This post is available in Google Documents format here.
Financial Market Report for the week ending June 27, 2014
I. … Introduction …. Across the Curve posts the Brown Brothers Harriman report EU Summit. The heads of state meet on Thursday June 26, and Friday June 27.
There are two issues, economics and politics. Fiscal and structural reform plans will be reviewed. Here, France, Spain and Italy, in what appears to be more a concert of interests rather than a coordinated position (which is why it is difficult to conceptualize this as a bloc), are pressing in different ways for a more liberal interpretation of the fiscal mandates. Germany may be able to make some concessions on the condition that the Stability and Growth Pact is itself not amended.
The high drama may be seen in the political agenda. The immediate issue is the European Commission President. The operative treaty requires the heads of state to take into account the parliamentary election results in naming the new president. The two main blocs in the European Parliament must choose a lead candidate to represent them. The center-right (EPP) won a plurality, but not a majority of votes. About one in four votes were cast for parties that are anti-EU. Juncker, who was the EPP’s candidate due to his extensive experience in European politics, was identified with the status quo. Moreover, even though Juncker was a head of state for many years, he is seen as a federalist who seeks greater authority for the European Union.
Juncker may not be very well liked, but the UK’s prerogative and obstructionism is less well liked. As more decisions are decided on a qualified majority basis rather than unanimity, the value of the UK’s veto is eroded. In the past, it has effectively vetoed EC presidential candidates. UK Prime Minister Cameron’s public objections may be a part of a principled position (against federalism), but seems poor politics and exposure the UK’s isolation. If Cameron had been more adept at negotiating and trading horses, as the case may be, he might have been able to have greater influence.
Recall that Cameron took the Tories out of the EPP coalition, in which Merkel’s CDU is a key participant, and recently formed an alliance with the AfP (Germany’s anti-EU party). There are three state elections in Germany in Q3 and the AfP, which did not meet the threshold for participation in the national parliament, will likely win some seats in these state elections. The AfP campaigns to the right of Merkel and may take votes from the CDU.
Cameron faces his own challenge in the form of the UKIP, which did well in the recent local and EU Parliament elections. Cameron has promised a referendum on the EU if he is reelected next year. There is a not very subtle threat: If there are not concessions forthcoming for the UK, it will withdraw from the EU, for which is accounts for a third of the budget, and this includes the EC President.
Yet, a recent YouGov poll (conducted for The Sun) found that by a 44-36 margin, British people wanted to remain in the EU. This was the widest margin since the survey began in September 2010. This dovetails with other reports that suggested that many who voted for the UKIP also want the UK to remain in the EU. Ironically, the kind of federalism Cameron eschews in Europe, he wants Scotland to accept within the UK.
Jean Claude Juncker, is an elite insider, and the consummate European Federalist, who has a vision for a Federal Europe, specifically who seeks greater centralized authority for the European Union and therefore will very likely be approved to be the next EU President.
The Telegraph reports Italy Will Use Its Six Month Presidency Of The European Union To Push For A “United States of Europe”, Prime Minister Matteo Renzi, said, in a move likely to raise hackles in Britain. Launching an appeal to convince European leaders to show “that a stronger and more cohesive Europe is the only solution to the solve the problems of our time”, Mr Renzi said: “For my children’s future I dream, think and work for the United States of Europe.”
He further called for “courageous leaders” to work towards achieving that goal – something that Britain has always objected to. In 1988 Margaret Thatcher, then prime minister, dismissed the idea that the United States might be a model for the future of Europe and David Cameron is actively trying to prevent the election of a committed federalist, Jean-Claude Juncker, to the head of the European Commission.
Italy takes over the rotating EU presidency from Greece on July 1. Its job will be to steer the EU at a time when the so-called “European Project” is coming under renewed attack, in the wake of an EU-wide surge in support for Eurosceptic parties in the recent European elections.
Mr Renzi, whose country will preside over the EU until December, said the only effective response to the outcome of the European elections is to offer “an idea of Europe that corresponds to an attractive adventure, rather than just a financial or economic exercise.” He said it was vital to show that the EU “is not only a common past but a common destiny.”
Two other pillars of the Italian presidency will be the push for growth over austerity, and greater help with the migration crisis in the Mediterranean. More than 50,000 people have arrived in Italy by boat from North Africa this year.
Mr Renzi’s comments, in a speech in Florence last week, come amid a growing storm over the nomination of Mr Juncker as president of the European Commission. David Cameron will call for a vote from fellow EU leaders at Thursday’s summit in Ypres if there is an attempt to rubber-stamp Mr Juncker in the role. Mr Cameron opposes the candidacy of the former prime minister of Luxembourg, whom he sees as preventing EU reforms and is seen by some as a politician with an instinct for ever-closer European integration.
Meanwhile, the incoming Italian presidency has caused a stir after ruling that its official website will only be published in English and Italian, meaning it will not be translated into French or German for the first time since 2007. In order to save money, it will not be translated into any of the other 24 official languages of the EU.
II … In this week’s trading
On Tuesday June 24, 2014, the see saw destruction of fiat wealth got strongly underway, as Equity Investments, VT, Global Financials, IXG, Nation Investment, EFA, Small Cap Nation Investment, and Yield Bearing Investments, joined Credit Investments, AGG, in trading lower; this coming on the trade lower in Ireland, EIRL, in Greece, GREK, and the European Financials, EUFN.
The loose monetary policies of the world central banks have finally stirred up inflation and have finally resulted in turning investment sentiment from greed to fear, specifically fear that the world central banks’ monetary policies have crossed the rubicon of sound monetary policy, and have “money good” investments bad
Gold Miners, GDX, GDXJ, Silver Mines, SIL, SILJ, Energy Production, XOP, Global Integrated Energy, IPW, FILL, Energy Service, OIH, IEZ, Solar Energy, TAN, Consumer Staples, KXI, Consumer Discretionary, RXI, Consumer Services, IYC, Timber Producers, WOOD, Automobiles, CARZ, Design Build, FLM, Aerospace and Defense, PPA, Semiconductors, SOXX, Global Industrial Producers, FXR, Metal Manufacturers, XME, Transportation, XTN, Coal Miners, KOL, and Copper Miners, COPX, led World Small Cap Stocks, VSS, and World Stocks, VT, lower, with the result that the world entered into the final phase of the Business Cycle, that is Kondratieff Winter, providing the perfect short selling opportunity of selling from an equity market top, more specifically an Elliott Wave 5 High. Fat Pitch posts Bullish Extremes
Ireland’s Bank, IRE, Greece’s Bank, NBG, Switzerland’s Banks, UBS, CS, and the UK’s Banks, RBS, LYG, BCS, and Germany’s DB, led European Financials, EUFN, lower; Argentina’s Banks, BMA, GGAL, BFR, traded lower; and Stockbrokers, IAI, Regional Banks, KRE, and Investment Bankers, KCE, traded lower, leading Global Financials, IXG, lower.
Gulf States, MES, Egypt, EGPT, Ireland, EIRL, Greece, GREK, Finland, EFNL, Austria, EWO, Spain, EWP, Portugal, PGAL, Italy, EWI, Argentina, ARGT, Emerging Africa, GAF, The UK, EWU, EWUS, Norway, NORW, Turkey, TUR. Thailand, THD, Canada, EWC, US Small Caps, IWM, IWC, New Zealand, ENZL, and Australia, EWA, KROO, led Nation Investment, EFA, lower.
Yield Bearing Investments, traded lower as Mortgage REITS, REM, and Residential REITS, REZ, traded lower, Industrial Office REITS, FNIO, traded lower, forcing Vanguard REITS, VNQ, lower.
Also, Eurozone Small Cap Dividend, DFE, Gulf Dividend, GULF, Australia Dividend, AUSE, Emerging Market Dividend, EDIV, Global Infrastructure, IGF, International Small Cap Dividend, DLS, Emerging Market Small Cap Dividend, DGS, Shipping, SEA, Smart Grid, GRID, Leveraged Buyouts, PSP, Water Resources, FIW, Global Telecom, IST, International Dividend Dogs, IDOG, Real Estate, IYR, Dividends Excluding Financials, DTN, such as Apple, AAPL, traded lower.
Junk Bonds, JNK, traded to a new all time high, as Aggregate Credit, AGG, was led higher by the 30 Year US Government Bonds, EDV, the 10 Year US Notes, TLT, and the Long Duration Corporate Bonds, LWC, which forced the Interest Rate on the US Ten Year Note, ^TNX, lower to 2.59%.
Credit Bubble Stocks posts “High Yield” Coal Bonds. Coal has had some rough times because of competition from cheap natural gas the past few years. Some of the coal companies have had negative income and even operating profit for multiple years in a row. You’d think maybe there’s be some distressed debt opportunities, but the bonds are extremely expensive.
- Alpha Natural Resources – mines coal in VA, WV, KY (higher cost) in addition to WY. EBIT less than interest expense the past three years. Highest yielding bond 13%.
