling $1.97 billion in loans and Dutch LLC, which does business as women’s apparel company Joie, scrapping a $200 million debt offering. The loan market is starting to show signs of tightening more than six months after the Federal Reserve and Office of the Comptroller of the Currency sent letters to banks telling them to improve their deteriorating underwriting standards. Investors are demanding better terms and pulled cash from leveraged-loan funds the last two weeks, snapping an unprecedented 95 straight weeks of inflows.

The trade lower in Education Services, High Beta ETFS, such as Internet Retail, FDN, Call Write Bonds, CWB, International Treasury Bonds, BWX, bearing 1.52% interest. the Floating Rate Note, FLOT, bearing a 0.43% interest, give additional evidence that the failure of credit has commenced.

The failure of credit comes with debt deflation, that is currency deflation. Said another way, investors no longer trust in the monetary policies of the world central banks to stimulate investment gain, and as a result currencies, the wheels on which investments drive, and the life blood on which nation states exist, are dying; these include Major World Currencies, DBV, such as the Australian Dollar, FXA, as well as Emerging Market Currencies, CEW, such as the Chinese Yuan, CYB.

What Doug Noland of Prudent Bear terms the Global Government Finance Bubble, consisting of such things as US Government Bonds, GOVT, International Treasury Bonds, BWX, and International Corporate Bonds, PICB. is about to burst.

While Nation Investment, EFA, led by EWC, EWU, and Small Cap Nation Investment, SCZ, led by NORW, EDEN, and EWI, have risen to rally highs, on a safe haven rally in International Energy Companies, IPW, TOT, E,  RDS-B, SNP,  STO, IMO, XOM, CVX, ECA, BP, SSL, SU, HES, CNQ, OXY, as well as Global Utilities, DBU, and Consumer Staples, KXI, global fiat asset prices are falling as the fiat money bubble has finally burst.

Transportation Shares, XTN, are at their rally highs. Global Industrial Producers, FXR, and Design Build Companies, FLM, are trading just below their rally highs.

Equity Investments, that is World Stocks, VT, and Global Financial Institutions, IXG, are trading lower from their April 9, 2014, highs, this coming on the failure of credit in China, in Russia, and in the US.

Investors are derisking out of debt trades, such as Leveraged Buyouts, PSP, such as DLPH, and Mortgage Backed Real Estate, BX, and deleveraging out of currency carry trades, such as China, YAO, ECNS, CQQQ, CHII, Russia, RSX, ERUS, and US Small Caps, IWC, IWM.

With the bond vigilantes calling the Benchmark Interest Rate from 2.49% on October 23, 2013, to 2.61% on May 1, 2014, its Global ZIRP no more. The Banker Regime ofPursuit Of Yield Bearing Equity Investments, such as Water Resources, PHO, Dividends Excluding Financials, DTN, and Mid Cap Value Stocks, FVL, and Global Telecom, IST, such as ORAN, PHI, VZ, T, and Nation Investment, EFA, particularly in Greece, GREK, Ireland, EIRL, and its companies, a IR,  COV, MNK, CRH, and RYAAY, are topping out and turning over. The extinction of the fixed income investor, whose love for Utility Stocks, PUI, XLU, has commenced on the failure of credit.

All fiat currencies will be debased and devalued by the ongoing failure of credit; some economies will experience faster debt deflation than others.

The Small Cap Developed Market Nations, SCZ, that are at the greatest risk of debt deflation are MES, ENZL, EDEN, DFE, EWS, EWI, ENZL, and GERJ, as is seen intheir ongoing Yahoo Finance Chart.

The Debt Loaded Emerging Market Nations,EMHD, that are at the greatest risk of debt deflation are IDX, THD, EPHE, THD, SCIN, EGPT, GXG, ARGT, GAF, and EMHD, as is seen intheir ongoing Yahoo Finance Chart.  Benson te writes Phisix Mania Rages As Money Supply Sizzles for the 9th Month!

Commodities, DBC, traded parabolically lower, on Thursday May 1, 2014, as Agricultural Commodities, RJA, Natural Gas, UNG, UNL, Oil, USO, Base Metals, DBB, and Silver, SLV, traded strongly lower on the failure of currencies, specifically Commodity Currencies, CCX.

