Financial Market Report for the Week Ending Thursday, July 3, 2014
This post is available in Google Document Format here
On Tuesday, July 1, 2014, Credit, AGG, specifically the 30 Year US Government Bonds, EDV, the 10 Year US Government Notes, TLT, and Junk Bonds, JNK, failed, as the Bond Vigilantes called the Interest Rate on the US Ten Year Note, ^TNX, higher from 2.49%, with the result that the world fully entered into Kondratieff Winter, the final phase of the Business Cycle, which commenced when the European Financials, EUFN, the European Small Cap Dividend Stocks, DFE, and the nations of Greece, GREK, and Ireland, EIRL, traded lower in value, on the death of the Euro, FXE, in June 2014.
This inquiring mind asks, Does or did the US Federal Reserve have an anti-inflation mandate or a full employment mandate?
Clearly, the Great Recession and weak recovery are the economic past, what lies ahead?
1) … Global debt deflation is underwriting disinvestment, as the world enters Kondratieff Winter, the final phase of the Business Cycle; with the result that regional economic governance is emerging to replace democratic nation state governance.
In the first half of 2014 hot money flowed into the Australia Dollar, FXA, as investors pursued yield, as is seen in the Bloomberg report Big Four Lead Bond Charge Abroad as Costs Fall … I relate that the carry trade into Australia, EWA, and KROO, as well as its peer New Zealand, ENZL, is history.
Bloomberg posts Yen Bears Say BOJ Exit Distant as Swaps at ’05 Low: Japan Credit. Interest-rate swaps are signaling the Bank of Japan will lag far behind the Federal Reserve in ending record stimulus, adding pressure on the yen to weaken … I relate that the carry trade in Japan, EWJ, JSC, DFJ, continued vertically higher on July 1, 2014, on the debasement of the Japanese Yen, FXY.
Bloomberg posts Memphis Bond Traders See Ongoing Low Treasury Interest Rates … I relate that the Memphis Bond Traders have it wrong, the Benchmark Interest Rate is moving continually higher, as the Bond Vigilantes have control of this Bow of Economic Sovereignty, as on October 23, 2013, Jesus Christ opened the First Seal of the Scroll of End Time events, and released the Rider on the White Horse, who has the Bow without any Arrows, to begin to effect coup d etats worldwide.
Beginning in July 2014, out of an ever rising Benchmark Interest Rate, ^TNX, climbing from 2.49%, the Bond Vigilantes will soon cause derisking out of debt trades, like those which occurred in the European Financials, EUFN, and deleveraging out of currency carry trades, like those which occurred in the European Small Cap Dividends, DFE, the Eurozone Stocks, EZU, and the Eurozone Nations such as Ireland, EIRL, Greece, GREK, and Austria, EWO. Those invested in EU Equities, were the first casualties in an ongoing war waged by the Bond Vigilantes against the Banker Regime.
World Stocks, ACWX, and Nation Investment, EFA, and Global Financial Institutions, IXG, will be trading lower when Commodity Currencies, CCX, such as the Euro, FXE, the Australian Dollar, FXA, and the Canadian Dollar, FXC, start to fall lower than the Yen, FXY, on the ongoing exhaustion of the world central banks’ monetary authority, as investors increasingly fear that the monetary policies of The Titans have crossed the rubicon of sound monetary policy, and have made “money good” investments bad. This will be seen in the ongoing Yahoo Finance Chart of CCX, FXY, ACWX and EFA. Look for the ratio of EUO to YCS, that is EUO:YCS, to become increasingly negative, forcing investors out of Euro Yen carry trade, that is EURJPY currency carry trades, as well as out of currency carry trades worldwide.
Given that the world operates on a debt based money system, the tug of war between the world central banks and the Bond Vigilantes, has, and always will create money. Trust in the nations’ ability to make good on its debt has underwritten the legitimacy of fiat money. Now on July 1, 2014, fiat money is dying, as exemplified in the Euro, FXE, trading lower; and diktat money is being established to provide one’s economic life experience.
This inquiring mind asks, What is the origin of our current economic experience? And just like who is coding our economic life experience now?
Hollywood has it right, in Prometheus like fashion, the Bond Vigilantes are creating a new monster. The Creature from Jekyll Island, is morphing to become something more terrible, that being The Beast Regime of Regional Economic Governance and Totalitarian Collectivism. It is gestating and will be rising out of disinvestment and out of economic deflation, to establish policies of diktat in every one of the world’s ten regions, and schemes of control throughout all of mankind’s seven institution, as foretold in Bible prophecy of Revelation 13:1-4. New Titans will rule this monster, just as the former Titans, Janet Yellen, Ben Bernanke, Mark Carney, Haruhiko Kuroda, have rule the former monster.
Fiat money, defined as the combination of Credit, AGG, and Major World Currencies, DBV, and Emerging Market Currencies, CEW, is starting to die; as exemplified in the Euro, FXE, and is being replaced by diktat money, defined as the diktat of regional sovereign leaders for regional security, stability, and sustainability; with the result that regional economic governance is replacing democratic nation state governance.
On Monday, June 30, 2014, Automatic Earth postsIt’s A Case Of Bad Debt Driving Out Good Money. The difference between debt and equity is the same as that between debt and money. And McNally wrote a great piece on how debt drives out equity in our world, and reaffirms Gresham’s law.
Ralph Atkins, the FT’s capital markets editor, relates Euro Debt Constraining Growth discusses high private sector debt levels in the eurozone with Moritz Kraemer, S&P’s chief sovereign ratings officer. Mr Kramer says Europe is ‘in for the long haul’ on debt deleveraging.
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 isRanked number 1 out of 742 like investments.
The final phase of Global ZIRP, is known as peak finance, and is producing a stupendous moral hazard based peak wealth, which has come via the three economic dynamos of creditism, corporatism, and globalism.
The ongoing Yahoo Finance Chart of the Russell 3000, IWC, illustrates how Stock Buybacks are part of Peak Finance. David Stockman writes Bubble Finance At Work: How The Share Repurchase Mania Is Gutting Growth And Leaving Financial Wrecks. With the stock market returning tobubble territory, stock buybacks for the Russell 3000 amounted to$567.6 billion in 2013. Share repurchases, in the previous bubble, hit an all-time high of$728.9 billion in 2007; right before the financial crisis of 2008 unfolded. It seems, indeed, as if corporate executives become intoxicated by bull markets in stocks. Can you say “buyback fever”?
For followers of Austrian economics, it is understood that stock market bubbles are fueled by the Federal Reserve’s monetary pumping; which goes hand-in-glove with artificially low interest rates engendered by the Federal Reserve. Consequently, misleading interest rate and price signals can cause businessmen to make costly errors in judgment. Since stock buybacks, misguidedly, are consideredinvestments in one’s own business, are we not witnessing a massive clustering of errors with innumerable executive management teams authorizingmalinvestment on a grand scale? Instead of businessmen misreading market signals and mal investing in capital and producers goods, many are male investing in shares of their own companies via stock buybacks.
