Financial Market Report for the week ending June 6, 2014.
This post is available in Google Documents format here
1) … The world achieved peak wealth the week ending June 6, 2014 as Mario Draghi births the Beast Regime with the ECB Announcement of June 5, 2014 of a Targeted LTROs and a negative interest rate policy.
Russian scientist Kondratieff discovered that modern economies move through a series of four seasons and thus a business cycle of spring, summer, fall and winter exists. With the traded higher in World Stocks, VT, the week ending June 6, 2014, the world passed came to the climax of the fall season of economic experience, and is set to enter the final season that being Kondratieff Winter.
Ralph Nelson Elliott developed the Elliott Wave Theory in the late 1920s, which presents that stock markets and thus economies move through a series of five waves, with the fifth wave, producing a zenith. A stock market top, an Elliott Wave 5 High, was attained the week ending 6, 2014, and is set to enter an Elliott Wave 1 Down.
1A) … Monday June 2, 2014, marked an inflection point in world economic history, as Credit Investments traded lower, as currency traders sold the Japanese the Japanese Yen, FXY, on realization of The Failure Of Abenomics: Domestic Sales Collapse, Inflation Soars, Tyler Durden reports. Investors fear that the monetary policies of the world central banks have crossed the rubicon of sound monetary policy and have made “money good” investments, particularly credit investments, bad; resulting in a strong trade lower in Bonds, BND.
The lower Japanese Yen, FXY, stimulated Nation Investment in Japan, EWJ, JSC, and in Far East Financials, FEFN, to trade higher. And currency traders sold the Brazilian Real, BZF, which stimulated Brazil, EWZ, EWZS, and Brazil’s Energy Company, PBR, Home Builder, GFA, and Airlines, GOL, to trade lower.
Seeing US Government Debt, that is the US 30 Year Government Bonds, EDV, and the US Ten Year Notes, TLT, overvalued, the bond vigilantes called the Interest Rate on the US Ten Year Note, ^TNX, higher above 2.49% to 2.53%, and steepened the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, as is seen in the Steepner ETF, STPP, steepening, and the Flattner ETF, FLAT, flattening.
Risk-on investing turned to risk-off investing in Credit Investments. There was a credit market upheaval on June 2, 2014, as the ascending wave of credit that defined the paradigm and age of liberalism reversed. A review of Popular Notes And Bonds, shows Eurozone Credit, EU, Junk Bond, JNK, Global Junk Bonds, HYXU, Longer Duration US Corporate Bonds, LWC, US Corporate Bonds, LQD, International Corporate Bonds, PICB, Emerging Market Local Currency Bonds, EMLC, Emerging Market Bonds, EMB, Mortgage Backed Bonds, MBB, 30 Year US Government Bonds, EDV, US Treasuries, TLT, Municipal Bonds, MUB, and World Government Bonds, BWX, traded lower, on the failure of trust in the world central banks’ monetary authority. Bond Trader Across The Curve posts “There was real money selling today and the street had no capacity to absorb it”.
Philip Lane posts in Irish Economy Joint BoE/ECB Paper On Reviving The European ABS Market. Versions of QE depend on a well-functioning ABS market and this joint paper outlines the various reforms required for this market to operate at a sufficient scale ECB PDF Document Presented Here.
To the dismay of Austrian economists, the world has operated on a debt based money system. Since 1971, at the encouragement of Milton Friedman, investment in sovereign currencies has sustained Nation Investment and Small Cap Nation Investment, EFA, largely through the endeavors of Global Financial Institutions, IXG; all of which sustained Yield Bearing Investments such as the International Dividend DOGS, IDOG, and International Telecom, IST.
Since 1971, when the US went off the gold standard, floating currencies have been the wheels upon which the global economy has operated.
With the trade lower in Major World Currencies, DBV, in May 2014, and now with the trade lower in Emerging Market Currencies, CEW, such as the Brazilian Real, BZF, as well as Credit, AGG, on June, 2, 2014, fiat money, defined as the combination of the two, is starting to die.
The sawing asunder of fiat wealth, coming from the bond vigilantes in calling the Benchmark Interest Rate, ^TNX, higher from 2.49%, will soon commence the start of Kondratieff Winter, the final phase of the Business Cycle.
Under the paradigm and in the age of liberalism, meaning freedom from the state, Global ZIRP produced the investor, as the centerpiece of economic action, driving up Risk Assets, such as Small Cap Pure Value, RZV, as well as Global Growth and Trade Assets, such as Energy Service, OIH.
Beginning in May, 2013, the bond vigilantes, not the world central banks, have been setting the Benchmark Interest Rate, ^TNX. And now on June 2, 2014, in calling it higher above 2.49 % to 2.53%, are in the process of terminating the investor as the centerpiece of economic activity, and have introduced the new paradigm and age of authoritarianism, where the debt serf is the centerpiece of economic action.
There no longer be any human action as perceived by the Austrian economists, there is only the destructive action of the bond vigilantes, who having the power of the Bow of Economic Sovereignty, that is the Interest Rate on the US Ten Year Note, ^TNX, and its enforcing authority of The Rider on the White Horse, galloping with greater intensity over planet earth, seen in Revelation 6:1-2, will continue to be hiking interest rates, and that at a rather quick pace.
The bond vigilantes are literally busting apart the sovereignty of the Banker Regime of world central banks and democratic nation states. Out of its ruins, the Beast Regime of regional governance and totalitarian collectivism will rise to rule the world, establishing regional fascism in each of the world’s ten regions and totalitarian collectivism in the world’s seven institutions, as foretold in bible prophecy of Revelation 13:1-4, where sovereign regional leaders rule in policies of diktat and in schemes of control.
The age of Disney, DIS, and its Magic Kingdom, as well as the age of fixed income investing ended June 2, 2014, with the Interest Rate on the US Ten Year Note, ^TNX, rising above 2.49% to 2.53%.
Martin Frost writes Today, we are faced with another Kondratieff Winter (depression) when the majority of the world anticipates economic expansion. Each individual needs to weigh the risk of depression in light of Kondratieff’s work.
The bond vigilantes effected a historic global economic coup d’etat on June 2, 2014, by calling the Interest Rate on the US Ten Year Note, ^TNX, higher above 2.49% to 2.53%. Liberalism’s dynamos of economic activity, creditism, corporatism, and globalism, failed on June 2, 2014, with the result that inflationism has turned to destructionism.
This inquiring mind asks just who are the bond vigilantes? They are the Primary Dealers and their clients!! Zero Hedge posts Clients Are The Most Net Short Treasuries Since 2006, JPMorgan warns.
As investors derisk out of debt trades, and delverage out of currency carry trades, regionalism will be the new dynamo of economic activity establishing the paradigm and age of authoritarianism, whereby out of soon coming Financial Armageddon, that is a global credit bust and financial breakdown, leaders will meet in summits to renounce national sovereignty and announce pooled regional sovereignty to establish regional security, stability and sustainability, this being foretold in bible prophecy of Revelation 13:1-4, and Daniel 2:25-45.
US Government Debt is no longer a safe haven investment. The rally in Bonds, BND, that started in January 2014, came to an end on June 2, 2014, as the longer duration US Government Debt, EDV, are now starting to sell off faster than the medium duration US Government Debt, TLT, this seen in the ratio of EDV:TLT, trading lower. Bonds, BND, and US Treasuries, TLT, are no longer safe assets.
The death of currencies commenced in May 2014, as is seen in Major World Currencies, DBV, such as the Euro, FXE, the British Pound Sterling, FXB, the Swiss Franc, FXF, and the Swedish Krona, FXS, trading lower; and the death of currencies, is accelerating in June 2014, with the Emerging Market Currencies, CEW, such as the Brazilian Real, BZF, trading lower. And, the failure of credit commenced in June of 2014, as is seen Aggregate Credit, AGG, trading lower.
Quote of the Day “The single biggest threat to the global economy is the threat of deflation.” says CNBC commentator Ron Insana. Economic deflation will come like a viper out of the failure of fiat money and fiat wealth, destroying the very fabric of societies across the globe. Economic deflation is already underway in Italy, and it is a result of the tremendous level of corruption in society, coupled with paralysis cause by socialism’s resistance of economic reforms.
Ambrose Evans Pritchard of the Telegraph reports Europe remains a jobless swamp, despite the Spanish miracle. Italy lost 68,000 jobs in April, according to the country’s data agency ISTAT. The total employed fell to 22,295,000. Italian unemployment rose to 13.6pc. For youth it has climbed to a modern-era high of 43.3pc, implying very serious damage to Italy’s long-term economic dynamism due to labour hysteresis. The employment rate dropped to 55.2pc. Ageing workers are giving up the search for jobs, chiefly in the Mezzogiorno, and returning to their patches of land in impoverished early retirement.