On Friday May 2, 2014,Credit Investments, that is Aggregate Credit, AGG, that is traded to a new rally high, as the chart of the Interest Rate on the US Ten Year Note, ^TNX, shows a return to its  February 1, 2014 value of 2.60%, and the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, flattened, as is seen in the Steepner ETF, STPP, flattening, with the result that the US Treasuries, TLT, the 30 Year US Government Bonds, EDV, and the Zeroes, ZROZ, traded vertically higher to new rally highs.

Notes and Bonds, such as European Debt, EU, traded to a new all time high as Bloomberg reports Spanish, Italian, Irish Bond Yields Drop To Records. Credit Madness drove the Highest Yielding Debt such as Build America Bonds, BABS, higher.

3) The trade lower in Commodities evidences the pivoting of the world from prosperity into austerity and opens the door to the opportunity of short selling.  

Trust in the monetary authority of Banker Regime and its schemes of Global ZIRP, which began when the US Fed traded out “money good” US Treasuries for Distressed Investments of all types, such as those traded in Fidelity Investments FAGIX Mutual Fund, provided the basis for global growth and more importantly investment in an age of credit that was underwritten by the Milton Friedman Free To Choose Architecture.

The failure of credit is getting strongly underway with Commodities, DBC, trading lower; thus the short selling opportunity of a lifetime has commenced, just as the WSJ reports Retirement Investors Flock Back to Stocks. Equities account for highest percentage of new contributions into 401(k) plans since crisis.

Numerous authors report that the institutional investor is selling and the retail investor is buying, confirming a market top has been achieved.  One could begin short selling from the top using these Inverse Market ETFs, as collateral in a brokerage account STPP, XVZ, GLD, EUO, YCS, CMD, DNO, PPLT, PALL, SBB, SBM, EFZ, YXI, SZK, SDP, KRS, REK, DDG, MYY, EUM, HDGE, SAGG, DTYS, JGBS

Countless short selling opportunities exist and include CVCO,  BSBR,  BAP,  AA,  CSTM,  RAD,  WM, TPL, MWV, AOS, CE, IR, ALV, URI, ABG, POOL, LACO, VNDA, REX, APH,  RCL, MOG-A,  FISV,  MU,  ASMI,  PSIX,  INFU,  KFY,  SNDK,  AWH,  DAL,  GNW,  AIG,   GE,  QCOM,  TEL.  PUK,  NP,  HEES,  NNI,  JNJ,  MMM,  EMR, WHR,  NXPI,  BEAV,  SNA,  IR,  COV,  ALK,  OILT,  THO,   ORLC,  HBI,  MHK,  BKW,  TROW,  DECK,  KR,  HPQ,  DV,  DJCO,  PCYC, HD,  GASS, GLP,  ODFL, DXPE, AXE, NNBR, EEFT, TSS,  FIS, WLP,  UNP, KMB, BOFI, FDX, R, UHAL, COP,  HAL, WY, DLX, DOV, MRK, BMY, BXE, KO, PEP, WM, ECOL, WTR, AWK, MIC, AWR, RSG, GWW, DIS, ECL, SNX, DDS, DISH, DTV, CMCSA, STLD, PCP, SBNK, BBW, MTOR, SANM, HURN, IBKR, JNJ, AAPL, MSFT, SLB, HAL, SNE, MKTAY, NJ, NTT , TEF, PHI, ORAN, NTL, VZ, VE, VOD, S, RNET, CHU, TSU,  TKC, SKM, PT, IQNT, TMUS, IRS, CRESY, APSA, LMNR, PME, ADM, OINK, GRO, SANW, WBK, DEG, KR, HELE, SIG, GSOL, FNHC, UIHC, UVE, AFH, HAL, BHI,HP, DOX, BSAC, CIB, BAP, UBS, SNY, KORS, CHU, TLK, MNK, CRH, JHX, LUX, NTZ, CHT, TI, KT, TEF, PHI, TV, PAC, ASR, OMAB, IBA, GMK, INXN, QGEN, CSTM, UN, LYB, ASMI, OFIX, AVGO, KEP, ALV, FWLT, NVS, SYT, STM, AUO, SPIL, TSM, ASX, AZN, CUK, PSO, IH, PUK, SMN, UL, DLPH, GSK,and Vice Stocks such as B, BUD, TAP, DEO, BF-B, FMX, KOF, GD, LMT, UTX, LO,  MO, RAI, LVS, MGM. ROX, STZ,

The world is pivoting from prosperity into austerity. The age of credit supported an investor centric, moral hazard based prosperity; but with investors derisking out of debt trades and deleveraging out of currency trades, the debt serf centric, age of debt servitude is emerging.

