Financial Market Report for Thursday January 19, 2011
The most toxic and overvalued investments rallied the strongest today, putting an end to the Free To Choose Regime of Neoliberalism that has governed the world ever since Milton Friedman encouraged abandonment of the gold standard in 1971. The topping out of the most rallied of investments heralds the beginning of the rise of the Beast regime of Neoauthoritarianism to replace the Banker Regime of Neoliberalism; this ten toed kingdom of regional government governance is rising to dominate the world.
Solar stocks, TAN, finally turned down, as Intel, INTC, led Semiconductors, XSD, higher.
The most insolvent financial institutions, IXG, the most insolvent banks, EUFN, and the most speculatively driven banks, EMFN, RWW, C, BAC, rose the strongest today. The most exemplary of neo liberal finance banks rose dramatically; these included, IBN, HDB, GGAL, BBD, BFR, BMA, ITUB, BSBR, IRE, NBG, LYG, RBS, BCS.
The WSJ reports Sugar rush for euro-zone markets. The most growth currency stimulated or insolvent nations, Spain, EWP, Italy, EWI, Austria, EWO, Europe, VGK, Turkey, TUR, Poland, EPOL, Emerging Asia, GMF, South Korea Small Caps, SKOR, India, INDY, India Earnings, EPI, India Small Caps, SCIN, China Small Caps, HAO, and Brazil Small Caps, BRF, Emerging Europe, CEE, Russia Small Caps, ERUS, China, FXI, Russia, RSX, Latin American Small Caps, LATM, Emerging Market Small Caps, EWX, rose.
The most speculative of commodities, timber, CUT, base metals, DBB, lead, LD, nickel, JJN, aluminum, JJU, and copper, JJC, rose. which drove Wood, WOOD, Uranium, URA, Aluminum, ALUM, Copper Mining, CHIM, Rare Earth, REMX, Coal, KOL, China Industrials, CHII, China Materials, CHIM, Steel, SLX, Taiwan, EWT, Global Agriculture, PAGG, Emerging Market Mining, EMMT, rose.
Growth shares Taiwan Semiconductors, TSM, Aluminum Corporation of China, ACH, Sterlite Industries, SLT, CF Industries, CF, Alcoa Aluminum, AA, Southern Peru Copper, SCCO, BHP Billiton, BHP, Vale, VALE, rose strongly.
Airlines, FAA, and Shipping SEA, rose strongly, with Greece Shipping Firms, ESEA ,CPLP, and DCIX, now turning lower.
S&P Materials, MXI, and S&P Financials, IXG, and S&P Financial Services, IYF, Investment Bankers, KCE, Stockbrokers, IAI, Lender, AXP, took the S&P, SPY, and RSP, higher.
Ford Motor, F, General Motors, GM, Tata Motors, TTM, and a number of automobile stocks, gave rise to CARZ and VROM. The rise in M2 Money and replacement of automobiles by the public has driven up auto sales.
Design Build, PKB, popped higher displaying a likely evening star candlestick.
Debt laden companies, such as MTW, and IP, rose strongly.
Industrial Office REITS, FNIO, and Small Cap Real Estate, ROOF, took real estate, IYR, higher; the seigniorage, that is the moneyness of Residential REITS is likely at its end, IYR, FNIO, ROOF, REZ
Metal Manufacturing, XME, NUE, STLD, RS have likely finished their rally.
Networking shares, IGN, FFIV, NTGR, AKAM, have likely completed their rally.
Petsmart, PETM, rose strongly.
The small cap value shares, RZV, RPV, IJS, IJR, IWN, IWD, RWJ, have likely completed their rally now that the European Financials have been stabilized temporarily by credit liquidity from the ECB’s LTRO facility, RZV, RPV, IJS, IJR, IWN, IWD, RWJ. The small cap revenue shares, RWJ, rose, led higher by Nicholas Financial, NICK, and Global Payments, GPN.
Homebuilders, ITB, and associated retailers, LOW, HD, have likely completed their rally.
Its a likely end to the rise in Brazil Shares, TSU, TAM, CIG, ABV, ERJ, FBR, SBS, GBB, UGP, VIV, VALE, SID. An it is a likely end to the rise in Argentina Shares, ARGT.
The most capital of depleted stocks rose; these included retailer Sears, SHLD, and LED Manufacturer, CREE, rose strongly. US Preferreds, PFF, rose, to their likely finale high.
The charts of DVY, EWX, RZV, PKB, and IXG shows the topping out of Neoliberalism’s death rattle rally; these always make market turns together.
Since October 11, 2011, dividend payer Exxon Mobil, XOM, has steadily attracted investment and closed at 87. In the last ninety days it has gained almost as strongly as the small cap energy shares, PSCE, and has outperformed Chevron, CVX, and Energy, XLE, as is seen in the chart of XOM, PSCE, CVX and XLE. Its rise was responsible for the rise of S&P dividend SDY.