As Eurozone Stocks. EZU, top out on EUR/JPY currency carry trade investing, and as European Small Cap Dividend Stocks, DFE, top out on European Credit, EU, liquidity, the economic gap between capitalized Germany and socialized France is greater than ever.
Zero Hedge posts The Most Worrying Chart For Europe’s Stability, A Bloomberg Brief. The difference in economic performance (and mood) between France and Germany, often referred to as the European “engine,” is at a record high. This disparity is likely to weaken France and isolate Germany further, heightening political tensions and indecision in the euro area.
Eurozone Credit, EU, traded lower as Zero Hedge posts Here Comes QE In Financial Drag. David Stockman viaContra Corner blog relates the WSJ report The ECB And Bank of England Outline Options to Boost Asset-Backed Securities Market. The European Central Bank and Bank of England on Friday outlined options to reinvigorate the market for bundled bank loans, which was “tarnished” by the global financial crisis, saying a better-functioning market for asset-backed securities can help boost lending to the private sector, particularly small businesses.
Yes, the ECB is now energetically trying to revive the a market for asset-backed commercial paper (ABCP) – the very kind of “toxic-waste” that allegedly nearly took down the financial system during the panic of September 2008. The ECB would have you believe that getting more “liquidity” into the bank loan market for such things as credit card advances, auto paper and small business loans will somehow cause Europe’s debt-besotted businesses and consumers to start borrowing again thereby reversing the mild (and constructive) trend toward debt reduction that has caused euro area bank loans to decline by about 3% over the past year. What they are really up to, however, is money-printing.
Here’s the thing. The ABCP market is not a place where hard-pressed business borrowers or consumer’s can find a new source of credit outside the banking system. Instead, it is a financial engineering arena in which banks will have a chance to mint phony overnight profits through an accounting expedient known as “gain-on-sale”.
What that means is that when credit card receivables or small business loans are “bundled” by their commercial bank issuers and sold into an off-balance conduit which issues ABCP against these “assets”, the life-time profits of these loans can be booked instantly. Indeed, modern technology allows the credit card swipe to be booked as a profit nearly the same nanosecond as it happens, and accounting convention allows the profits from a 7-year car loan issued at 110% of the vehicle’s value to be recorded virtually at the time it rolls off the dealer lot.
In short, Europe has more than enough inflation and doesn’t need a revived ABCP market to generate loans for the un-creditworthy. Today’s announcement is just part of Draghi’s desperate attempt to deliver QE next week in a manner which will not elicit a loud “nein!” from his German overseers.
Jenny Cosgrave of CNBC reports Eurozone Manufacturing Growth Slowest In 6 Months
Premium REITS, KBWY, such as Retail REITS, SLG, GGP, Residential REITS, such as EQR, AVB, ESS, AIV, MAA, Global Infrastructure, IGF, such as MIC, Industrial Office REITS, such as BXP, STWD, Hotel REITS, such as CHSP, HST, SOHO, Regional Banks, KRE, and the Chinese Financials, CHIX, traded higher. Base Metals, DBB, traded higher, stimulating Global Miners, PICK, slightly higher.
A review of the Leading S&P 500 Companies, shows that the S&P 500, SPY, and Transportation, XTN, led by Delta Airlines, DAL, and Disney, DIS, and Energy Service, OIH, and Global Industrial Producers, FXR, led by Halliburton, HAL, and Illinois Tool Works, ITW, traded to a new all time high on a slightly lower price of Oil, USO.
Arin Ray of Celent posts Big Banks Exit Commodity Trading The retreat of the big banks from commodity business has been driven by tighter regulation, stricter capital requirements, increasing political pressure and lower profitability in recent times.
1B) … On Tuesday June 3, 2014, The 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, steepened, as is seen in the Steepner ETF, STPP, steepening. Credit Investments continued to trade lower on the exhaustion of the world’s central banks’ monetary authority, reflecting a historic inflection of one of the two components of fiat wealth, with the other being Equity Investments.
The bond vigilantes called the Interest Rate on the US Ten Year Note, ^TNX, higher. Loss leading Aggregate Credit ETFs, AGG, of the day included EDV, TLT, EMB, LWC, MBB, LQD, and EMLC, reflecting that investors abandoned longer duration and the emerging market local currency debt.
Since the first of the year running through the end of May 2014, the wise credit investor has been long duration and long the worst of debt, as is seen in the ongoing Yahoo Finance Chart of the Flattner ETF, FLAT, and Distressed Investments, FAGIX, Junk Bonds, JNK, Build America Bonds, BABS, Long Term Corporate Bonds, LWC, The Zeroes, ZROZ, and Defensive Stocks, DEF, trading higher.
Yet liberalism’s debt trade investing, seen in High Yield Debt, JNK, LWC, EU, EMB, HYD, EMLC, BABS, HYXU, PZA, in Leveraged Buyouts, PSP, in Real Estate Investment, BX, in Spain’s Bank, SAN, as well as currency carry trade investing, seen in European Small Cap Dividend, DEF, is being relegated to the dustbin of history, as signs of risk-on investing are waning, and signs of risk-off investing in Nation Investment are emerging, such as the trade lower in Eurozone periphery nations, Portugal, PGAL, Ireland, EIRL, Italy, EWI, Greece, GREK, but not yet Spain, EWP, coming on the trade lower in the Euro, FXE.
Debt trade returns YTD have been JNK 5%, LWC 10%, EU 2%, EMB 87%, HYD 10%, EMLC 4%, BABS 13%, HYXU 3%, PZA 9%; these are now part of a bygone era.
The end of the age of investment choice is at hand, and the age of debt servitude awaits.
The Guardian posts Mario Draghi Faces Moment Of Truth As Man With Power To Steady Eurozone The European Central Bank governor has charmed the markets with words. But this week he must make bold policy decisions to unite a region increasingly driven by economic disparities … And Bloomberg posts Draghi Primes ECB as Inflation Scarcity Alarms Officials … And Mark Dow of Yahoo’s Daily Ticker says “There’s no way out”: Not much ECB can do to help Europe’s economy,
Questions arise. Will the Benchmark Interest Rate, that is the Interest Rate on the US Ten Year Note, ^TNX, jump higher? Will European Credit, EU, tumble? Will Aggregate Credit, AGG, trade lower with Credit Investments across the board trading lower? Will the Euro, FXE, that took a hit in May 2014, on anticipation of Mario’s Move, take another hit? Will Equity Investments trade lower?
Equity Investments are headed lower for sure, as the ratio of World Stocks, relative to Aggregate Credit, that is VT:AGG, is topped out; with underlying credit investments selling off, Equity Investments are destined to sell off as well, as Sober Look posts Markets Now Expect Shock And Awe From The ECB. Unless we see “shock and awe” from the central bank, global markets will be quite disappointed.
The end of the pursuit of yield is at hand as “shock and awe” will not be forthcoming, and World Stocks, VT, Nation Investment, EFA, and Global Financials, IXG, will trade lower, and an Elliott Wave 5 High completion of the S&P 500, presented in Safehaven chart article TheWaveTrading Weekly Technical/Elliott Wave Analysis (SPX, DOW, NDX, XLF, IWM) is at hand.
Thus, fixed income investing will be a losing proposition, and Yield Bearing Investments, such as Dividends Excluding, DTN, will be led lower by debt trade investments such as Leveraged Buyouts, PSP, and carry trade investments such as Water Resources, PHO, and Global Utilities, DBU, and International Telecom, IST, as is seen in their ongoing combined Yahoo Finance Chart with the Zeroes, ZROZ.
Soon it will be global ZIRP no more, as the Bond Vigilantes continue to manifest, having seized the Bow of Economic Sovereignty, that is the Interest Rate on the US Ten Year Note, ^TNX, beginning in May of 2013, from the Creature from Jekyll Island.
With the trade lower in Credits Investments, seen in Bonds, BND, trading lower on June 2, and June 3, 2014, the world is passing through a historic inflection point where the investor, most importantly, the fixed income investor will be going extinct, and the nature of governance will be changing from the democracy of nation states to the fascism of sovereign regional leaders.
In bearish news Quartz posts The 35 Economic Charts From May You Really Should See
1C) … On Wednesday, June 4, 2014, the S&P 500, traded by the ETF, SPY, rose to a new all time daily high, as the Defensive Sectors, Health Care Providers, IHF, and Insurance, KIE, such as AIG, as well as the Growth Sectors, Semiconductors, SOXX, Design Build, FLM, Energy Service, OIH, Transports, XTN, and Apple, APPL, traded to new all time highs. China Technology, CQQQ, and Global Energy Producers, IPW, PBR, TOT, SSL, SNP, E, RDS-B, BP, traded lower, (while Energy Producers, XOP, CLR, APC, EOG, EQT, CRZO, and COP, traded higher on the day).
