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I am not an investment professional. I do not engage in stock or currency trading. I am a blogger and investor who believes the failure of credit has created an investment demand for gold, and that gold bullion is the sole means of wealth preservation.
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  • Commodities Pivot Lower On Falling Currencies ... As The Banker Regime Produces Peak Money And Peak Wealth

    1) ... In early May 2014, the extinction of the investor commenced, at the hands of the currency traders and at the club of the bond vigilantes; the first investors to be butchered were investors in periphery Europe, that is Portugal, PGAL, Italy, EWI, Ireland, EIRL, Greece, GREK, but not Spain, EWP. The birth of the debt serf has commenced.

    Ever since Milton Friedman came out with the Free To Choose doctrine of floating currencies, the world has been operating on a debt based money system, and to the dismay of Austrian Economist, not a hard asset money system.

    At the end of the age of liberalism, meaning freedom from the state, debt becomes money, as the fiat, that is the rule of the Banker Regime is coming to a climax. And as is seen in May 28, 2014 financial marketplace trading, with 30 Year US Government Debt, EDV, and US Ten Year Notes, TLT, rising strongly in value, debt has become wealth.

    The Distressed Investments, traded by the Fidelity Mutual Fund, FAGIX, have increased in value ever since the US Fed traded out "money good" US Treasuries for the worst of debt in QE1 in 2008, with the aim of restarting financial marketplace investing and regenerating the global economic system.

    The US Fed's monetary policies and the Banker Regime's policies of credit choice were stunningly successful, in that they have produced terrific Equity Investment, VT, and Credit Investment, AGG. On May 28, 2014, the world is attaining peak wealth, it is an awesome moral hazard based wealth.

    As the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, has flattened, seen in the Flattner, ETF, FLAT, trading higher in value, Gold, GLD, has been pummeled, and Distressed Investments, FAGIX, and Junk Bonds, JNK, have come to be established as the most valued of all investments.

    Soon physical possession of gold bullion will emerge as the only "safe asset", as the fiat of the Banker Regime fails, as investors derisk out of currency carry trade investments and debt trade investments.

    Not only is the death of currencies underway, but the failure of trust is underway as well. While there was only a slight follow through from the sale of the Major World Currencies, DBV, and the Emerging Market Currencies, CEW, seen in only a slight trade lower in Equity Investment, VT, there was a sell in Regional Banks, KRE, beginning in April, led by the weakest of banks such as MBFI, BBNK, UMBF, ABCB, SASR, ABCB, FRME. One reason for the trade lower in Regional Banks, KRE, and its follow through into the US Small Cap Stocks, IWM, is that bankers do not like to see a flattening yield curve, and the other reason is that investor's greed has turned to fear, specifically fear that regional banks can no longer serve as a transmission vehicle for the US Fed's monetary policies.

    2) ... On Wednesday May 28, 2014, US 30 Year Government Bonds, EDV, US Ten Year Notes, TLT, and Mortgage Backed Bonds, MBB, traded higher, as the Benchmark Interest Rate, ^TNX, closed at 2.44% in a process of coming to establish peak credit wealth, AGG. Credit Investments are near to topping out.

    If one is invested in a bond fund, then one is jubilant, as these have soared terrifically higher since the first of 2014. For example, the PIMCO Long-Term US Government C, PFGCX, has returned 8.9% this year, and at the same time yields 1.8%.

    Mankind's peak economic experience has been attained, it came via the chieftain geniuses at the US Fed, the ECB, and the Bank of Japan, via their provision and enforcement of Global ZIRP.

    Now, not only is the death of currencies underway, as is seen in the Major World Currencies, DBV, such as the Euro, FXE, and the Emerging Market Currencies, CEW, trading lower in value; the failure of credit, that is failure of trust in the Banker Regime is underway, and is seen in the Floating Rate Note, FLOT, paying 0.41%, starting to trade lower in value on May 28, 2014.

    Of note, European Credit, EU, has traded lower in value, as Deutsche Bank posts in PDF document concerns over European social turmoil: the eurosceptic parties increased their share substantially, but winning parliamentary representation is not equivalent to gaining actual political influence.

    3) ... On Thursday, May 29, 2014, risk on investing continued as Nation Investment and Small Cap Nation Investment, traded by ETF, EFA, traded to a new all time high (up 3.4 YTD) as Egypt, EGPT, Vietnam, VNM, and the Philippines, EPHE, traded lower from their rally highs, thus evidencing as market top is being achieved; other evidence of a stock market top is seen in the ratio of Stocks, VT, relative to Aggregate Credit, AGG, VT:AGG, topping out in value.

    World Stocks, VT, and the S&P 500, SPY, (Up 4.1% and 4.6% YTD respectively) traded to new all time highs.

    The three leading investment sectors have been Transportation, XTN, up 13.5% YTD, Semiconductors, SOXX, up 12.5% YTD, and Energy Service, OIH, up 10.3% YTD.

    Dividends Excluding Financials, DTN, traded to a new all time high; up 6.5% YTD

    Global Financials Institutions, IXG, traded to a new all time high; up 2.2% YTD

    In Yield Bearing Investments, Global Real Estate, DRW, Global Utilities, DBU, Preferred Financials, PGF, Shipping, SEA, Global Infrastructure, IGF, traded to a new all time high, and European Small Cap Dividend, DFE, Australia Dividend, AUSE, traded strongly higher in recovery from a sell-off.

    Closed End Funds, GCE, traded to a new rally high; up 8.3% YTD

    Aggregate Credit, AGG, traded unchanged at its rally highs as Emerging Market Bonds, EMB, and Junk Bonds, JNK, rose strongly higher, pressing on to new rally highs.