The most toxic of debt, Michigan Municipal Bonds, MIW, rose as did Junk Bonds, JNK, and Leveraged Buyouts, PSP.
Its was a carry trade day with the Yen, FXY, falling and the world currencies, DBV, and emerging market currencies, CEW, rising, making the US Dollar, $USD, UUP trade lower. The chart of the USD/JPY shows trading around 76.70 after hours.
Neoliberalism featured neo liberal finance where bankers profited from credit liberality. Gary of Between The Hedges relates Tages-Anzeiger reports Harvard University Professor Kenneth Rogoff said he sees a risk of more than 80% that at least one or two countries will leave the 17-member euro region in the coming years. "Greece, Portugal, Ireland and possibly also Spain are insolvent and need a restructuring of their debt." Rogoff also said it's "problematic" to think that the ECB "could create money with a magic act, purchase bonds of problem nations and hide them in a dark corner of its balance sheet." That's "a Ponzi scheme, which eventually collapses." He said European banks need "hundreds of billions of euros" of fresh capital.
Fiat money is dead. It died in July of 2011 when investors feared that a debt union had formed in the EU and fled world currencies, DBV, emerging market currencies, CEW, causing debt deflation in world government bonds, BWX, in September 2011, and emering market bonds, EMB, in January 2012. The debt of the insolvent sovereigns, the PIGS, will not be restructured in the traditional sense, nor can any fresh capital be raised.
The Euro, FXE, is a dead currency. It lives a zombie existence through lending support from the ECB. The death of currencies and the Euro in particular mean capitalism is dead. Investment capital is giving way to political capital, particularly economic diktat and political diktat, where diktat will now serve as a currency. EU leaders are going to waive national sovereignty and create a One Euro Government where the economy will be directed by monetary cardinals who work as fiscal, credit, manufacturing and resource stakeholders, for the security and stability of the Eurozone. Neoliberalism’s sovereign debt and banking debt will be applied to every man, woman and child in the Eurozone. The EU is going to be come a totalitarian collective where residents live in debt servitude.
Fate is operating to empower the Beast regime of Neoauthoritarianism to replace the Banker regime of Neoliberalism. This monster of statism and collectivism is rising from the profligate Mediterranean countries of Italy and Greece. The Beast’s seven heads are rising to occupy in all mankind’s institutions, and its ten horns are rising to govern in all of the world’s ten regions. The Beast regime is coming like a terminator that can’t be bargained with. It can’t be reasoned with. It doesn’t feel pity, or remorse, or fear. And it absolutely will not stop, ever, until mankind is totally dominated and subdued.
Out of sovereign armageddon, that is a credit bust and global financial collapse, Neoauthoritarianism’s ten toed kingdom of regional global governance is coming to rule govern the world.
In today’s news
Brookings Institute The Next President Must Solve the U.S. Deficit Crisis America is on the edge of a cliff.
MarketWatch reports Treasuries Fall
James Puplava, Financial Sense writes that it is financial repression that will lead to a bursting of the global sovereign credit bubble in article The Debt Supercycle Reaches Its Final Chapter We are now at a state where the sovereign bond market has grown to become the largest financial bubble in history; a bubble that could succumb to three potential market shocks.
The first type of shock would come from a spike in commodity prices triggered by additional rounds of quantitative easing. It could be as simple as an "act of God" such as an earthquake, tsunami, or the failure of an important agricultural crop. The bond market would react in fear that higher commodity prices would be absorbed in the price of goods and services via loose monetary policy.
A second shock could be triggered as a result of political instability and loss of confidence in government policy. An example is what is occurring right now in Europe regarding an attempt toward a fiscal union or the debt ceiling debate in the U.S. The bond market would view negatively a failure by governments to rein in spending and control their deficits.
The third shock would emanate from a potential default or restructuring of a sovereign debt that would lead to a domino effect in the banking system. A large international bank or group of banks might not be able to meet their obligations which would lead to a rise in fear of uninsurable losses among the banks or their counterparties.
As the bond market continues to expand through sovereign debt expansion and central bank monetization, it is moving further away from reality as a result of speculative activity. This makes sovereign debt extremely sensitive to any unanticipated event. The probability of another black swan or rogue wave is beginning to multiply; from a failed bond auction, to larger than expected deficits, to political rancor over spending cuts. Sovereign debt can no longer be looked upon as a risk free asset. For the reasons cited above I continue to avoid U.S. treasury debt as the rates of return bear no resemblance to reality or are commensurate with the risk they entail. Caveat emptor!
Financial Market Report for Thursday January 19, 2011