Regional Banks, KRE, such as SNV, HBAN, RF, BBNK, SBNY, OZRK, The Too Big To Fail Banks, RWW, such as WFC, Stockbrokers, IAI, Investment Bankers, KCE, and Far East Financials, FEFN, traded higher, while China Financials, CHIX, traded lower.
In Yield Bearing Sectors, Energy Partnerships, AMJ, MLPJ, EMLP, such as MMP, SEMG, TRGP, SXL, ACMP, ETE, OILT, MPLX, LNG, OKS, and Shipping, SEA, traded to new all time highs; while China Real Estate, TAO, Brazil Financials, BRAF, Australia Dividends, AUSE, and Smart Grid, GRID, traded lower.
Commodities, DBC, traded lower, as Gold, GLD, traded lower, and as Oil, USO, traded lower to the edge of a massive Diamond Triangle Consolidation Pattern, to close at 37.50, and as Agricultural Commodities, RJA, and Base Metals, DBB, traded lower, as Commodity Currencies, CCX, traded lower. Zero Hedge reports Copper’s Long-Term Bear Trend Is Resuming, BofA Warns. Southern Copper Corp, SCCO, traded lower, on a lower price of Copper, JJC, as Economic By Design posts Copper Exchange Stocks Approaching Pre Crisis Levels.
The investor’s trust in the monetary policies of the world central banks to continue to stimulate investment gains, as well as to continue global economic growth, has been the basis for World Stocks, VT, US Stocks, VTI, Eurozone Stocks, EZU, Asia Excluding Japan, EPP, and the Emerging Markets, EEM, rallying strongly from January 2014 through May 2014, as is seen in their combined ongoing Yahoo Finance chart.
Support for the bull market in Equity Investments has been underwritten by Major World Currencies, DBV, such as the Euro, FXE, and Emerging Market Currencies, such as the Brazilian Real, BZF, which have now fallen lower.
And support for the bull market in Equity Investments has been underwritten by the major types of Credit Investments, as seen in the combined ongoing Yahoo Finance Chart of Distressed Investments, FAGIX, US Ten Year Notes, TLT, Junk Bonds, JNK, 30 Year US Government Bonds, EDV, Mortgage Backed Bonds, MBB, European Credit, EU, and Emerging Market Local Currency Bonds, EMLC, all of which except for Distressed Investments are now trading lower.
Bond Trader, Across The Curve, posts Frothy Bulls. The WSJ reports Danger Territory: Bullish Sentiment Hits Extreme Levels. Bullish sentiment in the stock market is reaching rarified levels which in past cycles have augured for severe corrections. Prior highs came in August 1987 and October 2007.
An inquiring mind asks, will investors faith in the monetary policies of Mario Draghi be shaken by the ECB Policy Statement of Thursday, June 5, 2014? Will there be a strong stock market reversal?
Credit Writedowns posts Repairing The Transmission of Monetary Policy Through Asset-Backed Securitisation.
I comment that there is nothing wrong whatsoever wrong with the transmission of monetary policy of the ECB. To frame the conversation as Credit Writedown posts, is a distraction from reality, and drives the communication suggesting that the ECB’s policies are for economic growth; frankly they are not, just as the FED’s policies are not, and the BOJ are not, and the PBOC are not.
The policies of the world central banks, through Global ZIRP, have been investor centric, and any economic growth has been secondary in nature.
1D) … On Thursday, June 5, 2014, ECB money printing brought results. Investors took Mario Draghi’s, long awaited monetary policy announcement as credit stimulative. World Stocks, VT, Nation Investment, EFA, and Yield Bearing Investments, such as Dividends Excluding Financials, DTN, traded to new all time highs, leveraging higher over Global Financials, IXG, which traded to a new rally highs. The S&P 500, SPY, rose strongly to a new all time high.
Growth and trade leaders, Semiconductors, SOXX, Global Industrial Producers, FXR, Transportation, XTN, and traded to new all time highs. Energy Producers, XOP, traded strongly higher. Gold Miners, GDX, GDXJ, and Silver Miners, SIL, SILJ, which have sunken terrifically in value, were buoyed by the ECB Chairman’s policy statement, which rallied Gold, GLD, and Silver, SLV.
The High Beta Sectors, Networking, IGN, Internet Retail, FDN, Nasdaq Internet, PNQI, China Technology, QQQQ, Software, IGV, and Aerospace, PPA, rose strongly
The riskiest of Equity Investments, that is European Small Cap Dividend, DFE, Small Cap Pure Value, RZV, such as HEES, URI, Small Cap Pure Growth, RZG, Small Cap Industrial, PSCI, Building Materials, Emerging Market Small Caps, EWX, and Credit Services, such as AXP, rose strongly, providing insight that investors see the ECB’s policy statement as supporting risk-on investing.
Eurozone Stocks, EZU, such as ORAN, rose to new rally highs, leading Norway, NORW, and Denmark, EDEN, to new all time highs.
Greece, GREK, Italy, EWI, Spain, EWP, France, EWQ, Austria, EWO, Finland, EFNL, Portugal, PGAL, and Netherlands, EWN, led the European Nations, and Nation Investment, EFA, to new rally highs.
Emerging Market Small Caps, EWX, and Egypt, EGPT, and Turkey, TUR, recovered from recent losses, and traded strongly higher, drove Emerging Markets, EEM, to new a new high, evidencing that investors perceived the ECB’s Chairman’s monetary policy statement, as supportive of the Banker Regime.
India, INP, and India Small Caps, SCIN, traded to new all time highs. Argentina, ARGT, and a number of its stocks, such as EDN, traded to a new rally high.
Malaysia, EWM, Vietnam, VNM, Philippines, EPHE, led Asia Excluding Japan, EPP, higher on the day. Japan, EWJ, and Japan Small Caps, JSC, traded higher, on the day.
US Stocks, VTI, traded to a new all time high.
Global Financials, IXG, were led higher by the credit sensitive Regional Banks, KRE, The Too Big To Fail Banks, RWW, Investment Bankers, KCE, Stockbrokers, IAI, and Chinese Financials, CHIX. European Financials, EUFN, such as Spain’s Banco Santander, SAN, and associated Brazil’s Banco Santander Brazil, BSBR, as well as Argentina’s Banks, GGAL, BFR, BMA, BBVA, and India’s HDB, IBN, traded to a new all time highs. Life Insurance companies, such as Netherland’s, ING, rose near their recent highs.
The most interest rate sensitive of the Yield Bearing Sectors, Gulf Dividends, GULF, Smart Grid, GRID, Water Utilities, PHO, and Electric Utilities, PUI, which had recently sold off, rose strongly.
The debt leveraged International Dividend Dogs, IDOG, Leveraged Buyouts, PSP, Global Utilities, DBU, such as China’s HNP, and International Infrastructure, IGF, traded strongly higher, rising up near their recent highs.
Ongoing pursuit of yield, drove Shipping, SEA, Energy Partnerships, AMJ, MLPJ, EMLP, Premium REITS, KBWY, and Industrial Office REITS, FNIO, to new rally highs. Residential Retail REITS, REZ, such as AIV, ESS, traded to new rally highs; these are likely the most credit leveraged investments of all time, and as a group have a stunning PE ratio of 38.
Closed End Funds, GCE, up 9%, YTD, traded to new all time highs.
Credit Investments, AGG, such as European Credit, EU, traded higher, as the Interest Rate on the US Ten Year Note, ^TNX, traded slightly lower to close at 2.58%. Junk Bond, JNK, up 5%, YTD, traded to a new all time high; it being the only Credit Investment that resides at an all time high, after all other debt traded lower earlier in the week, with the bond vigilantes calling the Benchmark Interest Rate, ^TNX, higher from last week’s close.
The ratio of Long Term TIPS, LTPZ, to 10-20 Year US Treasury Notes, TLT, that is LTPZ:TLT, and the Benchmark Interest Rate, ^TNX, trading above 2.49%, communicates that today’s strong rise in Equity Investments, is a blow off market top. Confirmation of such comes from the ratio of World Stocks, VT, relative to Aggregate Credit, that is VT:AGG, trading at a spectacular all time high.
Equity Investments cannot be sustained much longer over Credit investments. There is a limit to which the speculative leveraged investment community can drive stocks ever high.
Those who were invested long in Equity Investments patiently waiting for the June 5, 2014, Mario Draghi ECB Monetary Policy Statement were richly rewarded; their risk appetite satisfied, as Eddy Elfenbein posts The S&P 500 Rallied For The 14th Time In The Last 19 Sessions, and as Bespoke Investment reports The World is Overbought.