Katie Roof of Fox Business reports IPO Mania. The first half of the year is off to the best start since 2000 for U.S. IPOs, according to Dealogic. There have been 154 IPOs raising $36 billion in the first six months of the year, compared to 235 IPOs and $67 billion in the first half of 2000. Leading the pack with the most IPOs is the healthcare sector, which has seen 55 IPOs raising $4.1 billion, largely stemming from a biotechnology boom. Technology has seen the most volume, with $10 billion raised from 33 offerings… Venture-backed IPOs have had a strong turnout with 63 IPOs, compared to 30 in the first half of last year. The last time venture-backed IPOs had a stronger start was in 2000, with 166 deals priced in the first 6 months. In terms of volume, this has been the best year ever for financial sponsors. Fifty-five private equity-backed IPOs have raised $24 billion so far this year.
On Monday June 30, 2014, Commodities, DBC, traded lower on lower Agricultural Commodities, RJA, as CORN, WEAT, JJG, SGG, and SOYB, traded lower, which turned theDefensive Sector, Global Agriculture, PAGG, lower.
On Tuesday, July 1, 2014, the world passed through a historic economic inflection point, asCredit Investments, that is Aggregate Credit, AGG, specifically the 30 Year US Government Bonds, EDV, the 10 Year US Government Notes, TLT, and Junk Bonds, JNK, failed, as the Bond Vigilantes called the Interest Rate on the US Ten Year Note, ^TNX, higher from 2.49% to 2.56%, and which in so doing traded lower from a double top high.
The trade lower in the US Sovereign Debt, means the end of the era of US Dollar Hegemony, establishes the beginning of the end of the US Dollar Empire, and communicates the end of Global Finance. Inverse Credit Investments, such as JGBS, SAGG, TMV, DTYS, and TTT, traded higher.
Dan Sanchez posts in Medium War Is the Health of The…Economy? I reply war has been the health of the economy; but with the trade lower in US Treasuries, US Dollar Global Hegemony is being replaced by regional fascism of the Ten Toed Kingdom of regional economic governance and totalitarian collectivism.
And of note, the Bond Vigilantes also steepened the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX; seen in the Steepner ETF, STPP, steepening.
Currency traders called the Japanese Yen, FXY, lower, and the British Pound Sterling, and two Commodity Currencies, CCX, these being the Australian Dollar, FXA, and the Canadian Dollar, FXC, higher, with the result that most Equity Investments, that is World Stocks, ACWX, traded to new rally highs, as funds flowed out of the Credit Investments, that is Aggregate Credit, AGG, as global debt deflation commenced on July 1, 2014.
The failure of Credit, AGG, on Tuesday, July 1, 2014, propelled the world into Kondratieff Winter, is a painful economic experience, as it involves a see saw destruction of Fiat Wealth, such as the Eurozone Stocks, EZU, and Eurozone Nations, such as Ireland, EIRL, and Greece, GREK.
Junk Bonds, JNK, traded parabolically lower; these are now a failed investment. Reuters reports Global Investors Pare Risky Bond Holdings, Brace For Sell-off
The 30 Year US Government Bonds, EDV, and the 10 Year US Government Notes, TLT, traded decisively lower. The Pursuit of Yield Rally, that commenced in January 2014, ended on July 1, 2014.
Confirmation of the end of the Pursuit of Yield, comes from 1) Dividends Excluding Financials, DTN, trading below their June 24, 2014, rally high, 2) all of the High Yielding Debt, such as High Yield Municipal Bonds, HYD, with the exception of European Credit, EU, traded lower in value, and 3) risk free money, that is Floating Rate Notes, FLOT, traded sharply lower on July 1, 2014.
Vox writes Managing Credit Bubbles. That is an impossibility! The Global Bond Bubble burst on July 1, 2014, communicating the failure of credit has commenced, with the result that the world is starting to pivot from the age of credit and currencies, and into the age of diktat and debt servitude.
The trade lower in Credit Investments, AGG, is a profound historic change, as debt has been the engine of growth; the global economic future is one of economic deflation, now that debt is trading flower in value. The Jeremy Warner Telegraph analysis comes too late. We [in the UK] must end this addiction to debt as the engine of growth. There has been no serious attempt to get to grips with the financial cycle, which requires moving away from debt as the engine of growth.
The fact that destructionism is starting to replace inflationism establishes the fact that the world has entered into Kondratieff Winter, the final phase of the Business Cycle.
Gulf States, MES, Taiwan, EWT, Greece, GREK, Italy, EWI, Ireland, EIRL, Japan, EWJ, JSC, India Small Caps, SCIN, The US Small Caps, IWM, IWC, Peru, EPU, Columbia, GXG, Vietnam, VNM, Thailand, THD, Argentina, ARGT, The UK, EWU, EWUS, and Canada, EWC, CNDA, led Nation Investment, and Small Cap Nation Investment, EFA, higher to its June 24, 2014 high..
Regional Banks, KRE, Argentina Banks, BMA, GGAL, BFR, BBVA, India Bank, HDB, Japanese Banks, MTU, SMFG, NMR, IX, Panama Bank, BLX, and, Columbia Bank, CIB, led Global Financials, IXG, higher; but these remain below their June 2014, rally high.
Japanese Small Dividends, DFJ, India Earnings, EPI, Emerging Market Small Cap Dividends, DGS, International Telecom, IST, Shipping, SEA, Leveraged Buyouts, PSP, Global Utilities, DBU, Premium REITS, KBWY, Water Investments, FIW, Emerging Market Infrastructure, EMIF, Global Infrastructure, IGF, Energy Partnerships, AMJ, EMLP, MLPJ, and Regional Banks, KRE, led Yield Bearing Investments higher; while Utilities, XLU, and Mortgage REITS, REM, traded lower.
On Wednesday, July 2, 2014, Copper Miners, COPX, Steel Producers, SLX, Global Industrial Miners, PICK, Healthcare Providers, IHF, traded higher, taking World Stocks, ACWX, to a new rally high, drawing Copper, JJC, and Base Metals, DBB, higher. Of note, Tesla, TSLA, traded lower.
The chart of the S&P 500, $SPX, SPY, shows a trade higher, to a new all time high.
Australian, EWA, KROO, China Financials, CHIX, Hong Kong, EWH, China, YAO, and Taiwan, EWT, led Asia Excluding Japan, EPP, to a new rally high. The Gulf States, MES, India, INP, Russia, RSX, Eastern Europe, ESR, Thailand, THD, Peru, EPU, Denmark, EDEN, Mexico, EWW, and Argentina, ARGT, traded higher; while Brazil, EWZ, EWZS, BRF, traded lower on a lower Brazilian Real, BZF. Poland, PLND, EPOL, traded lower. China Investments traded higher as Bloomberg postsChina Debt Set for Biggest Quarterly Gain in Two Years on Easing.