- Armstrong Energy – Illinois basin coal (better), but operating income hasn’t covered interest expense since 2009, yet bond only yields 8.7%.
- Peabody (BTU) – good coal but highest yielding bond less than 7%.
- CLD – Powder River Basin (good coal), but highest yielding bond only 5.6%. Is profitable and covering interest expense though.
- Consol – highest yielding debt 5.5%.
- Westmoreland – yielding about 5%
This is probably the type of debt thatyield hunger funds have shorted the long bond to buy.
The Bull Flattening continuing, as is seen in the Flattner ETF, FLAT, rising in value. The 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, flattened as is seen in the Steepner ETF, STPP, trading lower in value.
An inquiring mind asks will inverse bond ETFs such as SAGG, HYND, and AGND, preserve one’s wealth, which can seen in their ongoing combined Yahoo Finance Chart?
Perhaps, but they are dollar based fiat wealth, and will not participate in the increase in wealth that comes from the demand for safe haven hard assets, such as the physical possession of gold bullion, GLD.
Soon the US Dollar, $USD, UUP, will buckle and trade lower with the rest of the World Major Currencies, DBV, as well as the Emerging Market Currencies, CEW, which will invigorate the investment demand for Gold, GLD, whose price will rise from its current range of $1,240 to $1,320.
Gold is in the middle of an Elliott Wave 3 Up, and as such only God knows how high it will go.
Wealth can only be preserved by investing in and taking physical possession of gold bullion.
Doug Noland described money manager capitalism as being characterized by wildcat finance, where bankers waived magic wands of credit creation. The new normal economic experience of regionalism will be one of wildcat governance where regional fascist leaders warn with clubs of debt servitude.
Disinvestment out of debt trade investments such as Coal Mining Stocks, such as ANR, Rental Landlord, Blackstone, BX, Wireless Provider, S, Rental and Leasing Companies, HEES, URI, Rubber and Tire Manufacturer, GT, Leveraged Buyout Company, DLPH, which had underwritten the most risky of debt, and deleveraging out of currency carry trade investments, in particular the European Financials, EUFN, the European Small Cap Dividends, DFE, Gulf Dividends, GULF, and Water Investments, FIW, brought Pursuit of Yield Investing to an end on Tuesday, June 24, 2014, and in so doing terminated the Banker Regime’s power of Global ZIRP, which has been largely responsible for the dynamos of creditism, corporatism, and globalism, which served to create the investor as the centerpiece of economic activity.
The Tuesday, June 24, 2014, trade lower in the European Financials, EUFN, such as NBG, IRE, RBS, LYG, BCS, terminated Pursuit of Yield Investing, which came via Global ZIRP, and marked an inflection point in economic history: the world pivoted from the age of currencies and credit, and into the age of diktat and debt servitude, where the investor and investment gain is no longer the centerpiece of economic activity, but now, the debt serf and debt servitude is the centerpiece of economic activity.
The age of investment choice is over and the age of debt servitude has commenced. There is no amount of reform that can be done to reinvent Ireland, Greece, France, Italy, or any of the Eurozone nations.
Periphery Europe, that is Portugal, Italy, Greece, and Spain, as well as France, are socialist nations characterized by truly staggering amounts of sovereign and municipal debt; and their banks loaded to the gills with such debt, as well as real estate debt. For all practical purposes these are insolvent sovereigns and insolvent financial institutions, whose seigniorage, that is whose moneyness, comes courtesy of the Liquidity Announcements of the ECB Chairman, Mario Draghi.
It is disinvestment out of debt traded and currency carry traded Ireland, EIRL, and Greece, GREK, that is leading World Stocks, ACWX, lower. This comes as Gigaom posts Apple’s Irish Tax Avoidance Schemes Come Under Formal European Investigation European authorities want to know if the Irish tax authorities’ deal with Apple, AAPL, unfairly advantages the company or a specific group of companies. If it does, it may constitute illegal state aid.
European authorities have launched a probe into whether Apple’s, AAPL, corporate income tax arrangements in Ireland are legal, or whether they qualify as unlawful state aid.
Ireland is the base of choice for many large tech firms’ international operations, largely because of a low corporation tax rate and favorable laws that enabled complex avoidance tricks like the legendaryDouble Irish arrangement (set to beshut down starting in January 2015 after U.S. lawmakers complained about Apple, AAPL, paying nearly no corporation tax anywhere).
The particular issue here is the “tax rulings” that were issued by the Irish authorities in Apple’s, AAPL, favor, confirming that the iPhone maker could continue with its transfer pricing schemes. If these rulings are found to specifically advantage the company, or indeed a group of companies, then they rulings may be seen as illegal state aid.
In a Statement, The European Commission has also opened similar probes in regard to Luxembourg and the carmaker Fiat, and the Netherlands and coffee peddler Starbucks.
As many know Interest is the cost of money, and its rate is determined by the battle between the bond vigilantes and central banks.
Despite the Credit Bubble Stocks report Treasury Implied Volatility Very Low $TLT, the Creature from Jekyll Island was struck a deadly blow by the bond vigilantes, who tenaciously have yielded the Bow of Economic Sovereignty, that is the Interest Rate on the US Ten Year Note, ^TNX, calling it higher from 2.49%, and sustaining it at 2.59%, which destroyed Credit Investments, that is Aggregate Credit, AGG, beginning June 2, 2014.
Debt deflation is underway, and it has led to the Euro, FXE, the British Pound Sterling, FXB, and, the Swedish Krona, FXS, trading lower in value. Soon, debt deflation will commence in Emerging Market Currencies, CEW, turning the Emerging Markets, EEM, and the Frontier Markets, EMFM, FRN, lower, making the Bloomberg report Norway’s $880 Billion Wealth Fund to Target Frontier Markets, a most unfortunate thing for the people of Norway.
America’s foreign policy will be shaped by the three factors. First, the dissolution of its Dollar global hegemonic authority and power. Second, the powering up of the dynamo of regionalism, on the powering down of the dynamos of creditism, corporatism, and globalism. Third, the ongoing pull of neocons responding to the security interests of the nation of Israel.
Please consider the bible prophecy of Revelation 13:1-4, which foretells that out of waves of economic recession and turmoil in the Club Med nations, coming largely out of derisking out of debt trade investments, and deleveraging out of EUR/JPY currency carry trade investments, that the Beast Regime will rule in every one of the world’s ten regions and occupy in all of mankind’s seven institutions, as the singular dynamo of Regionalism powers up, when leaders meet in summits to renounce national sovereignty, and to announce regional framework agreements that provide for regional pooled sovereignty which develop regional fascism to establish regional security, stability and sustainability.
Regional fascist leaders will be appointed and announce diktat policies of regional economic governance and schemes of totalitarian collectivism which will develop the debt serf as the centerpiece of economic activity, replacing the investor as the focal point of economic activity.
On Wednesday, June 25, 2014, the see saw destruction of fiat wealth intensified, as World Stocks, ACWX, traded lower, Frontier Markets, FM, and Nation Investment, EFA, traded lower, on the ongoing trade lower in European Financials, EUFN, in advance of the EU Summit; this comes as currency traders are long Major World Currencies, DBV, such as the Canadian Dollar, FXC, Emerging Market Currencies, CEW, such as the Brazilian Real, BZF, as well as Commodity Currencies, CCX, such as the Australian Dollar, FXA, as investors sought “safe haven” investment in Credit Investments.
Hedged Equity ETFs, Global Hedged Equities, HEDJ, and Emerging Market Hedged Equities, DBEM, were pulled lower by the trade lower in World Stocks, ACWX, and Nation Investment, EFA, despite sovereign currencies trading slightly higher.
Nation states, led by the UK, EWU, Sweden, EWD, and Switzerland, EWL, are losing their investment seigniorage, as leaders are poised to discuss policies for European regional economic sustainability.
The June 25, 2014, trade lower in World Stocks, ACWX, and Nation Investment, EFA, documents the failure of the sovereignty of democratic nation state governance, which is one half on the Creature from Jekyll Island’s investment seigniorage, the other half is Global Financials, IXG, which lost value yesterday. The global money system is breaking down.
Soon the monster, which through Global ZIRP created the investor as the lynchpin of economic activity, is going to be replaced by the Beast Regime of Regional Economic Governance and Totalitarian Collectivism, presented in Revelation 13:1-4, as investors derisk out of debt trade investments, and deleverage out of currency carry trade investments.
Soon policies of diktat and schemes of debt servitude, will govern economics in an effort to minimize economic deflation and global political instability, replacing policies of investment choice and schemes of credit liquidity which have governed economics for global growth and investment gain.