This inquiring mind asks, in what way does Mario Draghi’s ECB June 2014 Monetary Policy of cutting rates, imposing negative interest rates on its overnight depositors and offering banks new long-term funds, fight low inflation and boost the euro zone economy?
Merkelnomics writes ECB Enters Uncharted Territory – With one Foot. According to the ECB, these TLTROs will have a maturity of around 4 years. Counterparties will be entitled to borrow, initially, 7% of the total amount of their loans to the euro area non-financial private sector, excluding loans to households for house purchase, outstanding on 30 April 2014. Lending to the public sector will not be considered in this calculation. The maximum volume of such TLTROs could amount to around 400 bn euro. Two TLTROs will be conducted in September and December this year. Then, from March 2015 to June 2016, all counterparties will be able to borrow, quarterly, up to three times the amount of their net lending to the euro area non-financial private sector, excluding loans to households for house purchase, over a specific period in excess of a specified benchmark. The interest rate on these TLTROs will be fixed at the current ECB’s refi rate plus a fixed spread of 10 basis points. In our view, these TLTROs look like a reversed funding-for-lending scheme: the more lending commercial banks provide to the private sector, the more cheap funding they can get. Full allotment.
And this inquiring mind asks further, will Mario Draghi’s ECB’s LTRO monetary policy generate sufficient aggregate demand to pull the Eurozone economy up out of deflation? And does the new policy address the longer-term issue of government debt sustainability.
The bond vigilantes, that is the Primary Dealers, and their clients, have been in control of the Bow of Economic Sovereignty, that is the Interest Rate on the US Ten Year Note, ^TNX, since May of 2013, and have been calling it higher from 2.49%, to 2.58% where it stands today. With the result that debt deflation commenced in Major World Currencies, DBV, and Emerging Market Currencies, CEW, and which in turn commenced destruction of Aggregate Credit, AGG, in June 2014.
Thus fiat money, defined as the combination of Major World Currencies, DBV, and Emerging Market Currencies, CEW, together with Aggregate Credit, AGG, is starting to die. The death of fiat money in June 2014, is an inflection point in mankind’s history.
The failure of Sovereign Currencies has commenced, beginning with the Swedish Krona, FXS, and the Brazilian Real, BZF; and is an economic and political coup d’etat, that has commenced destructionism which is seen in Nation Investment in Sweden, EWD, and Brazil, EWZ, EWZS, trading lower.
The deflationary potential of unwinding currency of carry trade investments and associated debt trades, countervails against anything the ECB has done, or has announced. The tailwinds of economic deflation will be the perfect storm to introduce Kondratieff Winter, which will produce many new normals, as the world has passed from the paradigm and age of liberalism, meaning freedom from the state, into that of authoritarianism, with the death of sovereign currencies in May 2014, and June 2014.
The Mario Draghi ECB NIRP of June 5,2014, introduces risk James Hamilton writes in Econobrowser It’s Unambiguously A Tax On The Banking System that undermines efforts to replenish capital buffers. If you have concerns about financial stability, such a move is contraindicated. A variety of institutions– money market funds, customers’ accounts with private banks, brokerage accounts, are all set up on the assumption that the customers won’t lose any money held in those accounts. Remember that “breaking the buck”– the possibility that investors would discover they’re vulnerable to a capital loss on money market funds– was a key concern of U.S. policy-makers in 2008 as something that could have triggered a run on some financial institutions and instruments.
All things have fathers, that is starters.
The Banker Regime was born in 1971 on the genius of Milton Friedman’s principle of Free to Choose Floating Currencies; and fiat money came of age, where QE1 and Global ZIRP birthed the investor as the centerpiece of economic activity.
The Beast Regime was born in June 2014 on the genius of Mario Draghi’s imposing NIRP, that is negative interest rates, on its overnight depositors; and diktat money has come of age, where the June 2014 Mario Draghi ECB Mandate birthed the debt serf as the centerpiece of economic activity.
Inflation was the economic dynamic of growth coming from the exercise of investment choice, which was supported by the dynamos by creditism, corporatism, and globalism; these engines of democratic nation state governance are winding down, on the death of sovereign currencies.
Destruction is the economic dynamic of deflation coming from derisking and deleveraging out of investment choice, which is countervailed by the dynamo of regionalism; this engine of regional economic governance is winding up, as leaders meet in summits and workgroups to renounce national sovereignty and to announce regional pooled sovereignty, coming from regional framework agreements, such as seen in the Russia China Energy Deal, which has created the Eurasia region of economic governance, and is creating diktat money, defined as the mandates of sovereign regional leaders to establish regional security, stability and sustainability.
In similar vein, Peter A. Petri and Michael G. Plummer report in Econobrowser that initiatives for regional trade facilitation and regional integration are underway. Asia Pacific Regional Integration. Even ardent champions of multilateralism like Jagdish Bhagwati are now advising governments to pursue regional negotiations. Relative to GDP the outward-oriented ASEAN economies of Vietnam (14 percent) and Thailand (8 percent) would gain most. Most encouragingly, launching a feasibility study of FTAAP has now emerged as a key Chinese objective as China hosts APEC in 2014. The idea is an ambitious, comprehensive, inclusive, outward-oriented FTA by 2020. In short, the mega regionals of the Asia-Pacific region offer pathways toward deeper economic integration. Asia-Pacific economic integration may well reinforce the global trading system. The region has always championed “open regionalism”, measures that emphasize trade creation and increasingly inclusive agreements. Mega regional accords in the Asia-Pacific could emerge as the ultimate “building blocks” of multilateralism.
Thus both peak fiat wealth, defined as the combination of Equity Investments and Credit Investments, as well as the Beast Regime were established by Mario Draghi’s June 5, 2014 ECB Mandate.
The Japan-like “pernicious negative spiral” of deflation will intensify as investors are forced to deleverage out of EUR/JPY funded currency carry trades in Eurozone Companies such as France’s debt trade Telecom Provider Orange, ORAN.
A lower Euro, FXE, is coming, but it will not help boost exports, as all currencies will be falling together into the Pit of Financial Abandon.
Up until today, the ECB has done as much as the northern Europeans would let it. Mr. Draghi has figured out how to get them to do even more. The negative interest rate announced by Mario Draghi in effect has regionalized the Eurozone’s banks; it has established a defacto banking union. Throughout the world, banks, via regionalism, will be absorbed into the regional government and become known as Government Banks or Gov Banks for short.
Tyler Durden writes NIRP Has Arrived: Europe Officially Enters The “Monetary Twilight Zone”. Kiss money markets, which together with Repos are one of the core components of shadow banking, goodbye. From Bloomberg “A deposit rate at zero will be of particular support to banks in southern Europe because it could help encourage some flow of credit,” said Callow. “A negative deposit rate can be damaging for money markets.” Negative rates would destroy the business model for money- market funds, which would face the prospect of paying to invest, said Societe Generale economist Klaus Baader.
Negative interest rates on bank excess reserves caused Germany’s Deutsche Bank, DB, to immediately trade 2.6% lower on the June 5, 2014 Mario Draghi ECB announcement.
The Mario Draghi, ECB Negative Interest Rate Policy of June 5, 2014, means that banks which have their monies parked overnight at the ECB will pay a security fee, that is a 0.1% surcharge for the privilege of participating in the economic stability and sustainability of the Eurozone. Welcome to the age of diktat money, where regional leaders are sovereign and issue mandates that establish regional security, stability and sustainability.
John Rubino posts Welcome to the Currency War, Part 16: Interest Rates Go Negative. (Mario Draghi’s policy) won’t stop the eurozone’s downward spiral because liquidity doesn’t fix insolvency. In other words, if the system’s collateral isn’t as valuable as the debt it supports, then the system is in trouble. And coercing banks into making more loans against inadequate collateral will not help the situation.
The euro will fall due to rising supply, which is the same thing as saying that the dollar will soar. This will be deflationary for the US, producing a string of “unexpected” misses in corporate earnings, GDP and inflation.
A deflating Euro is already turning US based corporations lower; the formerly soaring Refineries, VLO, MPC, PSX, HFC, are now trading lower, on the lower Euro.
Currency deflation coming from the hands of the currency traders selling the Euro against the Yen, and from the June 5, 2014, Mario Draghi mandate, are globally destabilizing things, which export economic deflation and create economic deflation worldwide.
My Budget 360 posts Central Banks And A Global Soft Default. Global central banks are fully addicted to the opiate of debt. The financial system has created a rentier class that chases investment yield even when the economy isn’t necessarily growing. Think about that for a second. Why should someone expect a guaranteed return at any point in an economic cycle if the real economy is actually contracting? The U.S. for example while trying to play the role of responsible manager of debt is going full throttle when it comes to debt issuance. We have a spending, revenue, and financial system problem in the way incentives are structured.
