DOOM or BOOM?
The DOOM and GLOOM gang were out in force during the month of October predicting massive stock market collapses, currency collapses, China collapses, US collapses, EU collapses and the end of the economic world as we know it. BOOM stayed calm watching the stable currency markets, the stable commodity markets with some key industrial commodities actually rising in price and the sovereign bond markets steadily adjusting to a higher interest rate environment. A steeper US Treasuries yield curve is necessary when making such an adjustment so how can “experts” be surprised to see the long end rise in yield? Iron Ore futures prices in China finally fell a little in the last 3 days of last week’s trading after rising defiantly throughout all of October but that was no real surprise either.
BOOM also noted a big fall in global oil prices last week which is an especially welcome development. In a previous editorial, it was noted that lower energy prices are critical for the health of the economies in the emerging nations and China. West Texas Crude has fallen by 18 % during October and Brent Crude has fallen by 16 %. These are terrific falls which can only be seen as positive developments and especially in China because China is the world’s biggest importer of oil. During September, BOOM was becoming more and more concerned as West Texas approached $ 78 a barrel and Brent neared $ 88 a barrel. Such price levels were simply incompatible with global economic well being.
In regard to the global stock market falls, BOOM’s Price Pulse Dominance analyses have not revealed any change of long term trend in the US stock indices. That includes the Dow, the S & P, the Russell 2,000, the Nasdaq and the Transportation index. So the US Peak Madness scenario seems not to have arrived.
As frequent readers will already know, BOOM is inclined towards the view that we are nowhere near Peak Madness yet in that nation. After all, they are exceptional (according to themselves) and that means that they will be exceptional in terms of Peak Madness too. BOOM suspects that we ain’t seen nuthin’ yet when it comes to madness in that huge banana republic.
Global bank stocks recovered strongly last week. This is another welcome sign. And the Italian 10 year Bond yield continued to fall. Its highest recent yield was reached on 19th October at 3.783% and it has fallen steadily since then to 3.322%. It looks like Mario Draghi and the boys (they are all boys) at the Bank of International Settlements in Basel, Switzerland plus the Federal Reserve in the US are surely all hard at work arranging a consortium of buyers for the Italian bonds going forward. After all, it is not worth risking the whole of the EU experiment over this. If BOOM can see that, then surely they can too.
Or perhaps the Chinese are quietly supporting Italy by being always ready to bid?
KEY ECONOMIC DEVELOPMENTS
On the positive front, last week the Czech Republic raised its key short term 2 week repo rate by 0.25% to 1.75% because of increased inflationary pressures. Germany recorded its highest annual inflation figures in 10 years at 2.5%. And Australia’s exports for the month of September rose to a record high with their trade surplus now growing steadily.
But, meanwhile, the Italian economy was moribund with no growth recorded over the last quarter compared with the previous quarter. BOOM was unable to identify any other significant negative economic events globally over the last week while looking at the official releases.
So how can the DOOM and GLOOM gang keep up the negative sentiment? BOOM cannot see how they can keep it up. But the financial mainstream media seems endlessly awash in negative stories predicting the outbreak of economic turmoil and catastrophe.
One notable aspect of the “Red October” Panic has been the stability in the Crypto market. The price of Bitcoin has barely moved during the turmoil on the globe’s stock markets in October and the market capitalization of the entire Crypto world has stayed rock steady around $ 203 – 208 Billion.
It is hard to interpret this development. Has the “fizz” gone out of the Crypto world? Will it now just die out due to lack of interest? Or is this the calm before a coming storm of volatility? BOOM favors the former scenario. There really is no reason for the prices of individual Cryptos to rise again as far as BOOM can tell. They mostly represent nothing of intrinsic value — just sequences of digital code that may have some utility or may not. However, as discussed in previous editorials, there are new developments happening in this space. BOOM is watching those with great interest.
If you wish to learn more about this, you can start by reading this article published by MishTalk, most of which is a reasonable summary of where we are currently at in the Crypto space. Follow the link, read the article, watch the video and also read the comments after the article. None of this is simple. It is complex and that complexity is possibly the biggest potential problem for the whole Crypto phenomenon.
Beyond Bitcoin and ICOs: The Future of Blockchain
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.
Return to the BOOM Main Website – BOOM Finance and Economics at http://boomfinanceandeconomics.com/
EMAIL: gerry [@]
PRICE PULSE DOMINANCE CHANGES DURING LAST WEEK Ended 3rd November 2018:
1. SWISS FRANC (AGAINST $US) — Changed to DOWN Arrow Dominant
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 3rd November 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/
PRICE PULSE RISING — (RED ARROW UP DOMINANCE)
# BRAZIL STOCK INDEX — UP Arrow Dominant
# PALLADIUM PRICE — UP Arrow Dominant
# ARGENTINA STOCKS — UP Arrow Dominant
# US INFLATION PROTECTED BOND PRICES — UP Arrow Dominant
# US UTILITIES STOCKS — UP Arrow Dominant
# RWR (US Real Estate REIT Fund) — 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
PRICE PULSE FALLING — (RED ARROW DOWN DOMINANCE)
# SWISS FRANC (AGAINST $US) — DOWN Arrow Dominant
# FRANCE STOCKS — DOWN Arrow Dominant
# AUSSIE ALL ORDS INDEX — DOWN Arrow Dominant
# THAI SETI INDEX — DOWN Arrow Dominant
# GERMAN DAX — DOWN Arrow Dominant
# TAIWAN STOCKS — DOWN Arrow Dominant
# FVL — VALUE LINE — DOWN Arrow Dominant
# US KBW BANK INDEX — DOWN Arrow Dominant
# US LONG BOND PRICE (TLT) — DOWN Arrow Dominant
# YEN (AGAINST $US) — DOWN Arrow Dominant
# DENMARK STOCKS — DOWN Arrow Dominant
# COAL ETF (KOL) — DOWN Arrow Dominant
# TED SPREAD — 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
# SOUTH KOREA STOCKS — DOWN Arrow Dominant
# SINGAPORE STOCKS — DOWN Arrow Dominant
# AUSSIE DOLLAR AGAINST US DOLLAR — DOWN Arrow Dominant
# CANADIAN DOLLAR AGAINST USD — DOWN Arrow Dominant
# BRITISH POUND AGAINST USD — DOWN Arrow Dominant
# NOMURA HOLDINGS — DOWN Arrow Dominant
# EURO (AGAINST $US) — DOWN Arrow Dominant
# PLATINUM PRICE — DOWN Arrow Dominant
# SHANGHAI STOCKS — 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
PRICE PULSE UNCERTAIN NON-DOMINANCE OF RED ARROW –
# GOLD PRICE in USD —NO Arrow Dominant
# GOLD PRICE (in Aus Dollars) — NO Arrow Dominant
# TRIM TABS US FLOAT (TTAC) — NO Arrow Dominant
# US HIGH GRADE CORP BONDS (LQD) — NO Arrow Dominant
# AGGREGATE US BOND PRICES (BND) — NO Arrow Dominant
# COMMODITIES INDEX (USCI) — NO Arrow Dominant
# INDIAN STOCKS — NO Arrow Dominant
# SWISS STOCKS — NO Arrow Dominant
# RUSSIAN RTSI STOCK INDEX — NO Arrow Dominant
# NATURAL GAS (SPOT PRICE) — NO Arrow Dominant
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