In Yield Bearing Investments, Electric Utilities, XLU, such as Dominion Resources, D, traded parabolically lower, leading Dividends Excluding Financials, DTN, lower. Water Investments, FIW, and International Telecom IST, traded lower. Leveraged Buyouts, PSP, traded to a rally high. Gulf Dividends, GULF, Australis Dividends, AUSE, China Dividends, CHXF, China Real Estate, TAO, traded higher.
The Bond Vigilantes called the Interest Rate on the US Ten Year Note, ^TNX, strongly higher, and steepened the 10 30 US Sovereign Debt Yield Curve, seen in the Steepner ETF, STPP, trading higher, which drove Aggregate Credit, AGG, strongly lower, on lower 30 Year US Government Bonds, EDV, US Ten Year Notes, TLT, High Yield Municipal Bonds, HYD, Long Duration Corporate Bonds, LWC, Corporate Bonds, LQD, Mortgage Backed Bonds, MBB, and Municipal Bonds, MUB.
Currency Hedged Stocks, HEDG, traded lower, communicating that the way is now down for all stocks.
The nature of our current world is that it operates on a debt based economic system, and this begs the question, what is money?
Libertarian Mark Thurston of The Mises Institute, ask What Is Money?
Social Democracy posts Alfred Mitchell Innes on the Credit Theory of Money
Money is defined as the combination of Aggregate Credit, AGG, together with Major World Currencies, DBV, and Emerging Market Currencies, CEW.
And I present the Modern Credit Theory of Money. Money is defined as the credit and flow that proceeds from a sovereign for one’s economic life experience. Money is the trust of people in the sovereign authority’s monetary policies and schemes for economic life experience; it will either be one of prosperity or austerity; and is determined by the viability of the sovereign’s debt, and the Interest Rate there upon.
Inasmuch as the Bond Vigilantes have called the Benchmark Interest Rate, $TNX, consistently higher from 2.49% to 2.56 on July 1, investors no longer consider the Banker Regime’s credit viable, and as a result, July 1, 2014, establishes peak money, and marks a pivoting from the age of prosperity to the age of austerity.
The Banker Regime’s fiat money, was based upon policies of investment choice and schemes of credit liquidity; it is giving way to the Beast Regime’s diktat money, which is based upon policies of diktat and schemes of debt servitude.
The Banker Regime’s coinage was reworked with Global ZIRP beginning 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.
That coinage has topped out in value; it is becoming debased as investors no longer believe that the sovereign’s policies and schemes can stimulate investment gains in the acquisition of Risk Assets, such as Small Cap Pure Growth Stocks, RZG, such as the Fracking Companies, or Small Cap Pure Value Stocks, RZV, such as the Automobile Dealers, or procure global economic growth.
The ongoing printing of money by the US Fed, has resulted in a relentless rise in the Money Supply which has debased our currency, and is now starting to create Headline Inflation, as reported by numerous news sources.
A new coinage, that being the trust of people in the mandates of fascist regional leaders will be increasing in value, establishing regional kings in each one of the world’s ten regions, as the Ten Toed Kingdom of regional economic governance and totalitarian collectivism (presented in Daniel 2:25-45) grows in greater economic viability (as foretold in Revelation 17:12).
To be official, money bears the stamp of its sovereign, in the case of the US Dollar, the Pyramid on the back of the US Dollar, and in the case of diktat money, it bears the seal of Mario Draghi.
Eventually out of the total failure of diktat money, the Sovereign, and the Seignior, will rise to rule the world from Jerusalem, in a One World Government, and in a One World Religion, with One Coin To Rule Them All, that is the Charagma Money System, presented in Bible Prophecy of Revelation 13:18, where one takes the Sovereign’s Mark in order to conduct any economic activity.
On Thursday, July 3, 2014, Gold, GLD, traded slightly lower as the Dow, DIA, topped 17,000, and as the S&P 500, SPY, traded to a new rally high, producing peak wealth, coming as investors have sold out of Credit Investments, AGG, as the bond vigilantes called the Interest Rate on the US Ten Year Note, ^TNX, higher to close the week at 2.65%, and steepened the 10 30 US Sovereign Debt Yield Curve, $TNX:$TNX, seen in the Steepner ETF, STPP, steepening.
It was a slaughter house in Credit Investments, as the 30 Year US Government Bond, EDV, and US Ten Year Notes, ^TNX, traded strongly lower.
While the world has achieved peak wealth and peak money, Bonds, BND, are no longer a viable investment. The world is transitioning into the final phase of the Business Cycle, that is Kondratieff Winter, on the failure of credit, that is the failure of Credit Investments, as the Bond Vigilantes have called the Benchmark Interest Rate, $TNX, higher from 2.49% to 2.56%.
European Credit, EU, is now trading lower; in fact all Credit Investments are now trading lower from their rally highs.
Bond King, Bill Gross, is going the wrong way. Bloomberg reports Pimco’s Bill Gross Bets $200 Million Of His Own Cash On Low Rates. Bill Gross has wagered almost $200 million of his own money on a bet that interest rates will stay low.
Since 2008, the Banker Regime’s policies of investment choice and schemes of credit liquidity provided six years of risk-free investing leading to a fantastic swell of Equity Investments.
Today was no exception, in a strong but of risk-on investing, the legacy sectors, Timber Producers, WOOD, Metal Manufacturing, and Steel, SLX, traded higher. Small Cap Pure Value Stocks, RZV, Small Cap Pure Growth Stocks, RZG, Semiconductors, SOXX, Global Industrial Producers, FXR, Transportation, XTN, Smartphone, FONE, China Technology, CQQQ, Networking, IGN, Media, PBS, Internet Retail, FDN, Biotechnology, IBB, Health Care Providers, IHF, Global Miners, PICK, Copper Miners, COPX, Coal Miners, KOL, Rare Earth Miners, REMX, Automobiles, CARZ, and Consumer Discretionary sectors, Global Consumer Staples, KXI, Global Consumer Discretionary, RXI, Retail, XRT, Consumer Services, IYC, traded higher, taking World Stocks, ACWX, to a new blow off market top high.
Credit Services, such as AXP, V, MA, DFS, CIT, ECPG, FCFS, PRAA, as well as HEES, URI, traded higher.
China Financials, CHIX, Argentina Banks, BRF, BMA, BBVA, GGAL, and Mexico’s Bank, BSMX, traded higher, taking Emerging Market Financials, EMFN, higher. Regional Banks, KRE, Investment Bankers, KCE, Insurance Companies, KIE, and Asset Managers, traded higher, taking Global Financials, IXG, higher, to match its previous rally high.
Columbia, GXG, Peru, EPU, Mexico, EWW, Argentina, ARGT, Chile, ECH, and Egypt, EGPT, led the Emerging Markets, EEM, to a new rally high.