    The Defensive Stocks, DEF, all of which are Dividend Payers, such as Insurance Companies, KIE, Health Care Providers, IHF, Global Integrated Energy Companies, IPW, FILL, Real Estate, IYR, DRW, Global Agriculture, PAGG, Electric Utilities, XLU, PUI, Consumer Staples, KXI, and Global Utilities, DBU, are topping out, and some turning lower, reflecting that the rally in stocks is coming to an end.

    The bull market is acting like a bull market and in the process, peak fiat money and peak fiat wealth was achieved on Thursday, May 29, 2014, this being conveyed in the chart of Call Write Bonds, that is convertible securities, CWB, establishing a double top high. Other evidence of peak economic experience comes from Ludwig von Mises which posts The New Skyscraper Curse. And the high PEs of ETFs evidence a market top; these include the debt trades of Industrial Office REITS, FNIO, with a PE of 45, and Residential REITS, REZ, with a PE of 38.

    The Nasdaq, QTEC, QQQ, rally is over as is seen in the strong rise in Netflix, NFLX, and in Biotechnology leaders GILD, CELG, BIIB, coming to a screeching halt.

    4) ... On Friday May 30, 2014, Automobile Dealership Carmax, KMX, traded lower, distinguishing itself as a loss leader amongst its peers and among Small Cap Pure Value Stocks, RZV, as is seen in the ongoing Yahoo Finance Chart of PAG, SAH, ABG, KAR, AN, LAD, and KMX. The auto dealers as a group have been the very definition of risk-on investing as well as the definition of the investor, and not employment, and not economic renaissance, as the centerpiece of economic recovery.

    Clearly the investor was brought to the forefront of economic action by the US Fed's monetary policies and schemes of credit stimulus. The economy existed for the investor, and for the purpose of developing a moral hazard based prosperity. Spectacular investment results came to those who understood that Ben Bernanke's Cool Aid would be the Juice of All Economic Juice and the Elixir of Stock Jockeys. The Banker Regime has produced peak money and peak wealth.

    The Commodity ETFs, DBC, and GSG, pivoted lower on Friday May 30, on the trade lower in the Major World Currencies, DBV, and Emerging Market Currencies, CEW, that occurred during May 2014. This loss of investment value is the birth pains of the new normal of destructionism replacing inflationism; and heralds that the paradigm of authoritarianism will replace that of liberalism. Thus commodity price deflation came as the result of currencies trading lower during the month of May 2014.

    The South African Rand, ZAR, dropped strongly lower stimulating a trade lower in South Africa, EZA. The Brazilian Real BZF, traded lower stimulating Brazil's Integrated Energy Company, PBR, Brazil Financials, BRAF, and Brazil to trade lower. The India Rupe, ICN, traded lower, stimulating India Earnings, EPI, and India, INP, to trade lower. South Korean, Steel Producer, PKX, Electronic Manufacturer, LPL, Bank, SHG, KB, and Telecom Provider, KT, traded lower not on South Korea Won devaluation, but rather on Commodity, DBC, and GSG, deflation, which in turn stimulated South Korea, EWY, to trade lower.

    Emerging Markets, EEM, traded lower as Indonesia, IDX, IDXJ, Philippines, EPHE, Egypt, EGPT, Russia, RSX, ERUS, Emerging Europe, ESR, Emerging Africa, GAF, Chile, ECH, Mexico, EWW, Turkey, TUR, traded lower.

    The loss of Brazil's, India's, and South Korea's seigniorage is an investment coup d etat, coming from the ever increasing power of global investment destructionism, which is replacing inflationism.

    Debt deflation, specifically currency deflation, coming at the hands of the currency traders, on fears that the world's central banks' monetary policies have crossed the rubicon of sound monetary policy and have made "money good" investments bad, has pivoted Commodities, DBC, GSG, lower in price, with the result that investors sold investments in Basic Industries; these include Steel Producers, SLX, such as OSN, GSI, X, AKS, NUE, GGB, SID, MTL, PKX, Global Industrial Miners, PICK, such as VALE, RIO, BHP, Coal Miners, KOL, Uranium Miners, URA, and Rare Earth Miners, REMX.

    Ongoing currency carry trade disinvestment is going to be highly destructive economically. The result of debasement of the world's currencies will be economic economic destabilization and the much feared economic deflation.

    Given currency deflation in the Euro, FXE, the British Pound Sterling, FXB, the Swedish Krona, FXS, and the Swiss Franc, FXF, as well as the India Rupe, ICN, and the Brazil Real, BZF, economic growth is impossible.

    Economic growth was a largely a side benefit, that came from investment gains, flowing from the credit stimulus of Global ZIRP. Economic growth was a function of the investor pursuing investment gain in the bygone era of currencies, and the age of credit. One follow the ongoing collapse of currencies with this Finviz Screener of leading currencies.

    The bond vigilantes, not the Fed, has been in control of interest rates beginning in May of 2013, and will continue to be hiking interest rates, and that at a rather quick pace.

    This inquiring mind asks, just exactly who are the bond vigilantes? It is the Primary Dealers!!! And of note, it is these who hold tremendous amounts of Interest Rate Swaps, literally given to them by the US Fed, as part of an incentive to sell US Debt under POMO. So not only did the Primary Dealers get an a cut on issuing of bonds, they got deferred payment in terms of bets against bonds!

    Financial Post reports Mohamed El-Erian in Bloomberg News reports "Judging from data provided by the Commodity Futures Trading Commission, the movements in both rates and flows are catching many professional traders by surprise. Despite some recent repositioning, the net short position of non-commercial investors in 10-year Treasuries is the biggest in two years, meaning speculators have made bets designed to profit from an increase in yields and related outflows. Dealers are similarly positioned: Their net short in the largest in almost a year".