The trade lower on Tuesday, June 24, 2014, in Yield Bearing Investments, such as the European Financials, EUFN, European Small Cap Dividends, DFE, International Dividend Dogs, IDOG, Global Telecom, IST, and Leveraged Buyouts, PSP, documents the failure of Global ZIRP, to stimulate Dividend Investing, DTN. Risk-on investing has turned to risk-off investing. The peaking out of risk free money, FLOT, confirms the end of risk-on investing.
The trade lower on Tuesday June 24, 2014, in Yield Bearing Investments, was an “extinction event” that terminated not only Fixed Income Investing, DTN, but all forms of investing as well: Nation Investment, EFA, Banking Investment, IXG, and Global Stock Investing, ACWI.
The Eurozone, EZU, was led lower by EFNL, EIRL, GREK, EWO, EWQ, EWG, EWP, EWI, and EWN. However, US Stocks, VTI, were the exception to the Nation Investment, ACWX, sell off on June 25, 2014, as the sectors which sold off yesterday, traded higher, as investors clawed back losses from yesterday; these included Solar Energy, TAN, Energy Service, OIH, Social Media, SOCL, Energy Service, XOP, Internet Retail, FDN, Small Cap Pure Value, RZV, Consumer Services, IYC, Transportation, XTN, Medical Devices, IHI, Automobiles, CARZ, Steel Producers, SLX, Consumer Discretionary, RXI, Homebuilders, ITB, as well as Investment Bankers, KCE, and Regional Banking, KRE; but not Aerospace and Defence, PPA.
On Wednesday, June 25, 2014, Credit Investments, AGG, traded higher, as investors sought safe investment from falling Nation Investment, EFA, and World Stocks, ACWX, and traded higher in front on the European Summit.
Demand for Credit Investments was so strong that the Benchmark Interest Rate, ^TNX, fell to 2.56%.
It was Eurozone, Credit, EU, trading higher in front of the European Summit, that drew up all Credit Investments; these were led by the Long Duration Corporate Bonds, LWC, 30 Year US Government Bonds, EDV, International Corporate Bonds, PICB, Global Government Bonds, BWX, US Ten Year Notes, TLT, Emerging Market Bonds, EMB, and Mortgage Backed Bonds, MBB, which traded up near its late May 2014 high.
Credit mania is seen in the Bloomberg report China Banks Join Japan’s With 50% Surge in Aussie Loans. China’s banks, expanding overseas to gain the experience they need to compete with global lenders in their domestic market, have boosted loans in Australia by more than 20-fold over six years. Japanese finance providers, flush with low-cost money from the Bank of Japan’s stimulus program, have helped fund companies including Sydney Airport and Newcastle Coal Infrastructure Group Pty.
Banks led by Australia & New Zealand Banking Group Ltd. have syndicated $39.7 billion of Australian loans this year, a 22 percent gain on the same period of 2013, Bloomberg-compiled data show. Sumitomo Mitsui and Mitsubishi UFJ Financial Group Inc. helped to arrange the most after Australia’s four largest domestic banks.
The Australian 10-year yield was 3.59 percent as of 12 p.m. today in Sydney, compared with 0.57 percent for comparable Japanese paper.
Japanese and Chinese lenders were among the 19 banks and five export credit agencies involved with this year’s biggest Australian syndicated loan, a $7.2 billion facility to enable the development of an iron ore project by billionaire Gina Rinehart’s Roy Hill Holding Pty.
But, on June 25, 2014, Junk Bonds, JNK, traded lower, from their June 24, 2014, market top high, confirming that risk appetite has turned to risk avoidance; this at a time when Bloomberg reports Debut Bond Sales Swell in Europe as Risks Mount. Companies are debuting a record amount of bonds in Europe as investors demanding higher yields show greater tolerance for untested borrowers who are seeking to diversify funding as banks curtail lending.
Bloomberg reports New Zealand’s N.Z. Dollar Approaches Record High. The New Zealand Dollar climbed to within 0.7 percent of a post-float record after stronger-than-expected exports added to the currency’s allure amid signs of an uneven recovery in the U.S. economy.
New Zealand’s currency rose this month after Reserve Bank Governor Graeme Wheeler increased interest rates for a third time in 2014. Borrowing U.S. dollars to buy the kiwi in what’s known as a carry trade has returned 8.4 percent this year, the most among developed-nation peers. A gauge of the dollar against 10 major counterparts was set for the worst first-half performance in three years as weaker-than-expected U.S. economic data supported bets borrowing costs will remain near zero. The yen advanced to a five-week high versus the greenback.
“Given the momentum behind the kiwi at the moment, the prospects are really quite high in the near term that we reach the record,” said Kymberly Martin, a market strategist in Wellington at Bank of New Zealand Ltd. “Interest-rate differentials and low volatility are currently both in favor of the New Zealand dollar.”
The New Zealand dollar was little changed at 87.85 U.S. cents as of 1 p.m. in Tokyo after climbing to 87.94, approaching the high of 88.43 set on Aug. 1, 2011, that was the strongest since exchange-rate controls were scrapped in 1985.
The Bloomberg Dollar Spot Index lost 0.2 percent to 1,005.91 after sliding to 1,005.80, a level unseen since May 9. The gauge, which tracks the greenback against 10 major counterparts, has fallen 1.3 percent since Dec. 31, the first drop within the first six months of any year since 2011.
The demand for New Zealand Dollars is supported by low volatility.
The yen rose 0.4 percent to 101.35 per dollar after climbing to 101.32, the highest since May 21. Implied three-month volatility in dollar-yen fell to 5.64 percent yesterday, the least in data compiled by Bloomberg going back to December 1995. The U.S. currency traded at $1.3623 per euro, down 0.2 percent this week.
Deutsche Bank AG’s FX Volatility Index, (that is currency volatility index) fell to 5.28 percent on June 19, the lowest in figures dating back to August 2001.
The absence of price swings is encouraging investors to borrow in currencies where interest rates are low and use the proceeds to buy assets in economies where they are relatively high, such as in New Zealand, by reducing concern that large exchange-rate movements would wipe out any profits.
New Zealand’s 3.25 percent key rate compares with near-zero benchmarks in the U.S., Japan and the euro area. The nation’s central bank is the only one among advanced economies to have tightened monetary policy this year.
The Bull Flattening continuing, as is seen in the Flattner ETF, FLAT, rising in value. The 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, flattened as is seen in the Steepner ETF, STPP, trading lower in value.
The Tuesday, June 24, 2014, trade lower in the European Financials, EUFN, such as NBG, IRE, RBS, LYG, BCS, terminated Pursuit of Yield Investing and the subsequent June 25, 2014, trade lower Nation Investment, EFA, coming on more losses in the European Financials, EUFN, marked an inflection point in economic history: the world pivoted from the age of currencies and credit, and into the age of diktat and debt servitude.
Under liberalism, meaning freedom from the state, it was the bankers, corporations, government, entrepreneurs, and citizens of democracies who were the legislators of economic value and the legislators of economic life that shape one’s means and one’s ends.
Now, under authoritarianism, it is the currency traders, bond vigilantes, and regional fascist leaders working in public private partnerships and in regional governance, who are the legislators of economic value and are the legislators that shape one’s means and one’s ends.
Raúl Carrillo asks Where Does Money Come From? That’s Our Question.
With the rise to power of the British Empire and then the US Dollar Hegemonic Empire, the world economic system has based upon a debt based money system featuring currencies and credit.
Liberalism, meaning rule by oligarchs, featured fiat money, defined as sovereign currencies, backed up by treasury debt of democratic nation states; examples of sovereign money include the Australian Dollar, FXA, the British Pound Sterling, FXB, the Swedish Krona, FXS, the India Rupe, ICN, and the Brazilian Real, BZF. Through the liberal monetary policies of the world central banks and schemes of credit liquidity, the world has attained peak money, as is seen in Major World Currencies, DBV, and Emerging Market Currencies, CEW, trading to rally highs, on soaring World Treasury Debt, BWX.
Authoritarianism, meaning rule by tyrants, features diktat money, defined as the mandates of regional fascist leaders for regional security, stability and sustainability, backed up by trust in regional framework agreements.
Out of a global credit bust and financial breakdown, the Ten Toed Kingdom of Regional Economic Governance, with toes built in the mire of diktat and totalitarian collectivism, will emerge. The world will be based upon a new debt based money system featuring diktat and debt servitude.
Formerly one was a citizen of a soveign nation state residing under the rule of law. Now one is a resident residing in a region of economic governance under policies of diktat and schemes of control.
Soon there will be a run on money, beginning first with the Bond Mutual Funds, Bond ETFs, and then the Money Market Funds; look for exit restrictions and exit taxes of all types.
The Speculative Leverage Investment community created, administered, and regulated, the flow of economic resources; it has established peak sovereignty and peak seigniorage, providing peak wealth and peak fiat money. Soon regional fascist leaders will direct the factors of production, oversee fiscal spending, exact taxes, and manage banks, which will be integrated with the government and be known as government banks, or gov banks for short.