New Zealand, ENZL, and Netherlands, EWN, both high-beta nation investments, recovered all of last weeks’ losses. The UK, EWU, Canada, EWC, CNDA, Denmark, EDEN, and the Russell 2000, IWM, rose to a new rally highs, taking Nation Investment, and Small Cap Nation Investment, EFA, to a new rally high.
As a group Yield Bearing Investments, traded unchanged. Electric Utilities, XLU, and Mortgage REITS, REM, plummeted; while China Real Estate, TAO, India Earnings, EPI, and Emerging Market Small Cap Dividends, DGS, China Dividends, CHXF, and Leverage Buyouts, PSP, traded to new all time highs.
Gold, GLD, traded slightly lower, as the US Dollar, $USD, UUP, and US Stocks, VTI, traded higher, as the highly volatile Swedish Krona, FXS, the Australian Dollar, FXA, the Swiss Franc, FXF, and the Euro, FXE, traded lower; Commodity Currencies, CCX, traded parabolically lower.
Please consider that not only has the failure of credit commenced in July 2014, with Aggregate Credit, AGG, trading lower, but also the death of currencies, has commenced as well, with the trade lower in the Swedish Krona, FXS, the Swiss Franc, FXF, and the Commodity Currencies, CCX, such as the Euro, FXE, and the Australian Dollar, FXA.
A new father for a new age. The Monetarist Milton Friedman be dead; and the Regionalist Mario Draghi is rising to take his place.
The debt based money system is starting to crumble, the Milton Friedman Free to Choose paradigm of Floating Currencies is being relegated to the dustbin of history, and in its place the Mario Draghi paradigm of Regional Diktat is rising to provide economic life experience.
Although I am not an Austrian Economist, they correctly champion the principle of the Business Cycle, and the world is entering Kondratieff Winter, its final season, as investors are selling Bonds, BND, on the reality that the monetary policies of the world central banks and their schemes of credit liquidity, that is massive torrents of Fed money-printing, have crossed the rubicon of sound monetary policy and have made money good investments bad, these include Eurozone Stocks, EZU, European Financials, EUFN, and Eurozone Nations, such as Ireland, EIRL, Greece, GREK, and Austria, EWO.
I buy into the Austrian line that gold is economic freedom and QE is slavery. Like the Austrian Economists, Robert Murphy, Robert Wenzel, Lew Rockwell, and Mike Mish Shedlock, I believe that physical possession of gold bullion, is the only reliable, sound, and sustainable investment; and I encourage one to dollar cost average into the purchase, possession, and safe storage of this hard asset.
Noah Smith writes Austrian Economists And Brain Worms Austrianism wraps itself in the rhetoric of personal freedom and conservative politics, laying the free-market rhetoric on thick.
I do not champion personal freedom, nor do I have any free-market convictions, rather I have been force fed the Red Pill by God, and thus have succombed to the concept of the Apostle Paul in Ephesians 1:10, that Jesus Christ acts in dispensation, that is in stewardship of all things political and economic, bringing them to completion and perfection. And having produced peak liberalism, meaning freedom, from the government, that He is now introducing authoritarianism, where regional fascist leaders will establish regional economic governance and totalitarian collectivism, and rule in policies of diktat and schemes of debt servitude.
2) … Will the world move towards a Global Fed or towards regional economic governance?
Towards a Global Fed?
Liberal Economist Brad Delong of the Center for Equitable Growth posts The Federal Reserve Needs to Fulfill Its Global Role. The Federal Reserve these days is focusing well-nigh completely on the state of the US economy. It is broadly happy with its policies. I am not happy with its policies, not even from a narrow domestic demand-management perspective. Since mid 2007 policy has been and remains insufficiently expansionary: behind the curve.
The United States is not just another large open economy in a world of flexible exchange rates capable of following its own monetary policy. The United States is a global hegemon. The Federal Reserve is thus a global central bank: the central bank for the world as well as the United State.
It has a responsibility not just to stabilize output, employment, and inflation and ensure financial stability in the United States. It has a responsibility to successfully manage the world economy in its entirety: that means crafting policy in the interest of the world as a whole, and that means that its policy should take into account and compensate for market, institutional, governance, and policy failures elsewhere. One such areas of concern is the health and stability of growth in emerging markets as they attempt to (a) gain the benefits of capital inflows for development, (b) satisfy North Atlantic demands for open financial markets, and yet (c) manage the resulting instability created by “hot money”, the carry trade, irrational exuberance, and overshooting.
The most extraordinary problem facing the global economy today is the crisis of Europe, and of euros. Europe cannot resolve this crisis. It lacks the institutions of global governments to do so. What needs to happen is the northern and southern Europe need to rebalance their costs this is best done through insulation in the north rather than through deflation in the south. The problem is that European institutions within the euro zone cannot at least as presently constituted, deliver that outcome.
That is a mammoth failure–in labor market flexibility, in the construction of the institution of a single currency that far exceeds what is justifiable on optimal currency-area principles, in what groups and interests are represented to what degree in the governing councils, and in the policies adopted–that it is the Federal Reserve’s duty to craft global monetary policy to attempt to offset and neutralize, to the limited degree that it can.
The fact that the eurozone lacked the labor market flexibility that would make it an optimal currency area meant that adjustment via the regional reallocation of economic activity would be glacial. The fact that the eurozone was a fixed currency zone ruled out adjustment via nominal depreciation.
There were only two roads to recovery: reflation in northern Europe to push up relative costs and boost the north’s demand for exports from the south to allow it to pay off its debts and deleverage, or deflation in southern Europe to push down its relative costs–at the price of deep depression and lost decades. It is in the strong medium- and long-run interest of United States not to have to deal with a Europe swirling with political currents that at the least flirt with nationalism, authoritarianism, and fascism. A world in which the United States has a proven record of fulfilling the trust it has taken on by assuming the role of global economic hegemon–and thus in which the United States is trusted to manage the global economy for the collective common good–is a much better world for the United States then one in which it is not trusted, and in which global macroeconomic management becomes the emergent result of nation-level race to the bottom policy struggles that at best zero-sum.
Or Towards Regional Economic Governance?
With the trade lower in Aggregate Credit, AGG, specifically the 30 Year US Government Bonds, EDV, and the 10 Year US Government Notes, TLT, and Junk Bonds, JNK, coming as the Bond Vigilantes calling the Interest Rate on the US Ten Year Note, ^TNX, higher from 2.49%, the US Fed be dead.
The call of the Benchmark Interest Rate, higher from 2.49% to 2.56%, by the Bond Vigilances, has done what Ron Paul and the Libertarians have consistently called for: an end to the Fed.
The Bond Vigilantes call of the Benchmark Interest Rate, ^TNX, higher from 2.49% to 2.56% on July 1, 2014, ended the Fed, at least the Fed, as it is construed in masterminding Interest Rates lower.
US Treasury Debt is no longer the driving economic force in the world, and as a result the Dollar Standard, Super Imperialism, and the US Dollar Hegemonic Empire, as described by Michael Hudson, just like the previous global empire, the British Empire, is being relegated to the dustbin of history.
