BOOM as at 8th September 2018

US JOBS THE REAL SITUATION — TRUMP THREATENS MORE TARIFFS — US CHINA TRADE DEFICIT WORSENS — TURKEY FINDS SUPPORT — CRYPTOS CRASH YET AGAIN — ETHEREUM CRUNCHED — BANK PROFITS RISE AS INTEREST RATES RISE
US JOBS THE REAL SITUATION

The mainstream media always has a narrative to deploy.  They are generally not concerned with facts or objective analysis. Facts can be very disruptive (“they ruin a good story”) and most journalists have no idea these days how to recognize them or analyze them. They follow official narratives slavishly. It’s all about “the story” while Group-think rules. Currently, the official story reads “US Economic Growth Strong” so they endlessly spin any economic statistic positively to boost this argument. Their invited financial experts are very wary of breaking away to give a different slant because they will not be invited back if they do that too often.

Yes, US Real GDP Growth figures are increasing. But, then again, the GDP Growth numbers for Greece were also fabulous in the years prior to its economic collapse in 2008. Ya gotta look under the hood to really see what is happening.  That involves work, an examination of facts.

The August jobs figures for the US came out on Friday. They were terrible (again). Only 201,000 new jobs were created in August.  The number created in June was revised down from 248,000 to 208,000. The number created in July was revised down from 157,000 to 147,000.

These are not indicative numbers of America Becoming Great Again.

In the mid 1990’s, the new job numbers were often around 300,000 and sometimes peaked above 400,000 towards 500,000 per month. That was almost 25 years ago, a quarter of a century.

Job creation in America is currently moribund, awful by historic standards.

The media spun it all as “better than expected” which is true because they were probably expecting worse.  They turned to the Average Hourly Earnings Month on Month Growth number which showed a very slight improvement of 0.4% over 0.3% the previous month. The Headlines read “Wages Growth Soars — the Best since the Great Recession”. But an examination of the facts shows that wages growth per hour also grew by 0.4% in December 2017 and by 0.5% in September 2017. In fact, it has been as high as 0.4% on eleven months since 2008 and has been 0.5% on four occasions.

Time for a quote from Joseph Goebbels.

Paul Joseph Goebbels was a German Nazi politician and Reich Minister of Propaganda of Nazi Germany from 1933 to 1945. He was one of Adolf Hitler’s close associates and most devoted followers.

“If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State.”

TRUMP THREATENS MORE TARIFFS

US CHINA TRADE DEFICIT WORSENS

The man in the White House is threatening to raise another $ 267 Billion in Tariffs on goods imported into the US from China. This is a part of the “trade war” that he says will be “easy to win”.

It looks like he is correct. This trade war is “easy to win” and it looks like the winner is China (not America). The US trade deficit with China continues to grow, reaching a record number in August. So the winner here is clear. The trade numbers don’t lie. China’s trade surplus with the U.S. grew to $31 billion last month from $28.09 billion in July. That is some “win” for Donald.  Overall, America is importing MORE from China and exporting LESS.

“In the short term, it is difficult for the trade gap to narrow because American buyers cannot easily find alternatives to Chinese products,” Bank of Communications Economist Liu Xuezhi said.

Sadly the people of America now have to pay a huge number of new taxes (called Tariffs) on the things they buy that come from China. And LOTS of things come from China.  So this raises the cost of living and the CPI inflation figures.

China exports $ 2.5 Trillion of goods each year in total to the world. The US imports about one fifth of that, about $ 500 Billion. If China were to lose 10% of that US trade, it would reduce its overall exports by just 2%. They could easily switch those goods to other destinations. The global economy of $ 70 Trillion would swallow those goods of $ 50 Billion in a heartbeat.

China imports about $ 130 Billion of goods and services from the US.  Total Chinese imports per year from all nations amount to about $ 2.2 Trillion per year so the American contribution amounts to just 6%. A 10% reduction would amount to 0.6%.

