Peak Credit Achieved ….. Stocks Trade Lower As The Age of Investment Choice Transitions Into The Age of Diktat ….. On US Job Market And Service Businesses Weakness As Well As Fears Of Eurozone Sovereign And Banking Insolvency … Capital Controls Will Eventually Be A Reality

Financial Market Report for April 5, 2013

1) … Introduction: There is a God, that is an eternal spiritual being, whose nature is love, who exists in light, and operates with dynamic power in an electrical and physical universe; sound ideas are scarce, that is in using the general sense of the word, genuine and reliable wisdom and knowledge is limited, as God works to enlighten who He chooses, and works his dispensation, that is economic and economic plan, through the sovereign authority of His Son, Jesus Christ.

 

All things in the universe are governed by sovereign authority and operate by isms, that is processes, such as dispensationalism, liberalism, authoritarianism, crony capitalism, european socialism, Greek socialism, regionalism, etc.  A dispensation is a period of time during in which Christ works God’s will to completion, that is fulfillment.

 

Dispensationalism, is the ideology that Jesus Christ, God’s Son, is the power of God, 1 Corinthians 15:24, and He having all sovereignty, and being the all Sovereign One, Colossians 2:10, is in charge of the administration, that is the management, of all things, Ephesians 1:10, Ephesians 3:2, Ephesians 3:9, Colossians 1:25, and presents that He created Liberalism, as an age where trust in credit produced prosperity.

 

Strong’s Greek word oikonomia, #3622, dispensation, literally means household dispensing, household stewardship, household management and economic oversight of property. Dispensations are epochs, ages, and time periods of mercy and judgement.

 

MB-Soft relates Dispensational theology grows out of a consistent use of the hermeneutical principle of normal, plain, or literal interpretation. This principle does not exclude the use of figures of speech, but insists that behind every figure is a literal meaning. Applying this hermeneutical principle leads dispensationalism to distinguish God’s program for Israel from his program for the church. Thus the church did not begin in the OT but on the day of Pentecost, and the church is not presently fulfilling promises made to Israel in the OT that have not yet been fulfilled.

 

The greatest idea of all is that there is a God who operates with eternal power Romans 1:20, that He is Love, John 15:9 1 John 4-8-10, and that He is Light, Luke 1:79, John 3:19, John 8:12, John 12;46 and 1 John 1:5, and that in Him all live and move and have their being, Acts 17;28.

 

The New Testament is God’s most recent, and therefore most relevant and direct communication; it establishes the Present Truth, which suggest that there was a Past Truth consisting of such things as 1) The Law, spiritual precepts for personal obedience, 2) The Priesthood, agents of spiritual sacrifice, 3) God’s Holy City, Jerusalem, 4) The Temple, God’s dwelling place, and 5) A Name by which God was called and in which people had identity and experience, Jehovah.      

 

In the fullness of time, Christ came; unrest in area surrounding Jerusalem, led the Romans to make Herod The Great, “King of the Jews”, Matthew 2:1-2.

 

There are many ideas as to what constitutes good news. The Bible, God’s Scripture, presents the Gospel, consisting of the Gospels, the Acts of the Apostles, and the Epistles, as the best of news, which reveals that there are three distinct persons in The Godhead, Colossians 2:9. The first two are identified as the Father, and the Son, Colossians 1:2-3, and the third is the Holy Spirit.

 

The object of the Gospel is to bring forth ideas based upon God’s Will, so that one might be filled with heartfelt wisdom and intellectual knowledge, Colossians 1:9, to have conduct pleasing God and to bear spiritual fruit, Colossians 1:10, as well as to live a life of empowerment with all endurance, long suffering and joy, Colossians 1:11.  

 

There is no meritocracy by which one earns God’s favor, rather God, by His choice qualifies one and allots one enlightment, Colossians 1:12.

 

God the Son is the express image and likenes of God, who has material form in the Godhead. He is preeminent before all of creation, Colossians 1:15.   

 

In God the Son, all things were created, all sovereignty is appointed by Him, and all things serve Him, Colossians 1:16.  All things cohere in Him, Colossians, 1:17.

 

Christ resides in the believer, Colossians 1:27, and makes known to that believer the ideas of God, which constitute spiritual heartfelt wisdom and intellectual knowledge, Colossians 2:2-3.   

 

Competing against Christ are fiat ideas, that is ideas which come out of philosophy and religion, Colossians 2:8.  Such things constitute will worship, that is the worship of one’s own will, Colossians 2:23.

 

Christ constitutes life and when He appears, those who exist by faith in Him, will be glorified, Colossians 3:3-4.

 

The Son offered Himself as a sacrifice for sin, that is doubt, and provides freedom for all trust in Him; this provides one to experience the only right there is as put forth in John 1:12, “But as many as received Him, to them He gave the right to become children of God, to those who believe in His name.”

 

The Spirit came at Pentecost to present spiritual truth for the church age, with an unfolding of that truth coming through the Apostles, God’s sent ones.

 

The Acts of the Apostles was written by the historian and physician Luke to give a record of the apostles’ ministry, and to introduce sound spiritual doctrines, such as the election of grace, beginning with the idea that God appoints the very times and places in which one should live, Acts 17:26.

 

Reliable ideas are scarce, 1 Corinthians 15:34.

 

God delights in mysteries, that is unknown knowns, which He reveals to believers in Christ, Ephesians 1:8-9.  One of these mysteries, is that God has appointed Jesus Christ as His plan administrator, and that Christ operates in dispensations, that is administrations, for the fullness, that is for the completion of every age, epoch and time period, that Christ be sovereign in all things, Ephesians 1:10-11. So that the believer has an inheritance, being predestinated according to the purpose of God who works all things according the the purpose of His will, which excludes any meritocracy or self choice on the part of the believer in Christ, Ephesians 1:12.

 

Reality exists in Christ, spiritual truth is exclusive to Christ, Ephesians 4:21.

 

The Apostles made known the Present Truth, 2 Peter 1:12.  It presents that those in Christ have devine experience as they trust in God’s promises, 2 Peter 1:1-4. And for this reason, one adds the seven elements of divine nature living to one’s faith, so that one be fruitful and not barren in one’s knowledge of Christ, as well as to make one’s calling and election a genuine personal experience, not stumble, and have a broad entrance at heaven’s gate, 2 Peter 1:5-11. Not only does one have devine experience by trusting in God’s promises, but one also one has Christ as one’ all inclusive life experience Colossians 3:11.      

 

2) … On Monday April 1, 2013, Stocks, Currencies, and Bonds, traded lower, on the failure of junk bonds, consumer and small business credit services and regional banking.  

The Risk On ETN, ONN, traded lower, and the Risk Off ETN, OFF, traded higher, indicating that risk on investment has turned to risk off investment, as the toxic credit that was taken in by the US Fed under QE1, and high yield debt and junk bonds, that have financed corporate buybacks and corporate expansion, consumer and small business finance, and regional banks which provide credit of all types, as well as all yield bearing investments traded lower.  

 

The trade lower in Ultra Short Loans, FLOT, communicates the beginning of the end of credit.  Another word for credit is trust; investors no longer trust that the world central bank monetary policies of debt monetization are able to stimulate global industrial production and world trade. The US Infrastructure Stocks, PKB, that have been at the very center of a safe haven trade, away from eurozone debt issues, traded lower.  Another indicator of the end of credit is the divergence between the Russell 2000 and the S&P as seen in Bespoke Investment Group chart. The Small Cap US Shares, IWM, are highly dependent upon low cost financing for inventory replenishment, cutting payroll checks and running accounts payable.    

 

Most ominously it’s the dividend yielding stocks, excluding financials, DTN, that has supported investment growth over the last two years, trading lower on the day. And of note, the Assets Managers BLK, WDR, EV, STT, WETF, and AMG, seen in this Finviz Screener, traded lower, suggesting that these financial wizards are no longer able to coin wealth. Confirmation that a bear market is underway comes from Dow Theory, which holds that when Transports, IYT, and Industrials, IYJ, trade lower together, from a market high, that a bear market is underway.  Another indicator that a bear market is underway is that the Closed End Stock Fund, CSQ, traded lower, and it no longer leverages higher over the Closed End Debt Fund, PFL, as is seen the chart of CSQ:PFL.

