Financial Market Report for February 14, 2012
Volatility TVIX,VIXY,VIXM rose, as is seen in this combined chart.
Material and financial stocks traded lower today, as Tyler Durden of Zero Hedge reports Moody's Downgrades European Nations And Puts UK And France On Outlook Negative
COPX, ALUM, REMX, URA, GDX, SIL, KOL, SLX, MXI, TAN, XSD, RZV, XBI, XME, IYR, IWM, FAA … EUFN, NBG, KRE, XLF, IXG, KCE, IRE, RWW … GREK, VGK, KROO, EWA, EWY, TUR, EWO, EWZ, RSX, EWW, EZA, EPHE
The debt economy of capitalism is coming to an end. And out of creative destruction, regional global governance will establish a totalitarian collective in the Eurozone, and regional public private partnerships to manage the rest of the world's ten regions. This ten toed kingdom of regional global governance, Daniel 2:31-33, and Revelation 13:1-4, will provide diktat to replace Milton Friedman's Free To Choose Script, that governed global finance and trade for the last forty years.
Political capital will command economic transactions as the dynamos of regional security and stability gain traction providing order out of chaos. Investment capital that fueled growth and profit will literally be washed away into the pit of financial abandon.
Banks will be nationalized, better said regionalized, and integrated into the government, and become known as the government bank, or gov banks for short. In Europe, leaders will meet in summits and waive national sovereignty, and announce that the European Financial Institutions, such as Ireland's IRE, will be integrated into the Bundesbank or the ECB, which will become known as the Euro's bank. Regional monetary cardinals, will complement the work of budget commissioners; these sovereigns will work in private public partnerships for regional security and stability, as they oversee the region's resources and economic production. In Japan, MFG, MTU and SMFG will be merged into the Bank of Japan. In each of the world's ten regions, diktat will serve as both money and credit.
The Yen, FXY, fell sharply lower, leading the world currencies and emerging market currencies, CEW, lower as the Bank of Japan instituted its neo liberal finance facility. Tyler Durden writes Bank of Japan Sprays World With Surprising ¥10 Trillion Gift In Valentine's Day Liquidity. In a move that will surely shock, shock, the monetary purists out there, the Bank of Japan has just gone and done what we predicted back in May 2011, with the first of our "Hyprintspeed" series articles: "A Look At The BOJ's Current, And Future, Quantitative Easing" (the second one which discussed the imminent advent of the ¥1 quadrillion in total debt threshold was also fulfilled three weeks ago). So just what did the BOJ do? Why nothing short of join the ECB, the BOE, and the Fed (and don't get us started on those crack FX traders at the SNB) in electronically printing even more 1 and 0-based monetary equivalents (full statement here). From WSJ: "The Bank of Japan surprised markets Tuesday by implementing new easing policies and moving closer to an explicit price target, the latest sign of growing worries around the world about the ripple effects of the European debt crisis on the global economy. With interest rates already close to zero, the BOJ has relied in recent months on asset purchases to stimulate the economy. In Tuesday's meeting, the central bank expanded that plan by ¥10 trillion, or about $130 billion. The facility, which includes low-cost loans, is now worth about ¥65 trillion, or $844 billion." The rub however lies in the total Japanese GDP, which at last check was $6 trillion (give or take), and declining. Which means this announcement was the functional equivalent to a surprise $325 billion QE announced by the Fed. What is ironic is the market reaction: the BOJ expands its LSAP by 18% and the USDJPY moves by 30 pips. As for gold, not a peep: as if the market has now priced in that the world's central banks will dilute themselves to death. Unfortunately, it is only at death, and the failure of all status quo fiat paper, that the real value of the yellow metal, whose metallic nature continues to be suppressed via paper pathways, will truly shine
Nature economist Elaine Meinel Supkis provides her perspective. EU Credit Warnings: 2008 Crash Continues And Worsens As More Wars Loom. We are in the middle of the Second Great Depression and as I predicted several years ago during the height of the credit bubble boom, it will take many years to escape this collapse and worse, it will probably lead to many wars and maybe, WWIII. The relaxation of regulations of banking systems led directly to this mess. The creation of the entire galaxy of bizarre paper entities which I call collectively, the Derivatives Beast, led to the creation of a huge shadow financial entity that is bigger than the value of everything on earth. This is what the world's top bankers are clinging to keep alive. This is what hasn't blown up…yet. Meanwhile, whole nations slide off the economic cliff.
The entities holding 90% of the various derivative contract paper are freaking out because of a number of rules imposed by various international organizations or major countries like the US might cause the derivatives business to crash totally. As is must. But they don't like this and don't want this to happen. They get most of their phantom wealth via gaming the derivatives markets. The US has made a feeble attempt at reining in some of the worst practices of the top five bankers, Bloomberg reports Volcker Rule Draws a Barrage of Bank Lobbying. Regardless of how the final rule turns out, it will be a shock to the U.S. financial system, as banking entities will need to take extraordinary measures to attempt to implement it," Barry Zubrow, executive vice president of JPMorgan Chase & Co. said in a 67-page letter. Goldman Sachs Group Inc. (NYSE:GS) and Morgan Stanley submitted letters by midnight last night. Mark Lake, a spokesman for Morgan Stanley, and David Wells, a spokesman for Goldman Sachs, said the companies wouldn't publicly release or comment on the letters. The rule, named after former Federal Reserve Chairman Paul Volcker, was included in the 2010 Dodd-Frank Act in an effort to restrict risky trading at banks that operate with federal guarantees. Five U.S. regulators released the 298-page proposal seeking comment on how it would affect market-making, liquidity, foreign institutions and private equity and hedge fund investments.
Seattle Times reports Empty, Foreclosed Houses Burden Cities, Neighborhoods. Foreclosure sales helped drive the median home price in Covington down 18 percent last year to $230,250, making houses more affordable to new buyers but hammering the value of other homeowners' investments. Previously the fastest-growing city in King County, Covington fell hard when the bubble burst. Its monthly building-permit revenue plunged from a peak of $6 million in 2007 to $715,000 in 2009. Now, about one in every 48 residential parcels in Covington is owned by a financial institution, the highest rate in King County and more than three times the average, according to an analysis by the Assessor's Office. Rates are also high around Seattle-Tacoma International Airport and near the Pierce County line. The rash of foreclosures has cash-strapped city officials struggling with safety and legal issues of abandoned homes. Homeowners associations that handle landscaping and other amenities sometimes face bankruptcy as owners of houses or condos in foreclosure stop paying dues. And taxpayers, directly and indirectly, end up paying: Municipalities raise tax rates to make up for lower property values. In homes that revert to government-backed mortgage entities such as Freddie Mac, these institutions cover the cost of replacing missing appliances and maintaining the residences until they're sold.