The modern day, debt based, fiat money system failed on July 1, 2014, as the Bond Vigilantes, called the Benchmark Interest Rate higher, $TNX, higher from 2.49% to 2.56%. Throughout history, nation states and empires have died when their debt is no longer seen as trustworthy. The death of the US Dollar Empire occurred on July 1, 2014 as Credit investors were displaced by the Bond Vigilantes calling its 10 Year Note Interest rate higher.
From 2008 onward, the Global ZIRP monetary policies of the world central banks were really never designed for attaining price stability and employment, and thus have not provided economic recovery; rather the monetary policies were designed to change the primary function of money to serve as the basis of fiat wealth investment; and thus birthed the investor, and investment gain, as the centerpiece of economic activity, with the result being awesome fiat wealth inflation.
In contrast, the June 5, 2014 Mario Draghi ECB Mandate for NIRP and Targeted LTRO, together with theJune 21, 2014, Mario Draghi ECB Press Announcement Calling For Shared Sovereignty, address secular stagnation, defined as low growth, low employment, and low inflation.
These serve as the EU Economic Manifest, that is the Charter and Club, for Eurozone regional governance, and have birthed the debt serf and debt servitude, as the centerpiece of economic activity, and will become ever more apparent and defined, as the call for shared sovereignty becomes ever more trumpeted, as economic deflation worsens when investors increasingly derisk out of debt trade investments and deleverage out of currency carry trade investments.
The Business Cycle is one of investing, and its nascent entrance into its final phase, that is Kondratieff Winter, is seen in trade lower in European Financials, EUFN, on June 24, 2014, which is the result of a trade lower in the Euro, FXE, beginning in early May 2014, and its full entrance with the failure of credit, seen in Aggregate Credit, AGG, trading lower in value on July 1, 2014.
The Eurozone sovereigns, that is the Eurozone Nation States, with their policies of investment choice and credit liquidity, no longer support investment gain. Because they are insolvent sovereigns their investment seigniorage has failed. News reports communicate that the Eurozone periphery nations, such as Portugal, Italy, Greece and Spain, are loaded with all types of debt, not just Treasury Debt that cannot be repaid; this includes The WSJ Report Bad Property Loans Stick to Italian Banks. A Fraction of bad loans has been bought by investors. Other news reports consistently communicate that prosperity has been relegated to the dustbin of history by economic deflation; this includes the CNBC report Eurozone Retail Sales Stall As Households Feel Pain.
Failed sovereigns and failed seigniorage cannot, and does not provide ongoing economic experience; such only provide economic deflation and economic chaos.
The Bond Vigilantes, are in control of the Bow of Economic Sovereignty, and in calling the Interest Rate on the US Ten Year Note, ^TNX, from 2.49% have effected an investment coup d etat, destabilizing sovereign authority in the Eurozone, and in the US. They will be increasingly successful, in calling the Benchmark Interest Rate progressively higher.
In the Eurozone, a new sovereign, Jean Claude Juncker, and a new seignior, meaning top dog banker who in the process of coining money takes a cut, Mario Draghi, will lead the way forward in establishing regional economic governance as well as in providing new seigniorage of diktat money, to establish regional security, stability and sustainability.
Liberal Economist asks Are Calls for Income Redistribution Based on Envy or Justice?
In the new normal Mario Draghi economy of shared sovereignty, and the new normal Jean Claude Juncker economy of negotiated government, the call of liberals for income redistribution will not be met, as the mandates of these two Eurozone Titans and their soon to be appointed regional fascist leaders, will establish increasing austerity for all of the EU’s citizens.
The Eurozone will serve as the headquarters, and template, for the development of the Beast Regime of regional economic governance and totalitarian collectivism, which is synonymous with the Ten Toed Kingdom, which is replacing the US Dollar Hegemonic Empire now that the 30 Year US Government Bonds, EDV, and the US Ten Year Notes, TLT, are trading lower on the Bond Vigilante’s Call of the Benchmark Interest Rate, $TNX, higher from 2.49% to 2.56%.
3) … Times are changing: the world central bankers are now communicating their common intention to develop macroprudential regulation tools for financial system stability, and turn away from traditional interest rate policies.
FT writes Fed Must Not Linger Too Long On QE Exit.
David Wessel posts in the WSJ Central Bankers Appear to Line Up their Defenses … And Create The Macroprudential Maginot Line. It looks like there has been some international coordination of monetary policy rhetoric lately.
With price and wage inflation not a concern right now, we aren’t going to raise interest rates and throw a lot of people out of work to avoid excesses in financial markets or to head off possible asset bubbles, they said. There may come a day when our worries about financial stability will prompt us to hike interest rates, but rates are “the last line of defense.” Not now. The “first line of defense” is making the financial system more resilient so it can better withstand shocks and using our supervisory and regulatory “macroprudential tools” to rein in excesses, as we are doing now.
This inquiring mind asks, just what are “macroprudential policies”, and “macroprudential tools” for financial system stability? And what might they include?
Macroprudential tools are central bank regulations designed for financial stability; frankly they are quite blunt central bank clubs. Mike Mish Shedlock posts Spain Issues Retroactive 0.03% Tax on Bank Deposits to “Boost Economic Growth and Job Creation”. Via translation fromLibre Mercado, Spain will retroactively tax bank deposits to January 1, 2014 stating the move will boost growth and job creation. Other tools might be exit taxes from bond funds, another might be capital controls, and yet another might be for banks everywhere to be integrated with the government and be known as the government banks or gov banks for short. In the US most every bank, that is Money Center Banks and Regional Banks, have US Government Treasury Notes, TLT, residing at the Fed. As the Benchmark Interest Rate, $TNX, rises banks might be tempted to withdraw these monies from Mother Fed. So I believe the Fed will put a hold on such action and start to integrate banks into the Fed.
The Fed will be changing and morphing into the North American Fed, and will become the Atlantic compliment to the ECB, that is a North American Continent, that is Canada, Mexico, and America Regional Central Bank, which will serve as the singular banking institution for CanMexAmerica, that is the Regional Financial Hub, for the soon coming North American Union.
4) … LBJ’s Grandchild start to receive assistance.
Manchester, Clay County, KY, 40962, is a place of rural concentrated poverty. The Rural Blog posts 6 E. Ky. Coal Counties Are Among U.S.’s 10 Hardest To Live In, New York Times analysis says.
Down With Tyranny posts Politics And Race In Those 10 Worst Counties To Live In In America.
Can you guess where the political sympathies of these poor desperately difficult counties lie? Romney won each white majority county and Obama won each black majority county.
Viral Spell posts Clay County Is The Most Difficult One To Live In Among All US Counties.