 

Sectors trading lower included

Small Cap Energy PSCE, -2.5%

Metal Manufacturers, XME, seen in this Finviz Screener, -2.5%, AZZ, RS, VMI, WOR,

Rare Earth Manufacturers, REMX -2.5%

Semiconductors, XSD, -2.5%, CREE, SUPX, MU, NXPI, FXI, SMTC, ADI, ONNN, MXIM,

Copper, COPX, -2.2%, Coal, KOL, -2.0%, Industrial, PICK, -1.9%, and SIlver Miners, -1.6%

Steel, SLX, -2.2%

China Industrials, CHII, -2.2%

US Infrastructure, PKB, -2.0%, ARII, AMWD, AXLL, MWA, AOS, MTZ, EME, TREX, NPO, CBI,

Transportation, XTN, -1.9%

Small Cap Industrials, PSCI, -1.7%, HEES, AIT, MTW, DXPE, AEPI,

Automobiles, CARZ, seen in this Finviz Screener,-1.7%

Regional Banks, KRE, seen in this Finviz Screener, -1.7%,  

Diversified Equipment Manufacturers, seen in this Finviz Screener, -1.6 %, CFX, HUB-B. FLX, IEX

Industrial Electrical Equipment Manufacturers, seen in this Finviz Screener, -1.6%, ROK, BDC, LFS,

Home Builders, ITB, -1.6%

Global Industrial Providers, FXR, -1.5%, in this Finviz Screener, WHR, KUB, LPL, LYB, QCOM,

Small Cap Revenue, RWJ, -1.6%

Energy Service, IEZ, -1,6, and OIH, -1.4%

Casinos, BJK, -1.4%, BYI,

Dynamic Media, PBS, -1.4%

Consumer and Small Business Credit Services seen in this Finviz Screener, -1.3%.

Asset Managers seen in this Finviz Screener, -1.3%

IPOs, FPX, finally traded lower, -0.5%

 

Interest bearing sectors trading lower included International Small Cap Dividend, DLS, -1.6%, Dividend Excluding Financials, DTN, -0.5%, Water Utilities, PHO, Shipping, SEA, and International High Yield Bonds, IHY.

 

The Russell 2000, IWM, which are highly sensitive to falling regional bank shares, -1.6%, led US Stocks, VTI, -0.5%, Nasdaq 100, QTEC, -1.7%, Nasdaq Large Caps, QQQ, -0.6%, S&P, SPY, -0.4%, European Stocks, VGK, -0.5%, Asian Stocks, EPP, -0.5%, and World Stocks, VT, -0.5% lower. With the trade lower in the S&P 500, $SPX, SPY, -0.4%, these large cap shares are falling from at an Elliott Wave 5 High; the Business Cycle is complete; inflationism is turning to destructionism; the world is entering Kondratieff Winter, which will see all existing political and economic life eventually  destroyed.

 

Japanese Banks, such as NMR, and MTU, led Japan Small Cap, JSC, -5.2%, The Nikkei, NKY, -2.6%, Greece, GREK, -1.4%, Italy, EWI, -1.4%, Spain, EWP, -1.3%, Egypt, EGPT, -1.3% Nation Investment, EFA, -1.4% and Small Cap Nation Investment, IFSM, -1.1%,, lower. Of note, the Philippines, EPHE, traded lower from a second blow off top, and Ireland, EIRL, and New Zealand, ENZL, traded lower from rally highs.  

 

The US Dollar, $USD, -0.3%, and the 200% US Dollar, UUP, -0.4% traded lower. The Optimized Carry Trade ETN, ICI, traded lower as The Japanese Yen, FXY, rose +0.8%, leading the Euro, FXE, the British Pound Sterling, FXB, the Swiss Franc, FXF, the Chinese Yuan, CYB, the Brazilian Real, BZF, and the Indian Rupe, ICN, higher. Major World Currencies, DBV, -0.5% and Emerging Market Currencies, CEW, -0.2%, lower.  

 

Distressed Investments, FAGIX, -0.1% which constitute the investments taken in by the US Fed under QE1, Junk Bonds, JNK, High Yield Corporate Debt, HYG, traded lower, taking Bonds, BND, lower, communicating the beginning of the end of corporate debt funding as well as stock buybacks.  

 

A tectonic geopolitical and economic shift has commenced. The global economic paradigm of Liberalism has passed through a pivot point and the world is now entering Authoritarianism, as the world central banks monetary policies of debt monetization and ZIRP, have crossed the rubicon of sound monetary policy, resulting in the exhaustion of monetary expansion.

 

The Apostle Paul writes that Jesus Christ is at the helm of the Economy of God, Ephesians 1:10. He has been expanding credit globally through the Fed’s QE 1 through 4, the ECB’s OMT, the BoJ Unlimited Easing, and PBOC monetary injections to expand both money and credit to its greatest capability. Ambrose Evans Pritchard writes Helicopter QE will never be reversed.  It is not liquidity management as claimed so vehemently at the outset; it really is the same as printing money.  

 

Evidence of peak credit expansion comes from the CNN report Credit card delinquencies reach 18 year low.

 

Peak money was achieved on March 14 2013, when word stocks, VT, traded lower. And Peak credit was achieved on April 1, 2013, when junk bonds, JNK, consumer and small business credit service providers and regional banks traded lower. Evidence of peak credit expansion comes from the CNN report Credit card delinquencies reach 18 year low.

 

Jesus is commencing the destruction of credit on Eurozone sovereign and banking insolvency, and on exhaustion of the world central banks monetary authority, the result being the inability to stimulate corporate profitability and global trade, as is seen in European Stocks, VGK, and the European Financial Institutions, EUFN, trading lower, which have turned World Banks, IXG, and the Asset Managers, BLK, WDR, EV, STT, WETF, AMG, seen in this Finviz Screener, and the Consumer and Small Business Credit Service Companies, such as V, MA, DFS, AXP, seen in this Finviz Screener, as well as Junk Bonds, JNK, and High Yield Corporate Bonds, HYG, lower in value.

 

World Stocks, VT, traded lower once again on April 1, 2013, as the Age of Credit transitioned into the Age of Debt Servitude. Money, that is wealth died, on the failure of the Milton Friedman Banker Free To Choose Floating Currency System, as is seen in the Major World Currencies, DBV, and Emerging Market Currencies, CEW, trading lower in value.  The Beast Diktat Money System is rising from the Mediterranean Sea sovereign and banking debt crisis, as foretold in Bible Prophecy of Revelation 13:1-4. where a minotaur of regional governance will govern in the world’s ten regions and occupy in totalitarian collectivism and debt servitude in all of mankind’s seven institutions.  

 

The world central banks’ policies of debt monetization, which served for years to expand credit and grow investments, as well as promote global growth and trade, have finally made all forms of fiat wealth, that is Stocks, VT, Commodities, DBC, Bonds, BND, and now Currencies, such as the Euro, FXE, and  the Australian Dollar, FXA, untrustworthy.  Gold and the diktat of sovereign regional leaders and sovereign regional bodies, such as the ECB and the EU Finance Ministers, will be rising from the ashes of nation investment, EFA, IFSM, to become sovereign wealth. The new age of collapsing central bank monetary authority will create an investment demand for gold, $GOLD.     

 

Inflationism is turning to destructionism as the dynamos of global growth and corporate profitability, that have underwritten crony capitalism and eurozone socialism are winding down; and the dynamos of regional security, stability, and sustainability, are winding up, establishing regionalism. The world is passing from being a credit and carry trade banker centric world, to a diktat and regional governance centric nannycrat world, as is seen in the NYT report Troika sets tough terms for Cyprus bailout.

 

The world has passed through Peak Toxic Credit, as is seen in the chart of Fidelity Investments Mutual Fund FAGIX, topping out and trading lower. This mutual fund contains the most distressed of investments, which were taken in under QE 1 and exchanged for “money good” US Treasuries, which were returned to the Fed and are now classified as Excess Reserves. The banks really do own the US Treasuries residing at the Fed, but will not, repeat not be selling them at any time. And indeed for a while as stocks, VT, trade lower, Government Bonds, TLT, EDV and ZROZ,  will be increasing in value before they too fall dramatically lower in value. Very soon the largest of banks will be integrated with the Fed, and be known as the Government Banks, or Govbanks, for short.