Many news reports document the fulfillment of Bible prophecy of Revelation 13:1-4. The age of debt servitude has commenced, which centers around a debt serf grinding austerity, which will be underwritten by a Regional Fascist Architecture in each of the world’s ten regions and which establishes a unifying gulag of totalitarian collectivism in mankind’s seven institutions. Bloomberg reports Australian Asset Sales, Cuts to Welfare Urged to Lower Debt. Australia should privatize its rail and postal assets and cut family welfare payments as Prime Minister Tony Abbott seeks to meet election pledges to rein in record public debt, a report ordered by his government advised. And WSWS reports Irish Government Creates Police Unit To Target Social Welfare Claimants. The government’s 2014 budget aims to slash social spending by €2.5 billion.

An economic and political polar vortex has formed. With the failure of credit the world has pivoted from the paradigm and age of liberalism where bankers waived magic wands of wealth creation in what Doug Noland termed wildcat finance; and into the that of authoritarianism where fascist leaders warn with clubs of poverty infliction. Automatic Earth post How America Grows Its Way Into Poverty. Bloomberg reports Xi Vows to Combat Terrorism After Blast Kills 3 in Xinjiang. President Xi Jinping vowed to combat “violence and terrorism” after three people were killed in an explosion and knife attack in the capital of northwestern China’s Xinjiang region hours after he visited the city, according to state-run Xinhua News Agency. “Knife-wielding mobs” slashed travelers and set off explosives at the Urumqi’s south train station at about 7:10 p.m. local time yesterday, Xinhua said, citing the publicity department of the ruling Communist Party’s regional committee. The attack injured 79 people, four seriously, it reported.

The recovery since 2008, was primarily both investor centric and client centric, yet provided some economic growth. The Bespoke Investment Group report Ford F-150 Pickup Truck Sales Post Best April Since 2006, draws out the idea that the Fed’s policies, while not only focusing on and thus developing and defining the investor as the centerpiece of economic activity, underwrote small business development, and established Automobile Production, CARZ,  and Automobile Dealerships as credible investment opportunities.

The California Beach Pundit writes of clientelism The one thing that changed in a really big and durable way, starting in 2008, was fiscal policy. The Bush administration launched TARP in late 2008, and the Obama administration followed up with ARRA in 2009. Then came Obamacare in 2010, which purported to restructure fully one-sixth of the US economy within the space of a few years. Then came the Dodd-Frank super-regulation of the financial industry. Beginning in 2013, top marginal tax rates were increased.

As the first of the above two charts shows, massive fiscal stimulus increased the federal government’s debt from $5.34 trillion in June ’08 to $12.45 trillion as of this week. As the second chart shows, that surge of borrowing doubled the federal debt burden, raising it from 36% of GDP to 72% of GDP in a mere four and a half years. The only other time something of this magnitude happened with fiscal policy was WW II.

The federal government borrowed $7.1 trillion over the course of five and a half years and handed most of the proceeds out in the form of various transfer payments. Our leaders in Washington did this in the belief that this would stimulate spending and that would convince businesses to create more jobs. The federal government restructured the entire healthcare industry in the belief that this would lower costs and give everyone healthcare insurance coverage.

If anything, the massive growth of government intervention in the economy since 2008 looks to be the Occam’s Razor explanation for what caused the weakest recovery in history.

I comment that the fiscal path is unsustainable. The Fed’s borrowing defined and created the investor and the age of credit. Now with investors derisking out of debt trades and deleveraging out of currency carry trades, the world is entering into Kondratieff Winter, and a deadly Financial Apocalypse, that is credit bust and financial system breakdown, presented in Revelation 13:3-4, is imminent.

The Federal Reserve’s policies provided an investment renaissance in Energy Producers, Fracking Companies, and Refiners. The California Beach Pundit writes Amazing Increase In US Oil Production,

Brandeis International Business School Professor Stephen G. Cecchetti and NYU Stern’s Center for Global Economy and Business Director Kermit L. Schoenholtz call for Regulating Money Market Funds.