WSON Radio reports 2 Eastern Kentucky Labor Unions Endorse Republican Mitch McConnell. Campaign officials announced Monday that officials with the American Federation of Government Employees correction officer locals in Clay and McCreary counties endorsed Mitch Mcconnell because of his history of constituent service. McConnell has pushed for national right-to-work legislation, which many labor unions oppose. McConnell’s Democratic challenger Alison Lundergan Grimes has been endorsed by the Kentucky chapter of the AFL CIO and has promised to vote against right-to-work legislation.
WYMT TV reports Coordinator Chosen For Promise Zone In Kentucky. Kentucky Highlands Investment Corp has picked a program coordinator for the Promise Zone program in eight counties in southeastern Kentucky. Sandi Curd will manage implementation of the Promise Zone strategic plan. She’ll also serve as liaison between Promise Zone communities and the KHIC, which is regional administrator for the initiative. The area of Bell, Harlan, Letcher, Perry, Leslie, Clay, Knox and part of Whitley counties were awarded one of five national Promise Zone designations. The regions will be targeted for tax incentives and federal grants aimed at improving the economy and expanding educational opportunities.
Town Hall/AP posts Obama Unveils First 5 ‘Promise Zones. President Obama offered a glimpse at his coming State of the Union address and its expected emphasis on economic disparities while announcing five communities that will be targeted for tax incentives and federal grants under a government “Promise Zone” program.
“We’ve got to make sure this recovery, which is real, leaves nobody behind,” he said. “And that’s going to be my focus throughout the year.”
Obama named the new zones, a blend of rural, urban and tribal communities, at a bipartisan White House assembly, underscoring the type of administrative actions Obama wishes to employ that don’t all require congressional action.
Amid a slow recovery that has not reached many at the lowest rungs of the economy, addressing poverty has become an emerging issue in Washington. Obama has made it a central part of his agenda, and leading Republicans, including potential 2016 presidential contenders, are using the 50th anniversary of President Lyndon B. Johnson’s War on Poverty to offer policy proposals aimed at the poor and struggling workers.
Among those attending the White House event Thursday were Senate Minority Leader Mitch McConnell, R-Ky., a frequent critic of Obama economic policies. McConnell says he supports the “Promise Zone” designation for eight economically hard hit counties in his state, though he said the hardship endured in that coal region of the state is partly a result of the Obama administration’s energy policies. Kentucky’s junior senator, Republican Rand Paul, also attended the White House even
5) … In the News
The Mexico American Border is the test bed for developing martial law, and the emergence of Blue Helmet Order in the United States. The WSJ reports Obama Plans Executive Action to Bolster Border Security. President to act after declaring Immigration Legislation dead for this year.
Bloomberg suggests Hartford CT, and Providence RI, are The Riskiest Housing Markets In America.
Marianne Arms of WSWS posts Italian Comedian Beppe Grillo’s Five-Star Movement Joins Ranks With The Far Right. The alliance with UKIP is confirmation of the right-wing character of Beppe Grillo’s M5S.
Nick Beams of WSWS post Another Global Financial Crisis In The Making, Bank for International Settlements Warns The BIS report is the latest in a series of warnings that the present financial boom is creating the conditions for another crisis.
Lance Roberts of STA Wealth Management posts in Zero HedgeThe Great American Economic Growth Myth.
Forbes postsAustria Falls Out With Bavaria Over Zombie Banks. There’s a nice little storm brewing in the Eurozone core. Reuters reports that the German province of Bavaria is considering legal action against Austria. And it is seeking support for its action not only from the German federal government, but also from the EU.
Open Europe reports Nicolas Sarkozy Placed Under Investigation For Corruption. Former French President Nicolas Sarkozy has been placed under official investigation on suspicions of “active corruption” and “influence peddling”. He allegedly promised a high-ranking French judge a lucrative job in Monaco in return for confidential information about other investigations relating to the financing of his presidential campaign in 2007. A judge will decide whether Sarkozy will have to stand trial once the investigation is concluded. Meanwhile, a leader in the Times argues, “As the 2017 [French] presidential election draws near – in the same year as a likely British referendum on Europe – [the French Socialists] can also be expected to resort to anti-British obstructionism as a sop to the hard left.” SpiegelEUobserverHandelsblattTimes Reuters DELe MondeLe FigaroFT: CarnegyOpen Europe blogTimes: LeaderBBC
RT reports Ukraine’s Reverse Gas Flow From Europe Is Artificial, Putin Says. And RT reports Legality Of Reverse Gas Deliveries From Europe To Ukraine Are Under Doubt . And RT asks Is It legal? Ukraine Seeks To Fill Gas Gap With Reverse Flows.
Mike Mish Shedlock posts Full-time Employment Falls By 523,000!
Money is the trust of people in the sovereign authority’s monetary policies and schemes for economic life experience; it will either be one of prosperity or austerity; and is determined by the viability of the sovereign’s debt, and the Interest Rate there upon. Bloomberg reports that the first sovereign nation to experience a failure of sovereignty and seigniorage is Puerto Rico. Puerto Rico’s Lifeblood Choked Off as Credit Access Ends.
On July 1, Moody’s Investors Service cut the island’s rating to B2, five steps below investment grade. No local government has borrowed at that level, according to data compiled by Bloomberg. Prices on its general-obligation debt yesterday plummeted to record lows.
“They’re done,” said Matt Dalton, chief executive officer of White Plains, New York-based Belle Haven Investments, which oversees $2.1 billion in munis. “They’re not going to be issuing any more debt on the island. I don’t see how they can bring people back to the trough at this point.”
Puerto Rico and its agencies have operated for years on borrowed money — racking up $73 billion, Bloomberg data show — andWall Street made $910 million since 2000 by structuring its debt sales.
If the government can’t sell bonds at affordable rates, it will have to curtail services for its 3.6 million residents, 45 percent of whom live in poverty.
Like U.S. states, Puerto Rico can’t file for bankruptcy protection. Without the ability to issue debt, it will have to limit all spending to preserve money for health, public safety and education, said Sergio Marxuach, policy director at the Center for a New Economy, a research group in San Juan that focuses on economic development
The commonwealth had already begun closing about 100 schools to help balance the fiscal 2015 budget.
“We need to have guards in prisons,” Marxuach said. “We need to have public-school teachers teaching.”
Anything else, he said, “could be fair game.”
Puerto Rico’s economy has contracted about 11 percent since 2006, according to its Planning Board. The unemployment rate of 13.8 percent is more than double the U.S. average.
Still, returns generated by the island’s risky debt made investors eager to lend and allowed the commonwealth to paper over budget gaps. The securities, which are tax free in all states, are held in two-thirds of muni mutual funds.
The commonwealth is trying to put the brakes on. Garcia Padilla last week signed a bill that allows some public corporations to restructure debt outside bankruptcy. While the governor promoted the move as a way to protect general-obligation debt, creditors took it as an affront. Franklin Templeton Investments and OppenheimerFunds are challenging the law. The Moody’s downgrade followed.
