Financial market report for the week ending June 20, 2014
Financial market report for the week ending June 20, 2014
Fiat money is defined as the combination of Major World Currencies, DBV, Emerging Market Currencies, CEW, and Aggregate Credit, AGG.
Through the monetary policies of the world central banks and abundant choices of debt trade investing such as KATE, LAMR, and KR, and carry trade investing, such as MKTAY, PUK, NMM, money has become cheap, credit has become surreal, and wealth has become totally fiat.
The failure of money has commenced, as all three of its components are now trading lower from their market top highs. The death of sovereign currencies, such as the Euro, FXE, the Swiss Franc, FXF, the Swedish Krona, FXS, the Chinese Renminbi, CNY, and the Indian Rupe, ICN, communicates the soon coming beginning of extinction of all investors, specifically, the risk adverse investor, the risk purposeful investor, and the fixed income investor.
These are like the wooly mammoth, who was frozen instantly in place, by a rush of freezing air or water, as presented By John D. Keyser in Earth Rings and Frozen Mammoths.
A see saw destruction of the components of fiat wealth, these being Equity Investments, VT, Nation Investments, EFA, Banking Investments, IXG, and Credit Investments, AGG, is underway, on the failure of Sovereign Currencies, such as the Euro, FXE, the Swiss Franc, FXF, the Swedish Krona, FXS, and the India Rupe, ICN, trading lower in value.
One can follow the destruction of fiat wealth, coming at the call of the bond vigilantes, and the call of currency traders, with the use of this Finviz Screener of 50 Common ETFs.
Wealth can only be preserved by investing in and taking physical possession of gold bullion and by savings held in gold based Internet trading accounts such as Gold Is Money and Bullion Vault as in financial market trading on Friday, June 20, 2014, the stock market pivoted from a bull market to a bear market.
With the trade lower in Major World Currencies, DBV, and Emerging Market Currencies, CEW, coming on the June 5, 2014 Mario Draghi ECB mandate of NIRP and TLTR, pivoted the world from the age of credit and currencies and into the age of diktat and debt servitude.
The Mario Draghi ECB Mandate of June 5, 2014, for ZIRP and Targeted LTRO, together with the The June 21, 2014, Mario Draghi ECB Press Announcement, address secular stagnation, defined as low growth, low employment, low inflation, and the threat of economic deflation; and serve as the EU Economic Manifest, that is the Charter Call and Club, for Eurozone regional governance.
In the interview with Dutch newspaper De Telegraaf published Saturday, June 21, 2014, Draghi said "economic policy cannot be a purely national matter" because of the impact European countries' policies have on each other.
Much has been undertaken to close the gaps in Economic and Monetary Union, stricter budget rules and a banking union. Is everything now in place?
"The banking union is a major step forward in the direction of a more complete monetary union. The crisis has shown that the economic policies of one country have a clear impact on other countries. Economic policy cannot be a purely national matter. Where fiscal policy is concerned, a certain degree of Union-wide discipline is already given. But the marked imbalances between euro area countries are due to a lack of structural reforms in some countries. The next step to be taken is to subject structural reforms, too, to Union-wide discipline."
Current economic policy coordination in the euro area is merely a first step?
"Yes, indeed, it is merely a first step."
What will the second step look like?
"That is a matter for the political domain to decide. In the case of the budget agreements, sovereignty has been shared among Member States. That should also be done with respect to the labour market, competitiveness, bureaucracy, agreements on the internal market. Sovereignty needs to be shared at a level other than the national sphere. That is where I stop. Because now there are several options for politicians to choose from. You could grant greater powers to the European Commission, or to the Member States within the European Council, or you could create new European institutions. That is not for me to decide."
The contention of some politicians that EMU is complete is thus not correct?
"No, far more is necessary for a perfect monetary union."
Is a budgetary authority necessary at the euro area level, a fund for the compensation of weak countries?
"That is a highly political issue. Compliance with existing rules would be enough. But it is clear that my predecessor in office, Trichet, made a strong case for a budgetary authority."
The Mario Draghi ECB June 5, 2014, Announcement of NIRP and TLTRO, and the June 21, 2014, Press Conference Statement calling for a surrender of some sovereignty, comes to represent the important assertion of a unified experience, and serves as an early statement in the long process to establish Eurozone economic governance, where diktat provides seigniorage, that is moneyness, replacing democratic nation governance, and the traditional seigniorage of economic choice.
This inquiring mind asks will there be a Brexit? The UK has its own currency, and may be able to detach from growing German and Brussels control. John Mauldin suggests that Brexit Is But A Matter Of Time. Sooner or later the UKIP will take control in an act of sovereign self preservation. As elites gather to Harpsund, Sweden to decide who will be the next EU president, a firestorm is brewing as the consummate socialist insider Jean Claude Juncker anointment is being challenged by our friends in the UK. David Cameron can read the numbers and the UKIP shot across the bow has stiffened his spine in resisting the irresistible force of elites driving the process of gathering power to the central government in Brussels.