    The failure of trust in the Banker Regime, seen in Commodities, DBC, and GSG, trading lower on May 30, 2014, has begun to terminate the age of credit and the era of currencies, and is starting to birth the age of debt servitude and the era of diktat.

    Economics is defined as one's life experience in sovereign money and sovereign authority. With the ongoing trade lower in Major World Currencies, DBV, and a sustained trade lower in Emerging Market Currencies, CEW, a new sovereignty, that is the sovereignty of regional economic governance will emerge; and it will provide new sovereign money, that being diktat money to replace fiat money.

    Please consider that out of global economic chaos, national leaders will meet in summits to renounce national sovereignty and to announce regional pooled sovereignty, and to appoint regional fascist leaders who will head up the Beast Regime to establish regional security, stability and sustainability, and enforce debt servitude, first in the EU, and then in each of the world's ten regions, and throughout all of mankind's seven institutions.

    This monster is completely different than the Creature from Jekyll Island as it arises first out of Club Med, waves of sovereign insolvency, banking insolvency and corporate insolvency. We see news of its rise in the Reuters report ECB Goes On 300 Million Euro Spending Spree For Bank Watchdog. ECB will spend 300 million euros this year and next in building an elite group to monitor top banks, with the lion's share spent on generous pay for many of its staff.

    Now with destructionism replacing inflationism, the debt serf will become the centerpiece of economic action; and all economic resources will be centered upon him.

    The WSJ reports Moody's Warns on EU New Banking Rules. Rating Agency Says Directive Could Leave Stakeholders Vulnerable to Banking Crises. Moody's Investors Service Inc. has become the latest of the three big debt rating firms to warn that new European Union rules could make stakeholders more vulnerable to losses in any future banking crisis. In response to the EU's so-called Bank Recovery and Resolution Directive, under which shareholders, bondholders and some depositors may have to stomach big losses or commit to so-called bail ins to help rescue ailing banks, Moody's has cut its long-term rating outlook on 82 European Banks, EUFN, to negative.

    5) ... News reports document that there was a strong populist vote for new leadership in the Eurozone; and a call for a break from past policies; the European Debt Crisis seems to have fallen from the public's mind. The Telegraph posts The Race Is Wide Open For The European Commission's Top Job. The lesson is simple: offer voters a binary choice between "more Europe" and "no Europe", and eventually they will choose the latter. The answer must be sweeping reform.

    Reuters posts Populist Advances Set To Hobble EU Integration. Tuning gains by anti-EU and populist parties in the European Parliament elections will prevent any new treaty on deeper Eurozone integration for the foreseeable future and may tilt Europe's economic policy mix more towards expansion.

    Bruegel posts New European Leadership Needs To Focus On Growth The EU and in particular the euro area suffer from two key problems.Growth and job creation is unsatisfactory and one can therefore not say that the crisis is over.The governance of the European Union is still far too complicated and ineffective to address crises and respond to citizens' needs.A key message and mandate EU leaders should give to the post-election EU would therefore be to focus on what can actually be accomplished. The new European leadership consisting of the President of the European Commission, the President of the European Council and the President of the European Parliament should be able to act forcefully on growth. This will require the three individuals and their institutions to work together effectively. They will have to constantly remind the national leaders about the importance of enacting national reforms that not only create jobs but are also consistent with the prerogatives of monetary union. Putting public finances on a sound footing is one of the many challenges. But without a European growth initiative it will be hard to deliver on domestic fiscal targets. Therefore, the new EU leadership should develop a convincing European growth strategy.

    There is waiting in the wings of Europe stage, the most capable of sovereigns, perhaps this one is Jean Claude Juncker. Out of the European Debt Crisis, the Sovereign will step into the limelight, and through cunning and shrewdness rise in power to rule, and be accompanied in power by the Seignior, that is top dog banker, who in coining money, takes a cut. Their combined word, will and way, will provide economic direction unifying all of the Eurozone.

    6) ... Signs of headline inflation are emerging. Headline Inflation is a result of a steepening yield curve, as well as currency deflation, and can be present even in economic deflation. The chart of the Steepner ETF, STPP, reflects a slight steepening in the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX; it is out of this dynamic that headline inflation will eventually occur. And headline inflation will increase as formerly sovereign currencies buy ever increasing Dollar denominated commodities.

    The chart of the ratio of Long Term Tips, LTPZ, relative to the US Ten Year Notes, TLT, that is LTPZ:TLT, communicates that bond market investors expect price inflation to occur; and the Proshares UltraPro 10 Year TIPS/TSY Spread, UINF, is trading higher confirming the expectation of inflation on the failure of credit. Headline Inflation is seen in the Reuters report Consumer Prices Post Biggest Gain In 10 months.

    7) ... The short selling opportunity of a lifetime has arrived

    As currency traders further force derisking out of debt trades and deleveraging out of currency carry trades by selling the Major World Currencies, DBV, and the Emerging Market Currencies, CEW, and as the bond vigilantes further force derisking out of credit investments, by calling the Benchmark Interest Rate, ^TNX, higher from 2.44%, both fiat money and fiat wealth will tumble, and being democratic nation state, being unable to underwrite safe assets will crumble.

    The 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, steepened at the end of the week of May 30, 2014, seen in the Steepner ETF, STPP, steepening, and given that Equity Investments are terrifically overbought, and given that US Government Debt, EDV, TLT, is approaching overbought.

    Just as one buys into dips in a bull market one sells into pips in a bear market; for those inclined to trade, now is the time to start short selling, or better yet dollar cost averaging into the possession of gold bullion and storing it in a safe place, like a gun safe, and declaring its value on one's home insurance policy.