The Puerto Rico Electric Power Authority, which provides almost all the island’s electricity and is a prime candidate for restructuring, may have to choose between paying bondholders and keeping the lights on, Marxuach said.
The utility, which carries $8.6 billion in debt, paid investors for maturing bonds July 1. It now faces $617 million of bank lines of credit that expire this month and next.
Prepa, as the agency is known, may have to implement rolling blackouts on residential customers so hospitals, schools and businesses can function, Marxuach said.
I comment that Puerto Rico is an insolvent sovereign and has neither investment seigniorage nor fiscal seigniorage; it is a candidate for bondholders to literally own the electricity and water infrastructure and charge whatever rates they may for essential public services. Without access to credit, the people may come to be beholding to the sovereignty of investment funds such as Franklin Templeton and OppenheimerFunds, and will most assuredly be living out their lives in perpetual debt servitude.
Hot money flowed to Australia seeking sovereign yield in the first half of 2014, driving Australia, EWA, its Bank, WBK, and Australia Dividends, AUSE, as well as Bae Metal Commodities, DBB, strongly higher. Bloomberg reports Australian Bonds Delivered The World’s Biggest Gains To Global Investors Last Quarter. An index of government securities due in more than a year returned 5.5 percent including currency appreciation versus the US Dollar, the most of 26 markets tracked by Bloomberg and the European Federation of Financial Analysts Societies.
Australian bonds also had the best returns for yen- and euro-based investors at 3.6 percent and 6.1 percent, the data show.
Benchmark 10-year bonds yielded 3.55 percent, following a 54-basis-point drop last quarter, the most in two years. Investor demand pushed the yield down to 3.52 percent last week, the lowest level in a year.
The premium over U.S. Treasuries narrowed to 93 basis points, a level not seen since 2006.
Reserve Bank of Australia Governor Glenn Stevens signaled July 1 that investors can rely on the central bank’s 2.5 percent rate, second only to New Zealand’s among major developed nations. Investor demand at sovereign bond auctions last quarter was the strongest since 2012. Stevens warned today that investors are under-estimating the probability of a “significant fall” in the currency.
While the RBA’s benchmark of 2.5 percent is at a record low, it compares to the Federal Reserve’s target range of zero to 0.25 percent. The Bank of Japan’s main rate is close to zero, and that of the European Central Bank is 0.15 percent
I comment that what has amounted to free credit, that is free money, has driven up currency carry trade investment and debt trade investment in quite speculative fashion seen in the ongoing Yahoo Finance chart of Australia, EWA, its Bank, WBK, and New Zealand, ENZL.
Bloomberg reports Riksbank Abandons Debt Fight as Ingves Overruled on Rates. Sweden’s central bank left containing the consumer debt boom to the government after policy makers made the biggest cut in interest rates since 2009, overruling Governor Stefan Ingves who pushed for a smaller reduction.
Ingves, who advocated a quarter-point cut, was on the losing side of a 4-2 vote as other board members acted to shield the largest Nordic economy from the threat of falling prices. Policy makers, led by Ingves, have been reluctant to lower borrowing costs amid concern it would fuel further growth in record household debt and surging home prices.
“What will this mean for the housing-price market?” Knut Hallberg, an analyst at Swedbank AB, said by phone. “It will go bananas with a big boost to home prices.”
With rates back to levels last seen during the financial crisis, the central bank said it’s now up the government and the regulator to deal with the fallout of the borrowing binge. Property prices have almost tripled since 1995 while consumer debt has almost doubled to a record 175 percent of disposable incomes. Danes owe more than 300 percent and Norwegians about double.
Well-anchored inflation expectations are “incredibly central,” Deputy Governor Cecilia Skingsley said in a speech today in Visby,Sweden. It’s now even more important for the government to take responsibility for debt growth, she said.
Swedes have already responded to the prospect of lower rates. They raised their use of variable-rate mortgages — defined by the Financial Supervisory Authority as risky — to 77 percent of new loans in June. The ratio was 63 percent in 2012, according to data from state-owned lender SBAB.
Swedbank, Sweden’s biggest mortgage lender, cut its three-month mortgage rate by 0.10 percentage point to 2.59 percent yesterday. Svenska Handelsbanken AB, the second-biggest, lowered its three-month rate by 0.05 percentage point to 2.61 percent
The government has been increasing capital requirements for its banks, capped loan-to-value ratios and are pondering how to make more Swedes amortize on their mortgages. Sweden’s financial industry is one of the biggest in Europe relative to gross domestic product, with assets equivalent to four times the $560 billion economy. That’s left Swedes more vulnerable than most to bank crises.
The Riksbank said yesterday that need for action has become more urgent now and that regulators should take aim directly at consumers
The bank has faced criticism and split internally over how to address its dual policy concerns. Nobel laureate Paul Krugman have been among those lambasting the bank and in April described its policy as an example of “sado monetarism” that was creating a deflationary spiral. Lars E. O. Svensson resigned from the Riksbank board last year after failing to convince the majority to focus more on inflation and unemployment.
On July 3, 2014, in immediate response to the Swedish Central Bank lowering of rates, investors fled the Swedish Krona, FXS, and sold out of Sweden, EWD, but not its Automobile Parts Manufacturer, ALV. The liberal monetary policies of the Swedish Central bank have caused debased of its currency, and disinvestment out of Sweden.
The economic experience of credit growth and currency growth is over. The new normal economic experience is not only one of the failure of credit, seen in Aggregate Credit, AGG, trading lower in value on July 1, 2014, but also, as is seen in the case of Sweden, EWD, the death of currencies.
Steve Filips and Don Barrett of WSWS relate The Militarization Of American Public Schools: Syracuse, New York’s Fowler High School To Be Reformed The high school will be closed and transformed into an academy focusing on training students for the military.
And Steve Filips and Dan Barrett also write Syracuse, New York housing in shambles. The low income workers in Syracuse, NY are left little choice but to live in substandard housing.
John Vidal of the Telegraph reports Water Supply Key To Outcome Of Conflicts In Iraq And Syria, Experts Warn. Security analysts in London and Baghdad say control of rivers and dams has become a major tactical weapon for ISIS.
Isis Islamic rebels now control most of the key upper reaches of the Tigris and Euphrates, the two great rivers that flow from Turkey in the north to the Gulf in the south and on which all Iraq and much of Syria depends for food, water and industry.
Rebel forces are targeting water installations to cut off supplies to the largely Shia south of Iraq,” says Matthew Machowski, a Middle East security researcher at the UK houses of parliament and Queen Mary University of London.
“It is already being used as an instrument of war by all sides. One could claim that controlling water resources in Iraq is even more important than controlling the oil refineries, especially in summer. Control of the water supply is fundamentally important. Cut it off and you create great sanitation and health crises,” he said.
Isis now controls the Samarra barrage west of Baghdad on the River Tigris and areas around the giant Mosul Dam, higher up on the same river. Because much of Kurdistan depends on the dam, it is strongly defended by Kurdish peshmerga forces and is unlikely to fall without a fierce fight, says Machowski.
