Report on Emerging Market Banks for June 10, 2011
1) … Investment Bankers, KCE, took World stocks, ACWI, VT, World Small Cap Stocks, VSS, Transportation, IYT, and Industrials, IYJ, higher, going long the stocks that have experienced the greatest competitive currency devaluation.
Growth shares, Steel, SLX, Copper Mining, COPX, Coal Production, KOL, Aluminum Producers, ALUM, Semiconductors, XSD, Housing, ITB, Global Agriculture, PAGG, Wood Producers, WOOD ….. Risk shares, Silver Mining, SIL, and Rare Earth Mining, REMX ….. Mining, MXI, ….. Biotech, IBB, ….. Banking shares, RWW, BAC, C, QABA, ….. and Small Cap Revenue Shares, RWJ, rallied strongly.
Dividend shares, DVY, such as American Tower, AMT, rose.
Small Cap Energy Shares, PSCE, DNR, GPOR, EOG, PXD, NBL, blasted higher.
Small Tool Manufacturers, LECO, SNA, SSD, SWK, rose.
Most of these small cap industrial stocks, PSCI, WTS, HEES, PH, PNR, EMR, ROLL, AIT, BRC, CLC, DCI, PLL, FAST, rose.
Education companies, APOL, DV, ESI, BPI, STRA, rose strongly.
The railroads, KSU, UNP, CSX, NSC, GWR, rose.
Traders even went long the most toxic of stocks: European Financials, EUFN, Spain, EWP, Italy, EWI, China Industrials, CHII, Shanghai Shares, CAF, and China Materials, CHIM. The growth crippled Asian Tiger, South Korea Small Caps, SKOR, rose. India Small Cap Stock, SCIN, screamed higher.
Emerging Market Financials, EMFN, European Banks, DB, STD, Swiss Banks, UBS, CS, India Banks, EPI, IBN, HDB, Argentina Bank, BBVA, Brazil Bank, BSBR, ITUB, Puerto Rico, BPOP, Japan Bank, NMR, Columbia Bank, CIB, Chinese Financials, CHIX, UK Banks, RBS, BCS, LYG, HBC, Korean Banks, SHG, WF, KB, Peru Bank, BAP, Chile Banks, SAN, BCA, rallied International Financials, IXG. Practically the only world banking stock that could not be resurrected by wall street was the National Bank of Greece, NBG, One can create a internet portfolio of the world’s banks using this Finviz Screener.
Foreign Utilities, EOC, EBR, SBS, CIG, CPL, being revenue shares, rose strongly.
Shipping stocks, SEA, ESEA, NAT, CPLP, DCIX, rose.
Eaton, ETN, rallied strongly.taking the industrial electrical equipment manufacturers, ROK, AME, ENS, TNB, AIMC, AMRC, seen in this Finviz Screener higher.
Global growth electronics company LG Electronics, LPL, rose strongly in what may be a last gasp rally.
Companies having high levels of debt were among strong risers .Tim Catts of Bloomberg reports “General Electric GE and Ally Financial lead U.S companies that have $620 billion of bonds and loans coming due in 2012 as borrowing costs start to rise from record lows with the economy strengthening. Borrowers must refinance $498 billion of debt in 2013 and $505 billion in 2014.” The most heavily indebted growth stocks, such as MTW, IP, rallied strongly today.
The BRICS, EEB, rose on rallying China, YAO, Russian, RSX, India, INDY, and Brazil, EWZ.
Carry trade favorites Emerging Markets Small Caps, EWX, Developing Asia, GMF, Latin America, LATM, Brazil Small Caps, BRF, Emerging Europe, CEE, and Poland, EPOL, rose. A dead cat bounce came to Turkey, TUR. Silver Standard Resources Inc, SSRI, one of the most heavily traded carry trade investments of all time, jumped 5%.
Argentina, ARGT, rose more strongly than the S&P, SPY, today, led by Argentina Banks, BMA, GGAL, BFR, Oil Company, PZE, Risk traders went long with Emerging Market Mining, EMT, and Emerging Market Financials, EMFN, taking Emerging Markets, EEM, higher.
This may be the end of the rally in US Stocks, VTI, as it showed a questioning harami, as did Intel, INTC, suggesting an end of rally in semiconductors, XSD. A rally high may be in for the housing stocks, ITB, if one uses the same logic, And the lollipop hanging man candlestick in US Preferred, PFF, suggests a climax. The parabolic rise in biotechnology, IBB, suggests a completion of its rally. Retail, XRT, managed to eek out a small gain; it looks like its a top in the retailing stocks, RTH. A completion pattern shows in Real Estate, IYR, and Residential REITS, REZ.
Today’s rally was simply a zombie rally. Dead things rose today. Royal Caribbean, RCL, popped from a consolidation triangle. Appliance manufacturer, LII, blue collar labor provider, true blue, TBI, agricultural equipment manufacturer, AGCO, agricultural chemical producer, CF, industrial metal miner, ZINC, lender, COF, automobile parts producer, JCI, led the US stocks, VTI, higher.