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 money market funds, MMF, as well as banks everywhere will be integrated into the Government, and be known as Government Banks; and in this sense 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, such as BOFI, Regional Banks, KRE, such as SIVB, HBAN, and RF, the Too Big To Fail Banks, RWW, such as C, seen inthis Finviz Screener, will be integrated into the banks and be known as the Government Banks, and the money market funds known as the Government Money Market Funds.

With the failure of the three dynamos of creditism, corporatism and globalism, the singular dynamo of regionalism is establishing regional economic fascism. Henry Meyer of Bloomberg reports China plans to give the developers of its military planes, ships and weapons access to the nation’s capital markets by folding them into listed state-owned companies, according to people familiar with the matter. The plan would allow military research institutes to be incorporated into the state-owned companies. The policies, being drafted by the Ministry of Finance and other agencies, could be released as soon as next month. The changes fit with the ruling Communist Party’s pledge to give markets a ‘decisive’ role in the allocation of resources. They may also promote the formation of higher-quality defense companies, according to James Hardy, Asia Pacific editor of IHS Jane’s Defence Weekly. ‘There has been a trend to streamline originally fully-state owned enterprises and make them a lot more competitive internationally,’ Hardy said. ‘Generally these research institutes are where a lot of the high end, high-tech stuff like missiles tend to get designed and road-tested.’

4) Economics is the ordained life experience of humanity, and is a paradigm presenting the experience of money in an age.

As communicated by the Apostle Paul in Ephesians 1:10, economics is the paradigm and stewardship of all things by Jesus Christ in every epoch, bringing them to maturity and perfection, much like a ship’s captain completes the manifest before setting sail.

Economics is defined as the life experience between a person and another, a corporation, and the state, that is government; either it be ethical or pathological; economics is the trust and flow that comes from sovereignty, and the model that best presents economics is the Dispensation Economics Manifest.

An economy is defined as the life experience that comes from the administration of the credit and trade that comes from a household or stronghold. An economy exists for life and death experience, and is determined by the prevailing interest rate of the monetary regime and its monetary policies and schemes.

All be economists, as the field of economics is not restricted to NYT pundit Paul Krugman, or to ivory tower academicians, such as Oxford’s Simon Wren-Lewis.

Economics is money based; money is defined as the credit and trade that comes from the administration of a household or stronghold; debt based money bears interest, which is defined as the cost of money.

The banker regime established the freest of all economies in the history of mankind; beginning in 1999 with the repeal of the Glass Steagall Act and the provision of the Euro, it birthed and established the investor as the centerpiece of economic action; and with the financial recovery of QE1, and the ensuing Global ZIRP, the investor was set totally free to pursue investment choice, according to his risk profile. Those who risked the most and invested in Pure Small Cap Growth Stocks, RZG, and Small Cap Value Stocks, RZV, and who invested in the Euro Yen, EUR/JPY, currency carry trade, such as TRIB, MNK, IR, COV, RYAAY, and CRH, garnered the greatest reward in the creation of the greatest moral hazard mankind has ever known.

David Hay of Evergreen Gavekal writes in Zero HedgeCasino Capitalism. When central banks are bombarding the system with trillions of synthetic money, and anchoring interest rates close to zero, financial assets go bonkers.

Money flows into the capital markets (like stocks) rather than capital assets (like new factories); hence, the result is high frequency financial velocity and low frequency economic velocity.

Very low interest rates encourage companies to leverage up and buy back their own stock (or buy out competitors)

Paradarch Advisors in their provocatively titled, Sex, Drugs, and Debt (who knew those three were connected!?!). In their most recent missive, they included some commentary that I thought was so good I should just relay it as is: “The entire edifice of the 2009-2013 economic recovery has been built upon the foundation of wealth effects, i.e., higher stock prices.

This was precisely the intent of the recovery’s bearded architect. The wealth created has certainly been enormous: Since bottom ticking 666 on March 6, 2009, the S&P 500 is now up roughly 208%. But like all spectacular bubbles, behind all of that newly created paper wealth stands a mountain of debt.

Since the beginning of 2009, total outstanding US corporate debt has increased by $3.376 trillion to a total of $9.766 trillion at year-end 2013. Of that $3.376 trillion increase in net issuance, nearly 87% has been used to fund share buybacks and dividend payments. In other words, the last five years have been one massive, market-wide leveraged buyout/dividend recapitalization.”