 

News reports herald the death of credit; these include the Reuters report Italy sovereign spread rise hurts firms fast, IMF working paper relates.

 

With the failure of credit, the nature of banking and investment will change. The Too Big To Fail Banks, RWW, will no longer serve to provide credit, market financial instruments, and help to procure real estate, but rather will be participating in statist governance, by becoming one with government in public private partnerships for management of debt and overseeing ongoing economic activity. The Too Big To Fail Banks, such as JPM, BAC, C, KEY, and BK, will exist as Big Enough To Help Govern. The same will be true in the Eurozone, where the European banks, will be unified into a One Euro Government, as leaders meet in summits to waive national sovereignty and pool sovereignty regionally, and announce regional framework agreements which establish EU regional governance.

3) … On Tuesday, April 2, 2013, Consumer Staples, Health Care Providers and Real Estate rose strongly, taking the S&P to a new rally high; World Stocks, rose, but traded below their recent high.

The chart of the S&P 500, $SPX, SPY, shows a new rally high, on April 2, 2013, due largely to Consumer Staples, KXI, seen in this Finviz Screener, Health Care Providers, IHF, such as Cigna, CI, and Real Estate, IYR, such as FNIO, IFGL, KBWY, REZ, Services, such as FIS, FISV, Telecom, IST, such as V, S, VZ,  and Paper Producers, WOOD, such as IP, BLL, PKG, rising strongly …  Countries, Mexico, EWW, New Zealand, ENZL, and Turkey, TUR, rose to new rally highs …  Consumer Discretionary Stocks, IYC, seen in this Finviz Screener, traded to a new high … And Nasdaq Biotechnology, IBB, seen in this Finviz Screener, also traded to a new high … Sectors trading lower included the following: Gold Miners, GDX, -4.3% Silver Miners, SIL, 3.3%, Uranium Miners, URA,-1.8% and Copper Miners, COPX, -1.6%,  Metal Manufacturing, XME, -2.8% and Steel Producers, SLX, -2.5%, Semiconductors, XSD, -1.8%, Energy Production, XOP, -1.8%, Small Cap Energy, PSCE, -1.6%, and Energy, XLE, -0.6%, Regional Banks, KRE, -0.8% and Small Cap Pure Value, RZV, -0.6.

 

It has been the pursuit of high yielding investments that drove the S&P, SPY, to its rally high, these include Pharmaceuticals, XPH, Utilities, XLU, International Telecom, IST, such as A, and VZ,  Residential REITS, REZ and Premium REITS, KBWY, such as HPT, and is reflected in the closed end real estate equity fund, IGR, racing to a new high.

 

The pursuit of yield bearing financial instruments reflects the support of real estate assets directly by US Fed Reserve intervention as certain facilities within its QE initiative, its stated purpose of purchasing Mortgage Backed Bonds, MBB, its overall ZIRP initiative, and its monetary expansion policy, which created money, as seen in M2 money peaking recently. The Fed’s magnetic pull on the markets is seen most clearly in International REITS, IGFL, being drawn up strongly, as presented in this ongoing Yahoo Finance chart of IYR, FNIO, IFGL, KBWY, REZ, and IGR. Said another way the final rally in the S&P 500, SPY, is a grand final climax of US Federal Reserve Monetary Policies which reflects the AP report U.S. home prices rose in February by most in 7 Years.

 

Peak US Federal Reserve Monetary Authority is seen in Financial Preferred, PGF, and Senior Bank Loans, BKLN, rising to rally highs, in Leveraged Buyouts, PSP, topping out March 14, and in both High Yield Corporate Bonds, HYG, and Junk Bonds, JNK, topping out March 28. The bedrock of US Monetary Policy that has underwritten investment in US large Cap Stocks, SPY, has been investment in Distressed Investment, such as those traded in Fidelity Mutual Funds, FAGIX, which were taken in by the Fed, in exchange for “money good” US Treasuries under QE1; these traded lower in value on March 28, 2013.  

 

Yield bearing stocks, DTN, have been the foundation of investment in the S&P 500, SPY, as well as the foundation of investment in Global Industrial Producers, FXR, which peaked March 28, 2013, as is seen in their ongoing combined Yahoo Finance Chart.  Dividend Growth, VIG, peaked April 2, 2013, on the climax of the world central bank’s monetary authority.

 

The S&P 500, $SPX, SPY, peaked April 2, 2013, not only on the exhaustion of the world central banks’ monetary authority, but also on rising fears of eurozone sovereign and banking insolvency, the latter will be the albatross, that is the dead bird, that investors just will not be able to get off their neck, and will terminate not only the rally in the S&P 500, SPY, but the rally in the Global Industrial Producers, FXR, such as GE, ITW, BA, IR, IP, NVS, WHR, KUB, LPL, LYB, QCOM, as well.   

 

The full value of “money good” fiat financial assets has been achieved.  Monetary expansion of the world central banks’ monetary authority has fully expanded; the rally in US Stocks, VTI, was completed April 2, 2013. Jesus Christ acting as God’s dispensation manager, that is economic and political manager, Ephesians 1:10,  has made the age of investment choice is fully complete.

 

The age of Inflationism is history; and the age of Destructionism is commencing. Nation Investment, EFA, and Small Cap Nation Investment, IFSM, turned lower when European Financials, EUFN, broke lower on March 14, 2013. World Stocks, VT, also climaxed, March 14, 2013.   The ratio of closed end equity, CSQ, relative to closed end debt, PFL, CSQ:PFL, traded decisively lower indicating that stocks are unable to leverage higher over debt.

 

Peak Prosperity was achieved on April 2, 2013, when Peak Credit came in with Creditors, AXP, V, MA, DFS, topping out in value, and High Yield Corporate Debt, HYG, and Junk Bonds, JNK, and with US Large Cap Stocks, SPY, as well US Stocks, VTI, topping out in value.  With Money, that is Wealth, VT, and Major World Currencies, DBV, having peaked, an investment demand for Gold, GLD, will commence when investors fear that Government Debt, TLT, EDZ, and ZROZ, is unsustainable and that Capital Controls are coming.

 

Jesse’s Cafe Americain asks Are all G20 bank depositors exposed to a Cyprus style seizure?  Ellen Brown relates Bank confiscation scheme for US and UK Depositors. And Cliff Kule relates How the US is planning the Cyprus Approach. And 24th Gold reports Danger in bank accounts. And Bloomberg reports Head of Italy’s UniCredit Says global rule needed to bail in big deposits.

 

Spot Gold, $GOLD, traded lower to $1575. Wealth will increasingly be preserved by physical ownership of gold, in bullion coins, and in global trading forms, that is in Internet trading vaults, such as BullionVault.      

 

4) …. On Wednesday April 3, 2013, Stocks traded lower after reports showed signs of weakness in the US job market and service businesses.  

World Stocks, VT, traded -1.1% lower as the Risk Off ETN, rose, and the Risk On ETN, traded lower, as AP reported Stocks slip after weak reports on hiring, services, and CNBC ADP says job creation declining. The S&P, SPY, traded -1.0% lower and the Russell 2000, IWM, -1.6%, lower.

