BOOM as at 17th February 2019

GERMAN GDP DROPS — US RETAIL SALES DROP — CHINA CREDIT BOOMS — ARCNET – A GLOBAL INNOVATION SHOWCASE

 

There were lots of notable developments last week on the global finance and economics scene.German GDP growth dropped alarmingly to Zero for the last 3 months of 2018. Germany is now perilously close to a contraction of its economy. Italy, of course, is already in recession while the entire Euro Area GDP growth is moribund at 0.2%.  A Board Member of the European Central Bank (the ECB), Benoit Coeure, indicated that they were seriously considering another TLTRO Targeted Long Term Refinancing Operation to speed more funds into European banks. They will do “whatever it takes”.  BOOM is certain of that. Negative interest rates are common in Europe these days. Globally, there are now almost US$ 9 Trillion worth of Bonds on issue yielding negative returns. They call them safe havens.

US retail sales during December also dropped alarmingly. December sales were 1.2% below those of November and the worst in a decade. A Governor of the Federal Reserve, Lael Brainard, indicated that the Fed may have to slow down or cease its balance sheet reduction program in 2019 and she also indicated that further interest rate rises were probably not coming soon in the US.  At the Federal Reserve in Washington DC, she is Chair of the Committees on Financial Stability, Federal Reserve Bank Affairs, Consumer and Community Affairs, and Payments, Clearing and Settlements.

But clear evidence emerged for China’s huge boost to fresh new bank loan creation and local government bond issuance. New bank loans surged by 3.23 Trillion Yuan (almost $ 0.5 Trillion) in the month of January. That is the biggest monthly surge since 1992 — over a quarter of a century. Total Aggregate Finance increased 4.64 Trillion Yuan in January — almost US$ 700 Billion (in US Dollars) value already for 2019. China is well on its way towards a US $ 1 Trillion stimulation of its economy since late January and we are only in Mid February. Iron Ore prices and the Shanghai stock exchange benefited from this and rose strongly.

That confidence flowed through to the New York stock exchange on Friday. The West Texas Oil price surged by 2.9% on the day while the Russell 2000 Small Caps Index rose by 4% and the Dow Stock Index rose 3%. That was a big day in New York.

HARPEX SHIPPING INDEX VERSUS BALTIC DRY INDEX

Some commentators have been ringing economic alarm bells by pointing at recent falls in the global Baltic Dry Shipping Index. The index measures shipping costs for bulk raw materials such as iron ore, grain and coal and has plunged 58pc in less than two months. The Baltic Exchange in London calculates the index by assessing multiple shipping rates across more than 20 routes for each of the BDI component ships. Members contact dry bulk shippers worldwide to gather their prices and they then calculate an average. The BDI is issued daily.

BOOM prefers to look at the Harper Petersen Shipping Index. The HARPEX index is considered a more suitable indicator of global economic fleet shipping activity because it tracks changes in freight rates for container ships over a number of broad categories.  A ship containing dry bulk generally transports a single load type. Container ships, by comparison, usually transport a wide variety of finished goods — making measures such as the HARPEX Shipping Index more flexible for measuring global trade.

The HARPEX Index has been falling for the last 12 months but is now rising since Mid January. The huge economic stimulation happening in China may already be having an impact here.  Over many years, BOOM has found the HARPEX index to be a more reliable indicator of world trade than the Baltic Dry Index.ARCNET — A GLOBAL INNOVATION SHOWCASE

There were two significant events last week in the Crypto world. Arc from New York and Xinova from Seattle announced their ARCNET global innovation showcase. The Press Release read:  “Innovation experts and top-tier financial engineers join forces and launch an online platform where ideas can openly compete for capital”

“Xinova, a global market network of over 12,000 innovators, and Arc, a team of asset managers with decades of capital markets experience, today announced Arcnet, an online capital marketplace that allows investors to find and directly invest in innovation projects and alternative assets. Ultimately, Arcnet will use innovations in cryptography, like blockchain and distributed ledgers, to empower individuals to compete for investment based on the merits of their idea.”