    Those who are into short selling may want to consider using a portfolio of Inverse Market ETFs as basis for collateral; these might include STPP, XVZ, EUO, YCS, CMD, DNO, MLPS, SAGG, DTYS, JGBS, GLD, GYEN, GEUR, GGBP, as well as, HDGI, YXI, EUM, DOG, SEF, EFZ, DDG, PSQ, REK, which must be managed closely as they are volatile, and are not held to term but are traded on waves of buying and selling.

    Efficient management of such a portfolio should produce a daily gain of 0.2%, and a weekly gain of 0.1%, before trading fees in and out of these ETFs.

    Global Financial Institutions such as Japan's IX, NMR, Brazil's BSBR, ITUS, Mexico's BSMX, India's IBN, HDB, the UK's RBS, LYG, Canada's BNS, TD, CM, BMO, Chile's BCH, BCA Spain's STD, and Argentina's BFR, will be trading strongly lower, leading Nation Investment, EFA, lower, as debt deflation picks up at the hands of the currency traders and the call of the bond vigilantes, and thus are excellent short selling opportunities.

    Jun 01 3:54 PM | Link | Comment!
  • Greece And The European Small Cap Dividends Lead Eurozone Stocks Lower On The Failure Of Credit

    Financial Market Report for Monday April 14, 2014.

    Volatility, XVZ, rose as Greece, The National Bank of Greece, and the Eurozone Small Cap Dividends are leading the Eurozone Stocks lower, as is seen in the ongoing Yahoo Finance Chart of Greece, GREK, Eurozone Small Cap Dividends, DFE, European Financials, EUFN, and the National Bank of Greece, NBG, communicating the failure of European Credit, EU.

    Investors are deleveraging out of EUR/JPY currency carry trade investments as is seen in the ongoing Yahoo Finance chart of EURJPY and the Eurozone Stocks, EZU, such as ALU, VE, ASMI, RYAAY, AIXG, AER, PHG, CRH, SI, and the Eurozone Nations, such as EWI, EWG, EFNL, EWN, EWQ, EIRL, EWP, EWO, PGAL, GREK, with the European Financials, EUFN, and the National Bank of Greece, NBG, leading lower.

    Open Europe relates Kathimerini Kathimerini 2 Reuters report Poul Thomsen, head of the IMF's mission to Greece, told Mega TV, "In our view, [Greece's bailout] is not fully financed the whole way to 2016 and one would find some more money." Separately, Greek Prime Minister Antonis Samaras wrote in Kathimerini yesterday that "the country's return to the markets rebuffs [speculation]" about the need for a third bailout."

    The failure of credit in the US, VTI, is seen in Retail, XRT, US Infrastructure, PKB, Consumer Services, IYC, Small Cap Consumer Discretionary, PSCD, such as the Automobile Dealers, the Credit Service Companies, MA, V, AXP, DFS, Asset Managers, BLK, AMG, Regional Banks, KRE, Stockbrokers, IAI, Investment Bankers, KCE, the Too Big To Fail Banks, RWW, and the Russell 2000, IWC, trading lower from their highs.

    The Small Cap Growth, RZG, and the Large Cap Growth, JKE, are leading the Small Cap Value, RZV, and the Large Cap Value, JKF, lower, as is seen in their combined ongoing Yahoo Finance chart. And Utilities, PUI, XLU, such as GXP, BKH, NEE, UGI,NI, VVC, MDU, D, and NYLD, are topping out on the trade lower in the Interest Rate on the US Note, ^TNX, to 2.62%, on Friday April 11, 2014, and its close now higher on Monday April 14, 2014 to 2.64%.

    Eddy Elfenbein reports Best Retail Sales Report in 18 Months. While Atif Mian and Amir Sufi of House of Debt post The Consumer As A Shadow Of Its Former Self. Retail, XRT, bounced only slightly higher today, as did other ETFs, that had sold off most strongly last week. These included the Workplace Equality ETF, EQLT, which is comprised of companies that have a social mission to support workplace equality for lesbian, gay, bisexual and transgender employees; it is comprise of 164 companies that have scored 100% on the Human Rights Campaign Corporate Equality Index. The ETF follows in the line of socially responsible funds that are currently on the market; these products take into account social, environmental, and governance characteristics. The ETF has been a leading loss leader as Intuit relates that it is comprised of a number of large cap consumer discretionary, financial service stocks, and technology stocks such as GME, EA, MGM, WYNN, DIS, AAL.

    Junk Bonds, JNK, bounced higher, taking Aggregate Credit, AGG, slightly higher to a new rally high as International Treasury Bonds, PICB, traded lower manifesting a massive dark cloud covering candlestick chart pattern in its weekly chart confirming the failure of credit. Infrastructure Municipal Bonds, RVNU, popped 1.1% higher in short sell covering. Reuters reports RVNU focuses exclusively on municipal bonds issued to fund federal, state and local infrastructure projects, including water and sewer systems, public power systems and toll roads and bridges.

    Thursday, April 10, 2014, marked a pivotal economic change in mankind's history. The failure of credit commenced as popular currency carry trades unwound trading in Small Cap Nation Investment, IFSM, and Nation Investment, EFA, as the ECB failed to come forward with any new credit stimulus, and turned World Stocks, VT, Global Financials, IXG, lower. The failure of equity investments can be followed with this Finviz Screener of Equity ETFs.

    Another word for credit is trust. Investors no longer trust in the monetary policies of the world central banks to stimulate global investment growth. Said another way the world central banks' monetary policies have crossed the rubicon of sound monetary policy and have made "money good" investments bad.

    The failure of credit, commenced on Thursday, April 10, 2014, is the most remarkable turning point in economic history; and is seen in Call Write Bonds, CWB, trading lower from their March 2014 high, and is defined by the see saw destruction of equity investments (such as World Stocks, VT, Nation Investment, EFA, Small Cap Nation Investment, IFSM, Global Financial Investments, IXG, and Dividends Excluding Financials, DTN) and credit investments, AGG, which began to trade lower in May 2013.