If Trump adds the extra new China tariffs, then the taxes raised from them will amount to $ 517 Billion per annum. That’s over Half a Trillion for those who are mathematically challenged by large numbers. The people of America will have to pay those costs out of their pockets.

Trump calls himself a “very stable genius”.  So it is surely a genius policy that the White House has embarked upon here. It will hurt America and won’t make a jot of difference to China. There must be some “genius” at work there but BOOM can’t see it.

A coalition of the US National Retail Federation and 150 organizations said in separate comments — “The administration should cease further tariffs actions and give another shot at talks for a trade deal with with China”.   “Tit-for-tat tariffs are counterproductive and so far have only produced increased costs for American businesses, farmers, importers, exporters and consumers”.

TURKEY FINDS SUPPORT

The Turkish stock market, bond market and currency have found significant support over the last week. Presumably, international allies have come to their rescue and decided to support Turkey in its hour of need by buying. The ruthless attackers have met opposition. The threat is not over yet but it is looking good for President Erdogan at this stage.

As BOOM has pointed out previously, this is a historic financial battle. All smaller, vulnerable nations can learn from this event and defend themselves against financial attack if they can learn to cooperate.

CRYPTOS CRASH YET AGAIN

ETHEREUM CRUNCHED

Another weekend, another Crypto market crash.  This time Ethereum has led the charge, falling suddenly more than 11% and from almost $ 300 a week ago to below $ 193.   It was almost US$ 1,400 at its peak valuation in January, eight short months ago.  So that represents an 86% fall in price since the peak.

The total market capitalization of all Cryptos has again fallen below $ 200 Billion and Bitcoin’s price ominously looks like falling below $ 6,000 soon.  Gravity is an awful force to experience for young, inexperienced “investors”. Older players are very familiar with this force of nature.

BANK PROFITS RISE AS INTEREST RATES RISE

Contrary to popular belief, commercial banks make increased profits when interest rates are rising. If you doubt this statement, BOOM suggests you read this article from last week concerning Canadian Banks.

https://www.bloomberg.com/news/articles/2018-08-21/canadian-banks-to-post-profit-gains-on-rising-interest-rateshttp://

In economics, things work until they don’t.


Until next week …………  Make your own conclusions, do your own research.

BOOM does not offer investment advice.

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PRICE PULSE DOMINANCE CHANGES DURING LAST WEEK Ended 8th September 2018:

1.     NO CHANGES LAST WEEK

===================================================================

NOTE — RED ARROWS INDICATE BOOM PRICE PULSE DOMINANCE in the present moment (as indicated by the date of the chart and taking into account the 3 year time frame shown).  The charts are now arranged in PRICE PULSE RED ARROW DOMINANCE.    NOTE: All Charts are WEEKLY Charts over the last 3 YEARS time frame.  Arrows indicate PAST price action (not future).  No predictions are implied from past action.

Comments refer to past PRICE PULSE (Red Arrow DOMINANCE) over the last 3 years, the week ended 8th September 2018.  You can RIGHT CLICK a chart and OPEN in a New Tab.   Make your own conclusions, do your own research. BOOM does not offer investment advice. 

PLEASE NOTE — Many charts are ETF’s from NY Market  (not the base commodity or currency etc). The NY Stock Code is in the Top Left Hand Corner of each chart.
Charts are produced from http://www.stockcharts.com

Return to the BOOM Main Website –  BOOM Finance and Economics at  http://boomfinanceandeconomics.com/


NOTABLE PRICE PULSE CHANGES OVER THE LAST WEEK ENDED 8th September 2018:-

1.     NO CHANGES LAST WEEK

================================================================

PRICE PULSE RISING — (RED ARROW UP DOMINANCE)

