On Tuesday June 3, 2014, The 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, steepened, as is seen in the Steepner ETF, STPP, steepening. Credit Investments continued to trade lower on the exhaustion of the world's central banks' monetary authority, reflecting a historic inflection of one of the two components of fiat wealth.
Loss leading Aggregate Credit ETFs, AGG, of the day included EDV, TLT, EMB, LWC, MBB, LQD, and EMLC, reflecting that investors abandoned longer duration and the emerging market local currency debt.
Sectors, Social Media, SOCL, Semiconductors, SOXX, Automobile Dealerships, such as PAG, SAH, ABG, KAR, AN, KMX, LAD, Major Airlines, such as DAL, SAVE, UAL, traded higher; while Uranium Miners, URA, Solar Energy, TAN, and Resorts and Casinos, BJK, Railroads, and Trucking Companies, traded lower.
Nations, Thailand, THD, and Philippines, EPHE, traded higher; while Australia, EWA, Gulf States, MES, and Peru, EPU, traded lower.
Far East Financials, FEFN, and China Financials, CHIX, traded higher.
Yield Bearing Equity Investments, Australia Dividends, AUSE, Gulf Dividends, GULF, Mortgage REITS, REM, and Japanese Credit, IX, traded lower.
Closed End Funds, GCE, traded lower.
Southern Copper Corp, SCCO, is back to the level it was a year ago, as Economic By Design posts Copper Exchange Stocks Approaching Pre Crisis Levels. Having recovered, this is just one of many stocks that are candidates for short selling.
Since the first of the year running through the end of May 2014, the wise credit investor has been long duration and long the worst of debt, as is seen in the ongoing Yahoo Finance Chart of the Flattner ETF, FLAT, and Distressed Investments, FAGIX, Junk Bonds, JNK, Build America Bonds, BABS, Long Term Corporate Bonds, LWC, The Zeroes, ZROZ, and Defensive Stocks, DEF, trading higher.
The Guardian posts Mario Draghi Faces Moment Of Truth As Man With Power To Steady Eurozone The European Central Bank governor has charmed the markets with words. But this week he must make bold policy decisions to unite a region increasingly driven by economic disparities ... And Bloomberg posts Draghi Primes ECB as Inflation Scarcity Alarms Officials ... And Mark Dow of Yahoo's Daily Ticker says "There's no way out": Not much ECB can do to help Europe's economy,
Questions arise. Will the Benchmark Interest Rate, that is the Interest Rate on the US Ten Year Note, ^TNX, jump higher? Will European Credit, EU, tumble? Will Aggregate Credit, AGG, trade lower with Credit Investments across the board trading lower? Will the Euro, FXE, that took a hit in May 2014, on anticipation of Mario's Announcement Of ABS Purchases, take another hit? Will Equity Investments trade lower?
Equity Investments are headed lower for sure, as the ratio of World Stocks, relative to Aggregate Credit, that is VT:AGG, is topped out; with underlying credit investments selling off, Equity Investments are destined to sell off as well, as Sober Look posts Markets Now Expect Shock And Awe From The ECB. Unless we see "shock and awe" from the central bank, global markets will be quite disappointed.
World stocks, VT, and Eurozone Stocks, EZU, in particular are overvalued given the sell of the Euro, FXE, in May 2014.
The end of the pursuit of yield is at hand as "shock and awe" will not be forthcoming, and World Stocks, VT, Nation Investment, EFA, and Global Financials, IXG, will trade lower. Thus, fixed income investing will be a losing proposition, and Yield Bearing Investments, such as Dividends Excluding, DTN, will be led lower by debt trade investments such as Leveraged Buyouts, PSP, and carry trade investments such as Water Resources, PHO, and Global Utilities, DBU, and International Telecom, IST, as is seen in their ongoing combined Yahoo Finance Chart with the Zeroes, ZROZ.
Soon it will be global ZIRP no more, as the Bond Vigilantes continue to manifest, having seized the Bow of Economic Sovereignty, that is the Interest Rate on the US Ten Year Note, ^TNX, beginning in May of 2013, from the Creature from Jekyll Island.
Thus it is failure of credit, and the death of currencies, that will cause the death of fiat wealth, which is defined as the combination of equity investments and credit investments. And as such, the short selling opportunity of a lifetime, in equity investments, is now, at a stock market top . Better yet, an investment demand for gold will commence as investors seek safe investment in hard assets. One way to invest in gold is to start to dollar cost average into OUNZ, The Deliverable Gold ETF, in anticipation of an investment demand for gold, GLD..
With the trade lower in Credits Investments, seen in Bonds, BND, trading lower on June 2, and June 3, 2014, the world is passing through a historic inflection point where the investor, most importantly, the fixed income investor will be going extinct, and the nature of governance will be changing from the democracy of nation states to the fascism of sovereign regional leaders.
In bearish news Quartz posts The 35 Economic Charts From May You Really Should See