Stocks Falling into Final Hour on Surging Eurozone Debt Angst, Rising Global Growth Fears, Yen Strength, Financial/Energy Sector Weakness
Broad Equity Market Tone:
- Advance/Decline Line: Substantially Lower
- Sector Performance: Most Sectors Declining
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 13.14 +7.97%
- Euro/Yen Carry Return Index 145.29 -.37%
- Emerging Markets Currency Volatility(VXY) 7.45 +3.33%
- S&P 500 Implied Correlation 58.40 +3.27%
- ISE Sentiment Index 89.0 +1.14%
- Total Put/Call .99 -8.33%
Credit Investor Angst:
- North American Investment Grade CDS Index 65.0 +2.43%
- European Financial Sector CDS Index 79.28 +8.90%
- Western Europe Sovereign Debt CDS Index 36.13 +13.1%
- Asia Pacific Sovereign Debt CDS Index 84.35 +3.1%
- Emerging Market CDS Index 269.78 +1.84%
- China Blended Corporate Spread Index 357.39 +.75%
- 2-Year Swap Spread 13.75 unch.
- TED Spread 21.0 +.5 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -7.75 -.75 basis point
Economic Gauges:
- 3-Month T-Bill Yield .02% unch.
- Yield Curve 214.0 -3.0 basis points
- China Import Iron Ore Spot $102.80/Metric Tonne -.68%
- Citi US Economic Surprise Index -7.40 +4.0 points
- Citi Emerging Markets Economic Surprise Index -25.30 +1.8 points
- 10-Year TIPS Spread 2.18 +1.0 basis point
Overseas Futures:
- Nikkei Futures: Indicating -213 open in Japan
- DAX Futures: Indicating +16 open in Germany
Portfolio:
- Slightly Higher: On gains in my index hedges and emerging markets shorts
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 50% Net Long
1 comment:
On Tuesday May 13, 2014, The Euro, FXE, the Swiss Franc, FXF, and the British Pound Sterling, FXB, all started to die as a currency. Currency traders sold the Euro, FXE, to close lower at 135.28.
The see saw destruction of fiat wealth commenced in the Eurozone on the failure of credit. specifically the failure of trust in the world central banks to continue to stimulate investment gains as well as global growth. With the trade lower in Italy, EWI, the world has passed through an inflection point: the world has pivoted from the age of credit into the age of debt servitude.
On Wednesday May 14, 2014, there was a stock market reversal as Volatility, ^VIX, XVZ, traded higher, as the S&P 500, SPY, traded lower from its blow off market high, as Aerospace, PPA, such as LMT, Semiconductors, SOXX, such as MU, Retail, XRT, such as DDS, JWN, Consumer Services, IYC, such as, DIS, Global Industrial Producers, FXR, such as WHR, FLS, HON, Design Build Companies, FLM, such as Fluor, FLR, and Transports, XTN, such as UNP, DAL, SWFT, traded lower.
World Stocks, VT, Nation Investment, EFA, and Dividends Excluding Financials, DTN, traded lower from their market highs, evidencing the failure of credit, that is trust in the world central banks’ monetary authority to simulate investment gains and global growth.
Eight factors evidence the failure of credit; these include the trade lower in the following:
1) The Russell 2000, IWM, IWC, traded lower as the credit sensitive Small Cap Pure Value Stocks, RZV, the Small Cap Pure Growth Stocks, RZG, the Small Cap Industrials, PSCI, the Small Cap Consumer Staples, PSCC, the Consumer Recreational Goods, POOL, THO, WGO, PII, ESCA, traded lower, on the traded lower in Regional Banks, KRE.
2) Eurozone Nations, EZU, Portugal, PGAL, Ireland, EIRL, Austria, EWO, and Italy, EWI, traded lower. Ireland’s Bank, IRE, and the National Bank of Greece, NBG, traded lower; these are shown the way is lower in the European Financials, EUFN.
3) European Credit, EU, traded lower.
4) Credit Services, AXP, NNI,V, PRAA, DFS, FCFS, AGM, SLM, CACC, ECPG, CIT, MA, HEES, URI, traded lower
5) Homebuilders, XHB, and ITB, traded lower; and US Infrastructure, PKB, such as MWA, FTK, WSO, FLT, MMM, AAON, and PRIM; and Building Materials, and Manufactured Housing, CVCO, traded lower.
6) Life Insurance Companies, such as PUK, SYA, GNW, traded lower.
7) Industrial Textile Manufacturers, DXYN, UFI, AIN, MHK, traded lower.
8) Leasing Companies, HEES, URI, CAR, HTZ, UHAL, GMT, TGH, AER, traded lower
On Thursday, May 15, 2014, at market open, the Interest Rate on the US Ten Year Note, ^TNX, traded sharply lower to 2.51%, as the bond vigilantes anticipated huge flows out of Equity Investments and into Credit Investments, as is seen by Aggregate Credit, AGG, blasting to a new all time high. The Steepner ETF, STPP, plummeted, reflecting a flattening of the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, as investors flocked to so called safety in US Ten Year Notes, TLT.
The death of currencies, and the failure of credit, has commenced destructionism, replacing the former inflationism as the dynamic of economic activity.
Falling Major World Currencies, DBV, and Emerging Market Currencies, CEW, means the crush of investment in Global Growth, DNL. There are no markets anymore. Ireland, EIRL, was the crown jewel of debt trade investing and currency carry trade investing, in the age of credit and the age of currencies; now with IRE, JHX, IR, CRH, RYAAY, XL, ACN, trading lower it is one of the age of debt servitude loss leaders. And the death of the wheels of economic activity, means the dissolution of traditional governance. Fiat money is being replace by diktat money. And democratic governance is being replaced by regional fascism
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