Financial Market Report For the week ending May 13, 2011
1) … World banks fell lower today on falling major world currencies, DBV, and emerging market currencies, CEW.
Switzerland, UBS Bank, UBS, -3.8%
Netherlands, ING Group NV, ING, -3.4%
Germany, Deutsche Bank. DB. -3.3%
South Korea, KB Financial, KB, -3.2%
Switzerland, Credit Suisse, CS, -3.0%
Spain, Banco Santander, STD, -2.9%
France, Paraibas, BNPQY, -2.8%
UK, Barclays, BCS, -2.5%
Brazil Financials, BRAF, -2.0%
UK, Lloyd's Bank, LYG, -2.0%
US Regional Banks, KRE, -2.05
Bank of America, BAC, -2.2%
Australia, Westpac Banking, WBK, -1.2%
2) … The failure of Neoliberalism is seen in the fall this week of commodities, DJP, Oil, USO, Agricultural Commodities, JJA, Timber, CUT, and Base Metals, DBB, with the rise of the US dollar, $USD, and the beginning of world wide competitive currency deflation, which has turned world government bonds, BWX, international corporate bonds, PICB, basic material stocks, XLB, and IYM, and now the world’s leading banks lower. World stocks, ACWI, has entered an Elliott Wave 3 Down.
3) … The Seigniorage of Neoliberalism gave birth to the Euro and created sovereign debt that gave birth to affluent socialist economies, that is the affluent socialist PIGS, and in May of 2010 saved Greece as well as the Euro, with a seigniorage aid package
Andrew Davis of Bloomberg reports: “Greece, Ireland and Portugal, the euro region countries that needed 256 billion euros ($366bn) in emergency aid to avoid default, may all see their debt loads exceed the size of their economies this year. Greece’s debt, already the biggest in the euro’s history at 143% of gross domestic product last year, will jump to almost 158% this year and 166% in 2012. Portuguese debt will surpass total economic output for the first time this year, growing to 101.7% of GDP, while Irish debt will reach 112%, the forecasts show.”
Bloomberg reports Europe's Donor Nations Demand Tougher Greece Measures to Justify Extra Aid. Europe’s donor nations said Greece will need to meet tougher conditions than last year to win new aid that could avert a debt restructuring and cover almost 30 billion euros ($42 billion) of financing needs next year. Euro-region finance ministers will meet in Brussels on May 16 to discuss more support for Greece beyond the 110 billion- euro rescue granted a year ago, Luxembourg’s Jean-Claude Juncker, who leads the group, said today in Mainz, Germany. The yield on Greece’s 10-year bond has more than doubled since the bailout to 15.6 percent, complicating its return to market.
Josiane Kremer of Bloomberg reports: “Greek Prime Minister George Papandreou said Europe needs to move toward issuing common bonds to help tackle the region’s fiscal crisis. Europe needs to stop playing a ‘blame game’ and ‘move forward,’ Papandreou said. Issuing a common bond would be ‘one solution’ toward this end, he said.”
Jana Randow of Bloomberg reports: “German exports surged in March to the highest monthly value ever recorded, boosting growth in Europe’s largest economy. Exports jumped 7.3% from February, when they gained 2.8%..”
Joao Lima of Bloomberg reports: “Portugal’s economy shrank for a second quarter in the three months through March, putting the country back into recession as the government tries to cut spending and raises taxes to narrow its budget deficit. Gross domestic product dropped 0.7%.
Rainer Buergin of Bloomberg reports: “German Chancellor Angela Merkel signaled her backing for Mario Draghi as the next president of the European Central Bank, leaving the Bank of Italy governor unopposed by Europe’s political leaders.”
4) … Bloomberg reports U.S. Mortgage Rates Fall to Five-Month Low.
The average rate for a 30-year loan dropped to 4.63 percent in the week ended today from 4.71 percent, according to Freddie Mac. That is the lowest since the week ended Dec. 9. The 15-year rate slipped to 3.82 percent from 3.89 percent a week ago, the McLean, Virginia-based mortgage-finance company said.
Mortgage Backed Bonds, MBB
The failure of seigniorage of neoliberalism is seen in Annaly Capital Management, NLY, turning lower, while, mortgage backed bonds, have remained strong.
Wall Street Journal reports Ratings Firms Notch Legal Victory. Ratings firms won another victory against legal claims that they should be held responsible for billions of dollars in losses suffered by investors during the financial crisis. A three-judge panel of the U.S. Court of Appeals for the Second Circuit ruled that Moody's Corp., Standard & Poor's, and Fitch Ratings can't be held liable for their ratings of mortgage-backed securities
Reuters reports Exclusive: Asia holds its nose, keeps buying U.S. debt
5) … The Interest Rate on the Ten Year US Note, $TNX. turned up this week
The 20 Year US Government Bonds, TLT, turned down this week.
Junk Bonds, JNK, have turned lower; Bonds, BND, have topped out; and Municipal Bonds, MUB, are topping out.
The 30-10 US Sovereign Debt Leverage Curve Daily, $TYX:$TNX, has commenced an Elliott Wave 3 Down, establishing that US Treasuries have entered an active phase of deleveraging.
The 10 30 Yield Curve, $TNX:$TYX, has turned up suggesting that Treasury Bonds are not a good investment.
6) … The failure of Neoliberalism will result in the announcement of Regional Framework Agreements … and the provision of seigniorage by the Sovereign and the Seignior.
Regional framework agreements will waive national sovereignty and establish regional economic governance as called for by the club of Rome in 1974 and neither Secession as suggested by the Austrian Economists at LewRockwell.com nor World Wide Revolution by Socialists at WSWS.org, will be the resolution to the coming world wide sovereign debt crisis.