 

Industrial and Mining sectors declined included  

Gold Miners, GDX, -4.5%,  Silver Miners, SIL, -3.7%

Uranium Miners, URA, -2.9%, Copper Miners, COPX, -2.6%, Rare Earth Miners, REMX, -2.6%

Industrial Miners, PICK -2.0%,

Metal Manufactuers, XME, -1.8%,

Global Industrial Producers, FXR, 1.5%, Small Cap Industrials, PSCI, -1.5%

Diversified Industrial Manufacturers seen in this Finviz Screener, -1.1%

Industrial Electrical Manufacturers seen in this Finviz Screener, -1.2%

 

Energy sectors declining included

Dynamic Energy, PXE, -3.0%, Small Cap Energy, PSCE. -2.8%

Natural Gas Producers, FCG, -2.2%

Energy Service, OIH, -2.1% , Energy Service, IEZ, -2.1%

Energy Production, XOP, -2.1%, Energy, XLE, -1.7%

 

Global sectors declining included

Home Building, ITB, -3.0%

US Infrastructure, PKB, -2.8%

Solar Energy, KWT, -2.5%

Design Build, FLM, -2.5%

Semiconductors, XSD -2.3%

Paper Producers, WOOD, -1.9%

Semiconductors, XSD, -1.9%

Internet Retail, FDN, -1.5%

Dynamic Media, PBS, -1.7%

US Health Care Providers, IHF -1.5%

IPO’s, FPX, -1.5%

Nasdaq Biotechnology, IBB -1.5%

Casinos, BJK, -1.2%

Consumer Services, IYC, -1.0%

 

Banking sectors declining included

National Bank of Greece, NBG, -7.05

Chinese Financials, CHIX, -2.3%

Too Big To Fail Banks, RWW, -2.2%

Small Cap Revenue, RWJ, -1.8%

Banking, IXG, -1.5%

Regional Banks,KRE, -1.5%

Eurozone Financials, EUFN, -1.2%

 

Credit Providers seen in this Finviz Screener traded lower, -2.4%

 

Business Service Providers seen in this Finviz Screener traded lower, 1.7%  

 

Yield bearing sectors declining included

Shipping, SEA, -1.7%

Alerian Partnerships AMJ, -1.5%

North American Energy Partnerships, EMLP, -1.5%

Premium REITS, KBWD, -1.5%

Chinese Real Estate, TAO, -1.2%

Small Cap Real Estate, ROOF, -1.1%

Mortgage REITS, REM -1.2%

Dividends Excluding Financials, DTN, -0.9

Dividend Growth, VIG, -0.7%

 

Countries declining included

India, INP, -2.6%

Russia, RSX, -2.0%

Canada, EWC, -2.0

Australia, EWA, -1.5%

China, YAO, -1.7%

South Africa, EZA, -1.7%

Mexico, EWW, -1.5%

US Real Estate, VTI, -1.0%

Netherlands, EWN, -0.3, Spiegel Online reports The Netherlands falls prey to economic crisis. The Netherlands, Berlin’s most important ally in pushing for greater budgetary discipline in Europe, has fallen into an economic crisis itself. The once exemplary economy is suffering from huge debts and a burst real estate bubble, which has stalled growth and endangered jobs.

 

Small cap countries declining included

Indonesia Small Caps, IDXJ, -2.1%

Russia Small Caps, ERUS, -2.1%

Thailand, THD, -2.0%

Argentina, ARGT, -2.0%

Australia Small Caps, KROO, -2.0

Egypt, EGPT, -1.9%

Vietnam, VNM, -1.8%

Turkey, TUR, -1.9%

Small Cap India, SCIN, -1.7%

Poland, EPOL, -1.7%

China Small Cap, ECNS, -1.6%

Ireland, EIRL, -1.6%

Russell 2000, IWM, -1.6%

 

Debt trading lower included, Corporate High Yield Debt, HYG, -0.0, Junk Bonds, JNK, -0.0, Senior Banks Loans, BKLN, -0.4%, Leveraged Buyouts, PSP, -0.6%, Distressed Investments, FAGIX, -0.2%

 

5) …. On Thursday, April 4, 2013, Japan announced a new unprecedented monetary policy to devalue its currency, this sent the Nikkei, and US Government Bonds, blasting higher.

The chart of the Yen, FXY shows a 3.5% drop in just one day, which induced the Euro, FXE, to rise higher to 128.28, the Swiss Franc, FXF, to 104.57, and the British Pound Sterling, FXB, to 105.56, and  causing the Major World Currencies, DBV, to blast higher to 27.38.  The chart of the Nikkey, NKY, shows a 3.5% crack up asset boom blast higher;  Japanese Banks rose strongly, SMFG, 10%, NMR, 9%, MFG, 9%, and MTU, 8%; all on Mr. Kuroda’s “shock and awe” opening salvo. US Government Bonds, that is the US Ten Year Notes, TLT, the 30 Year US Government Bonds, EDV, and Zeroes, ZROZ, seen in their combined chart, blasted higher.   

 

Reuters reports BOJ to pump $1.4 Trillion into economy in unprecedented stimulus.  The Bank of Japan unleashed the world’s most intense burst of monetary stimulus on Thursday, promising to inject about $1.4 trillion into the economy in less than two years, a radical gamble that sent the yen reeling and bond yields to record lows.

Ambrose Evans Pritchard writes Japan makes history with monetary blitz. The Bank of Japan has launched the most daring monetary experiment of modern times, aiming to double the money base within two years to overpower deflation and catapult the economy out of slump.

Nature Economist Elaine Meinel Supkis writes Bank of Japan will double money printing/risky debt bond holding.

The Globe and Mail of Toronto reports Japan’s central bank enters bold ‘new dimension’ of monetary policy.

Nasdaq reports BoJ has announced staunch new easing policies aimed at reflating the economy. The Bank of Japan is clearly backing up the rhetoric of the past six months with new easing measures. First of all, the Bank of Japan is set to increase asset purchases to seven trillion yen, or more than $73 billion, per month in bonds and will increase the monetary base some 50 percent by this time next year and expects to double bond holdings in two years. For comparison, the most the Fed has increased the monetary base in one year is about 20 percent.

However, asset purchases are just one of the many policy tools announced overnight. The Bank of Japan first has announced that it will extend the average maturities of its bond holdings to seven years from three years, giving it the leeway to purchase longer dated bonds. Also, the Bank of Japan is switching its policy target to targeting the size of the monetary base from targeting an overnight borrowing rate, a very strong indication that easing efforts will be strong.

The Bank of Japan also announced that it will merge its two asset purchase programs into the quantitative easing to make purchases more clear to markets. The Bank followed this by announcing that it is temporarily suspending the Bank Note Rule, with a view to permanently suspend the rule, and also announced that QE will continue until inflation reaches two percent, ideally in 2 years time.

For reference, the Bank Note Rule was a self-imposed rule on the Bank of Japan upon its creation to make sure that the BoJ’s balance sheet did not become over-leveraged. Effectively, the rule limits the amount of bonds the BoJ can hold to the amount of currency in circulation. However, by abolishing the rule, the BoJ can effectively lever itself up and buy more bonds

Austrian Economist Benton te reports BoJ’s Kuroda’s Opening Salvo: 7 trillion yen ($74 billion) of Bond Purchases a Month.  In pursuit of Shinzo Abe’s parlous economic policies popularly known as Abenomics, Bank of Japan’s new chief, former ADB head Haruhiko Kuroda began his term with a baptism of fire. While Abenomics may create a short term boom, this will be equivalent to an economic Hara-Kiri in the fullness of time as Abenomics magnifies the risks of a debt, or if not a currency crisis. The worst is that the BoJ’s inflationism amplifies the risks of war.  As I pointed out in the past this hasn’t been about the strong yen (or deflation), which Japanese officials use as smokescreen, but “about saving the banks and financial institutions who constitutes as the major financiers or creditors or owners of Japan’s Government Bonds (JGBs)”.  Nonetheless the aggressive deployment of asset purchasing will bring BoJ’s balance sheet to the levels of her western counterparts.  As fund manager Axel Merk of Merk Investment warned, BOJ governor Kuroda will unveil which tools from his toolbox he may deploy. We refer to it as monetary madness because we don’t see how this can have a good ending for Japan, the yen, or the world. Japan has a $6 trillion economy, more than 200 times that of Cyprus. Should the market express its discomfort with Japan’s policies, there will be ripple effects to global markets. For now, the most direct implication is that we are rather negative on the yen. But don’t kid yourself: there may not be a place to hide, there may not be such a thing anymore as a safe asset. We have long argued that investors may want to take a diversified approach to something as mundane as cash. Given precarious Japan’s debt position, Mr. Kuroda’s embrace of “Abenomics” is like playing with fire…where everyone gets burned.

 

Emily Gosden of The Telegraph reports Europe faces slow death while Japan is trying to escape, Soros relates. George Soros, the billionaire investor, said Europe is adopting the same policies that led Japan into a quarter of a century of “slow death” that it is desperately trying to escape with “dangerous” new monetary expansion.