China Stocks rising included China Housing And Lending, CHLN, China Green Agriculture, CGA, Aluminum Corp, ACH, and Copper Producer, Lihua, LIWA.
Brazil Stocks rising included fabric producer, FBR, steel manufacturer, SID, GGB, communications provider, TSU.
An example of tulip mania advising that one purchase at this time is the CNBC Fast Money article Forget Europe: Market Pros Say It's Time to Buy US Stocks.
Today’s rally is a Neoliberalism’s death rattle.
Junk bonds, JNK and High Yield Bonds, HYG, rose on today’s rising risk rally.
The chart of bonds, BND, communicates that the world has passed through peak credit.
Utilities, XLU, are the first stocks to have passed through the current Euro contagion rally and are now falling lower.
Energy Partnerships, AMJ, DPM, KMP, EEP, EPD, MWE, TLLP, EEP, OKS, MMP, PAA, APL, seen in this Finviz Screener have passed through peak wealth, joining all other forms of fiat wealth to fail.
The risk trade in stocks drew Silver, SLV, Copper, JJC, and Timber, CUT, higher. Today’s rally in stocks took Commodities, DBC, USCI, higher; which pushed its floor, natural gas, UNG, lower.
The dead man walking rally in stocks, took World Currencies, DBV, and Emerging Market Currencies, CEW, higher. The currencies which have been the most depressed, rose the most, these included South Africa Rand, SZR, the India Rupe, INR, and the Brazilian Real, BZF. The Mexico Peso, FXM, rose, and the commodity currencies, the Australian Dollar, FXA, the Canadian Dollar, FXC, rose. Even, the Euro, FXE, traded up a little.
Needless to say the US Dollar, $USD, UUP, traded a little lower. The chart of the USD/JPY shows a trade lower at 76.83; its inverse JYN traded up to 76.51.
2) … Despite today’s rally, the number one financial issue in 2012 will be spreading European debt contagion.
Debt contagion will cause cause ongoing competitive currency devaluation in the world’s major currencies, DBV, and the emerging market currencies, CEW.
There will be strong disinvestment out of the stocks that have experienced a safe haven rally, particularly the US stocks VTI, that participated in the dollar rally, IHE, XSD, XHB, XTL, IEZ, as fears of diminished corporate profitability arise.
Debt contagion will continue to spread to the treasury bond market, ZROZ, EDV, TLT, as bond vigilantes call interest rates higher on treasury bonds globally. There will be continued disinvestment out of all types treasury bonds, BWX. Societies will be impacted by reduced fiscal spending as well as by dismissal of employees due to collapsing growth.
Eurogeddon, that is Eurodammerung, a calamitous clash between the European leaders and investors, cannot be avoided, it simply has been held in abeyance.
Bank failures will be the defining issue of the year, which will cause leaders to meet in summits, waive national sovereignty, and establish a European Federal Superstate, mandate a European fiscal union, and establish the ECB or the Bundesbank, that is Buba as the Euro’s Bank. Life in Europe will be characterized as a totalitarian collective. Totalitarian collectivism is the EU’s future. European Socialism will die in 2012.
Libertarianism’s desire for Freedom and Free Enterprise are simply mirages on the Neoauthoritarian Desert of the Real. Choice is an epitaph on Neoliberalism’s tombstone.
The 66 Claritas Nielsen PRIZM NE geo-demographic lifestyle segments of the United States are going to be dramatically compressed; many more are going to become part of the Low Rise Living a transient world of young, ethnically diverse singles and single parents who rent.
Despite today’s rally, global monetization of debt has reached the toxic point. Debt monetization has resulted in competitive currency devaluation, and this with diminished growth potential will be turning stocks lower.
Insolvent banks and insolvent sovereigns, are the death potion of stocks. Banking insolvency and sovereign insolvency have caused the death of fiat money. Today is simply a dead man walking rally.
We are witnessing a zombification rally. Zombified banks and zombified growth and risk assets rose from Neoliberalism’s grave. Most assuredly Milton Friedman and his Free To Choose Banker regime are dead and gone.
Fears of debt contagion, not greed, or speculation, will be driving all stocks, currencies, and bonds lower. The spigots of investment liquidity, carry trade lending and central bank easing have been turned off; and former flows are now running toxic.
The soon coming failure of stocks, will accompany the failure of fiat money that commenced in July 2011, financial armageddon will be the impetus for new governance worldwide.
The stocks that rose in today’s rally will be leading the way lower into the Pit of Financial Abandon as the world has entered into the Age of Deleveraging where the Beast Regime of Neoauthoritarianism and its diktat, is establishing regional global governance.
3) … Regionalism and the political capital of diktat are now the dynamos driving political and economic activity.