Money is the script of government; an example is SNAP Food Stamps. Sovereigns coin money out of their sovereign authority. Seigniorage belongs to the sovereign power that issues money. Sovereigns provide seigniorage, that is moneyness for economic experience, specifically for one’s life experience either in prosperity or in austerity.
Central banks, together with corporate banks have provided seigniorage; increasingly regional fascist leaders will provide seigniorage as Jesus Christ, operating in the economy of God, a concept presented by the Apostle Paul in Ephesians 1:10, on October 23, 2013, opened the First Seal of the Scroll of End Time Events, and released the Rider on The White Horse, who has given the Bow of Economic Sovereignty, to bond vigilantes to effect global coup d etats to call treasury interest rates higher, and in so doing transfer sovereignty from democratic nation states to regional sovereign leaders; these having sovereign authority are establishing the seigniorage of diktat, and are providing diktat money for one’s economic life experience.
Media Stocks, PBS, rose 3% as Breakout reports Supreme Court Kills Aereo, And Cord Cutters Dreams. To the dismay of cord-cutters everywhere, the Supreme Court put the kibosh on Internet television service Aereo.
The court ruled that Aereo, which transmits broadcast TV channels over the Internet to its subscribers, was just like a cable television service, which must pay licensing fees to broadcasters in return for showing copyrighted programs. Aereo had argued it merely rented a tiny, dedicated broadcast antenna to each of its thousands of customers, who have a right to watch the copyrighted programs and shouldn’t have to pay licensing fees.
Stocks of broadcasters, which had sued to shut Aereo down, shot up on the ruling, led by Sinclair Broadcasting (SBGI), up 15%, and CBS (CBS), which gained 6%. More-diversified network owners Walt Disney (DIS), Twenty First Century Fox (FOXA) and Comcast (CMCSA) were up about 1%.
A ruling in favor of Aereo could have upset the current system that requires cable providers to pay billions of dollars a year to broadcasters such as CBS and Sinclair. Cable companies could have set up their own multiple antenna systems, mimicking Aereo, for example.
On Thursday, June 26, 2014, Peter Schwarz of WSWS posts EU summit In Ypres: The End Of The European Union In Its Current Form In the runup to the Ypres summit, the debate over who should be the next president of the European Commission escalated to a point that makes any compromise virtually impossible.
The president of the European Council, Herman Van Rompuy, is opening today’s EU summit in the Belgian city of Ypres. The 28 heads of state and government are due to pay tribute to the hundreds of thousands of troops who died on the battlefields of the First World War around the town in Flanders. “It will be a moving ceremony as we will be testifying to what Europe is: a project of peace, solidarity and cooperation”, Van Rompuy commented.
In fact, Ypres is likely to be a symbol for the opposite: national discord, social conflict and war; and for the end of the European Union in its current form.
In the run-up to the summit, the conflict over who should be the future president of the European Commission escalated to a point that makes any compromise virtually impossible. British Prime Minister David Cameron is determined to prevent the election of former Luxembourg government leader Jean-Claude Juncker, who is supported by the majority of the EU parliament and of government heads. A vote, which Cameron will lose, seems inevitable. For the first time in the history of the EU, the influential head of the Brussels bureaucracy with its 33,000 employees will not be determined by consensus.
Cameron has become a victim of the genie he himself released from the bottle. In order to stanch the influence of the anti-EU UKIP party and EU-skeptics in his own Tory Party, he has denounced Juncker as the embodiment of European “federalism”. The British tabloid press has eagerly taken up the theme, with the Daily Mail describing Juncker as a man “notorious for fanatical federalism” and someone who has “pursued with dogged determination a vision of political and economic union which defies popular will, cultural identities, democratic principles and the merest common sense”.
This is a gross exaggeration. The Luxembourg Christian Democrat, who in his 19-year reign transformed the Grand Duchy with its half million inhabitants into a tax haven for banks and large corporations, shares similar views to Cameron on many political issues. As head of the Euro Group, Juncker played a key role in rescuing ailing banks with billions of euros in public money. The British charges against him contain a kernel of truth, however, in that he is suspected of placing the interests of the euro zone countries above those of the City of London.
What bothers Cameron in particular about Juncker is the fact that he was proposed by the European Parliament for the post of president of the Commission. Cameron is of the opinion that the head of the Brussels bureaucracy should be nominated exclusively by the heads of state and government as representatives of nation states, rather than by the parliament, a central EU institution.
The Ypres summit takes place in the shadow of May’s European elections, which saw a massive popular backlash against almost all the ruling parties in Europe and the EU as a whole. Well over half of the electorate stayed away from the ballot box, while a fifth voted for parties that criticize or reject the EU. Under conditions where the Social Democrats and the European left support the EU, right-wing, nationalist parties were able to profit from the anti-EU sentiment. In the UK, UKIP emerged with the biggest vote, and in France, the National Front.
While the UK increasingly distances itself from the EU, the proponents of a strong EU are reacting to the election result with fresh attacks on the working class. This is the essence of the dispute over the future handling of the Stability Pact, which, along with the controversy over Juncker, dominated the run-up to the summit.
French President François Hollande and Italian Prime Minister Matteo Renzi, both Social Democrats, have expressed their support for Juncker—but only under the condition that the stringent austerity targets of the Stability Pact be applied more flexibly. They have the support of the German SPD chairman Sigmar Gabriel, who is Economics Minister in Merkel’s grand coalition. Gabriel took part in a meeting of Social Democratic government leaders earlier this week in Paris to prepare the EU summit.
The goal of the Social Democrats is not to stop the massive social cuts made in recent years. On the contrary, the relaxation of austerity targets is aimed at giving necessary time to implementing massive reforms to the labor market, thereby improving economic competitiveness at the expense of the working class. Renzi has set himself the goal of catapulting Italy from 65th place in the world competitiveness rankings of the World Bank to 15th place. His role model is the “Agenda 2010” introduced by SPD Chancellor Gerhard Schröder (1998-2005), which created a huge low-wage sector in Germany.
The Süddeutsche Zeitung summarized the plans of the Social Democrats as follows: “Governments ready to impose noticeable changes on their citizens—e.g. loosening up the protection against dismissal, abolition of automatic pay increases or reducing subsidies—should get more time to reduce budget deficits and debt.”
European governments are aware that this will provoke massive social resistance. On the eve of the summit, and largely ignored by the media, the relevant European ministers adopted provisions for implementing a so-called “solidarity clause”, which regulates the Europe-wide deployment of military, police and other security forces in crises which have a “serious impact on people, the environment or property”. This includes control of protests and riots.
Also on the agenda of the Summit is the signing of the economic part of the Association Agreement with Ukraine. Refusal to sign this agreement led to the coup against former Ukrainian President Viktor Yanukovych, which was spearheaded by fascists and backed by the EU.
Originally the summit was also to decide on increased sanctions against Russia. Following a retreat by the Russian president, however, this will probably not take place. With the signing of the Association Agreement, however, which binds Ukraine tightly to the EU, the summit will makes clear that the EU is maintaining its aggressive offensive against Russia.
In June 26, 2014, financial marketplace trading Nation Investment, EFA, traded unchanged, as Asia Excluding Japan, EPP, was led higher by CHXF, EWH, KROO, YAO, ECNS, ENZL, EWT, EPHE, as China stocks rose as the first IPOs in four months were well-received, while India, INP, SCIN, Poland, EPOL, ESR, and Turkey, TUR, traded lower.
World Financials, IXG, traded unchanged as European Financials, EUFN, and Emerging Market Financials, EMFN, traded lower.
World Stocks, ACWX, traded higher, as Metal Manufacturing, XME, such as AA, CSTM, HAYN, CVR, SXT, KALU, SLCA, CENX, and Global Miners, PICK, and Steel, SLX, traded higher on higher Base Metals, DBB.
Commodities, DBC, traded lower as Oil, USO, and Natural Gas, UNG, traded lower.
The Bull Flattening continued, as is seen in the Flattner ETF, FLAT, rising in value. The 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, flattened, as is seen in the Steepner ETF, STPP, trading lower in value. The 10 30 yield curve appears to have achieved maximum flattening, suggesting that the rally in US Treasuries, TLT, while it may continue, is approaching completion.
The Interest Rate on the US Ten Year Note, ^TNX, traded lower to 2.53%, and appears that it could fall once again to 2.49%. Of note, Premium REITS, KBWY, Closed End Funds, GCE, Mortgage REITS, REM, and Energy Partnerships, AMJ, EMLP, MLPJ, Global Real Estate, DRW, Financial Preferreds, PGF, traded to a new all time highs on the lower rate; and Leveraged Buyouts, PSP, Global Utilities, DBU, and International Telecom, IST, traded near their previous highs, while Dividends Excluding Financials, DTN, traded lower.
The trade lower in the Benchmark Interest Rate, ^TNX, reinvigorated the debt trade, and carry trade darlings, that is the Global Wireless, Utility, and Telecom Stocks, great short selling opportunities.