A soft default by any other name. The U.S. outside of a couple of years, has spent more than it takes in for well over a generation year over year. We continue to spend money we don’t have courtesy of foreign investors and our Fed that continues down the QE road. Yet these actions have consequences. You have global funds coming back home to roost for the elixir of cheap goods. The result? For most people we are now importing low wage capitalism. In many metro areas local families are now competing against big real estate investors and in some cases foreign investors merely to purchase a home to live in. There is always a cost to borrowing cheaply.
$6 trillion are now owed to foreign investors. Some tend to think this comes with no strings attached. Of course there are strings attached. A generation of people were able to enjoy a strong dollar, high wages, and plentiful cheap goods.
You can see that the Great Recession caused us to run some epic deficits. But what was the end result? Pricing out regular families from buying a home? Making college unaffordable to millions unless they commit to a lifetime of student debt? Giving access to healthcare but making premiums so high that most are seeing more of their funds consumed by these changes? Since most Americans are cash strapped and deep in debt, it appears that we have been auctioning off our debt to global yield chasers. The results for the top one percent have been fantastic. For the rest, not so much.
Assume that rates went up to 6 percent overall which is a low rate overall given the global risk in the market and we are looking at paying roughly $1 trillion per year simply on the interest expense without lowering any of the principal balance. So think about that next time you hear about taper talks and gear up for more non-reported inflation to consume most of your daily cost of living.
This is a soft default by any other name and central banks are going to do everything they can to inflate the debt on their books away.
I respond, yes it is a soft default, and through on going money printing operations, the central banks have indeed inflated the debt on their books, but that has finally come to an end with the Mario Draghi June 5, 2014 Mandate of Negative Interest Rates.
The wisest of all banks were those the Primary Dealers who demanded and received Interest Rate Swaps as part of POMO, and who went started to go short US Treasuries, TLT, beginning in January 2014, as the long-duration trade, EDV:TLT, and the flattening yield curve, FLAT, commenced, as now their shorts will start to increase in value and as their positions in Interest Rate Swaps soar as the Benchmark Interest rate increases in value.
Austrian Economist, Benson te, writes (The ECB’s Announcement) Is Really Camouflage For Perpetual Debt Accumulation. Aside from Negative Deposit Rates, the ECB has placed in the pipeline more easing measures. From ZH, the much anticipated additional measures have been revealed:
-DRAGHI UNVEILS PACKAGE OF TARGETED LTROS, WORK TO PREPARE QE
-DRAGHI SAYS INITIAL SIZE OF TARGETED LTRO PLAN IS 400 BLN EUROS
-ECB EXTENDS FIXED RATE FULL ALLOTMENT, SUSPENDS SMP STERILIZING
-DRAGHI SAYS PACKAGE INCLUDES PREPARATIONS FOR ABS PURCHASES.
In other words, even more actions along what was expected: keep in mind the last time the ECB did €1 trillion in LTROs it did exactly nothing to boost inflation or the “real economy.” Furthermore, the ABS purchases aren’t activated: just being “prepared.” However, what was not revealed was the biggest wildcard: European QE, which as we said repeatedly, won’t happen until Europe’s deflation is far worse, if ever.
All these represent no more than subsidies, as I previously commented. Governments around the world have been forcing a ‘reverse Robin Hood’ redistribution of plundering the Main Street in favor of the Wall Streets of the world through a variety of financial repression policies such as blowing bubbles, bank deposit haircut, negative deposit rates and more.
Yet there is no such thing as a free lunch. Every action has a consequence. Unproductive spending and malinvestments will backfire. As the great Austrian economist Ludwig von Mises presciently warned The age-old disapprobation of interest has been fully revived by modern interventionism. It clings to the dogma that it is one of the foremost duties of good government to lower the rate of interest as far as possible or to abolish it altogether. All present-day governments are fanatically committed to an easy money policy. As has been mentioned already, the British Government has asserted that credit expansion has performed “the miracle … of turning a stone into bread.”
A Chairman of the Federal Reserve Bank of New York has declared that “final freedom from the domestic money market exists for every sovereign national state where there exists an institution which functions in the manner of a modern central bank, and whose currency is not convertible into gold or into some other commodity.” Many governments, universities, and institutes of economic research lavishly subsidize publications whose main purpose is to praise the blessings of unbridled credit expansion and to slander all opponents as ill intentioned advocates of the selfish interests of usurers.
The wavelike movement affecting the economic system, the recurrence of periods of boom which are followed by periods of depression, is the unavoidable outcome of the attempts, repeated again and again, to lower the gross market rate of interest by means of credit expansion. There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.
It is sad to see that that the average citizens of the world have been treated like guinea pigs by monetary authorities, for an age old experiment that not only transfers resources from society to the political class and their cronies but importantly has been DESTINED for failure: quasi booms morph into horrific busts. When real savings have been substantially diminished relative to misallocated capital, then expect and prepare for a global economic depression in a not so distant future.
Soon there is coming a day that will mark an inflection point in mankind’s history as the paradigm and age of investment choice will terminate, as investors derisk out of debt trades, such as seen in this Finviz Screener, and deleverage out of currency carry trades, such as seen in this Finviz Screener, and this Finviz Screener, and this Finviz Screener of Global Banks, on awareness that the monetary policies of the world central banks no longer support investment gain, or global growth and trade, and in so doing introduce the age of debt servitude.
As European leaders argue over Jean-Claude Juncker’s candidacy for the top job at the European Commission, Telegraph posts Jean-Claude Juncker profile: ‘When it becomes serious, you have to lie’.
1E) … On Friday, June 6, 2014, World Stocks, VT, rallied to a new all time high as the riskiest of Equity Investments such as European Small Cap Dividend, DFE, Small Cap Pure Value, RZV, Small Cap Pure Growth, RZG, Small Cap Industrial, PSCI, Emerging Market Small Caps, EWX, and Building Materials, rose strongly.
Global Growth, DLN, Sectors Energy Service, OIH, Transportation, XTN, Global Industrial Producers, FXR, Semiconductors, SOXX, Design Build, FLM, Automobiles, CARZ, Aerospace And Defense, PPA, Energy Production, XOP, as well as Defensive Sectors, Insurance, KIE, and Consumer Staples, KXI, rose strongly to new rally highs.
Global Financials, IXG, rose to a new all time high as Spain’s Banco Santander, SAN, led European Financials, EUFN, Credit Services, such as AXP, Regional Banks, KRE, Investment Bankers, KCE, strongly higher.
Nation Investments, EFA, rose to a new all time high as the Emerging Markets, EEM, EWX, led by Vietnam, VNM, Philippines, EPHE, Thailand, THD, Developing Europe, ESR, Egypt, EGPT, Turkey, TUR, Argentina, ARGT, Brazil, EWZ, EWZS, popped to a new rally high as Emerging Market Currencies, CEW, traded strongly higher over the Japanese Yen, FXY; in particular India, INP, SCIN, EPI, traded strongly higher on a higher India Rupe, ICN. Developed nations Norway, NORW, Mexico, EWW, and Singapore, EWS, traded to a new rally high. South Africa, EZA, Russia, RSX, ERUS, Gulf States, MES, and Sweden, EWD, traded strongly higher.
The awesome Equity Investment rally of June 5, 2014, and June 6, 2014, was one of investor mania coming from the Mario Draghi ECB promise of Targeted LTROs, as well as NIRP, without checking out the details of exactly the announced monetary policy will provide sufficient stimulus to pull the Eurozone out of economic deflation.
Past credit stimulus has not provided sufficient inertia to pull the Eurozone out of economic deflation. David Stockman writes In truth, the Euro zone has had an explosion of bank credit growth to the private non-financial sector. Outstanding bank loans grew at a 7.5% CAGR during the 10-years ending at the eve of the financial crisis in early 2008. During those halcyon days there was obviously nothing wrong with the bank credit machinery—especially given the fact the euro zone money GDP grew during the same decade at only a 4.4% CAGR. Expressed in absolute dollar terms, the gain borders on a borrowing frenzy. During that decade, nonfinancial debt outstanding in the euro zone grew by the equivalent of $7 trillion—which is to say, by an amount equal to the entire loan book of the US banking system on the eve of the crisis.
The inflation trade in Equity Investments, that is World Stocks, VT, Nation Investment, EFA, Global Financial Institutions, IXG, and Dividends Excluding Financials, DTN, coming on the liberal monetary policies of the world central banks, was was a risk free trade.
Zero Hedge reports No More Risk: VIX Plunges Below 11 For The First Time In Years. The Inverse Volatility ETFs, XIV, SVXY, soared, and the Volatility ETFs, VIIX, VIXY, plummeted as is seen in their combined ongoing Yahoo Finance Chart.