Paradarch notes “This situation has the potential to devolve into something extraordinarily dangerous very little of the post-recovery corporate debt issuance has gone into either the building or purchase of productive assets, meaning a deeper long-term economic contraction is more likely whenever the (bear market) comes. The current situation seems perversely worse than the housing bubble, because at least after that iteration of the credit mania we were left with something tangible (i.e., cheaper houses).“

Lest you think this is an off-the-wall, renegade view, the iconic Jeremy Grantham was just interviewed in Fortune, where he echoed this same sentiment. Given that Mr. Grantham previously issued early warnings on both the tech-wreck and the housing-hosing, it’s wise to heed his words.

As with Charles Gave and Paradarch, Grantham wants to know where all of the long-term investing has gone, per this line from his Fortune interview: “The theory is that lower interest rates are supposed to spur capital spending, right? Then why is capital spending so weak at this stage of the cycle?” As you can see from the chart below, it’s hard to argue that over the last 15 years that we’ve been adequately investing in productive assets.

Could it be that by letting ourselves get caught up in a series of bubbles we’ve been engaging in a societal version of what the Austrian school of economics calls malinvestment? If the answer is yes, we should all be doing some serious thinking about future implications.

There has been a paradigm shift. Casino Capitalism is over, through, finished and done; the banker regime of democratic nation states is being replaced with the beast regime of regional governance and totalitarian collectivism, seen in Revelation 13:1-4, as on October 23, 2013, Jesus Christ opened the first seal of the scroll of end time events, seen in Revelation 6:1-2, releasing the Rider on the White Horse, who has the Bow of Economic Sovereignty, to effect global coup d’etat, to replace fiat money with diktat money, as the bond vigilantes began calling the Interest Rate on the US Ten Year Note, ^TNX, from 2.48%, and thus pivoted the world from the paradigm of liberalism, meaning freedom from the state, into that of authoritarianism. Diktat money is defined as the mandates of regional fascist leaders ,which establish debt servitude for the purpose of regional security, stability and sustainability.

Liberalism featured the sovereignty of democratic nation states which provided policies of investment choice and schemes of credit, producing seigniorage in equity investments and credit investments.  But now with the failure of credit, seen in China, Russia, and the US Small Caps trading lower, and commodities trading lower being the tipping point, authoritarianism is the new normal, and features the sovereignty of regional governance which provides policies of diktat and schemes of debt servitude in regional fascism, where the debt serf is the centerpiece of economic activity, as the investor is going extinct.

5) In the news

The Street reports Why Sallie Mae Stock Plummeted to a One-Year Low. Sallie Mae, SLM, plummeted more than 65% to a one-year low of $8.98 on Thursday after the company completed the spin off its loan-management, servicing and asset-recovery business into a new entity called Navient, NAVI, Navient will service almost $300 billion in student loans, according to a statement. The consumer banking business keeps the Sallie Mae name.

Julie Miecamp and Katie Linsell of Bloomberg report Billionaire Patrick Drahi is offering concessions to win over U.S. investors as he finances the acquisition of Vivendi SA’s French phone unit with the world’s biggest junk bond offering. As part of about $23 billion of funding in euro and dollar bonds and loans to buy SFR, Drahi may pay about 7.75% in interest on $2.9 billion of eight-year junk notes with a preliminary B rating from Standard & Poor’s.

The WSJ reports Entrusted Lending Raises Risks In Chinese Finance. Companies Turn to Other Firms, Not Banks, for Loans. With credit tight in China, companies in industries beset by overcapacity are turning to an unconventional source for cash—other companies—in a new rising risk for the country’s financial system. These company-to-company loans, known as entrusted lending, have emerged as the fastest-growing part of China’s shadow-banking system, which provides credit outside of formal banking channels. Net outstanding entrusted loans.

ZeroHedge reports on employment

Doug Noland reports ten-year Portuguese yields dropped six bps to 3.63% (down 251 bps y-t-d). Italian 10-yr yields fell six bps to a record low 3.04% (down 108bps). Spain’s 10-year yields dropped nine bps to a record low 2.98% (down 118 bps). German bund yields declined three bps to 1.45% (down 48 bps). French yields fell five bps to 1.93% (down 63 bps). The French to German 10-year bond spread narrowed two to 48 bps. Greek 10-year yields sank another 20 bps to 6.13% (down 229bps).