Last week Iraqi troops were rushed to defend the massive 8km-long Haditha Dam and its hydroelectric works on the Euphrates to stop it falling into the hands of Isis forces. Were the dam to fall, say analysts, Isis would control much of Iraq’s electricity and the rebels might fatally tighten their grip on Baghdad.
Securing the Haditha Dam was one of the first objectives of the American special forces invading Iraq in 2003. The fear was that Saddam Hussein’s forces could turn the structure that supplies 30% of all Iraq’s electricity into a weapon of mass destruction by opening the lock gates that control the flow of the river. Billions of gallons of water could have been released, power to Baghdad would have been cut off, towns and villages over hundreds of square miles flooded and the country would have been paralysed.
Some academics have suggested that Tigris and Euphrates will not reach the sea by 2040 if rainfall continues to decrease at its present rate.
News events herald the soon coming Psalms 83 War. Jason Ditz of Antiwar posts Israel Vows Aid To Prevent Invasion of Jordan
6) … What constitutes a sound investment strategy?
Jeremy Hill of Forbes writes Smart Equities For Creeping US Inflation. Basic materials is the primary sector for long positions to take advantage of creeping inflation.
But such thinking fails to perceive that inflationism in fiat wealth is over through and done.
Global debt deflation is introducing destructionism of every form. Deleveraging out of currency carry trades and derisking out of debt trades is going to literally destroy fiat wealth.
The chart pattern in two of his recommendations show completion. LyondellBasell Industries NV, LYB, a popular currency carry trade, manifested a massive dark cloud covering candlestick; and International Paper, IP, a popular debt trade, manifested a blow off market top candlestick.
One could commence a short selling investment strategy, and use these Inverse Market ETFs as the basis of collateral, as a huge number of short selling opportunities exist, such as Manufactured Home Builder, CVCO, Tool Manufacturer, MKTAY, and Property Manager, Z, all of which are at their market peak.
The best investment strategy is one designed for the failure of credit and the death of currencies.
Short Side of Long postsJune Sentiment Report Hedge Funds Have Been Covering Their Short Bets On PMs. Technically speaking, PMs sector still remains in a downtrend and have to overcome quite a few resistance levels before a bull market is to return.
My take is that those covering their shorts will capitulate, asEquity Investments, VT, Nation Investment, andSmall Cap Nation Investment, EFA,Global Financial Institutions, IXG, andYield Bearing Investments, such as DTN, trade lower, and that an investment demand for gold, GLD, commenced on June 21, 2014, as a wild bout of purchasing of Gold Mining Stocks, GDX, drove Spot Gold, $GOLD, from $1,275 to $1,315.
I expect the US Dollar, $USD, UUP, to trade higher for a brief period of time asSovereign Currencies trade lower for a while, and thus for Spot Gold, $GOLD, to trade lower to $1,285, before it soars ever higher on the failure of Credit, AGG, and the death of Currencies, DBV, CEW, that is on the death of fiat money. Gold is in the middle of an Elliott Wave 3 Up, that is in the middle of the most sweeping of all economic waves, specifically the one which creates the bulk of the wealth on its way up to an Elliott Wave 5 High.
The trade lower in the price of gold, if it does occur, makes for an excellent buying opportunity, as in a bull market one buys into price dips, just as in a bear market, one sells into pips.
In understanding the value of gold, it is helpful to understand its relationship to empire. Robert Ramsey posts Hidden Secrets of Money II, The 7 Stages of Empire. One of the hidden secrets of money is that each empire goes through 7 stages.
I recommend that one start to dollar cost average an investment in the physical possession of gold bullion; it can be held
- in audited vaults, and spread around the world for safety, and covered by an insurance policy.
- in physical Internet Trading Platforms, such as GoldMoney or BullionVault, and sold as needed.
- in the Merk GOLD TRUST, the deliverableGold ETF (OUNZ). It’s an ETF with the option to take physical delivery of gold.
7) … Please consider that out of the Additive Process of 2 Peter 1:5-7, one has experience in Christian ethics.
Economics is defined as one’s life experience in the credit and flow coming from sovereign authority. One’s economics comes from the isms of life, that is the process of branding, where a sovereign establishes identity and experience.
Many will be of the fascist and totalitarian brand of the Beast Regime, and give homage to it, for Bible Prophecy of Revelation 13:3-4, communicates they worshiped and followed after the Beast, saying who can make war against it.
Jesus Christ is the ism of God, that is thedivine nature of theGodhead, by which some come to know the identity of God and have experience in God. The experience of His Sovereignty is one of holiness and of truth as presented in Ephesians 1:4, Hebrews 1:3, and John 14:7.
it is out of this practice that one has identity as a Christian and life experience in Christian ethics, which is defined as the quality and type of relationships one has with others; ethics is the one’s set of moral principles; which are established by one’s values, that is one’s framework for thinking, and activities which motivate.
When one takes Christ’s brand, that being the Gospel, which translated into English means the Good News, then one has identity and experience in His Sovereignty, and becomes a Christian.
There are many other isms; these include Socialism, Communism, Capitalism, and Libertarianism.
When one embraces personal sovereignty and individualism for identity and experience, one practices Libertarianism, and becomes a Libertarian.
One cannot serve two authorities, one will yield to one, and turn away from the other.
Thus, one cannot be a Libertarian and a Christian. An individual is one or the other. And it was a choice made in eternity past by God. One decides to follow Jesus, but that choice is one made by The Sovereign of All, as he looked down the hallways of time and decided to have mercy on who ever he would; it was a decision not based on one’s meritocracy but upon God’s infinite grace and mercy.
It’s my hope that one will follow the Apostle Paul, and be God’s economist, that is one who has life experience out of the sovereignty of Jesus Christ. As one Has life, one comes to greater trust, and grows the credit and flow of His holiness; and one grows in personal satisfaction of His brand.
One’s character, defined as the aggregate of moral and ethical traits, will come out of the person of Chirst and form the nature of a person.
Christian faith is not compatible with philosophy, which I define as the vision that guides human action in every field of human endeavor; for those interested in a pursuit of philosophy I recommend The History of Philosophy.
Christian faith is no compatible with the doctrine of Libertarianism as presented by Chris Rossini writing in Economic Policy Journal Economic Follies With Google’s Larry Page as Christians believe God alone is sovereign and that his son acts in Dispensation, Ephesians 1:10, providing Divine Action in all things.
8) … A new direction for your blog author.
I feel fortunate that God has given me insight to blog on sovereignty and seigniorage since May of 2010, when Herman van Rompuy, announced that there will be no default on Greek Debt, and came forward with Greek Bailout I. I am seeking a new experience, I do not know what that will be.
What I really desire to do, is to work as an Economist, Financial Analyst, and Short Selling Strategist, recommending specific stocks to be sold short.