The initial opportunities are listed here https://arcnet.com

This is an excellent summary — could this herald the death of the Venture Capital industry?

https://www.bizjournals.com/seattle/prnewswire/press_releases/Washington/2019/02/12/SF50213

COINROUTES

An interesting development in the world of Crypto trading is Coinroutes. CoinRoutes provides traders a unified view of many cryptocurrency markets with the ability to find the best prices from multiple exchanges. CoinRoutes claims to show a more accurate view of the market. It covers more than 75 exchanges.

As there are now 16,132 markets according to Coinmarketcap, this appears to be a much needed service. But, in reality, the vast majority of those “exchanges” have very little, if any volume.

So how many exchanges are worthy of analysis? The Top 120 have 24 Hour Volumes of more than $ 1 Million (according to Coinmarketcap). The Top 10 markets have 24 Hour Volumes of more than $ 300 Million and the Top market has 24 Hour Volume of more than $ 500 Million (data from Coinmarketcap).  BOOM cannot  vouch for the accuracy of this data. Please note that Crypto exchanges are unregulated so some of these reported volumes could possibly be complete frauds.

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

EMAIL: gerry [@] boomfinanceandeconomics.com

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

HOW MOST MONEY IS CREATED

BANKS CREATE FRESH NEW MONEY OUT OF THIN AIR
(but they always need a Borrower to do so)
THERE IS NO SUCH THING AS A DEPOSIT
BANKS PURCHASE SECURITIES, THEY DON’T MAKE LOANS
BANKS DON’T TAKE DEPOSITS, THEY BORROW YOUR MONEY

Watch this short 15 minutes video and learn as Professor Richard Werner brilliantly explains how the banking system and financial sector really work.

https://www.youtube.com/watch?v=EC0G7pY4wREhttp://

How is Most New Money Created ?

LOANS CREATE DEPOSITS — that is how almost all new money is created in the economy (by commercial banks making loans).

From the Bank of England Quarterly Bulletin Q1 2014    —

“Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.

“Most money in the modern economy is in the form of bank deposits, which are created by commercial banks themselves”.

Youtube Video —  https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-in-the-modern-economy-an-introduction

and

https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy

Paper:  Money in the Modern Economy  PDF —  CLICK HERE

Quarterly Bulletins Index

http://www.bankofengland.co.uk/publications/Pages/quarterlybulletin/2014/qb14q1.aspx

Most economists are unaware of this and even ignore the banking & finance sectors in their econometric models.

On 25th April 2017, the central bank of Germany, the Bundesbank, released a statement on this matter —

“In terms of volume, the majority of the money supply is made up of book money, which is created through transactions between banks and domestic customers. Sight deposits are an example of book money: sight deposits are created when a bank settles transactions with a customer, ie it grants a credit, say, or purchases an asset and credits the corresponding amount to the customer’s bank account in return. This means that banks can create book money just by making an accounting entry: according to the Bundesbank’s economists, “this refutes a popular misconception that banks act simply as intermediaries at the time of lending – i.e. that banks can only grant credit using funds placed with them previously as deposits by other customers”. By the same token, excess central bank reserves are not a necessary precondition for a bank to grant credit (and thus create money).”

Reference: https://www.bundesbank.de/Redaktion/EN/Topics/2017/2017_04_25_how_money_is_created.html

The Reserve Bank of Australia (Australia’s central bank) has also contributed to the issue in a speech by Christopher Kent, the Assistant Governor on September 19th 2018.

“…… the vast bulk of broad money consists of bank deposits”

“Money can be created …….. when financial intermediaries make loans

“In the first instance, the process of money creation requires a willing borrower.”

“It’s also worth emphasizing that the process of money creation is not the result of the actions of any single bank – rather, the banking system as a whole acts to create money.”