 

Doug Noland write Kuroda Leapfrogs Bernanke.The Bank of Japan, BOJ, announced the Japanese version of “Do Whatever it Takes.” What commenced during the Greenspan era as central planning of pegged interest-rate and market liquidity backstops, later evolving to ever-expanding crisis-period bailouts, market interventions and debt monetization, has escalated to an unprecedented global free-for-all of monetary inflation and debt purchases in a non-crisis environment. Amazingly, the Japanese, with 4.3% unemployment and approaching 25 years since the bursting of their Bubble, somehow succeeded in leapfrogging the Bernanke Federal Reserve.

 

A few notable Kuroda quotes courtesy of Dow Jones: “This is an entirely new dimension of monetary easing, both in terms of quantity and quality… I will not use my fighting power in an incremental manner… Our stance is to take all the policy measures imaginable at this point to achieve the 2% target in two years.”

 

“Charles Evans, president of the Chicago Fed, called the move ‘pretty aggressive’, adding:’ ‘I certainly hope that every foreign central bank around the world is able to adopt policies that ultimately lead to the most vibrant economies that those economies can have because we need it around the world.'”

 

Leika Kihara and Stanley White of Reuters report “Bank of Japan Governor Haruhiko Kuroda played down concerns his unprecedented burst of monetary stimulus would create asset-price bubbles even as it delivered an immediate pay-off in global markets, with government bond yields at a record low, the yen hitting a 3-1/2 year trough and stocks surging to multi-year highs… ‘We will be vigilant of the risk of a bubble. I don’t think there’s a bond or stock market bubble now and I don’t see one emerging any time soon. But we will be vigilant of the risk,’ Kuroda told the lower house of parliament.”

 

I’ll have to disagree with Mr. Kuroda. Japanese debt is a historic Bubble – and I’d suggest a rather conspicuous one at that. And Japan’s move to follow the Fed down the path of 24/7 monetary inflation is a key facet of the “global government finance Bubble” more generally. Japanese institutions were said to be major buyers of European bonds this week. French 10-year yields dropped 24 bps Thursday and Friday to a record low 1.75%. I have a hard time believing anyone with a sound grasp of monetary history can see this as anything other than an unfolding disaster.

 

In our 21st Century age of runaway electronic debits and Credits based finance, the distinction between “money” and Credit has completely blurred. I’ve tried to make the case that there is in reality an exceedingly important difference: Credit is much about confidence, while money is “precious.” Credit, as was on full display between 2006 and 2008, can be robust, whimsical, fleeting and frighteningly fragile. “Money” – perceived as a trusted liquid store of nominal value – is the rock foundation for the entire financial system. As such, “money” enjoys almost insatiable demand. And this attribute has ensured repeated episodes of gross over-issuance that has plagued mankind for centuries. These days, “money” is the domain of the government debt and central banking nexus. The monetary black plague is back and it has spread globally like never before. Yet it’s virtually invisible and comes with a surprisingly protracted incubation period.

 

When his “Mississippi Bubble” scheme was faltering in 1720, John Law moved to devalue competing hard currencies. He was desperate to keep investors and, particularly, the manic crowd of speculators in his monetary instruments to stave off Credit collapse. The Fed, BOJ, BOE, ECB and others have been working desperately to keep investors and speculators fully engaged in global debt, equities and risk markets. With near zero interest-rates and Trillions of monetization, “money” is being methodically devalued around the world. Federal Reserve devaluation is forcing savers out of “money” and into risk markets, apparently believing that asset inflation will spur wealth-creation, risk-taking and economic activity. The Bank of Japan is devaluing yen-denominated “money,” hoping a weaker yen and expectations for higher inflation will jumpstart the Japanese economy.

 

These central bankers seem oblivious to the fact they are on a perilous course that risks a crisis of confidence in “money,” not to mention global risk markets. The history of monetary fiascos is replete with out of control inflations. Once the money printing gets heated up, there is a strong proclivity for one year of elevated money printing ensuring only more intense pressure for even greater printing the next. This dynamic has been in play for years now. After having carefully studied these types of dynamics, I’ll confess it’s almost surreal to witness them in real time.

 

Bloomberg quotes George Soros in CNBC TV interview saying, What Japan is doing is actually quite dangerous because they’re doing it after 25 years of just simply accumulating deficits and not getting the economy going,”. “If the yen starts to fall, which it has done, and people in Japan realize that it’s liable to continue and want to put their money abroad, then the fall may become like an avalanche.

 

I thediktatreporter relate that with Japan’s debt accounting for more than 20x tax revenue Japan is definitely insolvent. Japan will soon implode under the weight of its debt.

 

The age of stimulus is over as the the world central banks monetary policies of debt monetization and ZIRP, have crossed the rubicon of sound monetary policy, resulting in the exhaustion of monetary expansion. Peak Monetary Expansion has been achieved as

1) Investors no longer trust in carry trade investing to leverage stocks higher, this being reflected in the Optimized Carry Trade ETN, ICI, manifesting bearing engulfing at the edge of a massive ascending wedge, portending a disinvesting out of stocks driven up by the Mario Draghi OMT EUR/JPY rally, and the Shinzo Abe Unlimited Quantitative Easing rally.

2) Toxic debt, traded by the Fidelity Mutual Fund, FAGIX, that the US Federal Reserve took in as exchange for “money good” US Treasuries under QE 1, to restimulate global banking, IXG, and global trade, FXR, has turned lower in value.

3) The funding for stock buybacks, that is High Yield Corporate Bonds, HYG, and the pursuit of risk assets, Junk Bonds, BND, are no longer being purchased.

4) Leveraged Buyouts, PSP, began trading lower on March 14, 2013.  

5) Fox news Unemployment claims climb as layoffs surge to highest level since 2011 Freshly released employment numbers show more lows than highs for the U.S. economy. For the third straight week, the number of Americans seeking unemployment aid rose. Bespoke Investment Group follows up with the uptick in Initial Jobless Claims Chart.

6) Reuters reports American employers hired at the slowest pace in nine months. And Andre Damon of WSWS report US jobs growth slows to a crawl. Hundreds of thousands drop out of the workforce. The US economy created 88,000 jobs in March, far less than had been expected, as $1.2 trillion in sequester cuts began to take effect.

 

All central bank stimulus efforts, such as the MarketWatch report Bank of Korea to focus on supporting growth, will fail. Such will only result in currency traders conducting competitive currency devaluation and investors derisking out of South Korea, EWY, as is seen in its 1.8% trade lower.   

 

The failure of world central banks’ monetary policies to provide stimulus marks the end of stimulus and commences the beginning of the end of credit.

 

The exhaustion of the world central bank’s monetary authority means that national sovereignty, as well as the experience of Crony Capitalism, European Socialism, and Greek Socialism is coming to an end.      

 

The dynamos of Liberalism, being global growth, and corporation profitability are winding down investment choice. The dynamos of Authoritarianism, being regional security, stability, and sustainability are winding up diktat.

 

Seigniorage that is moneyness, will no longer come from the Banker Regime of Investment Choice, but rather seigniorage will come from the Beast Regime of Diktat, manifesting in the world’s ten regional zones, and in all of mankind’s seven institutions. A world, governed by the Iron Hegemony of The British Empire and the US OIl for Blood Empire, is giving way to a Ten Toed Kingdom of Regional Governance as communicated by the Statue of Empires present in Nebuchadnezzar’s Dream interpreted by the prophet Daniel in Daniel 2:25-45, where toes of iron diktat and clay democracy form an unstable mixture  of governance.      

 

Spot Gold, $GOLD, closed lower at $1,550.  Of note, Gold Mining Stocks, GDX, rose 2.8%, to strong support at 35.22, and Silver Miners, SIL, rose 2.7%, to strong support at 17.04; individual gold and silver miners can be followed in this Finviz Screener.

 

6) …  On Friday, April 5, 2013, Volatility rose from its recent low and World Stocks traded decisively lower on the exhaustion of the world central banks’ monetary authority.

Volatility, ^VIX,  rose this week as is seen in the Volatility ETFs, VXX, VIXY, and VIXM, rising as is seen in their ongoing Google Finance chart, and World Stocks, VT,  traded decisively 0.3% lower, Nation Investment, EFA, 0.5%, and Small Cap Nation Investment, IFSM, 0.6% lower. Global Industrial Producers, FXR, trading lower included, MAT, SAP, PPG, HNP, EWC, DEO, AMZN, FLS, MTD, PHG, IP, ABB, ROP, LPL, QCOM, TTM, IR, NVS. TSM, ETN, ERIC, and LYB

 

Sectors trading lower included the following,  Networking, IGN, -3.3%, China Industrials, CHII, -1.6%

Industrial Miners, PICK, -1.5% , Paper Producers, WOOD, -1.5%. Yield bearing sectors trading lower included, TAO, AUSE, SEA , PHO, DTN and VIG.

