BOOM as at 24th February 2019

KRAFT CRASH
BUFFETT THUMPED

The shares of Kraft Heinz crashed 27.5% in New York on Friday to $ 35 a share. This amounts to $ 15 Billion in value lost in a single day. The price was around $ 90 just 2 years ago so this has been a dramatic change of fortune for shareholders.

Warren Buffett apparently lost $ 4 Billion off his stake. Buffett owns 7.66% of the company according to Berkshire’s most recent SEC filing with an average entry price of around $ 30 so he is still ahead of the game but his profits on paper that looked so good in early 2018 have evaporated. It shows that even the greatest investors can get caught out by events. Berkshire Hathaway A shares closed down almost 2% on the day.

CARACAS SUPERMARKET

An American journalist visited Venezuela last week and filmed himself shopping in a large supermarket in Caracas. The film is all over the Internet. Just Google search “supermarket tour in Caracas”. The shelves were bulging with all manner of goods including a vast array of toilet paper and soaps. Food and drinks of all kinds were on offer. None of this complies with some exaggerated western media reports of mass starvation and huge shortages. So where is the truth?

“The first casualty of war is truth” said Aeschylus the ancient Greek playwright in 525-546 BC, almost 2,500 years ago. Nothing seems to have changed. How can anyone who is not in Venezuela establish the truth? Much of the mainstream media appears to have lost its way and can no longer be relied upon.

GEO-POLITICAL SOUP
THE PLANET CHANGES

Some people say that there is no such thing as economics. They state that “in the end, it is all politics”. Time to take a look at the Geo-political landscape on planet Earth.

Last week, events in Turkey, Saudi Arabia and Germany were simply stunning. Did you notice? Did your mainstream media news source tell you? Or did they appear to be more overly concerned about the weather “news” and the sports “news” as per usual?

In Turkey, the Government announced that they would now certainly reject the US Patriot missile system in favor of buying the Russian S 400 missile defense system, due for delivery in July. If it goes ahead, this decision by Turkey breaks all the well established bonds of the US dollar empire that dominates our planet. Those bonds are based upon the convention of international trade being principally settled with the global reserve currency, the US Dollar. This especially applies to trade deals for US manufactured weapons and especially for Saudi Arabian oil.

Let’s clarify the situation, this is the second biggest military force in NATO (North Atlantic Treaty Organization) rejecting the USA as an arms supplier, an event of great historical significance. Perhaps it is just a bluff.

NORD STREAM

Meanwhile, the chairman of the German-Russian Chamber of Commerce, Matthias Schepp, antagonistically stated in Berlin on Thursday that “Germany is not the 51st state of the United States”. He was rejecting persistent US interference in the Nord Stream 2 Gas Pipeline project which is an alliance between major energy companies from Russia, France, Germany, Austria, the Netherlands and the UK. Germany’s patience with the US is clearly wearing thin. They need cheap, reliable, readily available natural gas from Russia as a prime energy source. The alternative is to freeze to death in winter. America says it can supply gas to Europe from across the seas using large ships. But that is a pipe dream and everyone knows it. After all, energy underwrites all economic endeavor. Expensive energy is simply not an option and Europe cannot become reliant upon a string of bulk LNG carriers stretched out across the North Atlantic. Doing business with Russia is absolutely an imperative not just for energy supplies but also as a close purchaser of all the advanced manufactured goods supplied by Europe. Proximity is the key with geography as destiny. Geo-politics must follow. It’s as simple as that. Trump is trumped here.

BACK IN TURKEY

Back in Turkey on Thursday, the country’s leader Recep Tayyip Erdogan told a crowd in the western province of Denizli that Turkey does not want to be on the hook with the International Monetary Fund (IMF). He attacked the Washington-based, US dominated organization born from the Bretton Woods Agreement of 1944 — “I told the IMF chair in Davos ‘You are not the prime minister of Turkey, I am. You do not have a job to run Turkey, take your money and leave’…… Now we have no debts to the IMF.”

The IMF, the World Bank, US Dollar trade settlement, US arms supplies (settled with US Dollars) and the settlement of international oil supplies also with US currency are all key elements of the dominant global empire. All were established in July 1944 at the Bretton Woods Agreement meeting or were established in the immediate post WW2 era.

THE OIL GAME

So — what about oil? Surely America’s ally in the Middle East can be relied upon to keep the US Dollar currency pact together in regard to oil? What happened last week in Saudi Arabia?

The answer is that China and Saudi Arabia signed a $ 10 Billion deal to establish a joint oil refinery and petrochemical project. The prince of Saudi Arabia even travelled to China to seal the deal and had his picture taken smiling and standing on the Great Wall of China. Oil major Saudi Aramco and Chinese companies signed the agreement during Crown Prince Mohammed Bin Salman’s two-day trip to Beijing. Believe it or not, China is Saudi Arabia’s major trade partner, not the US.

ISRAEL AND RUSSIA

Surely, America’s other great Middle Eastern ally can be relied upon to maintain an aggressive stance against the so-called “adversaries” of the US? No — shock, horror, the President of Israel, Benjamin Netanyahu is heading to Moscow to meet Vladimir Putin yet again on 27th February, this Wednesday. The two leaders have recently spoken by phone and discussed “regional developments”. This is no real surprise as Netanyahu often travels to Moscow and has almost a million Russians resident in his country, most of whom are citizens.

IRAN AND VENEZUELA

Then there is Iran and Venezuela to consider. The European nations have steadfastly held to the JCPOA nuclear agreement with Iran in direct defiance of the US. Germany, in particular, is steadfastly against breaking that agreement.

And Italy has joined Turkey in condemning US actions to support an alternative government in Venezuela. There are many Venezuelans of Italian descent so this is the connection. Italy is not keen on “meddling” in Venezuelan politics and supporting an overthrow of the government. The Italians are defying the European Union and Trump.

SYRIA

And then there is Syria to consider. The latest news reveals that Trump may have caved into pressure in leaving up to 400 US troops in Syria as “peace-keepers” and “for a period of time” rather than pulling them all out immediately. Does that mean leaving them for a week? A fortnight? or a decade? This is not a UN approved move and the US is clearly in breach of international law in maintaining a presence there. Turkey is very unhappy about this. Remember — they are the NATO ally nation buying Russian missile systems and opposed to the overthrow of the Venezuelan government.

FOUR AMIGOS

With all of this happening, it appears that the four amigos running US foreign policy — Bolton, Pence, Trump and Pompeo — seem only capable of issuing threats, trying to force other nations to comply with their wishes. Their policy seems to boil down to “you are either with us or against us. You must now choose”. This approach is usually successful in the primary schoolyard playground but it soon loses its potency in high school. The amigos have not yet worked that out. We are all now a long way from high school days. Where are the professional diplomats of the US State Department in all of this? Missing in action?

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 24th February 2019:

1. SWISS STOCKS — Changed to UP Arrow Dominant
2. SOIL (POTASH ETF) — Changed to UP Arrow Dominant
3. COPPER PRICE — Changed to UP Arrow Dominant
4. TED SPREAD — Changed to DOWN Arrow Dominant

SWISS

POTASH

COPPER

TED SPREAD

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 24th 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)

# COPPER PRICE — UP Arrow Dominant
# SWISS STOCKS — UP Arrow Dominant
# SOIL (POTASH ETF) — UP Arrow Dominant
# 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)

# TED SPREAD — DOWN Arrow Dominant
# 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
# 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

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.

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MOLS   Denmark

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