Ambrose Evans Pritchard posts The Euro Sovereign Markets Have Gone Mad. Irish 10-year yields are nearing US Treasury yields , the global benchmark price of money, and Spain is not far behind, Neil Mellor’s of Bank of New York Mellon relates. Borrowing costs are back to 2008 levels, yet the debt burdens are massively higher, and still rising. As Mr Mellor reminds us, Germany has shot down any prospect of an EMU fiscal union, and the Draghi backstop plan for Italian and Spanish debt (OMT) has been declared a treaty violation and probably ultra vires by the German constitutional court.

The deflationary/lowflation climate is eroding the debt dynamics of the Club Med bloc. “Japan has managed a similar scenario over the years but only with the active connivance of the Bank of Japan and its acquiescence to debt monetisation – something that is worlds away in the euro-area,” he said.

“All considered, it is difficult not to conclude that the euro-area debt markets are therefore in the grip of speculative forces – forces that convey progress and confidence, but belie an underlying economy that is only just getting to its feet after four years of penury.

“Greece is the euro-area microcosm: its growth remains anaemic, its unemployment queues long with a generation of youth part structurally disengaged, and with debt of 175 per cent of GDP and rising, it is far from clear whether the country can pay its way and avoid further assistance: but despite these profound uncertainties, its government recently returned to the market and despite numerous defaults in recent years, saw its allocation of five year bonds oversubscribed to the tune of 7-1 despite offering a return of less than 5 per cent. If nothing else this surely speaks volumes about the forces permeating markets in 2014.”

Credit Madness, has sustained the EURJPY Currency Carry Trade Investments, such as Luxottica, LUX, Shipping Stocks, SEA, such as KEX, TK, TOO, TGP, SFL, GLNG, GLOG, SBLK, CMRE, NM, DLNG, GLBS, CPLP, GASS, Eurozone Nations, such as Netherlands, EWN, and the European Financial Institutions, EUFN, such as Switzerland’s, UBS, as well as the Design Build Companies, FLM, such as Switzerland’s FWLT.  The EUR/JPY is about to unwind as investors derisk out of the Euro, FXE. which closed at 136.95 on Friday May 2, 2014; look for great deleveraging to reward stock market short sellers.

On March 12, 2014, Tyler Durden wrote Baltic Dry Plunges 8%, Near Most In 6 Years As Iron Ore At Chinese Ports Hits All Time High.  I comment that Shipping Stocks, SEA, relative to the Baltic Dry Index, $BDI, that is SEA:$BDI, is trading quite high; and is going to plummet, driving bulk shipping rates down further; there is coming a wipe out of shipping companies; these will be the first going into the Pit of Financial Abandon.

6) An investment in gold is a significant better investment than short selling.

In the age of the failure of credit, physical possession of gold bullion will be the only sustainable investment.

An investment demand for gold is imminent as investors panic in a flight to safety out of Financial Armageddon, that is credit collapse and financial breakdown foretold in Bible prophecy of Revelation 13:3-4.

The chart of Spot Gold, $GOLD, showed a closed at $1,300; the US Dollar, $USD, closed at $79.56. Gold is in an Elliott Wave 3 of 3 up, rising from an Elliott Wave 2 Down of $1,280; the 3 of 3 up wave is the most dynamic and sweeping of all waves, as it establishes bhe bulk of the wealth on the way up to the wave 5 top.

Jack Chan presents the Gold ETF, GLD, in Safehaven Chart article, This Week In Gold, trading at support of 125 and resting above support at 124.

7) Times of Israel reports Even If Israel Doesn’t Like It, Palestinians Will Get State, US Officials Say. American officials directly involved in the failed Israeli-Palestinian peace process over the last nine months gave a leading Israeli columnist a withering assessment of Prime Minister Benjamin Netanyahu’s handling of the negotiations, indicated that Palestinian Authority President Mahmoud Abbas has completely given up on the prospect of a negotiated solution, and warned Israel that the Palestinians will achieve statehood come what may, either via international organizations or through violence.

The soonest that Palestinian statehood might be achieved is when the Sovereign moves into Jerusalem and announces a middle east peace plan. 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, 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.

8) An improved information sources is now available from Trading Floor

Trading Floor announces New Format On Quant Corner Starts Next Week.

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