 

World Stock, VT, and US Stocks VTI, SPY, IWM, QQQ, QTEC, traded lower. The Nikkei, NKY, traded slightly lower yesterday’s strong blast higher to a rally high, while its banks,   Japanese Banks rose strongly with SMFG, rising 3%, NMR, 1%, MFG, 1% and MTU, 5%  

 

This week ending April 5, 2013, stocks traded lower. World Stocks, VT, traded, -0.7%, Nation Investment, EFA, -1.0%, Small Cap Nation Investment, IFSM, -2.7%, and Global Industrial Producers, FXR, -2.7%.  Small Cap Value, RZV,  traded -3.3%, and Small Cap Growth, RZG, traded -3.1%. The chart of the S&P 500, $SPX, shows a 1.0% trade lower from an Elliott Wave 5 High; its ETF, SPY, -0.3%. And the chart of the Russell 2000, $RUT, shows a 3.0% trade lower, IWM, -2.3%.  A bear market is now in full operation as the Risk On ETN, ONN, traded lower, and the Risk Off, OFF, traded higher. This as Jody Shenn of Bloomberg reports Real-estate investment trusts that invest in mortgage debt, REM, sold the most stock in two years last quarter, bolstering demand for government-backed home-loan bonds as other investors prepare for the Federal Reserve’s retreat. Equity offerings by mortgage REITs jumped to $7.4 billion from $1.7 billion in the three months ended Dec. 31, 2012.

 

Small Cap Value, RZV, sectors, trading lower included the following seen in this Finviz Screener.

Automobile Dealerships, PAG, LAD, ABG, CRMT, RUSHB,

Rental and Leasing Services, TAL, FLY, CAP, RCII, GATX, CAR,

Sporting Goods, JOUT, NLS, ESCA

Personal Services, CSV, GK, STEI,

Consumer Services, LOV,

Business Services, FLT, MMS, ENV, IILG, HCSG,

Long Term Care Facilities, CSU, FVE,

Specialized Health Services, HGR, IPCM,

Staffing and Outsourcing, TMH, AHS, ASGN, TBI, KFRC, MHH, BBSI, JOBS

Apparel Stores, DEST, SMRT, ASNA, MW,

Restaurants, KKD, AFCE, RRGR, BAGL, CAKE, SONC, DRI, DENN, ARKR, TRRH, PZZA, CBRL

Home Furnishings and Fixtures, AMWD, FBHS, LZB, BSET, ETN, FLXS,

Credit Sevices, WRLD, CPSS, GDN, CSH, ECPG, NEWS,

 

Small Cap Growth, RZG, sectors trading lower included

Specialty Chemicals, FTK, IOSP, FUL, KWR, POL, WDFC, OLN,

Industrial Equipment Wholesale, DXPE, AIT,

Railroads, ARII

General Contractors, EMC,

Building Materials Wholesale, BECN,

Paper Products, KS, BZ, WPP, CLW, GLT, SWM, TIS,

Packaging and Containers, GPK,

General Building Materials, TREX, APOG,

Industrial Electrical Equipment, AIMC, BDC, AOS, LFUS,  ENS,

Rubber and Plastic, AEPI, CTB.

Industrial Equipment, SXWI, WTS, HEES,

Diversified Machinery, BGG, JBT

 

Sectors trading strongly lower this week include:

Semiconductors, XSD, and Solar Energy, KWT, and Wind Energy, FAN,

Gold Miners, GDX, GDXJ, and Silver Miners, SIL, SILJ,

Steel, SLX, and Metal Manufacturing, XME,

Miners: Industrial, PICK, Rare Earth, REMX, Copper, COPX, Uranium, URA, Coal, KOL,

Energy: Dynamic Energy, PXE, Small Cap Energy, PSCE, Energy Production, XOP,

Industrials: China Industrial, CHII, Small Cap Industrial, PSCI, Automobiles, CARZ,

Homebuilding, ITB,

Internet Retail, FDN,

US Infrastructure, PKB,

Transportation, XTN

Design Build, FLM,

Networking, IGN

North American Software, IGV,

Financials: Chinese Financials, CHIX, European Financials, EUFN, Too Big To Fail Banks, RWW, Regional Banks, KRE, Small Cap Revenue, RWJ,

 

This week ending April 5, 2013, the world entered into competitive currency devaluation as the Japanese Yen, FXY, fell 1.6%, lower, following a 3.5% trade lower April 4, 2013, to close at 100.17. The US Dollar, $USD, traded lower from 83.14 to close at 82.66, as the BZF, FXS, FXF, FXB, FXE, FXC, and CEW rose, while the FXA, traded lower. The Euro, FXE, closed up at 128.98.

 

Competitive Currency Devaluation is confirmed by the Currency Demand Curve, that is the ratio of the Small Cap Pure Value Stocks, RZV, relative to the Small Cap Growth Stocks, RZG, RZV:RZG, trading below its 50 day moving average. Additional confirmation comes from the Optimized Carry Trade ETN, ICI, falling from an ascending wedge pattern. Todd Buell of Dow Jones reports European Central Bank Executive Board member Benoit Coeure saying ‘the temptation to divert global demand and foreign capital towards the domestic economy at the expense of other ailing countries could be dangerously alluring.’ He added economic literature shows the dangers of individual countries pursuing ‘beggar thy neighbor’ policies

 

Peak Currencies, that is Peak Major Currencies, DBV, was achieved April 5, 2013 at 27.47.  Peak Emerging Market Currencies, CEW, was achieved February 15, 2013.

 

An inquiring mind asks, if competitive currency devaluation has commenced, will the US Dollar, $USD,  fall lower from it April 5, 2013, value of 82.66/ and seen in the Jack Chan’s chart of its 200% ETF, UUP, I believe that is possible, even if US Treasuries rise higher.  And an inquiring mind asks, if competitive currency devaluation has commenced, will the Japanese Yen, FXY, traded lower from April 5, 2013, value of 108.17, while other major world currencies, trade range bound? I do not know.

Mike Mish Shedlock writes Competitive Easing Madness; Japan to Double Monetary Base; Draghi Signals More Easing; Yen Plunges.  As one might expect on such a surprise announcement, the Yen had a spectacular plunge.

 

Draghi Signals More Easing.  Bloomberg reports German Yields Fall to 8-Month Low as Draghi Signals More Easing.  German government bonds rose, pushing 10-year yields to the lowest since August, after European Central Bank President Mario Draghi signaled further stimulus is possible should economic conditions deteriorate. French and Austrian 10-year yields fell to records as Draghi said monetary policy will “remain accommodative for as long as needed” to boost growth. Spanish and Italian bonds pared gains as the ECB president said the central bank won’t immediately implement measures to ease funding strains for smaller companies.

 

Fed Uncertainty Principle.  This is all in accordance with the Fed Uncertainty Principle Corollary Three.  Corollary Number Three: Don’t expect the Fed [central banks in general] to learn from past mistakes. Instead, expect the Fed to repeat them with bigger and bigger doses of exactly what created the initial problem. Japan is eventually going to achieve “escape velocity” on deflation, and I assure you Japanese citizens will not like the results when it happens. When the Japanese bond market finally reacts to this inane policy, there is going to be a global currency crisis.

 

As competitive currency devaluation picks up speed at the hands of the currency traders, commodity producers such as Brazil, Canada, and Australia, EWZ, will see loss of stock value, EWZ, EWC, and EWZ, as well as loss of currency value, BZF, FXC, and FXA; debt deflation is coming to Brazil Financials, BRAF, Canadian Banks, BMO, BNS, CM, TD, and Australia Dividend, AUSE.      