On Thursday, June 26, 2014, a double top high in Credit Investments, AGG, was nearly achieved as the European Summit convened, and as investors sought a “safe haven” investment from falling World Stocks, ACWX. Chinese Credit, DSUM, traded to a new rally high, supporting the Chinese Yuan, CYB. And Eurozone Credit, EU, rose near its previous multiple top rally high, supporting European Stocks, EZU, from selling off, despite a falling EUR/JPY, coming from a rallying Yen, FXY, over a failing to rally Euro, FXE. The stronger Yen, FXY, has driven the Japanese Small Caps, JSC, much higher over Japanese Stocks, EWJ.
Lorenzo Totaro of Bloomberg reports “As Italy’s borrowing costs fall to new lows, its debt is rising to the most ever. The country owed 5% more in April compared with a year earlier, with debt reaching 2.15 trillion euros ($2.9 trillion) (presented in Yahoo Finance Chart, ITLY. That matches the outstanding borrowing of Germany, the largest economy in Europe and the most of any country on the continent. While Germany is scheduled to grow 2% this year, Italy will expand 0.3% in 2014. This year, Italy foresees increasing its debt ratio to 135% of gross domestic product from 133% in 2013”.
The take-away concept is that the investor’s greed has turned, specifically that the monetary policies of the world central banks monetary policies have crossed the rubicon of sound monetary policy and has made money good “investments bad”, with the European Financials, EUFN, and Nation Investment in Ireland, EIRL, Greece, GREK, Europe Small Cap Dividends, DFE, are the worst of risk assets. Clearly NBG, IRE, DB, CS, UBS, and BCS, are failed investments. And Aerospace and Defense Investments, PPA, such as GT, GD, LMT, NOC, HRS, ESL, MOG-A, are comprised investments, at risk for going down the drain as a political initiative emerges to kill the Ex-Im Bank.
BrainyQuote relates Grover Norquist as having said, Our goal is to shrink government to the size where we can drown it in a bathtub.
Arnold King ask When To Kill The Export-Import Bank? Under current conditions mercantilism works, so this is exactly the moment when ending an export-support program really would cost jobs. Pointer fromMark Thoma. I say that the right time to kill it is any time you can. If killing the Ex-Im bank istea-party mischief, then I say let’s have more such mischief.
The AEI’sTom Donnelly writes, The worst thing about the defense loan program is that it only applies to our richest and best allies, NATO Europe, Israel, Japan, South Korea, the ones who can most afford to finance arms purchases on their own, and does nothing for real at-risk states in Africa, Latin America or the Middle East. The FMS-DELG duo has hampered, not helped the Pentagon’s security “partnering” efforts. In today’s environment, and particularly when China aims to replace Russia as the alternate, non-US source of front-line military equipment, the United States government needs a bigger, better and more aggressive export credit agency. The Congress should rejuvenate, not exterminate, the Ex-Im Bank. His case for the Export-Import Bank speaks for (i.e., against) itself.
The Eurozone’s leading banks are insolvent financial institutions, and the European periphery countries such as Ireland and Greece are insolvent sovereigns. Insolvent banks and insolvent nations cannot provide investment seigniorage, and cannot support regional and global economic growth.
As foretold in Bible Prophecy of Revelation 13:1-4, out of waves of Club Med, sovereign, banking, and corporate insolvency, new sovereignty, that of the Beast Regime, and new seigniorage, that is the seigniorage of regional fascism, will rise to provide governance and economic experience through diktat money, that is the mandates of regional fascist leaders for regional security, stability, and sustainability.
The Banker Regime has developed peak moral hazard; the world’s debts cannot be repaid, and under the Beast Regime, seen in Revelation 13:1-4, Europe’s forthcoming Sovereign, seen in Revelation 13:5-10, and its Seignior, seen in Revelation 13:11-18, will rise to rule the world, seen in Daniel 9:25, and apply all debts, to all the people, that is every man, woman and child on planet earth, as is seen in Revelation 13:19.
On Friday June 27, 2014, Canada,EWC, CNDA, traded higher on a higher Canadian Dollar, FXC. Mexico, EWW, traded higher. The National Bank of Greece, GREK, and Banco Santander, SAN, led the European Financials, EUFN, lower. Emerging Market Financials, EMFN, and Far East Financials, FEFN, traded lower. Canada’s Bank, RY, BMO, BNS, Mexico’s Bank, BSMX, Panama’s Bank, BLX, Columbia’s Bank, CIB, and US Bank, BK, traded higher. Greece, GREK, and Spain, EWP, led the Eurozone, EZU, lower. Sectors PBS, ITB, OIH, IGN, CQQQ, RZG, RZV, and FONE, traded higher. In Yield Bearing Investments, Global Infrastructure, IGF, Financial Preferred, PGF, Energy Partnerships, AMJ, EMLP, AMJ, Utilities, XLU, Global Real Estate DRW, traded to new rally highs.
The bond vigilantes, have tenaciously yielded the Bow of Economic Sovereignty, that is the Interest Rate on the US Ten Year Note, ^TNX, calling it higher from 2.49%, to its close this week at 2.53%.
Junk Bonds, JNK, traded lower, confirming that Pursuit of Yield Investing is history. Demand for risk assets, that came via money manager capitalism, is being relegated to the dustbin of history. An investment demand for gold, GLD, has commenced as investor seek genuine safe haven investment in the physical possession of gold bullion.
With the see saw destruction of fiat wealth underway, that is with World Stocks, ACWX, Nation Investment, EFA, and Global Financial Institutions, IXG, underway, and Credit Investments, AGG, moving to a double top high, global economic deflation will get seriously underway as investors deleverage out of Currency Carry Trade Investments, and derisk out of Debt Trade Investments, as well as out of High Yield Debt, such as JNK, LWC, EU, EMB, HYD, EMLC, BABS, HYXU, PZA, in Leveraged Buyouts, PSP, such as DLPH, in Real Estate Investment, such as BX, and in Global Banks, such as SAN, and in Regional Banks, such as EGBN is being relegated to the dustbin of history.
The bond vigilantes will have a hay day, together with the currency traders, in effecting coup d etats world wide, resulting in steepening the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, and in driving the Benchmark Interest Rate, ^TNX, ever higher, sparking a dramatic rise in inflation, be a source of economic deflation, and birth the new normal government of regional fascism, replacing all current forms of government such as Crony Capitalism, European Socialism, Greek Socialism, Chinese Communism, where the investor and investment choice, is replaced by the debt serf and debt servitude as the centerpiece of economic activity.
An inquiring mind asks what has driven stocks ever higher? Benson te writes Stocks Continues On With Record Run. Record stocks in the face of contracting economy, so what’s the connection? Who says stocks are about the economy? Aside from retail investors driving record stocks, and the just off the record in margin debt, a bigger factor has been corporate buybacks.
Sigmund Holmes notes According to Reuters, 1st quarter share weighted earnings amounted to $258.8 billion. So companies in the S&P 500 spent 93% of their earnings on buybacks and dividends. It’s been all the rage in this cycle to look at “shareholder yield” which is a combination of buybacks and dividends, something I find too clever by half considering the past track record of management led buybacks. But if you think that is a useful metric, you have to ask yourself, is a 93% payout ratio sustainable? I guess we do have the answer to one question though. We know why capital spending has been so punk.
The rising price of Gold, GLD, reflects risk avoidance, and communicates that an investment demand for safe assets has commenced. Wealth can only be preserved by dollar cost averaging into the physical possession of gold bullion.
Those into short selling may want to consider using a basket of daily managed Inverse ETFs, as collateral, such as STPP, XVZ, MLPS, GLD, GYEN, GEUR, GGBP, EUO, YCS, as well as DDG, EUM, YXI, DOG, SEF, EFZ, PSQ, REK, MYY, RWM; with the latter Proshares 100% Bear Market ETFs, presented in their combined ongoing Yahoo Finance Chart.
I foresee rising currency volatility, as investors start to derisk out of debt trade investments, and deleverage out of currency trade investments, as greed has to turned to fear, specifically fear that the world central banks monetary policies have crossed the Rubicon of sound monetary policy and have made money good investments bad, as well as the fear that said policies no longer stimulate global growth and trade; this being seen in the Global Growth And Trade ETF, DNL, trading lower.
Therefore I expect the Short of the Euro, EUO, to increase in value over the Short of the Yen, YCS, which is presented in in their combined ongoing Yahoo Finance Chart; and this straddle of the two currencies should expand and could serve as the basis for collateral in a short selling strategy.
III … In the News
TradingFloor posts Saxo Bank Chief Investment Officer Jakobsen relates Why Juncker’s EU Appointment Would Be A Violation. If as expected, Jean-Claude Juncker is soon appointed President of the European Commission, it would be a “total violation” of the results of last month’s European elections which saw a big rise in support for anti-Europe parties.