    Investors no longer trust in the monetary policies of the world central banks to stimulate investment growth, despite TradingFloor reporting Global Manufacturing PMI Tracker Shows Growth Robust In March. One can follow the destruction of credit investments with this Finviz Screener of Credit ETFs.

    The failure of credit is established by Distressed Investments, such as those traded by Fidelity Investments, FAGIX, and by Junk Bonds, JNK, trading strongly lower on Thursday April 10, 2014 and Friday April 11, 2014. It was the Distressed Investments, that the US Fed took in and traded out "money good" US Treasuries in 2008 and 2009, as part of QE1 to regenerate the US and World Financial System. Regional Banks, KRE, lost 5% of their value last week, and thus document the failure of credit. Look for a strong destruction of Popular Notes And Bonds, such as SHY, EMCD, TLT, ZROZ, FLOT, QLTA, VCLT, PICB, BWX, MBB.

    Bespoke Investment Group reports Sovereign Yields Continue Lower. Yet, look for Aggregate Credit, AGG, to very soon, once again, trade lower as Corporate Bonds, LQD, Long Duration Corporate Bonds, BLV, International Corporate Bonds, PICB, and World Treasury Bonds, BWX, which are seen peaking out, turn lower, commencing the failure of currencies.

    Debt Deflation will be driving Major World Currencies, DBV, and Emerging Market Currencies, CEW, lower. Said another way, bond vigilantes calling the Benchmark Interest Rate higher, $TNX, from 2.62% on Friday, April 11. 2014, and on steepening the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, seen in the Steepner ETF, STPP, steepening, from 38.67, on the exhaustion of the world central banks' monetary authority. Spectacular competitive currency devaluation will cause unwinding liberalism's currency carry trades and debt trades worldwide. One can follow the destruction of currencies with this Finviz Screener of Currency ETFs.

    The pursuit of yield is history. Global ZIRP is history. The failure of credit is terminating risk driven investors, such as those invested in High Yield Debt, JNK, VCLT, EU, EMB, HYXU, EMLC, HYMB, QLTB, EMCD, RVNU, and those invested in Biotechnology, IBB, Social Media, SOCL, Small Cap Pure Value, RZV, and Small Cap Pure Growth, RZG, as well as fixed income investors, invested in Dividends Excluding Financials, DTN, and other Popular Yield Bearing ETFs, DFE, GRID, SEA, FIW, PUI, PSP, KBWD, IST, DBU, as well the high yielding Dividend ETF, DVYL, which is 200% leveraged the S&P High Yield Dividend Aristocrats Index.

    As of Black Thursday April 10, 2014, the day credit died, as evidenced by World Stocks, VT, Nation Investment, EFA, Global Financials, IXG, and Dividends Excluding Financials, DTN, trading lower, the investor is no longer the centerpiece of economic activity. He is being replaced by the debt serf, as Robert Stevens of WSWS reports Greek Parliament Approves New Attacks On Workers. The latest agreement between the European Union led Troika and the Greek government includes measures to limit the right to strike.

    Out of soon coming economic chaos stemming from derisking out of currency carry trade investments, such as the EUR/JPY, and the GBP/JPY, as well as out of deleveraging out of debt trades, such as Real Estate Company, Blackstone, BX, yield curves such as the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, will be steepening, and short term interests rates will be rising, causing 1 to 3 Year US Government Note, SHY, to plummet.

    As the Benchmark Interest rate rises from 2.62%, popular real estate investments Global Real Estate, DRW, Office REITS, FNIO, Mortgage REITS, REM, Residential REITS, REZ, and Retail REITS, such as General Growth Properties, GGP, will plummet.

    Money market funds will break the buck, that is the traditional constant $1 Dollar Value, with the result that capital controls will be implemented and banks everywhere will be integrated into the Government, and be known as Government Banks, and in the US, the Bank's Excess Reserves will be captured, so as to speak, by the US Fed.

    Banks everywhere will be integrated into regional governments, with the Eurozone and the US being leading examples of economic fascism. Savings and Loans, Regional Banks, KRE, such as BOFI, SIVB, HBAN, and RF, the Too Big To Fail Banks, RWW, seen in this Finviz Screener, will be integrated into the banks and be known as the Government Banks, or Gov Banks.

    Money has been in an awesome bubble ever since it was underwritten by credit of the US Fed in taking in Distressed Investments, such as those traded by the Fidelity Mutual Fund, FAGIX, and in trading out money good US Treasuries, TLT, to underwrite faith in Regional Banks, KRE, and the Too Big To Fail Banks, RWW, under the Paulson Gift and Ben Bernanke Stimulus of QE1.

    The investor is going extinct: the failure of credit is an extinction event, that pivots the world economy out of liberalism, that is the paradigm and age of investment choice and credit, and into authoritarianism, that is the paradigm and age of diktat and debt servitude, which features the debt serf, is the centerpiece of economic activity.

    With the trade higher parabolically higher in Nickel, JJN, the rally in Commodities, DBC, DYY, is likely over. Bloomberg reports Oil Climbs to Five-Week High on Ukraine-Russia Tension.

    Buy and hold stock investing was an economic principle of the bygone era of credit. The greatest bear market of history has commenced: it will totally destroy all fiat investments where they be equities such as VT, EFA, IXG or DTN, or credit, AGG. One could use these Inverse Market ETFs as collateral for short selling: STPP, XVZ, JGBS, GLD, EUO, YCS, OFF, HDGE, SAGG, TYBS, DNO, PPLT, KRS, REK, SBB, SBM, DDG, EFZ, YXI, SZK, SDP.