 

This week Commodities, ending April 5, 2013, DBC, -1.8%, and US Commodities, USCI, -2.4%, DBB, -3.3%, JJN, -3.3%, JJC, -3.7%, JJT, -0.6%, LD, +1.7%, CUT, -1.7%, BAL, -.6%, JJA, -6.1%, JO, +3.2%, GRU, -7.6%, COW, -0.3%, FUD, -3.8%, CORN, -8.7%, SOYB, -3.6%, WEAT, -2.3%, UNG, +4.1%, USO, -1.0%, BNO, -2.8%, UGA, -5.7%, GLD, -1.7%, SLV, -4.9%. This week ending April 5, 2013, Spot Gold,  $GOLD, rose from its April 4, 2013, spike down low,  to close the week at $1,580.

 

This week ending April 5, 2013, Bonds, BND, blasted vertically higher, as the Zeroes, ZROZ,  the 30 Year US Government Bonds, EDV, and the US Ten Year Note, TLT, traded parabolically higher, as the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX,  flattened to 0.59; this flattening of the Yield Curve, is seen in the Steepner ETF, STPP, dropping vertically to 33.27.  Corporate High Yield Debt, HYG, Junk Bonds, JNK, Senior Banks Loans, BKLN, and Distressed Investments, FAGIX, closed higher or unchanged.

 

Doug Noland reports sovereign wealth, that is the wealth of the sovereigns of Liberalism rose. Federal Reserve Credit increased $3.3bn to a record $3.191 TN. Fed Credit expanded $405bn over the past 26 weeks. In the past year, Fed Credit expanded $348bn, or 12.2%. And Global central bank international reserve assets (excluding gold), as tallied by Bloomberg, were up $668bn y-o-y, or 6.5%, to $10.954 TN. Over two years, reserves were $1.508 TN higher, for 16% growth.

 

7) … New bird flu has markings of being able to be spread by humans.

Bloomberg reports New bird flu seen having some markers of airborne killer. The new bird influenza that’s killed six people in eastern China has some of the genetic hallmarks of an easily transmissible virus, according to the scientist who showed how H5N1 avian flu could become airborne. The H7N9 strain, which is a new virus formed as a result of two others merging their genetic material, has features of viruses that are known to jump easily from birds to mammals, and a mutation that may help it attach to cells in the respiratory tract, said Ron Fouchier, a professor of molecular virology at Erasmus Medical Center in the Netherlands, in a telephone interview yesterday. “That’s certainly not good news,” said Fouchier, who reviewed a gene sequencing of H7N9 published by Chinese health authorities. “This virus really doesn’t look like a bird virus anymore; it looks like a mammalian virus.”

 

8) … Boondoggles at the end of the age of credit

Kevin Martinez of WSWS reports Disney shuts down video game developer LucasArts, lays off 150 staff.  Following the $4 billion acquisition of the parent company Lucasfilm by the Walt Disney Company, all current projects and staff at LucasArts have been suspended. And John Stark of the Bellingham Herald reports Airport area Holiday Inn gets nod for $20 Million,160 room development from Port of Bellingham Commissioners.  

9)  … Summary … The week ending April 5, 2013 marked the pivoting of ages … liberalism has pivoted into authoritarianism … the world has pivoted from the age of investment choice into the age of diktat … the age of sovereign nation states is history and the age of regionalism commenced with the topping out of the S&P 500 on fears of eurozone sovereign and banking insolvency, and weakness in the US job market and service businesses.  

Sovereignty begets seigniorage, that is moneyness. Insolvent sovereigns and their banks are unable to govern and are unable to provide moneyness. Zero Hedge reports 97% of Spanish social security pension fund in domestic bonds. There are a number of reasons why EU banks and retirement funds have loaded up on their own country treasury debts; one being that the purchase of the debt provides funding for the country’s fiscal spending that the financial markets no longer provide. This fake seigniorage, this fake moneyness, cannot continue forever. The purchase of national treasury debt by national banks and national retirement agencies in insolvent countries only concentrates moral hazard for all Euro using nations

 

Out of growing sovereign crisis will come a new economic and political paradigm, that being Authoritarianism, and a new money system, that being the diktat money system.

 

Liberalism was an era characterized by sovereign nations states, whose central banks practiced liberal policies of monetary expansion. The monetary authority of the world central banks gave seigniorage to fiat assets producing Peak Credit, AXP, DFS, V, MA, Peak US Stock Wealth, VTI, and Peak Large Cap Stock Wealth, SPY, Peak US Real Estate, IYR, and Peak Banking, IXG, Peak Dividend Investing, VIG,

 

It was the sovereign authority of nation states that produced the age of investment choice, which produced Peak Nation Investment, EFA, Peak Small Cap Nation Investment, IFSM, Peak Global Industrial Production, FXR, Peak Major Currencies, DBV, Peak Emerging Market Currencies, CEW, and Peak Leveraged Investing, PSP.  Countries such as Mexico, EWW, New Zealand, ENZL, Turkey, TUR, Thailand, THD, the Phillippines, EPHE, Indonesia, IDX, and Ireland, EIRL, became investment carry trade darlings. The age of investment choice was underwritten by the Banker Milton Friedman Free To Choose Floating Currency Regime, which had its origins in the creation of the creation of Federal Reserve in 1913, and the development of the Milton Friedman fiat money system in 1971.

 

Robert Wenzel writes The Stockman Backlash. Peter Schiff writes that the fiat money system was doomed ever since its inception. Despite David Stockman’s misalignment with the Republican hierarchy, the Left has an even greater revulsion for Stockman. Since the crisis, he has become perhaps the most respected figure (with the possible exception of Alan Meltzer) to take the position that a system based on fiat currency is doomed. Those who most visibly argue these points, like Ron and Rand Paul, and myself, come from the libertarian movement. As a result, we can be easily dismissed as cranks. However, Stockman was once a card carrying member of the power elite. His embrace of these principles is taken more seriously and is thus ripe for instant attack from liberal economists.  While the usual suspects of Jared Bernstein and Joe Weisenthal weighed in with heaps of invective, the loudest heckles have come from, whom else, Paul Krugman. He began his multi-post campaign by questioning the “mystery” of why the New York Times would sully Krugman’s own gravitas by forcing him to share column inches with someone as “non serious” as Stockman. He then offers the back of his hand: “I thought Stockman would offer some kind of real argument, some presentation, however tendentious, of evidence. Instead it’s just a series of gee-whiz, context- and model-free numbers embedded in a rant – and not even an interesting rant. It’s cranky old man stuff.” In actuality, Stockman’s NYT piece offers a litany of objectively dismal facts and cogent explanations of how we got here.

 

Three bailouts of Greece, GREK, the just announced bailout of Cyprus, the absence of government in Italy, EWI, the failure of economy in France, EWQ, with Mike Mish Shedlock reporting Sharp deterioration in French manufacturing, and Gary of Between The Hedges relating the Los Echos report

French confidence in Hollande Falls Below 30% as CSA polls finds President Francois Hollande is least popular president since establishment of Fifth Republic, and the economic collapse of Spain, EWP, turned European Financials, EUFN, lower on February 1, 2013, and then again on March 14, 2013, bringing in Peak Wealth, VT, on March 14, 2013, and Peak Credit April 5, 2013.

 

Trust in the US Federal Reserve and the other world central bank’s monetary policies of debt monetization and monetary expansion, gave strong seigniorage, that is strong moneyness, to the Small Cap Pure Value Stocks, RZV, as is seen in their chart combined together with nation Investment, EFA, Global Industrial Producers, FXR, Small Cap Real Estate, ROOF, Mortgage REITS, REM, Residential REITS, REZ, and Industrial Office REITS, FNIO.  With global policies of ZIRP in place investors have pursued high yield bearing investments especially Small Cap Real Estate, ROOF, and Residential REITS, REZ.  

 

But now, the expansion of the Business Cycle is complete, and the World Banks, IXG, seen in this Finviz Screener, are turning lower in value, on the exhaustion of the world central banks’ monetary authority.  

 

The world is passing into Kondratieff Winter as investors derisk out of the most carry trade and credit sensitive stocks, that is out of the Small Cap Value Stocks, RZV. The age of speculative leveraged investment is over.  

 

Now on fears of EU nation default, the age of diktat is commencing, where the Beast Regime of Regional Governance, Totalitarian Collectivism, and Debt Servitude, will be established in ten regional zones, as leaders meet in summits and workgroups to announce regional framework agreements which waive national sovereignty and pool sovereignty regionally, as foretold in Bible Prophecy of Daniel 2:25-45 and Revelation 13:1-4.        