# TRIM TABS US FLOAT — UP Arrow Dominant
# US HIGH GRADE CORP BONDS (LQD) — UP Arrow Dominant
# US INFLATION PROTECTED BOND PRICES — UP Arrow Dominant
# US UTILITIES STOCKS — UP Arrow Dominant
# AGGREGATE US BOND PRICES (BND) — UP Arrow Dominant
# US LONG BOND PRICE (TLT) — UP Arrow Dominant
# RWR (US Real Estate REIT Fund) — UP Arrow DominanT
# AUSSIE ALL ORDS INDEX — UP Arrow Dominant
# INDIAN STOCKS — UP Arrow Dominant
# VALE STOCK (Iron Ore) — UP Arrow Dominant
# US BIOTECHNOLOGY INDEX — UP Arrow Dominant
# WEST TEXAS OIL PRICE — UP Arrow Dominant
# US DOW STOCK INDEX — UP Arrow Dominant
# RUSSELL 2000 INDEX — UP Arrow Dominant
# US TRANSPORT INDEX — UP Arrow Dominant
# US INSIDER SENTIMENT (KNOW) — UP Arrow Dominant
# NASDAQ COMP INDEX — UP Arrow Dominant
# US JUNK BOND PRICES — UP Arrow Dominant
# US 3 MTH T BILL YIELD — UP Arrow Dominant
# LIBOR — UP Arrow Dominant
# FRANCE STOCKS — UP Arrow Dominant

PRICE PULSE FALLING — (RED ARROW DOWN DOMINANCE)

# TED SPREAD — DOWN Arrow Dominant
# GOLD PRICE (in Aus Dollars) — DOWN Arrow Dominant
# COPPER PRICE — DOWN Arrow Dominant
# INDUSTRIAL METALS ETF (DBB) — DOWN Arrow Dominant
# YUAN (AGAINST USD) ETF — DOWN Arrow Dominant
# HANG SENG — DOWN Arrow Dominant
# GOLD PRICE in USD —DOWN Arrow Dominant
# SOUTH KOREA STOCKS — DOWN Arrow Dominant
# SINGAPORE STOCKS — DOWN Arrow Dominant
# THAI SETI INDEX — DOWN Arrow Dominant
# AUSSIE DOLLAR AGAINST US DOLLAR — DOWN Arrow Dominant
# CANADIAN DOLLAR AGAINST USD — DOWN Arrow Dominant
# BRAZIL STOCK INDEX — DOWN Arrow Dominant
# ARGENTINA STOCKS — DOWN Arrow Dominant
# BRITISH POUND AGAINST USD — DOWN Arrow Dominant
# NOMURA HOLDINGS — DOWN Arrow Dominant
# EURO (AGAINST $US) — DOWN Arrow Dominant
# SWISS FRANC (AGAINST $US) — DOWN Arrow Dominant
# PLATINUM PRICE — DOWN Arrow Dominant
# SHANGHAI STOCKS — DOWN Arrow Dominant
# PALLADIUM PRICE — DOWN Arrow Dominant
# BITCOIN INDEX $NYXBT — DOWN Arrow Dominant
# DEUTSCHE BANK SHARES — DOWN Arrow Dominant
# FOOD INPUT PRICES (DBA) — DOWN Arrow Dominant
# EURODOLLAR INDEX ($XED) — DOWN Arrow Dominant
# COMMODITIES INDEX (USCI) — DOWN Arrow Dominant

PRICE PULSE UNCERTAIN NON-DOMINANCE OF RED ARROW –

# SWISS STOCKS — Changed to No Arrow Dominant
# TAIWAN STOCKS — NO Arrow Dominant
# DENMARK STOCKS — NO Arrow Dominant
# YEN (AGAINST $US) — NO Arrow Dominant
# JAPAN NIKKEI STOCKS — NO Arrow Dominant
# RUSSIAN RTSI STOCK INDEX — NO Arrow Dominant
# COAL ETF (KOL) — NO Arrow Dominant
# FVL — VALUE LINE — NO Arrow Dominant
# US KBW BANK INDEX — NO Arrow Dominant
# NATURAL GAS (SPOT PRICE) — NO Arrow Dominant
# GERMAN DAX — NO Arrow Dominant

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