    Gold, $GOLD, traded higher to $1,327, on a slightly higher US Dollar, $USD, UUP. The chart of the Gold ETF, GLD, shows that it entered an Elliott Wave 3 of 3 Up in January 2014; and now is technically overbought. Short Side Of Long posts Gold Has Outperformed Other Asset Classes In First Quarter 2014. In the age of the failure of credit, wealth can only be preserved by purchasing and taking possession of and safely storing gold bullion.

    Libertarian Richard Eleling writes in EPJ The Free Market vs. the Interventionist State What people call the "free market" in the United States and around the world, is in fact the regulated economy -- the Interventionist State. I explain the defining characteristics of a truly free market economy, as defined for example by the Austrian economist, Ludwig von Mises. And I contrast this with the meaning of the Interventionist State under which we all live. The Interventionist State distorts the economic activities of all those in society in various ways.

    The Interventionist State featured the Banker Regime, that is the Creature from Jekyll Island, and its cohort, democratic nation state rule, which featured inflationism, coming from the three economic dynamos of creditism, corporatism, and globalism, under policies of investment choice and schemes of liberal credit.

    The bond vigilantes are effecting a global economic coup d'etat, transferring sovereignty from democratic nation states to sovereign regional leaders and sovereign regional bodies, such as the ECB, by calling the Interest Rate on the US Ten Year Note, ^TNX, higher from 2.48% on October 23, 2013, and thus are powering up the singular dynamo of regionalism to establish regional security, stability, and sustainability, to deal with the destructionism of unwinding currency carry trades and debt trades.

    Out of a soon coming Financial Apocalypse, that is a credit bust and financial system breakdown, the Beast Regime will rise to replace Banker Regime, where policies of regional economic governance and schemes of totalitarian collectivism will establish regional gulags of debt servitude.

    Under liberalism, the speculative investment community provided seigniorage through money manager capitalism, Under authoritarianism, regional leaders provide seigniorage through the word, will and way of their diktat .

    Specifically out of Eurozone sovereign, banking and corporate insolvency, leaders will meet in summits to renounce national sovereignty and announce pooled regional sovereignty, where regional framework agreements will provide the legal basis for regional economic fascism enabling leaders from Brussels and Berlin to rule in diktat establishing Europe as the preeminent world power. Johannes Stern of WSWS writes German Government Planning Major Military Build-up. The German government is using the mounting conflict between NATO and Russia to massively rearm the army.

    Chart of the Day, International Corporate Debt, PICB Weekly, courtesy of Finviz (click to enlarge)

    Apr 14 9:54 PM | Link | Comment!
  • World Stocks And Nation Investment Pop To New Highs On A Rally In The Euro Yen Carry Trade And Margin Credit While Aggregate Credit Trades Lower As The Benchmark Interest Rate Trades Higher

    1) ... Liberalism became the paradigm and age of investing through the intervention of the world central banks. Liberalism is defined as freedom from the state and commenced with John Calvin as Doug Phillips writes John Calvin (was) the man most responsible for our American system of liberty based on Republican principles of representative government.

    It was Founding Father and the second President of the United States, John Adams, who described Calvin as "a vast genius," a man of "singular eloquence, vast erudition, and polished taste, [who] embraced the cause of Reformation," adding: "Let not Geneva be forgotten or despised. Religious liberty owes it much respect."

    Calvin, a humble scholar and convert to Reformation Christianity from Noyon, France, is best known for his influence on the city of Geneva. It was there that his careful articulation of Christian theology as applied to familial, civil, and ecclesiastical authority modeled many of the principles of liberty later embraced by our own Founders, including anti-statism, the belief in transcendent principles of law as the foundation of an ethical legal system, free market economics, decentralized authority, an educated citizenry as a safeguard against tyranny, and republican representative government which was accountable to the people and a higher law.

    Quantitative Easing, fathered by Ben Bernanke, started the final phase of liberalism as a paradigm and age of investing, which featured the investor as the centerpiece of economic action whose investment choice was underwritten by currency carry trade and debt trade investing, and which also featured the client of government whose dependency was underwritten by SNAP Food Stamps, Public Housing, Section 8 Vouchers, SSI/SSD payments and other transfer payments such as TANF.

    What began with QE1, was finalized by Global ZIRP of the world central banks, consisting of what amounted to money printing operations of LTRO 1 and 2 and OMT, as well as Abenomics which rewarded risk-on investing and powered up Liberalism's three dynamos of economic activity: corporatism, creditism and globalism.

    The government policies of democratic nation states, and the credit schemes of the world central banks and the speculative leveraged investment community, set the investor free, yes liberated the investor, to pursue investment choice, and experience a moral hazard based prosperity based upon his risk appetite.

    With the exception of clients of government, such as those in Greece who experience what the Economist Magazine describes as a culture of pork and patronage, and those living in the US in public housing on transfer payments, the entire world's population was set free in 2008 as investors.

    2) Peak liberalism came in on Thursday, March 6, 2014, World Stocks, VT, and Nation Investment, EFA, popped to new highs on a rally in the Euro Yen Carry Trade and Margin Credit, while Aggregate Credit, AGG, traded lower as Junk Bonds, JNK, topped out and traded lower, and as the Interest Rate on the US Ten Year Note, ^TNX, traded higher to 2.79%, forcing US Government Bonds, GOVT, lower, commencing a see saw destruction of credit investments and equity investments, establishing liberalism's peak investment experience.

    Currency traders took the Euro, FXE, higher to close at 137.03, and the Yen, FXY, lower to close at 94.47, driving the Euro Yen Currency Carry, EUR/JPY, to close higher at a new rally high of 142.64 driving the Eurozone Stocks, EZU, European Financials, EUFN, and moving Global Financials, IXG, including Regional Banks, KRE, as well as the Too Big To Fail Banks, RWW, roaring back to new rally highs. The US Dollar, $USD, UUP, closed lower at 79.73.