UK Conservative MP John Redwood posts What Difference Will The Appointment Of Mr Juncker Make? The new President of the Commission will be very powerful, because he will be the master of compromises between individual member states and between the Council and Parliament, driving relentlessly forward with the usual centralising agenda. At the end of this new Commission, like its predecessors, member states will have lost more power and the EU will have gained it.
The Telegraph posts Jean Claude Juncker Appointed To Head Up The EU. Keeping Britain in the EU “has got harder”, the Prime Minister said, after he was outvoted by 26 to two in his attempt to prevent Mr Juncker becoming the European Commission president. The result emboldened Eurosceptic MPs and Ukip supporters who want to leave the EU. However, Mr Cameron said he would wage a “long, tough fight” to reform Brussels before campaigning for Britain to remain in the EU in an in-out referendum he has promised to hold in 2017.
Testosterone Pit posts Last Time Lenders Did This, They Triggered The Financial Crisis. During the first quarter, 3.7 million credit cards were issued to subprime borrowers, up a head-scratching 39% from a year earlier, and the most since 2008. A third of all cards issued were subprime, also the most since 2008, according to Equifax. That was the glorious year when “subprime” transitioned from industry jargon to common word. It had become an essential component of the Financial Crisis. As before, subprime borrowers pay usurious rates. These are people who think they have no other options, or who have trouble reading the promo details, or who simply don’t care as long as they get the money. In the first quarter, the average rate was 21.1%, up from 20.2% a year ago, while prime borrowers paid an average of 12.9% on their credit cards, and while banks that are lending them the money paid nearly 0%.
USA Today posts Chicago Lays Off 1,150 Teachers And Staff
Cecchetti & Schoenholtz call for overnight lending facility for overnight lenders, and for facilities to deal with bank runs within the shadow banking system Reverse Repo Risks.
Zero Hedge posts Spain To Create Tax On Bank Deposits.
Reuters reports Risks Rising For China’s Commodity Traders. Pledging commodities to a bank using a warehouse receipt as proof of ownership, while agreeing to buy the cargo back at a set point in future, is a popular way to raise finance in global commodity markets.
It took off in China as traders sought to profit from the difference in global interest rates in the wake of the 2008 credit crisis: borrowing in dollars to invest in China’s sizzling shadow banking market often through non traditional wealth management products linked to property where the gap between returns and funding costs could be as much as 10 percentage points.
ETF Daily News reports Up to $80 Billion Gold Backed Loans Are Falsified, Chinese Auditor Warns
Reuters reports Argentina Deposits Debt Payment, But US Court Blocks Payout
In Iraq News, Pentagon Sets Up Iraq Command: 500 Troops in Iraq, More Comin. And UNZ reports It May Be Too Late for a Unity Government. And Antiwar reports Iraq’s Shiite MPs Preparing to Replace Maliki.
Peter Van Buren & Tom Engelhardt post in Antiwar Shredding the Fourth Amendment in Post-Constitutional America.
The Times of Israel posts US House Panel Approves Expanded Hezbollah Sanctions.
Reuters reports Obama Administration Expands Affordable Housing Plan. The Obama administration said on Thursday it would tap Treasury funds to bolster the construction of affordable rental housing and extend the life of a program aimed at helping homeowners avoid foreclosure. The announcement by Treasury Secretary Jacob Lew was timed to coincide with the fifth anniversary of the Making Home Affordable program, an Obama administration initiative launched at the height of the economic crisis in 2009 to revitalize the housing market.
Bamboo Investor posts China Ting Group, A Garment Maker, Said Two Borrowers Defaulted On Entrusted Loans It Made Through Ningbo Bank Corp And Bank of Communications. Bloomberg News reports China Ting Says Borrowers Default on Entrusted Loans. China Ting Group Holdings Ltd. (3398), a garment maker, said two borrowers defaulted on entrusted loans it made through Ningbo Bank Corp. and Bank of Communications Ltd. The stock fell.
Zhongdou Group Holdings Ltd. and Hangzhou Zhongdou Shopping Centre Co. failed to make interest payments on schedule on loans worth 160 million yuan ($26 million), China Ting said in a Hong Kong exchange filing yesterday. Entrusted loans, advances between companies arranged through banks, are part of China’s shadow banking system that regulators are seeking to rein in. Some of the entrusted funds, which totaled 8.2 trillion yuan as of the end of 2013, were being directed to industries that face lending curbs from the government, according to the People’s Bank of China.
Bespoke Investment posts Global Home Price Values. The real winner among the 11 economies is New Zealand. Home prices there have gone up by more than 93% since 2000, the best performance of any advanced economy. It’s no surprise then that the Reserve Bank of New Zealand hiked interest rates at their last meeting.
The New Yorker posts The Rise Of The Absolutist. Ted Cruz is an unyielding debater, and the far right’s most formidable advocate.
Daily Bell posts Opt-out of Common Core, Opt-into the Ron Paul Curriculum
Barry Gray of WSWS posts Drone Memo On Drone Killings Of US Citizens Makes Case For Presidential Dictatorship. The Obama administration memo constitutes prima facie evidence of crimes against international law, the US Constitution, and the democratic rights of the American people. And PopSci posts Lockheed’s Vision: Autonomous Drones With Lasers
Across The Curve posts Detailed Analysis of the Situation in Iraq. The Long War Journal blog has a lengthy post on the situation in Iraq and how it may play out. The authors paint a gloomy picture and think that it will be difficult for the government to overcome the insurgents without outside help.
Robert Wenzel posts Warning Financial Troubles Mount for Puerto Rico Signaling worsening financial trouble for the island, Puerto Rico’s governor, Alejandro Garcia Padilla, on Wednesday proposed a legal means to revamp the debt of some its largest public corporations, which provide vital services like electricity, Michael Corkerywrites in DealBook. The new law is meant to quell concerns that Puerto Rico’s inability to file for federal bankruptcy protection would set off a chaotic scramble among creditors in the case of a default. Investors say the proposal raises the threat that one of Puerto Rico’s agencies could falter soon.
Reuters reports Puerto Rico agency debt slumps on downgrades, restructuring law. Puerto Rico public corporation debt slumped on Friday after a new law that allows agencies to restructure their debts sparked fears of an imminent default and led to a slew of downgrades on the electricity, highway, and water authorities.
There are many vulnerabilities in the municipal bond market right now. Yesterday, I reported on problems in Harvey, Illinois (SEE: Tip of the Iceberg in Illinois? SEC Obtains Court Order to Halt Fraudulent Bond Offering by City of Harvey, Ill.)
Frank Dimora posts Bible Prophecy Foretells Of Two Soon Coming Middle East Wars, these being the Psalms 83 War which is centered upon Syria, and the Ezekiel 38 War which is centered upon Israel.
Mr Dimora relates The War spoken about in Ezekiel 38 takes place when Israel thinks they are living in safety without any walls to protect them, we believe the Psalms 83 war will take place at the time Israel and the Arabs are still calling for peace and safety and, at the time when Israel is protected by all their bars, gates, and walls.
The Bible prophesied Psalm 83 War emerged in the Middle East on June 23, 2014, as Jason Ditz of Antiwar posts Israeli Airstrikes Kill 10 Syrian Soldiers. Attack Destroyed Tanks, Artillery Inside Syria. The war will soon expand as The Times of Israel posts Jordan May Ask Israel to Go to War Against ISIS, and as Antiwar post US-Backed Syria Rebels Crumbling in Face of ISIS.
Russia will be fully engaged in the Ezekiel 38 War, as God relates, “I will turn you around and put hooks in your jaws to lead you out with your whole army, your horses and charioteers in full armor and a great horde armed with shields and swords: it will suffer a terrific loss as it moves into Syria. The Northern Bear is starting to growl, as is seen in the Zero Hedge report Putin Fires Warning Shot.
The Daily Sheeple reports Red Heifer Discovered – Major Obstacle To The Rebuilding Of The Jewish Temple Removed. Up until now, one of the major barriers to the rebuilding of the Jewish Temple in Jerusalem has been the lack of a red heifer. A qualified red heifer has not been seen in the land of Israel for nearly two thousand years, and without one it would not be possible to resume Temple worship. But now a candidate has been found that could change everything. The Temple Institute in Jerusalem has released stunning video footage of a red heifer that they believe meets the Biblical requirements.
This red heifer was born in the United States, and the owners of the red heifer contacted the Temple Institute in order to receive instructions about how to care for it. It is hoped that this red heifer will eventually be transported to the land of Israel and be used for the purification of the priests and the vessels that will be used in a rebuilt Jewish Temple.