PRICE PULSE DOMINANCE CHANGES DURING LAST WEEK Ended 17th February 2019:

1. DENMARK STOCKS — Changed to NO Arrow Dominant
2. SINGAPORE STOCKS — Changed to UP Arrow Dominant
3. US JUNK BOND PRICES — Changed to UP Arrow Dominant

DENMARK STOCKS

SINGAPORE

JUNK BONDS OVER 6 MONTHS

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 17th February 2019.  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)

# SINGAPORE STOCKS — UP Arrow Dominant
# US JUNK BOND PRICES — UP Arrow Dominant
# HANG SENG — UP Arrow Dominant
# RWR (US Real Estate REIT Fund) — UP Arrow Dominant
# RUSSIAN RTSI STOCK INDEX — UP Arrow Dominant
# US HIGH GRADE CORP BONDS (LQD) — UP Arrow Dominant
# EMERGING MARKETS ETF (EEM) — UP Arrow Dominant
# YUAN (AGAINST USD) ETF (CYB) — UP Arrow Dominant
# US LONG BOND PRICE (TLT) — UP Arrow Dominant
# AGGREGATE US BOND PRICES (BND) — UP Arrow Dominant
# GOLD PRICE in USD — UP Arrow Dominant
# GOLD PRICE (in Aus Dollars) — UP Arrow Dominant
# INDIAN STOCKS — 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
# RIO STOCK (Iron Ore) — UP Arrow Dominant
# US 3 MTH T BILL YIELD — UP Arrow Dominant
# LIBOR — UP Arrow Dominant

PRICE PULSE FALLING — (RED ARROW DOWN DOMINANCE)

# NATURAL GAS (SPOT PRICE) — DOWN Arrow Dominant
# SWISS STOCKS — DOWN Arrow Dominant
# US DOW STOCK INDEX — DOWN Arrow Dominant
# US BIOTECHNOLOGY INDEX — DOWN Arrow Dominant
# JAPAN STOCKS — DOWN Arrow Dominant
# WEST TEXAS OIL PRICE — DOWN Arrow Dominant
# US TRANSPORT INDEX — DOWN Arrow Dominant
# US INSIDER SENTIMENT (KNOW) — DOWN Arrow Dominant
# SOIL (POTASH ETF) — DOWN Arrow Dominant
# QUAL (Quality ETF) — DOWN Arrow Dominant
# MTUM (Momentum ETF) — DOWN Arrow Dominant
# RUSSELL 2000 INDEX — DOWN Arrow Dominant
# TRIM TABS US FLOAT (TTAC) — DOWN Arrow Dominant
# FINANCIAL SECTOR ETF (XLF) — DOWN Arrow Dominant
# US KBW BANK INDEX — DOWN Arrow Dominant
# NASDAQ COMP INDEX — 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
# YEN (AGAINST $US) — DOWN Arrow Dominant
# DENMARK STOCKS — DOWN Arrow Dominant
# COAL ETF (KOL) — DOWN Arrow Dominant
# COPPER PRICE — DOWN Arrow Dominant
# INDUSTRIAL METALS ETF (DBB) — DOWN Arrow Dominant
# SOUTH KOREA 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 –

# DENMARK STOCKS — NO Arrow Dominant
# TED SPREAD — NO Arrow Dominant

Disclaimer: All content is presented for educational and/or entertainment purposes only. Under no circumstances should it be mistaken for professional investment advice, nor is it at all intended to be taken as such. The commentary and other contents simply reflect the opinion of the authors alone on the current and future status of the markets and various economies. It is subject to error and change without notice.The presence of a link to a website does not indicate approval or endorsement of that web site or any services, products, or opinions that may be offered by them.

Neither the information nor any opinion expressed constitutes a solicitation to buy or sell any securities nor investments. Do NOT ever purchase any security or investment without doing your own and sufficient research.  Neither BOOM Finance and Economics.com nor any of its principals or contributors are under any obligation to update or keep current the information contained herein. The principals and related parties may at times have positions in the securities or investments referred to and may make purchases or sales of these securities and investments while this site is live. The analysis contained is based on both technical and fundamental research.

Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.

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MOLS   Denmark

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