Please consider the concept of the Apostle Paul presented in Ephesians 1:10, that being that Jesus Christ is in charge of the economy of God and appointed world central bank leaders, Ben Bernanke, Janet Yellen, Shinzo Abe, and Mario Draghi as his point men; and that these were the greatest liberators in history, and that they led the greatest liberation movement of all time. They set the investor free, to experience economic life in the world central bank’s monetary policies of investment choice and schemes of credit to pursue investment gains. .
The June 5, 2014 Mario Draghi ECB Announcement of NIRP and Targeted LTROs, produced a stunning moral hazard based prosperity in fiat money, and produced the zenith of liberalism, defined as freedom from the state, as investors drove World Stocks, VT, Nation Investment, EFA, Global Financials, IXG, and Dividends Excluding Financials, DTN, to produce peak Equity Wealth, while Peak Currency Wealth, DBV, and CEW, was achieved in the third week of May 2014, and Peak Credit Wealth, AGG, was achieved the week ending May 30, 2014.
The age of currencies and the era of credit came to an end the week ending June 6, 2014, as stock investors drove Equity Investments, manifesting as three long candlesticks in the weekly chart of the S&P 500, SPY, to their grand finale high, at a time when the bond vigilantes, called the Interest Rate on the US Ten Year Note, ^TNX, higher to 2.59%.
Peak Equity Wealth is seen in the chart of World Stocks, VT, relative to Aggregate Credit, AGG, that is VT:AGG, rising parabolically, and then peaking in value in the week ending June 6, 2014.
The Mario Draghi ECB announcement of NIRP and targeted LTROs produced a blow off stock market top on Friday June 6, 2014, and at the same time has birthed the Beast Regime, to replace the Creature from Jekyll Island, which ruled in liberal policies of investment choice and in schemes of credit. Soon out of the waves of Club Med sovereign, banking, and corporate insolvency, it will rise to rule the world in authoritarianism, in policies of diktat in every one of the world’s ten regions, and in schemes of totalitarian collectivism in all of mankind’s seven institutions.
The age of diktat and the era of debt servitude commenced on the June 5, 2014, with the mandate of Mario Draghi for a 0.1% surcharge on money held overnight at the ECB. His word, will and way, will compel the debt serf, to experience economic life in regional fascist leader’s policies of regional economic governance, which establish regional security, stability and sustainability.
Thus the Mario Draghi announcement of NIRP and targeted LTROs was both a climax event, one of peak wealth. and also a genesis event, one of the beginning of a new economic age of authoritarianism.
In a stunning denial of reality, Reuters reports ECB’s Coeure: Rates To Diverge From UK, U.S. For Years. Euro zone interest rates will diverge from those in the United States and Britain for a number of years, European Central Bank (ECB) Executive Board member Benoit Coeure told France Inter radio on Saturday. Speaking after the ECB this week cut rates to record lows, Coeure said they would remain around that level for a long time, whereas central banks in the United States and UK would at some point raise rates. “Clearly what we wanted to indicate on Thursday is the fact that monetary conditions will diverge between the euro zone on one hand and the United States and the United Kingdom on the other for a long period, which will be several years,” he said. “We are going to keep rates close to zero for an extremely long period, whereas the United States and the United Kingdom will at some point return to a cycle of rate rises.” Coeure said this should help to weaken the strong euro, which is threatening economic recovery and importing disinflation. French President Francois Hollande has been calling for months for ECB action to weaken the currency.
Truth is that he bond vigilantes are in control of the Interest Rate on the US Ten Year Note, ^TNX, and are using this Bow of Economic Sovereignty, to effect coup d’etat worldwide, which have caused derisking out of debt trade investments such as Ireland’s Bank, IRE, and deleveraging out of currency carry trade such as Ireland’s, Software Manufacturer, FLTX, and Medical Lab, ICLR.
Through global debt deflation, coming at the hands of the currency traders, following upon the work of the bond vigilantes, all currencies, will be falling ever lower than the Japanese Yen, resulting in all Credit Investments, including European Credit, EU, trading ever lower, inducing the dreaded economic inflation worldwide.
All things have a beginning and an end.
The 1971 Milton Friedman Call for Free to Choose Investing and Floating Currencies, created a great fiat money swell. And the Ben Bernanke QE1 of trading out money good US Treasuries for Distressed Investments, regenerated the global financial system, whereby the Banker Regime birthed the investor, and has finally culminated the age of currencies and the era of credit, producing peak fiat money and peak fiat wealth. The June 5, 2014, Mario Draghi ECB announcement of NIRP drove Equity Investments to their Elliott Wave 5 High.
Now said announcement has birthed the age of diktat and the era of debt servitude, where the Beast Regime will rule in policies of diktat in regional governance in every one of the world’s ten regions, and in totalitarian collectivism throughout mankind’s seven institutions.
The short selling opportunity of a lifetime has emerged; and an investment demand for gold will soon arise.
On Friday June 6, 2014, the Inverse Market ETFs, as a group, traded strongly lower; these include XVZ, STPP, EUO, YCS, CMD, DNO, MLPS, SAGG, DTYS, JGBS, GLD, GYEN, GEUR, GGBP, YXI, EUM, DOG, SEF, EFZ, DDG, PSQ, REK, MYY, RWM, These could be used selectively and under wise management to serve as the basis for collateral in a short selling investment strategy.
Thus it is failure of credit, and the death of currencies, that will cause the death of fiat wealth, which is defined as the combination of equity investments and credit investments. And as such, the short selling opportunity of a lifetime, in equity investments, is now. Better yet, an investment demand for gold will commence as investors seek safe investment in hard assets. One way to invest in gold is to start to dollar cost average into OUNZ, The Deliverable Gold ETF. The investor should start to dollar cost average into the purchase and possession of gold bullion.
The rally in Emerging Markets, EEM, such as TUR, THD, EWZ, GAF, IDX, EPHE, GXG, EGPT, and SCIN, that came via the pursuit of yield and the duration trade in Credit Investment is over, through, done, and over.
Since the beginning of 2014, the Japanese Topix, ITF, had been the worst performing stock developed stock market, as is seen in the ongoing Yahoo Finance chart of ITF, EZU, EEM, VTI, EPP, coming on debt deflation, as Investors went short the Yen, FXY, and long the Euro, FXE, driving the EUR/JPY, higher. Now with the death of currencies, it is time for all the other nations to experience debt deflation.
Bloomberg reports Shinzo Abe orders overhaul of Japanese Pension Fund’s Investments. The push to move the changes forward is good for the market,” said Masaru Hamasaki, a Tokyo based senior strategist at Sumitomo Mitsui Asset Management. “Revamping the allocations three months after the pension review came out will be quite a tight schedule, but if the prime minister has asked for this I think they’ll do it by then.”
Investors are watching for Japan’s cautious retirement-savings managers, led by the fund, to shift into shares as the Bank of Japan spurs inflation that risks eroding the value of bonds. The Topix index of equities slipped 5.3 per cent this year as of last week, adding pressure on Abe to prove his policies can spur a sustained economic recovery. Trust banks, which often buy and sell on behalf of pension investors, are putting the most money into local stocks in five years as foreigners sell, fuelling speculation that the fund is already buying.
The fund may change its strategy in August and putting 20 percent of its assets into local stocks would not be too much, Yasuhiro Yonezawa, who heads its investment committee, told the Nikkei this week. That compares with a current target of 12 per cent.
Trust banks made 250 billion yen in net purchases of Japanese equities last week, according to data from the Tokyo bourse. That was the most since the period ended March 27, 2009. The banks have added money to the stock market for five consecutive weeks as the Topix index climbed 2.7 percent and foreigners reduced holdings by 83 billion yen during the period.
“Given that it’s the biggest net purchase since stock prices plummeted during the financial crisis, you’d have to speculate that the fund or corporate pensions were doing the buying,” said Shoji Hirakawa, chief equity strategist at Okasan Securities. “It’s likely the fund is doing what it can to prepare for allocation changes. The market was expecting them to buy next fiscal year, but it looks like they’re already doing it.”
Trust banks have bought a net 574 billion yen of Japanese shares this year, while foreign investors sold 1.4 trillion yen, the TSE data shows. That contrasts with 2013, when Topix’s 51 per cent surge was accompanied by record foreign buying and the banks sold four trillion yen of shares.
The Topix slumped as much as 13 per cent this year up to an April 14 low as the yen strengthened and investor optimism about Abe’s revival strategies waned. The equity gauge has rebounded 8.8 per cent from that low as of Thursday. It remains the worst performer among developed markets.
2) … There be many new normals.
2A) …The new normal way of life is compliance to mandates of regional leaders.
Commodities, DBC, trading lower, and Aggregate Credit, AGG, trading lower reflect the reality that disinvestment out of debt trade investment and currency carry trade investments has pivoted the world out of the paradigm and age of liberalism into that of authoritarianism, where the Beast Regime rules.