Most assuredly Jean Claude Juncker, is an elite insider, and the consummate European Federalist, who has a vision for a Federal Europe, and therefore will very likely be approved to be the next EU President.
The Friday, June 20, 2014, pivot from bull market to bear market is seen in Convertible Securities, CWB, topping out in value, as well as the 20 20 Target Date ETF, TDH, the International Quality Dividend Defensive, IQDE, and the S&P Buy Write, PBP, trading sharply lower.
The age of financialization and securitization is over, though, finished, and done, as is seen in the Proshares Short MSCI EAFE, EFZ, trading higher in value.
Peak wealth has been attained with Utilities, XLU, topping out; its 2.6% rise the week ending June 20, 2014, evidences that pursuit of yield investments has run its course.
And Global Integrated Energy, IPW, and Global Agriculture, PAGG, topping out, evidences the termination of defensive stock investing.
The Emerging Market Bear Market ETFs, EUM, EEV, and EDZ, traded higher on Friday June 20, 2014. The Emerging Market, EEM, sell off will soon proceed to become Developed Market sell off, as sovereign currencies trade lower on debt deflation.
Most of the Inverse Market ETFs, STPP, XVZ, EUO, YCS, MLPS, SAGG, DTYS, JGBS, GLD, GYEN, GEUR, GGBP, YXI, EUM, DOG, SEF, EFZ, DDG, PSQ, REK, MYY, RWM, are now trading higher, evidencing that peak wealth has been attained; these could be used as collateral for the basis of short selling.
Across The Curve posts Inflation Rears Its Ugly Head. Janet Yellen at her press conference last week dismissed concerns about higher inflation reading as "noise ". The Business Insider blog has a compendium of street research pieces which all comment on the nascent inflation problem and its possible impact on FOMC policy. For now the Fed is firmly focused on employment and is paying less attention to inflation.
The labor market remains less than robust and wage gains are stagnant.Until we see consistent wage gains which would foster spending which fosters revenue and net income and then the virtuous cycle fulfills itself via business investment it is hard to imagine that we get a sustained uptick in inflation.
The Bull Flattening of the 10 30 US Sovereign Debt Yield Curve $TNX:$TYX, came to an end on June 2, 2014, as is seen in Steepner ETF, STPP, steepening in value in June. The surge in Oil, USO, and the investment demand for Gold, GLD, as well as the failure of the government in Iraq and an enduring civil war in Ukraine, has not yet been priced into inflation; there has only been a tiny rise in the ratio of Long Term Tips. LTPZ, to US Ten Year Notes, TLT, that is in LTPZ:TLT.
The Bear Steepening that commenced in early June 2014, continued the week ending June 20, 2014, as The 30 Year US Government Bonds, EDV, The 10 Year US Government Notes, TLT, and Long Duration Corporate Bonds, LWC, traded lower. Risk Free Credit, FLOT, traded to a new all time high.
Awesome inflation, inflation beyond the imagination of most is coming very soon as investors derisk out of debt trade investments and deleverage out of currency carry trades and as the Bond Vigilantes call interest rates world wide in response to the turmoil which is coming as the International Reserve Currency, that is the US Dollar, literally dissolves into diktat money, that is the mandates of regional fascist leaders, designed to establish regional security, stability, and sustainability.
The peaking out in risk assets comes with rising headline inflation, has produced an investment demand for Gold, GLD, and Silver, SLV. The demand for safe assets, that is gold and silver, is seen in the rallying value of gold relative to sovereign currencies, and is presented in the ongoing Yahoo Finance chart of the ETFs, GLD, GYEN, GGBP, and GEUR.
Finviz Screeners listing short selling opportunities.
Global Utilities And International Telecom Stocks, such as PHI
EUR/JPY Carry Trade Investments, such as TRNX
Railroads, such as TRN
Shippers, such as NMM
Truckers, such as PTSI
Global Producers, such as LYB
Diversified Industrial Manufacturers such as CLC
Aluminum Producers, such as AA
Dig And Dirt Moving Stocks, such as IR
Industrial Electrical Equipment Manufacturers, such as ETN
Paper and Packaging Producers, such as KS
Automobile Stocks, such as TSLA
Semiconductor Stocks, such as NXPI
Rental And Leasing Companies, such as HEES, and URI
Fracking Companies, such as BAS
Property Management Companies, such as Z
Real Estate Development Companies, such as JOE
Hotel REITS, such as LHO
Premium REITS, such as SBAC
Leading S&P 500 Companies, such as HAL, COP, FDX, JNJ, TAP, PPG, MSFT, VZ
The Top Ten Energy Producers such as FANG, and CRZO
Manufactured Housing, such as CVCO,
50 Inflated Stocks, such as SMFG
50 More Inflated Stocks, such as CELG,
Peak Prosperity posts Why The Next 20 Years Will Be Completely Unlike The Last 20