    Nations outside of the Eurozone trading higher included, Switzerland, EWL, UK Small Caps, EWUS, the UK, EWU, Sweden, EWD, Denmark, EDEN, and Norway, NORW, all rose to new rally highs. The Nikkei, NKY, traded higher. Australia, EWA, KROO, blasted higher, and New Zealand, ENZL, rose parabolically higher to a new rally high, as Major World Currencies, DBV, rose to a new rally high.

    World Small Nation Investment, SCZ, were led higher by India Small Caps, SMIN, India, INP, being led higher by India Earnings. China Small Caps, ECNS, and China, YAO, were led higher by China Financials, CHIX. Brazil, EWZ, and Brazil Small Caps, EWZS, were led higher by Brazil Financials, BRAF. Indonesia, IDX, Indonesia, IDXJ, Argentina, ARGT, Thailand, THD, the Phillippines, EPHE, South Africa, EWZ, Egypt, EGPT, and Israel, EIS, traded higher. All rising on a rising Emerging Market Currency Carry Trade, seen in CEW:FXY, trading higher, as Emerging Market Currencies, CEW, rose to a new rally high, which drove the Emerging Market Financials, EMFN, and the Emerging Markets, EEM, higher.

    Investors driving Transportation Stocks, XTN, in particular, Airlines, Railroads, and Trucking Stocks, has been truly spectacular, as these have been in greater demand than Small Cap Pure Value Stocks, RZV, or Small Cap Pure Growth Stocks, RZG.

    Yield Bearing Stocks, DTN, traded to a new rally high, being led so by debt trade investing in Leveraged Buyouts, PSP, European Small Caps, DFE, Global Telecom, IST, Water Resources, FIW, Global Real Estate, DRW, and Chinese Real Estate, TAO.

    3) ... The world is at the inflection point between liberalism and authoritarianism; it is about to pivot from the paradigm and age of freedom into that of diktat, as the monetary policies of the world central banks have crossed the boundary of sound monetary policy and have money good investments bad and because of the failure of democratic nation states such as the Ukraine.

    International Financing Review posts Eurozone banks' sovereign exposure hits new high The world is at peak equity market capitalism, peak national sovereignty, and peak banking sovereignty, as the seigniorage, that is the moneyness, that is the fiat money consisting of Aggregate Credit, AGG, together with Major World Currencies, DBV, and Emerging Market Currencies, CEW, of the Milton Friedman Free to Choose floating currency regime has failed.

    While posts Stefan Isaacs posts Arguments in favour of high yield, clearly, s stock values, nation investment, and bank investment, as well as Junk bonds, JNK, International Treasury Bonds, BWX, and International Corporate Bonds, PICB, have risen to their maximum potential on massive currency carry trade investing and debt trade investing. The dynamos of creditism, corporatism, and globalism are now winding down economic systems such as crony capitalism, European socialism, Greek socialism, Russian communism, and clientelism.

    Inflationism has come to an end as the Distressed Investments, similar to those which were taken in by the US Fed under QE1, and traded by the Fidelity Mutual Fund, FAGIX, are trading lower in value.

    Thus the world has attained peak economic expansion and peak global growth. The liberal Economist's View posts Four Components of AD Relative to the Business Cycle Peak. As exports have expanded to their maximum, US Infrastructure Stocks, PKB, seen in this Finviz Screener will be trading lower; their chart shows the terminal lollipop hanging man candlestick pattern.

    Excessive easy money led to the death of fiat money, defined as Aggregate Credit, AGG, Major World Currencies, DBV, and Emerging Market Currencies, on October 23, 2013, when bond vigilantes called the Benchmark Interest Rate, ^TNX, higher from 2.48; and is about to cause the death of fiat wealth, that is World Stocks, VT, Nation investment, EFA, and Global Financials, IXG. Money manager capitalism is about to cause a Minsky Moment, that is a global credit bust and world wide financial system breakdown.

    With the dual extinction event of the death of fiat money and the death of fiat wealth, the world will pass from the paradigm and age of liberalism into that of authoritarianism, and the world will enter the final phase of the Business Cycle, that being Kondratieff Winter.

    Destructionism is the new normal. Deflation is already underway in the Eurozone as Eurostat reports in PDF document Industrial producer prices down by 0.3% in euro area. Disinvestment out of currency carry trades, and out debt trades, deleveraging factors for economic recession and economic deflation, which will be marked by falling economic metrics such as falling Industrial Producer Prices, falling ISM, and falling GDP. Furthermore deflation will be the order of the day as Reuters reports US factory orders, shipments fall in January. And as Reuters reports US service sector growth at slowest since Feb 2010 - ISM survey reveals.

    Under authoritarianism, the singular dynamo of regionalism is already powering up regional economic fascism, as the beast regime rises in regional sovereignty authority replacing that of democratic nation states, in response to ever increasing waves of national, banking, and corporate insolvency, as well as investors deleveraging out currency carry trade investments and debt trade investments.

    Deutsche Welle posts Italy's sovereign debt explodes as economy shrinks in 2013 Italy's public debt hit a new high in 2013, soaring to a level not seen since the country's statisticians began taking records. The debt exploded as Europe's third-largest economy remained locked in recession. Reuters reports Italy 2013 fiscal deficit hits EU 3 pct limit for second year running, GDP falls 1.9 pct. Bloomberg reports EU says italy faces a major challenge in reducing debt

    The beast regime's power establishes policies of regional economic governance, and schemes of totalitarian collectivism, which enforces debt servitude producing austerity for all, in each of the world's ten regions to establish regional security, stability and sustainability.

    Regional leaders, working in public private partnerships, provide the seigniorage of diktat money, as they coin mandates, which direct the factors of production, establish fiscal spending, and oversee banking, commerce and trade, as the debt serf working in debt servitude becomes the centerpiece of economic action.