Regionalism is the new dimension in globalism. Despite today’s rally, political capital is rising to replace investment capital as the dynamo that drives all of mankind’s economic and political activity.
Andy writes in New Regionalism and the East Asian Economic Cooperation Under the new regionalism, the four kinds of structure which belong to East Asian economy cooperation established and developing, they have the possibility to become the embryonic form that the East Asian economy community have.
NL-Aid writes The creation of the Community of Latin American and Caribbean States (CELAC) at a summit of heads of state from the region in Caracas in November reflects the growing sense of regional autonomy and self-confidence in Latin America and the Caribbean. The CELAC was ratified by 33 countries in the region. Unlike the Organization of American States (NYSE:OAS), it does not include the United States and Canada. Also, unlike the OAS, it does include Cuba.
Destiny is weaving the future, out of sovereign armageddon, that is a credit bust and global financial collapse, regional global governance will be established; this having been called for by the 300 elite of Club of Rome in 1974.
Fate, not any human action, will bring forth a revived Roman Empire, that is a German led Europe. Fate will open the curtains, and out onto the world’s stage will step the most credible of leaders. This Little Authority, will work behind the scenes in regional framework agreements to change our times.
EU’s New Charlemagne will be instrumental in transitioning to the supranational New Europe, where national sovereignty is seen as a relic of a bygone era. The rule of law will be replaced by his word, will and way, as he mandates sweeping economic and political changes. The people will be amazed by this, and place their faith and trust in him; they will give their allegiance to his diktat.
The Sovereign will be accompanied by a European banker, the Seignior, who will appoint stakeholders from government, industry and finance to oversee public private partnerships, PPPs, to provide credit, manage infrastructure, and resources, critical to the security and stability of the Euro zone.
Banks globally will be nationalized, better said, integrated into the regional super structure. Structural reforms, austerity measures, pension overhauls, reworked national wage contracts, dismissal of government employees, and debt servitude will be de rigueur.
What kind of structural changes are coming? First and foremost, the right of a constitutionally guaranteed state job in Greece, with an extra two extra months’ salary! This right of employment guaranteed by the state makes Greek Socialism the most extreme form of socialism every known.
EFSF Monetary Authority Bonds are dead on arrival; these thing are not going to make it off the ground. Risk appetite has change to risk avoidance. In today’s currency depleted, risk adverse, credit evaporated world, there are no buyers for such a thing, despite an every increasing guarantee, which by news reports is said to be thirty percent.
Christophe Chamley writes in VOX EU, Europe Requires European Bonds, This column argues that Eurobonds have always been the right solution. Every successful union throughout history has needed to create a proper financial instrument of sovereign debt – and the Eurozone is no different.
Eurobonds are dead on arrival in the Age of Deleveraging. Sovereign debt is going to be replaced by fiscal management from the EU ECB and IMF Troika. Diktat in a Eurozone Federal Union, that is a European Super State, will be achieved through coordinated leaders’ announcements; this will be the new currency supplementing the Euro. Sovereign debt, BWX, is an anachronism in the new age of Beast Regime rule. Failed sovereign nation states cannot underwrite and market Euroland debt: there will be no Eurobonds.
There will be New Credit for the New Europe, it will be Stakeholder Credit coming from the Stakeholder Committee as it meets in working group conference. This Stakeholder Credit will complement regional global governance to provided funding for the operations of industry critical to the EU’s security and stability. As for the people, the residents of the New Europe, let them eat diktat.
Investors have already begun exiting US Government Treasuries, ZROZ, EDV, TLT. The chart of the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, is steepening as reflected in the Steepner, ETF, STPP, rising, and the Flattner ETF, FLAT, falling.
The age of deleveraging is characterized by failed the failure of sovereign nations and the failure of seigniorage of fiat money. Countries are loosing their debt sovereignty now that the monetary policies of the Federal Reserve and the ECB have made credit bad.
Failed nation states cannot provide order or issue treasury debt; failed banks cannot provide lending; failed currencies cannot generate wealth or support commerce; the seigniorage of diktat will provide credit and regional global governance; and the people will trust in these.
Gold and diktat, having sovereign authority, will be the only forms of sustainable, and thus sovereign wealth. Gold and diktat will be the only money good.
Stocks: FXE, EUFN, KCE, ACWI, VT, VSS, IYT, IYJ, SLX, COPX, KOL, ALUM, XSD, ITB, PAGG, WOOD, SIL, REMX, MXI, IXG, IBB, RWW, BAC, RWJ, DVY, AMT, PSCE, PSCI, EWP, EWI, CHII, CAF, CHIM, SKOR-OLD, SCIN, EMFNGY, SEA, ETN, EEB, YAO, RSX, INDY, EWZ, EWX, GMF, LATM, CEE, EPOL, TUR, SSRI, ARGT, EMT, EEM, VTI, INTC, PFF, XRT