 

Liberalism featured wildcat finance, a Doug Noland term where wizards of finance waived magic wands of debt and carry trade investment producing prosperity. Authoritarianism features wildcat governance, where lizards of technocratic government yield clubs of debt servitude enforcing austerity.

 

Liberalism’s seigniorage was produced by World Banks, IXG, such as BAC, C, KEY, BK, JPM, and coined by Asset Managers, such as BLK, WDR, EV, STT, WETF, and AMG, providing the seigniorage of investment choice.  Authoritarianism’s moneyness will come from nannycrats working in public private partnerships of government, industrial and banking oversight of the factors of production.  Macquarie Infrastructure Company, MIC, will likely be a leader in providing regional economic direction throughout the world.  Under regionalism, seigniorage, that is moneyness, will come from sovereign regional leaders, and sovereign regional bodies, such as the EU Finance Ministers and the ECB. providing the seigniorage of diktat such as Capital Controls seen in Cyprus.

 

Zero Hedge relates Bridgewater asks Could Italy blow up the Euro? And The Irish Times reports European funding for banks will be invaluable if recovery in Ireland is to occur. The ninth review of Ireland’s bailout programme warns of significant obstacles ahead. And The Irish Independent reports Draghi signals support for debt deal after push by IMF. And Kevin O’Rourke of Irish Economy writes Political asymmetries and EMU. My quote of the week is from another must-read article, this time by Wolfgang Münchau, who says “I have believed for some time that it is impossible for Germany, Finland and the Netherlands to be in a monetary union with Cyprus, Greece and Portugal. Either the two sides agree to adjust more symmetrically, politically and economically, or this experiment should end.” The argument about economically asymmetric adjustment has at this stage been done to death, and almost everyone understands it, although the German government remains resolutely, proudly, and vocally, macro economically illiterate. Another reason why anti-German posters at mass demonstrations are something that we will have to get used to, which is tragic. But Wolfgang’s point about politically asymmetric adjustment is just as important, and gets to the heart of the matter. When the EU club works according to its rules, people accept the outcomes, but in crises policies are made on the hoof, and it is the powerful who call the shots. This is inevitable, but it is also very dangerous, especially since the decisions that are made at times like this have a much bigger impact on peoples’ lives than anything that typically comes out of Brussels. We have been in crisis mode for much too long now, the crisis shows no signs of going away any time soon, and the political asymmetry is becoming intolerable. A meaningful banking union, that had the power to stick its nose into the German banking system, and had a set of ex ante mutually agreed principles regarding how to resolve banks in all member states, would help reduce political asymmetries. More expansionary monetary and fiscal policies would help make economic adjustment more symmetric. I suspect we’re going to get neither, in which case we need to end the EMU experiment before it drags the broader European project down with it.

 

As liberalism pivots into authoritarianism, there will be no free people anywhere.  In Euroland, there will be no citizens of democratic states; rather there only be residents living in a region of true economic government. While Germans can’t be Greeks or Cypriots, they will all be one living in debt servitude and totalitarian collectivism, accountable to nannycrats in Brussels and Berlin. The Nordic Latin Divide, that is Europe’s North South Divide, will be bridged by statist and technocratic regional governance.    

 

The topping out in Dividend Growth, VIG, and Mortgage REITS, REM, as well as all the yield bearing ETFs seen in this Finviz Screener, is prime evidence that the moneyness of investment choice is dissipating. The moneyness of diktat is coalescing and is seen in the EU Finance Ministers and ECB’s Cyprus Deposits Levy and Capital Controls.    

 

The ETFs of Liberalism which produced wealth, will increasingly be seen as dead men walking investment vehicles, zombified by world central bank money policies of debt monetization and ZIRP.

 

Liberalism’s better investments will increasingly be seen as toxic will include AUSE, BJK, CARZ, CUT, EIRL, EPHE, EWW, FDN, FPX, FXR, IBB, IDXJ, ITB, IYC, KBWY, PJP, PKB, PSP, PXE, REM, ROOF, RZV, TAO, THD, TUR, WOOD, XRT, and XSD, seen in this Finviz Screener.   

 

The Asset Managers which coined these ETFs will increasingly be seen as burnt out wealth foundries abandoned by burned investors. Anachronistic financial enterprises will include Van Eck, Wisdom Tree, First Trust, Guggenheim, iShares, Powershares, SPDR State Street, State Street Global Advisors, Vanguard, Eaton Vance, Waddell & Reed, Affiliated Managers Group, and Blackrock. The layoffs in the financial industry are just now beginning as Dow Jones Newswires reports Bank of America to lay off 1,320 employees in upstate New York.

 

The financial wealth belt covering an area from Millbrook in Dutchess County and Westchester County in upstate New York, and extending throughout the Gold Coast will become like the rust belt, or like McDowell County, the southernmost county in West Virginia; its county seat is Welch, it use to be a major be a metallurgical coal mining town; but now the biggest employer is Walmart at Big Four.       

In summary, a global paradigm shift is underway, Liberalism is falling to Authoritarianism with the failure of investment choice, as is seen in the trade lower in world stocks, and the rise of diktat, as is seen in the mandate of the deposits levy and capital controls in Cyprus.    

 

Regionalism is supplanting democracy. The Eurozone is setting the model for the sovereignty of regional governance to supercede the rule of law, whether it be nation state constitutional law, parliamentary legislation, election results, or natural law of Libertarianism, as championed by libertarians such as Lew Rockwell and Ron Paul.  

 

News reports documents creeping regionalism is starting to dismantle Greek Socialism. Robert Stevens of WSWS reports Greek parliament overturns right to free, universal education. The cynically-named Athena Plan, calling for mass closures of universities and technical institutions, was passed in flagrant violation of the Greek constitution. And Mr Stevens writes again After Cyprus, more austerity in Greece. Fresh from its financial looting of Cyprus, the European bourgeoisie is threatening to withhold funds from Greece unless it complies with mass sackings in the public sector.

 

In the US, Detroit sets the model for public private partnerships to rise in preeminence to rule society as Bryan Dyne of WSWS reports Emergency manager’s ex-law firm hired to oversee Detroit restructuring. Jones Day, the law firm where Kevyn Orr worked before becoming Detroit’s emergency financial manager, has been retained by the city of Detroit as its restructuring counsel.  And Jerry White of WSWS reports New law granting Detroit emergency manager sweeping authority goes into effect. Powerful financial interests are using Detroit as a test case for imposing deeply unpopular measures in line with what is occurring in Cyprus, Greece and other European countries. And Lawrence Porter of WSWS reports Multi-billionaire Dan Gilbert seeks to cash in on Detroit’s financial dictatorship. Dan Gilbert, the multi-billionaire owner of Quicken Loans, has unveiled a plan to gentrify downtown Detroit with the aid of the newly installed emergency manager.

 

Benton te reports Debt papers, may be used in Portugal.  “More debt leads to higher taxes which will pose as a hindrance to productive commercial enterprises” …  “If and when Portugal defaults, then public workers and pensioners and all those other sovereign debt holders will become the “greater fools” (greater fool theory). I comment that the introduction of the Euro, FXE, has multiplied and intensified moral hazard.  and since the Euro came into use interest rates on German Treasury Debt, started to move to zero. Eurozone ZIRP became a reality with LTRO 1, and LTRO 2, as well as OMT, moving even more capital to Germany’s Treasury. German industriousness and German productivity has risen to the point where Germany became not only Europe’s exporting state but also a global exporting superstar. Now with the collapse of government in Italy, EWI, the only EU country with productive, viable, and sustainable commercial enterprises is Germany.  As the world continues transitioning from Liberalism into Authoritarianism where diktat, that is mandate of leaders, becomes credit, money and power debt papers could be a form of dikat money used by country leaders in technocratic government.  

 

I conclude by relating that faith in the current fiat based money and banking system is now starting to erode. Spot Gold, $GOLD, traded at $1590 on September 5, 2013. Wealth will increasingly be preserved and owing by physical ownership of gold, in bullion coins, and in global trading forms, that is in Internet trading vaults, such as BullionVault.  

 

Its only a short matter of time before gold trades higher, recovering from its death cross as is seen in Jack Chan’s chart of the Gold ETF, GLD.

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