State Corporatism, that is combined state and corporation rule, will be the defacto form of government where stakeholders will be appointed over the factors of production. Keith Jones of WSWS.org reports Canada’s NDP Gave Private Assurances To Bay Street.
State Corporatism is seen in the CBS report Detroit Doesn’t Want An Emergency Manager: “Speaking before a packed room, Thursday, at a meeting of the "Big Four," Detroit Mayor Dave Bing reiterated that he does not want a Lansing-appointed Emergency Financial Manager doing his job.”
Milton Friedman with his manifesto of Free To Choose neoliberal economics was the father of Neoliberalism, which gave birth to the Age of Leverage which saw such great leaders as the Purveyor of Credit Liquidity Alan Greenspan and the author of Quantitative Easing, and QE 2, Ben Bernanke.
In the Age of Deleveraging, Neoliberalism’s floating currency regime and age of prosperity, will be replaced by sinking currencies, that is competitive currency deflation, sovereign debt crisis and global austerity, where leaders announce framework agreements waiving national sovereignty and establishing Regional Economic Governance as called for by the Club of Rome in 1974.
Out of a soon coming economic flameout, an Iron Chancellor and adept Banker, such as Mario Draghi, will arise to lead a revived Roman Empire, in a Euro German Federal Union of European States to be the dynamo of world power, and establish a new seigniorage, to replace that moneyness of the US Federal Reserve, which has been based upon US Treasuries, TLT, distressed investments, FAGIX, and mortgage backed bonds, MBB. Soon, a beastly new economic system led by a Sovereign, and a Seignior, is coming to rule the world.
Mike Mish Shedlock reports Economic bust in Australia
EconomicPolicy Journal relates that Quantitative Easing 3 might involved a seizure of 401K, IRA and Keogh Retirement accounts. And HoweStreet reports A set-up for QE3
7) … World Stocks, VT, fell lower today
Stocks falling lower today included
Semiconductors, NVIDIA Corp, NVDA, -10.9%
Transportation, :Quality Distribution, QLTY, -6.8
Office Supplies, Acco Brands, ABD, -3.4
Morgan Stanley Cyclicals Index, Paper Component, International Paper, IP, -2.9%
The Morgan Stanley Cyclicals Index, Packaging Component, Temple Inland, TIN, -2.8%
Internet Software: Internet Capital Group, ICGE, -2.7%
Semiconductor manufacturer, CEVA, -2.7%
Semiconductors manufacturer, Cavium Networks, CAVM, -2.5%
Dram Chip Manufacturer, Micron, MU, -2.4%
Storage Disk Manufacturer, SanDisk, SNDK, -1.8
Motor Sporting Activities: International Speedway, ISCA, -.2.3
Insurance: Life: American Equity Investment Life, AEL, -2.3
Manufactured Housing, CVCO, -.2.0
ETFs falling lower today
Emerging Market Financials, EFN, -2.4
European Financials, EUFN, -2.1
Banks, KRE, -2.2
Wood Production, WOOD, -2.0
Emerging Markets Materials, EMMT, -2.8
Industrial Design And Build, FLM, -2.5
Metal Manufacturing, XME, -2.3
Emerging Markets, EEM, -2.1
Steel, SLX, -2.1
Countries falling lower today
Turkey, TUR, -4.8%
Spain, EWP, -2.5
Australian Small Caps, KROO, -2.5
Austria, EWO, -2.5
South Africa, EZA, -2.0
Japan Small Caps, JSC, -2.1
Thailand, THD, -2.5
Brazil Small Caps, BRF, -2.3
China Tech, CQQQ, -2.5
Sweden, EWD, -2.2
Germany, EWG, -2.2
Latin America Small Caps, LATM, -2.2
Japan, EWJ, -2.1
Brazil, EWZ,. -2.1
New Zealand, ENZL, -2.1
South Korea, EWY, -2.0
Europe, VGK, -1.8
8) … The Age Deleveraging has commenced …. it will be characterized by competitive currency devaluations.
The currency yield curve, the ratio of Small Cap Pure Value Shares Relative To Small Cap Pure Growth Shares, RZV:RZG, confirms that competitive currency is now actively underway.
This Finviz database report of FXA, FXE, FXM, FXC, ICN, FXB, FXS, SZR, FXF, BZF, XRU, BNZ, shows competitive currency devaluation is underway.
The U.S. dollar, $USD, rose 1.2% while
the Russian ruble, declined, 4.6%
the South African rand 1.8%,
the Swedish krona 1.4%,
the Norwegian krone 1.1%,
the New Zealand dollar 1.0%,
the Brazilian real 1.0%,
the Australian dollar 1.0%,
the Swiss franc 0.9%,
the Danish krone 0.9%,
the Euro 0.9%,
the Mexican peso 0.9%,
the Canadian dollar 0.6%,
the British pound 0.6%,
the Singapore dollar 0.5%,
and the South Korean won 0.2%.
Stocks: UUP, FXA, FXE, FXM, FXC, ICN, FXB, FXS, SZR, FXF, BZF, FXRU, AUNZ, ING, DB, KB, CS, SAN, BNPQY, BAC, BCS, WBK, MBB, TLT, NLY, DJP, USO, JJA, CUT, DBB, BWX, CEW, DBV, PKB, XLB, IYM, ACWI, MUB, JNK, VT, EMMT, FLM, WOOD, KRE, EUFN, FGEM, XME, SLX, EEM, TUR, KROO, EWO, EWA, THD, BRF, CQQQ, EWD, EWG, LATM, EWJ, EWZ