WHO BLINKS FIRST?
Last week, BOOM wrote a list of the things that had to happen in order for global financial markets to heal themselves and move on from the recent negative volatility that has been clearly evident during October and November.
The list included 6 items
1. The US Federal Reserve must pause in its monetary policy tightening
2. The Italian Government’s conflict with the European Union and the European Central Bank must move towards a pragmatic settlement
3. A Brexit agreement must be reached in the UK
4. The China US Trade War must be settled
5. The Oil Price must stabilize
6. The US Dollar must start to weaken
Over the last week, we have seen the financial media frequently refer to “blinking” as a code word for any possibly significant change in stance. This refers to an old kid’s staring game — who blinks first loses. In an adult world, it often describes a high tension stand-off between rivals in business or even war.
Since the list was drawn up, the US Federal Reserve has “blinked”, the Italian Government has blinked, Theresa May may have (possibly) blinked, Donald Trump has blinked (in relation to the Chinese) and the West Texas Oil price has risen by 1% with the Brent Crude price staying stable.
However, the US Dollar has not shown any significant weakness. BOOM expects that to happen soon. Once that happens, then the whole check list will be in motion and the global financial markets should stabilize. BOOM expects stock markets in particular to become less volatile and perhaps return to being more positive rather than negative. The emerging markets should be major beneficiaries especially because of the lower oil prices. And advanced nation stock and bond markets should see steady growth leading into 2019.
If the check list fails to materialize, then the opposite will happen. More uncertainty will cause more uncertainty. And there is one thing that investment markets hate and that is increasing uncertainty.
BOOM recorded another global macro-economic Podcast on Black Friday 23rd November last week with the ever brilliant Paul Gambles of MBMG Group. The topics discussed were — the crypto-currency world, Goldman Sachs’s involvement in the MDB Malaysian bond issue scandal and whether or not that might trigger a global banking crisis, the US corporate bond market, the US Government bond market, the Italian situation, the current global government debt default rate (0.3%), the long term structural problems in the US economy and China’s Belt & Road Initiative (the BRI).
Of course, BOOM recommends that you listen to it. It lasts for about 40 minutes and is available here —
On Soundcloud — https://soundcloud.com/user-649725326/obnew-podcast-4
BITCOIN MINERS CRASH
Between 600,000 and 800,000 bitcoin miners have shut down since mid-November amid declines in price and hashrate across the network, according to the third-largest mining pool. As bitcoin’s price recently fell below $4,000, mining farms that have been using machines made in 2016 and 2017 with lower productivity just can’t break even. And one of the top 5 biggest Bitcoin miners has filed for Chapter 11 bankruptcy protection in the US claiming that the firm is insolvent and unable to pay its debts when due. From the court documents, it was estimated that they may owe somewhere between $ 10 – $ 50 Million to creditors.
A Swiss-based crypto-mining startup that planned to use renewable energy to mine cryptocurrency “off the grid” has also been shut down for allegedly conducting an illegal initial coin offering (ICO).
And one of the largest funds established to invest in Bitcoin and other cryptos has apparently lost $ 136 Million so far this year to the end of September even before the recent price falls are taken into account. If this is true, then the growing institutional interest in the sector will probably evaporate more quickly than expected.
US TRADE DEFICIT WORSENS
Donald Trump must be pulling his hair out (if such is possible). The US trade deficit with the rest of the world is getting worse despite all his efforts to improve it via aggressive trade policies aimed at “Making America Great Again”.
President Trump’s tariffs were supposed to reduce America’s trade deficit, but it has instead grown for five straight months and is on track to hit a record high before the end of the year. The monthly goods deficit grew by $1 billion in October, according to a US Census report released on Wednesday last week.
RUSSIA SAUDI OIL AGREEMENT
Meanwhile, Trump would not be happy to see Vladimir Putin and the leader of Saudi Arabia getting on so well at the G20 meeting in Argentina. Bloomberg has reported that Russia and Saudi Arabia have agreed to extend into 2019 their agreement to manage the oil market, known as OPEC+. However, apparently they have yet to agree on any fresh output cuts.
This underlies what BOOM has been saying for some time now. The western mainstream media persistently underestimates the growing ties that Russia has to both Israel and Saudi Arabia. The ties to Israel are founded in the fact that almost a million Russians live in Israel. And the fact that Russia and Saudi Arabia are now the two biggest players in the world of energy outside the US is also not understood well as a tie that binds.
AUSTRALIAN BANKING INQUIRY ENDS
The Royal Commission inquiry into the Australian Financial industry has come to the end of its public hearings. The commission received more than 10,000 submissions. Many bankers lost their jobs throughout the course of the inquiry but the biggest scandal has been the “fees charged for no service” matter. This became especially damaging when it was revealed that some bank fees for service had been charged for financial services provided to dead clients (after their death). The whole matter begs the question whether or not these actions constituted criminal acts. If so, then some bankers may eventually find themselves behind bars, convicted of crimes. And not before time as far as BOOM can see. It is high time that some bankers are convicted and sentenced to incarceration for their activities. Previously, bankers in other nations have gotten away with the dubious defense of “miss-selling” rather than being charged with outright fraud. Miss-selling is the deliberate, reckless, or negligent sale of products or services in circumstances where the contract is either misrepresented, or the product or service is unsuitable for the customer’s needs. But it appears that there is no public tolerance for such a defense in Australia. So the Commissioner may recommend criminal sanctions in his final report, to be delivered by February 1 next year.
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 1st December 2018:
1. INDIAN STOCKS — Changed to UP 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 1st December 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)
# INDIAN STOCKS — UP Arrow Dominant
# JAPAN STOCKS — UP Arrow Dominant
# NATURAL GAS (SPOT PRICE) — UP Arrow Dominant
# 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
# WEST TEXAS OIL PRICE — UP Arrow Dominant
# US DOW STOCK INDEX — UP Arrow Dominant
# US TRANSPORT INDEX — UP Arrow Dominant
# US 3 MTH T BILL YIELD — UP Arrow Dominant
# LIBOR — UP Arrow Dominant
PRICE PULSE FALLING — (RED ARROW DOWN DOMINANCE)
# TRIM TABS US FLOAT (TTAC) — DOWN Arrow Dominant
# US HIGH GRADE CORP BONDS (LQD) — DOWN Arrow Dominant
# EMERGING MARKETS ETF (EEM) — DOWN Arrow Dominant
# FINANCIAL SECTOR ETF (XLF) — DOWN Arrow Dominant
# NASDAQ COMP INDEX — DOWN Arrow Dominant
# US JUNK BOND PRICES — DOWN Arrow Dominant
# COMMODITIES INDEX (USCI) — DOWN Arrow Dominant
# 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
# EURO (AGAINST $US) — DOWN Arrow Dominant
# NOMURA HOLDINGS — 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 –
# RUSSELL 2000 INDEX — NO Arrow Dominant
# US BIOTECHNOLOGY INDEX — NO Arrow Dominant
# US INSIDER SENTIMENT (KNOW) — NO Arrow Dominant
# GOLD PRICE in USD —NO Arrow Dominant
# GOLD PRICE (in Aus Dollars) — NO Arrow Dominant
# AGGREGATE US BOND PRICES (BND) — NO Arrow Dominant
# SWISS STOCKS — NO Arrow Dominant
# RUSSIAN RTSI STOCK INDEX — NO Arrow Dominant
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