Philippine asset markets today can be described as the strange case of Dr. Jekyll and Mr Hyde. That’s because the domestic bond and the stock market went in opposite ways.
Following yesterday’s bear market low, the Phisix staged a monster 5.7% rally on a rather tepid volume (technistock.net).
And in a bizarre twist, early today the mouthpiece of today’s new political economic paradigm, the stock market section of the Inquirer.net appears to have “given up” on the daily routine of quoting mainstream experts explaining away how misguided sellers have been in crashing Philippine equities.
Such seeming “capitulation” could have signaled this bounce.
Nonetheless this post-trading report from the Wall Street Journal has been a lot less sanguine about today’s “biggest gain since 2008". Nonetheless, expert sentiments appear as in denial about the true grizzly nature of bear markets.
There is one single force that will prove to be a key obstacle to any real recovery of Phisix: this is if the drubbing of the domestic bond market continues.
Today 10 year yields surged by another 11 bps or 2.57% (chart from investing.com). This is the 3rd consecutive day for the sharp climb which nears 50 bps.
It would be a mistake for some to think that this represents a sign of “shifting” (from bonds to stocks). There are really no “flows” on the financial markets. For every buyer there is a seller. For every transaction, cash transfers from buyer to the seller in exchange for securities.
What drives prices is the aggressiveness of either the buyer or the seller.
Today’s actions means that stock market bulls aggressively bid up the stock markets, while bond vigilantes continue to harass the Philippine bond markets regardless of the reasons behind them.
Again a sustained rise in yields will eventually force the BSP’s hand to raise rates, as explained yesterday. And higher rates amidst rapidly growing of systemic leverage only increases credit risks.
The Dr. Jekyll and Mr Hyde syndrome hasn’t been a Philippine only characteristic.
As of this writing Indonesia’s equity bellwether the JCI has been significantly up even as 10 year bond yields today soared by 31 bps or 4.42%
I comment that the Finviz chart of the Philippines, EPHE, ... http://finviz.com/quote.ashx?t=ephe ... shows a vertical rise, after having fallen vertically.
ReplyDeleteWe are witnessing a "sew saw" destruction of fiat wealth, credit investments, equity investments and currencies are literally being sawed asunder, as credit, that is trust, dissipates on the rise of the Interest Rate on the US Ten Year Note, ^TNX.
Fiat money is now longer trustworthy. People will increasing be placing their confidence in diktat money.
Specifically stated, the jump on the Interest Rate on the US Ten Year Note to 2.01% on May 24, 2013, constituted an "extinction event", that is a cataclysm, which literally destroyed the investment choice offered by bankers as the way of life, and terminated the paradigm of Liberalism. Jesus Christ is operating at the helm of the Economy of God, Ephesians 1:10, and has pivoting the world into Authoritarianism, where the diktat of nannycrats is the way of life. Fiat money died, and diktat money has been coming to life.
Extinction Protocol tweets earth changes news and geological events enroute to the New Earth foretold by prophets, sages, and scriptures. And I, in similar vain, as a Dispensational Economist, one who believes in Dispensational Economics, and being a Reformed Christian, that is one who has the like precious faith of the Apostles of Jesus Christ, believe that the “mass extinction of investors” commenced on the failure of Credit, AGG, and Major Currencies, DBV, and Emerging Market Currencies, CEW, in May 2013. Debasement of the Dollar by the US Central Banks has finally turned all “money good” investments bad, as is seen in M2 Money Weekly Not Seasonally Adjusted WM2NS failing on 04-15-2013, when it turned lower from 10681.4, to 10571.8 on 04-22-2013 ... http://research.stlouisfed.org/fred2/data/WM2NS.txt ...
The world has pivoted from inflationism to destructionism, as Jesus Christ has now fully unleashed the Four Horsemen of the Apocalypse presented in Revelation 6:1-8, who will within ten years totally terminate all existing economic and political life as it currently is known, as the Rider on the White Horse is transferring sovereignty from democratic nation states to regional governance, the Rider on the Red Horse is increasing violence, the Rider on the Black Horse is increasing famine and economic death, and the Rider on the Pale Green Horse is increasing chaos. As a result, people no longer exist as residents of nation states, but rather as debt serfs under the authority of regional governance, totalitarian collectivism, debt servitude and austerity, as the Beast Regime of Revelation 13:1-4, rises in power to replace the Banker Regime.