    Under authoritarianism the only prevailing forms of economic resource are diktat and the possession of gold bullion.

    4) ... A sound investment strategy.

    As a whole, a Finviz basket of inverse market ETFS, rose; these include STPP, HDGE, XVZ, JGBS, GLD, EUO, YCS, SAGG, JGBS, and HDGI; these could be used as a basis for short selling. Yet I recommend that one buy and take possession of gold bullion.

    5) ... In the news

    My Budget 360 reports Household debt first increase in 4 years largely driven by massive increases in student debt. Auto loans showed increase volume in sub-prime loans.

    My Budget 360 reports Personal income faces first year-over-year drop since recession ended: As incomes collapse, spending via consumer credit begins to increase.

    Mike Mish posts Nigel Farage: "UKIP biggest threat to political establishment in modern times.

    Julie Hyland of WSWS reports Germany's Angela Merkel feted by the UK to little effect. The German chancellor allotted just six hours to her visit, stopping off on the way back to Berlin from Israel, where she had spent two days with her entire cabinet.

    Jason Ditz of Antiwar reports Kerry to AIPAC: America Won't Fail Israel

    Jason Ditz of Antiwar reports Palestinians see AIPAC Speech as end to peace talks

    Bloomberg reports Philippine Index to monitor the risk of property bubble. The Philippine central bank is set to introduce a residential property-price index in the first half of the year as it intensifies monitoring of asset-bubble risks, Deputy Governor Diwa Guinigundo said. The index initially will cover Manila and nearby provinces using data including building permits and wholesale prices of construction materials of new housing units from 2006 to 2012, Guinigundo, 59, said in an interview in his office in Manila late yesterday.

    Bloomberg reports Oaktree's Marks urges caution as money flows Into junk loans. The head of the world's largest distressed debt fund is emphasizing the need for making careful choices as loan funds inundated with unprecedented cash enable junk-rated companies to borrow at cheaper rates. "When things are rollicking and the market is permitting low-quality issuers to issue debt, that's when you need a lot of caution," Howard Marks, the founder and chairman of Oaktree Capital Group LLC, said in a telephone interview. "You have to apply a lot of discernment."

    Mother Earth News asks Is Roundup the cause of 'gluten intolerance'? and Peak Prosperity posts

    Dr. David Seaman: inflammation from our diet is killing us.

    Illusion of Prosperity posts Employment growth is slowing again. Employment growth has been slowing in a fairly predictable way since December of 2012. Contrary to popular expert financial opinion, this downtrend cannot be blamed on this winter's weather. It's been going on for more than a year. I firmly believe that we are in the late stages of this business cycle and I'm fairly comfortable with my recession by October of 2014 prediction.

    Macronomy writes Credit the thin red line. The Thin Red Line became an English language figure of speech for any thinly spread military unit holding firm against attack. The phrase has also taken on the metaphorical meaning of the barrier which the relatively limited armed forces of a country present to potential attackers. You must therefore be already wondering where we are going with our chosen analogy. Colin Campbell, 1st Baron Clyde, the commanding officer of the "Thin Red Line" had such a low opinion of the Russian cavalry that he did not bother to form four lines but two lines, although military convention dictated that the line should be four deep.

    When ones look at the growing sense of "impunity", in both the equity space with the S&P breaking records after records and in the credit space with the Markit CDX North American Investment Grade Index touching the lowest intraday point of 61.6 basis point, the lowest level since the 1st of November 2007, we are left wondering in this replay of "Balaclava" if investors are not too "complacent" by not bothering to protect their portfolio, preferring, like Colin Campbell, to hold two lines of defense, rather than the conventional four (volatility being currently very cheap).

    Credit wise, we reminded ourselves that dealers' books have shrunk from $256 billion in 2007 to $56 billion today. So, when and not if, the market turns, mind the gap because, as goes one of our favorite quote which we have used repeatedly:

    "Liquidity is a backward-looking yardstick. If anything, its an indicator of potential risk, because in liquid markets traders forego trying to determine an assets underlying worth - they trust, instead, on their supposed ability to exit." - Roger Lowenstein, author of When Genius Failed: The Rise and Fall of Long-Term Capital Management. - "Corzine Forgot Lessons of Long-Term Capital"

    So dwindling dealers' books and rising bond offerings might make DCM bankers put on a huge smile but if the market turns, everybody will cry, much more than in 2008.

    For us "The Thin Red Line" is how thinly liquid credit markets are today relative to 2007. Valuations wise in segments of the technology space are akin, we think to 1999, and credit markets looks more eerily familiar to 2007. We could indeed be looking at 1999+2007 for both equities and credit.

    In this week's conversation, we wanted to convey our thoughts and some of the "Red Flags" we have seen as of late, not justifying the on-going complacency when it comes to assessing the replay of "Balaclava". We are not too sure the "Scots" (USA and Europe) can hold the line this time around versus Russia but we digress slightly.

    More and more, investors are not getting compensated for the credit risk they expose themselves to in the High Yield space. For instance, a recent example of the complacency we think is illustrated by the new HeidelbergCement 2019 new issue in Euro, offering 2.40% of yield, for an annual coupon of 2.25%. It isn't much being paid out for a BB+ 5 year bond when you think that the Iboxx Euro Corporate All benchmark index commonly used in investment grade mutual funds is offering a yield of 2.12% for a modified duration of around 4.5 years.

    Another illustration of this 1999 feeling comes from the recent surge in China's Tencent Holdings Ltd, as displayed by Bloomberg's Chart of the Day. (The chart of Tencent Holdings TCEHY shows a likely market top was attained the week ending March 7, 2014)

    Mar 10 2:09 PM | Link | Comment!
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