This is a very big deal, because without a red heifer the Temple would never be rebuilt. So needless to say, the video footage that you are about to see is creating quite a stir in Jewish communities throughout the world. The Temple Institute contacted a documentary filmmaker to film this red heifer, and this video was just released to the public earlier this month…
If you are not familiar with the Temple Institute, it is an organization located in the heart of Jerusalem that is dedicated to making preparations for the rebuilding of the Jewish Temple. The Institute has created a whole host of items that are intended to be used in a future Temple including priestly garments made to Biblical specifications, a seven-branched Menorah made of pure gold, a golden Incense Altar and a golden Table of Showbread.
But without the ashes of a red heifer, all of those preparations are in vain. Before the Temple can be rebuilt and Temple worship can be resumed, a perfect red heifer must be found. And now one has been discovered.
According to Orthodox Jewish authorities, a suitable red heifer cannot even have a single black hair. So finding such a creature is not easy. According to Jewish tradition, only nine such red heifers were found during the entire time when the first two temples were standing.
All of this has huge implications for world events.
Traditionally, many Orthodox Jews have believed that the spotting of a red heifer would herald the coming of the Messiah.
And if this red heifer does indeed turn out to be a suitable candidate, one of the biggest obstacles to rebuilding the Jewish Temple in Jerusalem will have been removed.
For Christians, this is an extremely exciting development as well.
The Bible tells us that there will be a Temple standing in Jerusalem in the last days, and that the Antichrist will defile it.
But that Bible prophecy could never be fulfilled until a red heifer was found.
Yes, there are still many more obstacles standing in the way of the Jewish people rebuilding the Temple. For one, the Islamic world would go into convulsions if Israel tried to build anything on or near the Temple mount at this point.
However, the Temple Institute and a whole host of Orthodox Jews are absolutely determined to make the rebuilding of the Temple a reality, and now they appear to be one giant step closer to achieving that dream.
Mike Mish Shedlock posts French Private Sector Contracts Second Month. “France is back in recession, with rising costs and falling output prices as well. Thank the socialist policies of Francois Hollande for this result.” I relate that the report highlights that the much feared economic deflation has intensified.
Mr. Shedlock continues, “Government spending accounts for close to 57 percent of French GDP, a truly inane percentage.” I relate that France is a failed socialist nation; its economy is defined by municipal government and agricultural production, and these no longer provide economic seigniorage, that is economic moneyness to support France as a sovereign nation. Socialist France is a cancer within the common currency union known as the Eurozone.
Bloomberg reports Ukraine to Extend Cease-Fire as President Signs EU Pact. Ukraine will extend a cease-fire in its fight against separatist rebels today after President Petro Poroshenko signed a European Union accord rejected by his predecessor that sent the country spiraling into crisis
IV … A new direction for your blog author. I’ve been blogging ever since April of 2010 when Greece was shut out of the bond market by the bond vigilantes and Herman Rompuy engineered Greek Bailout I, on the concepts of sovereignty and seigniorage.
Greece gave birth to democracy; as Greek Left Review communicates in Review Of The Greek Debt Crisis, Greece has become a wretched society and failed nation state within the common currency union known as the Euro.
It is now time to move on and do a new thing.
Perhaps the new thing will be focusing on narcissism, that is the ism of the psychopath and the sociopath, that is the morally insane individuals; these are the ones with a mask of sanity, that is just a facade of normalcy.
Benjamin Buehne writes in Conscious Life News Psychopaths. There is a theory that is gaining a foothold on the internet known asPonerology (the science of Evil). The antisocial motivation of essential psychopaths is seen in the Silvia Cattori Political Ponerology remark “They also learn very early how their personalities can have traumatizing effects on the personalities of non-psychopaths, and how to take advantage of this root of terror for purposes of achieving their goals”
Claudia Moscovici providesa clear example on the psychopathic mindset when it comes to hypocrisy. Although she speaks of psychopaths in terms of romantic relationships, the mindset she describes is consistent regardless of the context.
“Honesty” means “My truth,” or “Saying whatever gets me what I want at the moment.”
“Nothing’s ever my fault. If I do something harmful, it’s because you (and others) weren’t good enough for me.” Unless you learn to decipher the psychopathic code, you’re likely to be “lost in translation.” If I put my mind to it, I could write a whole dictionary of “psychopath-speak” and its translation into regular human language.
Every so-called “truth” psychopaths utter is momentary and contingent upon their immediate gratification. Since their feelings are shallow, so is their truth-value. If you add “for now” to their declarations of love, they may sometimes ring plausible. For instance, during the euphoric seduction phase, psychopaths may believe when they tell a girlfriend that they love her and want to spend the rest of their life with her. But, as my novel, The Seducer, illustrates, their passion isn’t grounded in any empathy, love or commitment.
180 Rule asks Why Do Psychopaths Lie. Why lie about innocuous details such as what they had for lunch? Actually there is a method to their madness. The psychopath’s lies are usually 180 degrees the opposite of the truth. These lies serve the purpose of misdirection.
V … The New Normal Weather is Extreme Weather. NBC Nightly News with Brian Williams Heavy Rains Flood Season,With Extreme Weather: The threat of flooding, hail and tornadoes is expected in regions throughout the nation and June has proven to be a month of weather extremes.
VI … Conclusion. Out of disinvestment from debt trade investments and currency carry trade investments resulting in a soon coming credit bust and global financial system breakdown, known as Financial Armageddon, as prophesied in Revelation 13:3-4, new sovereignty and new seigniorage is coming.
The new normal governance is regional pooled sovereignty replacing democracy; and the new normal moneyness is diktat replacing investment choice, as the singular economic dynamo of regionalism powers up establishing regional security, stability and sustainability.
The Global ZIRP monetary policies of the world central banks have not provided economic recovery, as they were not designed for such; rather they changed the primary function of money to serve as the basis of fiat wealth investment, and birthed the investor, and investment gain, as the centerpiece of economic activity, as can be concluded by countless news reports.
My Budget 360 posts The Chasm Between The Real Economy And The Stock Market. And USA Watchdog reports Corporate Empire Created Failed Global Economic System. And Gavyn Davies in FT Blog asks How Close Is The Fed To Mission Accomplished? And House of Debt posts Terrible Recovery. Here is real GDP indexed to the quarter before each recession for all 10 recessions since 1950, taking into account this morning’s revision. Notice the significant bend downward in the last quarter for the 2007-2009 recession (solid red line). It makes the recent recovery look even worse relative to previous recoveries
Global ZIRP began in 2008 with Paulson’s Gift, which became Ben Bernanke’s QE1, where the worst of investments, that is Distressed Investments, such as those traded by Fidelity Mutual Fund, FAGIX, were traded out for money good US Treasuries; according to Morningstar, Fidelity Capital & Income is Ranked number 1 out of 742 like investments.
The final phase of Global ZIRP, is known as peak finance, and has produced a stupendous moral hazard based peak wealth, which has come via the three economic dynamos of creditism, corporatism, and globalism, providing support for investing characterized by
1) Purchase of High Yielding Debt, JNK, LWC, EU, EMB, HYD, EMLC, EMCD, BABS, HYXU, PZA,
2) Purchase of Pursuit of Yield Investments, DBU, XLU, DRW, FNIO, REM, REZ, KBWY, SEA, AMJ, DTN; this as Financial Sense posts Fixed Income Risk Appetite Headed For Euphoria. As Aggregate Credit rose to a double-top high, Global Real Estate, DRW, also put in a double-top high.
4) Purchase of Energy Production and Energy Service Investments XOP and IEZ,
5) Purchase of Defensive Equities, IPW, OIH, KIE, PAGG, KXI, XLU, IHF, IYR,
6) Purchase of Global Growth and Trade Investments, TAN, SOXX, PJP, FONE, IBB, QTEC, COPX, XTN, FXR,
7) Safehaven investing in Popular Notes And Bonds, SHY, EU, TLT, EDV, FLOT, LQD, LWC, PICB, BWX, MBB.
Inveterate, buy and hold investor, Eddy Elfenbein posts Falling Earnings, Higher PEs. As investors, our concern isn’t the macro economy but corporate profits. Monday is the end of the second quarter, and soon Corporate America will report earnings results. What’s interesting is that this earnings season will be the first one in several quarters in which we haven’t seen forecasts lowered just before earnings came out. As we all know, Wall Street loves playing the game of guiding analysts lower, then beating those much-reduced expectations.
This time, earnings forecasts have come down some, but not much. The consensus on Wall Street is for the S&P 500 to report earnings of $29.40 for Q2 (that’s an index-adjusted figure). That’s down about 2.5% in the last year, which is very small compared with recent quarters. Typically, analysts overestimate early on, and the forecasts are gradually pared back as earnings season approaches. For now, Wall Street expects full-year earnings of $119.60 for the S&P 500, which means the index is going for about 16.4 times this year’s earnings.
Yet, in a pivotal change, on Tuesday June 24, 2014,the see saw destruction of fiat wealth got strongly underway, as Equity Investments, VT, Global Financials, IXG, Nation Investment, EFA, Small Cap Nation Investment, and Yield Bearing Investments, joined Credit Investments, AGG, in trading lower; this coming on the trade lower in Ireland, EIRL, in Greece, GREK, and the European Financials, EUFN, and as a result we will see falling PEs, not increasing PEs.