This monster is completely different than the Creature from Jekyll Island; as it has feet of a bear, mouth of lion, and the stealth of a leopard, and is foretold to manifest most strongly out of Mediterrean, read Club Med, waves of sovereign insolvency, banking insolvency and corporate insolvency.
The former fiat of choice is being replace by the new fiat of diktat coming from the Beast Regime’s regional fascist leaders, which establishes regional security, stability and sustainability, and enforces debt servitude in each of the world’s ten regions, and throughout all of mankind’s seven institutions, this being foretold in Bible Prophecy of Revelation 13:1-4.
As investors derisk out of debt trades and deleverage out of currency carry trades, the Banker Regime’s dynamos of creditism, corporatism and globalism are winding down the fiat of credit and the fiat of currency; and the Beast Regime’s singular dynamo of regionalism is powering up the fiat of diktat and the fiat of debt servitude.
In an economic move establishing regional security, stability and sustainability, supply lines become regional replacing former global ones. Damien Cove of the NYT reports As Ties With China Unravel, US Firms Head to Mexico.
James Brewer of WSWS reports Michigan Senate Passes Detroit “Grand Bargain” Package. The legislation includes a financial oversight panel that will extend the bankers’ dictatorship over Detroit for at least another 13 years.
The new normal in the age of authoritarianism is that the word, will and way of fascist leaders directs economies. Bloomberg reports Obama Said To Propose Deep Cuts To Power Plant Emissions. Fox News reports Coal-state lawmakers rally against power plant emissions crackdown. Coal-state lawmakers, accusing President Obama of using a back door to impose strict emissions limits on power plants, are rallying to slam that door shut, claiming the plan would cost jobs and jack up electric bills. In Kentucky, West Virginia, and other states that rely on coal to fuel their own economies, and that help generate power for everybody else, officials vowed Monday to introduce legislation halting the newly announced EPA plan.
2B) … The new normal price system is the beastly price system.
Econbrowser posts Commodity Prices And Resource Scarcity. The technological advances that led to the broad trend of falling real food prices often seen in the graphs above are well understood. The Green Revolution, improvements in irrigation, fertilizer, pesticides, and hybridization, managed to keep significantly ahead of Malthus’s diminishing returns. One could make a case that Yamada and Yoon’s statistical trend lines, which see the world as still in the midst of a broad downward trend in the relative price of many agricultural products, will turn out to be a correct prediction of what we’ll see over the next decade.
I respond that the falling real food prices will increase, as the World’s Major Currencies, DBV, and Emerging Market Currency Prices, CEW, started to decline in May 2014, and it will take more of these to buy Agricultural Commodities, RJA, which are priced in US Dollars.
Econobrowser continues, The graphs below include a number of extractive commodities; for copper, tin, and lead, it’s more difficult to dismiss the price surge over the last decade as a temporary anomaly.
I respond that the price of Copper, JJC, has been inflated by liberal PBOC credit liquidity policies, by the China Shadow Banking practice of stockpiling copper as collateral for loans, and by ever increasing currency carry trades such as the EUR/JPY, until January 14, 2014, when it started to deflate.
Econobrowser concludes, There is no question that the relative price of any commodity is subject to competing long-run pulls from increasing marginal cost on the one hand and improving technology on the other.
I respond please consider that the relative price of commodities, especially agricultural commodities, is going to soar, as investors derisk out of debt trade investments and currency carry trade investments, and as authoritarianism’s singular economic dynamo of regionalism increasingly replaces liberalism’s three dynamos of creditism, corporatism and globalism.
A new price system is emerging; it will neither be afixed price system where prices are set by the government, nor will it be free price system; the new normal price system is the beastly price system, where prices operates on diktat money, and where prices are governed by the Four Horsemen of the Apocalypse, in particular, The First Horseman, and The Fourth Horseman; these are The Rider on the White Horse, seen in Revelation 6:1-2, who introduces regional governance via coup d’etats replacing democracies, and The Rider on the Pale Horse, seen in Revelation 6:7-8, who introduces economic deflation replacing economic inflation, the result of which is economic death replacing economic life.
Wikipedia relates “The fourth and final horseman is named Death. Known as “the Pale Rider“, of all the riders, he is the only one to whom the text itself explicitly gives a name. Unlike the other three, he is not described carrying a weapon or other object, instead he is followed by Hades (the resting place of the dead). However, illustrations commonly depict him carrying a scythe (like the Grim Reaper), sword or other implement.
The Rider on the Pale Horse introduced the beastly price system on Friday May 30, 2014, by forcing investors to sell commodity ETFs, DBC, and GSG, lower on May’s trade lower in the Major World Currencies, DBV.
Said another way, debt deflation, specifically currency deflation, coming at the hands of the currency traders, on fears that the world’s central banks’ monetary policies have crossed the rubicon of sound monetary policy and have made “money good” investments bad, has pivoted Commodities, DBC, GSG, lower in price, on lower Commodity Currencies, CCX, with the result that investors sold investments in Steel Producers, SLX, such as OSN, GSI, X, AKS, NUE, GGB, SID, MTL, PKX, Global Industrial Miners, PICK, such as VALE, RIO, BHP, Coal Miners, KOL, Uranium Miners, URA, and Rare Earth Miners, REMX.
Bond vigilantes and their partners, the currency traders, set the price system, with the result being economic deflation, as Jesus Christ as is presented in Revelation 6:6-8, has opened the Fourth Seal of the Scroll of End Time Events, and released the Rider of Pale Horse. A repeat of 1914 is underway, as Lord Grey famously said, “the lamps are going out all over Europe.” This time, it’s not a metaphor.
Ongoing currency carry trade disinvestment is going to be highly destructive economically. The result of debasement of the world’s currencies will be economic destabilization, economic deflation, and economic death.
Given currency deflation in the Euro, FXE, the British Pound Sterling, FXB, the Swedish Krona, FXS, and the Swiss Franc, FXF, as well as the India Rupe, ICN, and the Brazil Real, BZF, economic growth is impossible.
Economic growth was a largely a side benefit, that came from investment gains, flowing from the credit stimulus of Global ZIRP. Economic growth was a function of the investor pursuing investment gain in the bygone era of currencies, and the age of credit.
News reports illustrate economic death. BBC reports ‘Conflict Minerals’ Deadline Looms for US Technology Firms.
This inquiring mind asks what will become of the Alcoa Aluminum Ingots Manufacturing Plant, located in Ferndale, WA, given global debt deflation.
2C) … The new normal education system is the fascist education system
Nick Barrickman of WSWS posts New Orleans Recovery School District Set To Convert Entirely To Charter Schools. With the closing of its last five traditional public schools, New Orleans is set to become the largest city in the US with an all charter school district.
In 2010, the city was awarded $1.8 billion to renovate its schools as a part of the disaster assistance given by FEMA. One of the key stipulations of this funding permitted the city to construct new facilities which could then be handed over to private operators, rather than rebuild the remaining traditional schools. The Post story notes that many of these rebuilt schools have simply been given to charter operators free of charge.
The move to shutter the remaining traditional schools is unpopular with the city’s population; a recent poll conducted by the Cowen Institute for Public Education Initiatives at Tulane University showed that only 41 percent of New Orleans residents supported the move.
3) … Jane Stanton Hitchcock, relates Imagination Is The Key To Life.
News reports, books, literature, websites, television and radio programs, can inspire one to imagine worlds and people that do not exist, or they inspire one to properly perceive reality.
Blessed Economist posts Person: Imagination. The imagination is like the memory, but whereas the memory relates the past, imagination focuses on the future.
Dreams appear in our imagination. So do our daydreams. If they are from God, they can be powerful motivators. If they are from the devil, they can scare and cripple us.
The imaginations of evil men are full of evil. The Lord saw how great the wickedness of the human race had become on the earth, and that every imaginations of the thoughts of the human heart was only evil all the time (Gen 6:5). From their callous hearts comes iniquity; their evil imaginations have no limits (Ps 37:7). People who fill their imaginations with the benefits of evil will end up enjoying evil.
The spiritual powers of evil can put things into our imagination. When the devil appeared to Jesus, he may actually have appeared through Jesus imagination, because he does not have a physical body. We need to deny those false imaginations as soon as they come, by declaring the word of God.
When we are living in the Spirit, our imagination can perceive what is happening in the spiritual world. Understanding what is happening in the spiritual realms is really important for the Christian life. A few Christians perceive what is happening in the spiritual realms through their external senses. Most of us perceive it in through our imagination when the Holy Spirit displays what is happening there in our imaginations for us. More about this in Spiritual Realms.