Disinvestment out of debt trade investments such as Rental Landlord, Blackstone, BX, and deleveraging out of currency carry trade investments, in particular the European Financials, EUFN, such as NBG, IRE, RBS, LYG, BCS, the European Small Cap Dividends, DFE, Gulf Dividends, GULF, International Dividend Dogs, IDOG, Water Investments, FIW, brought Pursuit of Yield Investing to an end on June 24, 2014, and in so doing terminated the Banker Regime’s power of Global ZIRP, which has been largely responsible for the dynamos of creditism, corporatism, and globalism, which served to create the investor as the centerpiece of economic activity.
Tuesday June 24, 2014, marked an inflection point in economic history: the world pivoted from the age of currencies and credit, and into the age of diktat and debt servitude, where the investor and investment gain is no longer the centerpiece of economic activity, but now, the debt serf and debt servitude is the centerpiece of economic activity.
Please consider that the June 5, 2014 Mario Draghi ECB Mandate for ZIRP and Targeted LTRO, together with the June 21, 2014, Mario Draghi ECB Press Announcement, address secular stagnation, defined as low growth, low employment, low inflation, and the threat of economic deflation; and serve as the EU Economic Manifest, that is the Charter Call and Club, for Eurozone regional governance, and have birthed the debt serf, and debt servitude, as the centerpiece of economic activity.
Just as President Nixon in taking the US off the gold standard was the genesis event of the Banker Regime, in like manner, the two Mario Draghi Announcements of June 2014, were the genesis event that created the Beast Regime, where European Citizens have been called upon to share some sovereignty now. As time goes on ever increasing sharing of sovereignty will be required. Monetary sovereignty, and banking sovereignty, now resides in Frankfurt; soon fiscal sovereignty and economic sovereignty will exist in Brussels and Berlin; fiscal federalism will establish a One Euro Government. Eventually the periphery nations will be like hollo moons, revolving around planet Belgium and planet Germany.
Economic life experience will no longer center around buying and selling (or lending) national currencies for US treasury bills, nor will it be centered around the issuance of Treasury Debt by Eurozone Nations such as Italy or any nation for that matter.
The two two Mario Draghi announcements of June 2014, have commenced the end of national currencies, and have birthed regional currencies, regional exchanges, and regional economic governance.
Dollarization, defined as the tie that binds countries together, is coming undone. As the economic dynamos of creditism, corporatism, and globalism, wind down as investors derisk out of debt trade investments and deleverage out of currency carry trade investment, sovereign currencies, will sink into the Pit of Financial Abandon; and Dollarization will be a relic of a bygone era.
Doug Noland speaks to Dollarization, asking Sound or Unsound? During the past 22 years, ROW holdings of U.S. Financial Assets have inflated $21 TN, or over 1,000%. Essentially, the U.S. has unrelentingly flooded the world with dollar balances. This helps explain a lot.
The consequences of the massive inflation/devaluation of the world’s reserve currency have for a long time been readily apparent.
After ending the ’90s at $6.209 TN, ROW holdings of U.S. Financial Assets doubled (again) in just over six years. The mortgage finance Bubble period (2002-2007) saw ROW holdings surge $8.7 TN, or 116%, to $16.2 TN. It’s my view that the historic dollar devaluation during this period played a major role in precarious Bubble excess throughout the Eurozone (especially at the periphery). The crisis year 2008 saw U.S., European and global financial chaos. During that year, ROW holdings dropped an unprecedented $813bn to $15.386 TN.
In the 21 quarters since the end of 2008, ROW holdings have jumped $7.585 TN, or 49%. The world was once again literally flooded with dollars. The global government finance Bubble thesis posits that these dollar balances inundated the emerging markets, fueling unprecedented Credit growth, financial Bubbles and economic malinvestment. China, in particular, succumbed to Bubble Dynamics on an historic scale.
Is Global Finance sound or unsound?
Please consider that Dollarization and Global Finance came to an end with the June 5, 2014 Mario Draghi ECB Mandate for ZIRP and Targeted LTRO, and together with the June 21, 2014, Mario Draghi ECB Press Announcement, which addresses secular stagnation, defined as low growth, low employment, low inflation, and the threat of economic deflation; and through its call for sharing of sovereignty, serve as the EU Economic Manifest, that is the Charter Call and Club, for Eurozone regional governance, and have birthed the debt serf, and debt servitude, as the centerpiece of economic activity.
The singular dynamo of regionalism will be winding up on the failure of Credit, AGG, and the death of currencies, DBV, and CEW. Regionalism is predicated upon the process of de-dollarization.
Given the world’s debt based money system, money cannot exist without trust in sovereigns; fiat money existed as people trusted in the monetary authority of the world central banks, such as the US Fed, the ECB, together with asset managers, such as Blackrock, BLK and Eaton Vance, EV.
Fiat currency is coming to an end; the nature of money is changing; it has been based upon investment choice and credit; it will increasingly be based upon diktat and debt servitude.
Monetary nationalism is being replace with monetary regionalism, where people trust in the monetary authority and economic authority of regional leaders. Seigniorage profit will be retained within the region of origin; and supply chains will be regional rather than global.
The father of the Euro, Robert Mundell’s seminal article, “A Theory of Optimum Currency Areas,” asks the question, “What is the appropriate domain of the currency area?” He relates “It might seem at first that the question is purely academic,” and he observes, “since it hardly appears within the realm of political feasibility that national currencies would ever be abandoned in favor of any other arrangement.”
Beyond the Euro, optimum currency areas, are now emerging via regional framework agreements, which feature undollar bargaining economic transactions, a case in point being the China Russia Energy Deal, whereby oil is no longer priced in Dollars, and which birthed Eurasia as a region of economic governance; eventually ten such regions will become well defined, and eventually ruled by a king within each region.
Voice of Russia reports De-dollarization Continues: China Starts Direct Currency Trading With UK. A rejection of Bretton Woods is underway. The US Dollar is no longer the world reserve currency; increasingly, in places like Cambodia, and Sierra Leone, and Vietnam, the Dollar will no longer be King. Dedollarization is the process of establishing new monetary sovereignty and new seigniorage.
The dollar’s privileged status as global money is coming to an end. The Milton Friedman liberalization of money has come to an end as the Mario Draghi regionalization of money has commenced.
Dollarizing countries, such as the Philippines, EPHE, will soon be giving up independent monetary policy as a tool of government macroeconomic management; and will be participating in regional monetary and economic policy.
Dollar Hegemony, and the US Dollar Hegemonic Empire, is literally dissolving into a Ten Toed Empire, presented in bible prophecy of Daniel 2:25-45, where ten toes of regionalism, that is ten regions of economic governance and totalitarian collectivism, are emerging.
Economic globalization is coming to an end; that is the international trade liberalization and financial liberalization accompanied by a significant increase in flows of goods and services, and an even larger increase in the gross flows of capital well above the needs to finance trade observed by Crotty in 2009, and described by Matias Vernengo, is a characteristic of the bygone era of credit and age of currencies.
Economic regionalization is commencing, and is characteristic of the new age of diktat and debt servitude. What Jeffrey Frankel calls “credibility in a bottle”, will be the word, will and way of regional economic leaders, and characterize the era of diktat and age of debt servitude.
I’ve been thinking on International Living, and relocating to Panama, a dollarized nation.
Simon Black, The Sovereign Man posts Notes From The Field Date: March 8, 2012 Reporting From: Panama City, Panama. Panama is a dollarized economy. In fact, since Panama’s independence wasengineered by JP Morgan in 1903, the country has never circulated its own currency. Officially, Panama’s currency is the ‘Balboa’, though it has been pegged to the US dollar at parity since inception, and US dollar notes are the only currency in circulation.
The United States can print all it wants, and, at least until now, export the worst of the inflationary effects overseas to those poor suckers in Asia who keep buying Treasuries. Panama cannot export its inflation to the same extent, so rising prices have made a permanent home down here in the tropics over the last few years.
Perhaps Costa Rica may be a better International Destination.
Out waves of Club Med, that is the PIGS, sovereign, banking and corporate insolvency, and its resulting economic deflation, the new money, diktat money will emerge as the standard for economic life experience, as people come to trust in the mandates of regional fascist leaders, for regional security, stability and sustainability.
VII … Investment Strategy: I recommend that one start to dollar cost average an investment in gold bullion.
Gold bullion can be held in audited vaults, and spread around the world for safety, and covered by an insurance policy.
Gold can be held in physical Internet Trading Platforms, such as GoldMoney or BullionVault, and sold as needed.
Gold can be held in the Merk GOLD TRUST, the deliverable Gold ETF (OUNZ). It’s an ETF with the option to take physical delivery of gold.