Imagination creates empathy. If we can understand what life is like for another person, we can understand why they are behaving the way that we do. “Walk a mile in their shoes”. We should use our imaginations to increase our empathy for other people.
The imagination is a wonderful tool. We should use it for God, to increase our faith and hope, and grow our awareness of events in the spiritual realms.
Through my imagination, I see the Lord, as I listen to InVuBu posts of Lyrics By The Song Title: I See The Lord; and I also see Morpheus The God Of Dreams as I reflect throughout the day, who tells me “Be faithful unto death and I will give you the crown of life”. He does not look anything like a black man wearing sunglasses, but rather He is dark complected Mediterranean and has white flowing hair and red flaming eyes and is surrounded by shimmering leaves of light which are angels.
4) … Prophecy Signs of The Last Days.
4A) … A Prophecy Sign of the end times: Jerusalem The Burdensome Stone.
The prophecy sign of Jerusalem The Burdensome Stone, is found in Zechariah 12:3, ”On that day, when all the nations of the earth are gathered against her, I will make Jerusalem an immovable rock for all the nations. All who try to move it will injure themselves”
Ynet News reports US Congressmen Vow to Work to Keep Jerusalem Undivided.
But on the other side of the Middle East Divide, Hamas has acquiesced, that is has capitulated, that is has tacitly agreed, to recognizing Israel’s right to exist, by accepting the fascism of the Palestinian Authority’s technocratic governance, as Jerusalem Post reports Hamas Official: Formation Of Unity Government Is Surrender On Part Of Hamas
Reuters reports US Says To Work With, Fund Palestinian Unity Government. The United States said it plans to work with and fund the new Palestinian unity government formed after an agreement by the Fatah and Hamas factions, and Israel immediately voiced its disappointment with the U.S. decision.
Palestinian President Mahmoud Abbas swore in a unity government on Monday in a reconciliation deal with Hamas Islamists, who advocate Israel’s destruction.
The United States views Hamas as a “terrorist” organization and the U.S. Congress has imposed restrictions on U.S. funding for the Palestinian Authority, which typically runs at $500 million a year, in the event of a unity government.
Senior U.S. lawmakers said on Monday Washington should suspend aid to the new unity government until it is sure of the Islamist group’s commitment to pursuing peace with Israel.
In its first comment since the Palestinian government was sworn in, however, the State Department stressed that it regarded the new Cabinet as made up of technocrats and that it was willing to do business with it.
“At this point, it appears that President Abbas has formed an interim technocratic government that does not include ministers affiliated with Hamas,” State Department spokeswoman Jen Psaki told reporters at her daily press briefing.
“Based on what we know now we intend to work with this government but will be watching closely to ensure that it upholds principles that President Abbas reiterated today,” she said, referring to Abbas’ commitment to honor past peace deals and the principles underlying the peace process with Israel.
In Jerusalem, an Israeli official, speaking on condition of anonymity, said in a statement to reporters: “We are deeply disappointed by the State Department regarding working with the Palestinian unity government.”
4B) … A Prophecy Sign of the end times: The rise of the Ten Toed Kingdom Of Regional Governance and Totalitarian Collectivism.
The prophecy sign of the Ten Toed Kingdom is found in Daniel 2:25-45.
Robert Wenzel of EPJ posts Ron Paul is out with a video discussing a recent commentary written by neocon columnist Charles Krauthammer.
“Their enhanced partnership (that of China and Russia) marks the first emergence of a global coalition against American hegemony since the fall of the Berlin wall,” Krauthammer wrote of the deal, which will supply China with Russian gas for the next 30 years.
In response, Dr. Paul said in a video that the US is risking much more than Americans might realize by letting the China-Russia deal slip by. According to RP, the multi-billion-dollar agreements will not only cost the US its international influence in the long run, but will decimate the worth of the dollar. “We talked a lot over the years about military blowback: we do things and it comes back to haunt us and Americans ended up getting killed. But there is blowback that comes in different manner, and its economic blowback,” he said
Well yes, Dr. Paul has it correct. The China Russia Energy Deal just slipped by. The regional framework agreement births Eurasia as a region of economic governance where there are undollar bartering economic transactions. And via ECNS.CN The Renminbi Clearing Bank Opening In London This will be quite deflationary to the US Dollar. The China Russia Energy Deal is a fulfillment of the Prophet Daniel’s Statue of Empires, presented in Daniel 2:25-45, where the Two Iron Empires that have ruled the world since 1778, that is the British Empire and the US Dollar Hegemonic Empire, dissolve, and out of void a Ten Toed Kingdom with toes form in the world’s ten regions. These have a miry mixture of iron diktat and clay totalitarian collectivism, where Regional Economic Fascism replaces all current economic systems such as Crony Capitalism, European Socialism, Greek Socialism, Chinese Enterprise, and Communism; and is synonymous with the Beast Regime of Revelation 13:1-4. This governing substance cannot and will not last long.
As foretold in Daniel 7:7, the Wild Beast, the Fourth Beast of a one world government and a one world religion, will rise to govern all, by means of the word, will, and way, of the Sovereign, seen in Revelation 13:5-10, and the Seignior, seen in Revelation 13:11-18, who will provide the chargma money system, that is the 666 money system, where one is required to take the Sovereign’s Mark, seen in Revelation 13:18, in order to conduct any economic activity.
In related offshore investing news, courtesy of Dollar Collapse International Man posts 77,000 Firms Worldwide Sign Up For FATCA. And Daily Bell posts Facing The Invasive Onset Of GATCA, Take Human Action
Opposite Dr. Paul, on the left side of the political spectrum are the Progressives and the Liberals. Sociologist Daniel Little posts Basic Social Institutions and Democratic Equality. The author fails to perceive that God, that is the Sovereign Lord God of the Universe works through Empires, always has and always will; and that the paradigm and age of liberalism, meaning freedom from the state, is coming to an end and that of authoritarianism is commencing. The age of the investor is complete, and the age of the debt serf is underway.
4C) … A Prophecy Sign of the End Times: A Strong Delusion
The prophecy sign of a strong delusion is found in 2 Thessalonians 2:11.
The IGM Economic Experts Panel presents The IGM forum polls responses to this statement: There is a social value to having institutions that issue liquid liabilities that are backed by illiquid assets. Not one of the economists polled disagrees.
An inquiring mind asks have you considered what constitutes an example of illiquid assets. Benson te provides a good example As Debt Surges, Malaysia’s Shadowy Fund Adds to Systemic Risk.
4D) … A Prophecy Sign of The End Times: The rise of the King of the South
The prophecy sign of the rise of the King of the South is found in Daniel 11:11 and Daniel 11:40-42 .
VOA News reports Egypt’s Sisi Wins 97 Percent; Iran Invited to His Inauguration
4E) … A Prophecy Sign of The End Times: The Mark of the Beast
The prophecy sign of the the Mark of the Beast is found in Revelation 13:18.
Bloomberg announces Amazon Planning to Unveil Smartphone to Vie With Apple’s.
One’s smartphone becomes one’s wallet. Mobile payment technology is now fully established and will serve as the basis for the 666 Charagma Mark of the Beast Money System.
All now be banked, the only unbanked are those without payments such as the genuine homeless.
Physical banks and physical credit unions are obsolete as tap mobile contactless payment technology, such as American Express’ Bluebird Checks with Mobile App, Tap2Pay™ and Tap & Go™, now provide instantaneous payments to others and vendors, and thus provides the foundation for the 666 Charagma Mark of the Beast Money System.
On Track Innovations Ltd announces oti Launches Trio Modular Payments Reader. The Trio Reader handles multiple payment methods in single solution for self service markets.
Secure ID News reports Retailers Create Custom Mobile Wallets With Airtag AIRSHOP enables retailers to launch their own self-branded mobile wallets for fast and advanced ordering, payment, loyalty, geo-location services and couponing.
Secure ID News reports The Macao Special Administrative Region of the People’s Republic of China Has Made The Switch To Contactless Smart Cards For Citizen ID. The card has many applications but one of the main reasons for the move to contactless was automated passenger clearance at the border. Contactless enables quicker throughput and transaction speed and also increases the lifespan of the card since a chip isn’t exposed.
4F) … Prophecy Sign of the End Times: Abnormal weather, drought, as well as rains, snow, and ice.
Zero Hedge posts US Q1 Productivity Misses; Plunges By Most In 6 Years. nonfarm productivity in the frost-bitten US in Q1 plunged at its fastest pace since Q1 2008.
4G) … Prophecy Sign of the End Times: Fraud
The Automatic Earth posts 3 Articles On The Mysterious Missing 100,000 Tons Of Copper And Aluminum that could have far reaching repercussions in commodities and financing markets. As if it’s not nuts enough to use metals as collateral for more metals, what if they were never even there? And how widespread is this?