Last Week in the US Financial Markets — Deaths from all Causes Collapsing in Europe and UK — Corona Cases Plunge Worldwide — Employment Boom Coming in the US

LAST WEEK IN THE US FINANCIAL MARKETS

BOOM said last Sunday “…… in regard to the prices of Bitcoin and Tesla, BOOM suspects that their recent rises in price will soon be over and price declines should begin. And the FANGS plus maybe Apple could also weaken soon. This should allow other stock sectors in the US with more fundamental value to shine as investors rotate from fashionable sectors to other less fashionable ones.”

On Monday, Bitcoin and Tesla began falling sharply. By the Friday close, the Grayscale Bitcoin Trust had fallen by 30 % over the week and Tesla was down by 26 % from its high in late January. Apple shares had dropped 16 % from their late January High and Amazon had dropped about 10 % from its recent High. Netflix was down over 8 % from its late January High. Facebook and Google shares proved more resilient.

BOOM noted investor support in the following sectors over the week — Homebuilders, Construction Materials, Transport, Trucking, Banks, Consumer Finance,  REITs (real estate) , Telecommunications, Steel, Aluminium, Energy.  Most of these suffered a little selling pressure on Friday but it did not look convincing to BOOM. Thus, the BOOM bullish thesis for the US real economy to recover strongly in 2021 as the year progresses is being backed by investors’ money.

The dramatic collapse in Covid case numbers and deaths per day numbers all over the planet in most nations is also very positive for global economic recovery. That collapse began in early – mid January (before the vaccines could have any effect). BOOM discusses that phenomenon later in today’s editorial.
The Bond market got a lot of attention from the mainstream media due to price falls through the week in the longer dated Treasuries, driving up long term interest rates in the range from 5 – 30 years. But, on Friday, buyers appeared for TIPs, high quality corporate bonds and the long dated Treasuries signalling the end of the current pullback as far as BOOM can see. Junk was under some pressure but it didn’t look too convincing so perhaps the weak hands were bailing out, leaving the Risk On investors in place.

So, overall, as BOOM had forecast two weeks ago, a correction has occurred in most of the US Sovereign Bond market resulting in a more positive yield curve which is a net positive effect. In equities, the New Tech sector was hit the hardest but that was to be expected as it had flown way too high by late January. The rotation to quality appears to have begun, just as BOOM suggested last week — “Watch for significant sector rotation throughout the year. This has already begun with investors switching to the energy sector as well as both regional and large banks.”

DEATHS FROM ALL CAUSES COLLAPSING IN EUROPE

The graphs in Euromomo for Deaths from All Causes in 27 European nations (including the UK) were updated on Thursday as usual and they show dramatic plunges in absolute death numbers right across Europe and the UK back to normal levels (and below normal in many cases). This phenomenon of collapse began in early January, about 6 – 7 weeks ago. It is crystal clear that children were not affected at any time over the past 12 months with no unusual rises in death numbers. Schools should be open.
BOOM advises readers to study the graphs provided by Euromomo closely. Scroll down on the link to look at the Z Scores of all the nations. You will find that death rates are at normal levels or below normal in almost all nations — except Portugal where the graph is collapsing just a little later than the others.

Somehow, the politicians have not noticed any of this as they continue their Fear and Panic narrative.

Link:  https://euromomo.eu/graphs-and-maps

US EMPLOYMENT BOOM COMING

BOOM last week forecast a BOOM in the US economy starting mid-year and growing through to the end of 2021, triggered by increased new home construction. What could that mean for jobs?

If we look at the employment statistics for the age group 15 – 54 in the US, we can see that 7 million net jobs were lost due to the Coronavirus Panic over the last 12 months in that age range.

Current employment numbers in that group number 114 million out of 238 million population.  That is an employment rate of 48 %.  That’s awful. Twenty years ago, it was at 76 % around the year 2000. And it was 74 % in 2008 just before the Great Financial Crisis (the GFC).

However, if we look at the 15 – 74 years age group, we find a very different pattern. The total jobs lost overall in the US over the last 12 months was a net of 10 million. Thus, we can deduce that 3 million older people lost their job versus 7 million young people. This means that relatively few people lost their job in the 54 – 74 age group. 

The employment rate is now at 61.7 % across the longer age range of 15 – 74 years. This is the same employment ratio as in 1971 and is actually higher than the rate in 2008 before the Great Financial Crisis and subsequent great recession. A good base from which to build.

And the next phase over the next decade will see almost all of those aged over 74 retiring progressively year by year. That should make way for a boost in full employment in the younger working cohort. Good news as long as the economy recovers from here. Youth unemployment is already collapsing from its peak of 27 % in April last year. That is a good start.

BOOM’s US boom thesis implies that many people in the younger age groups will be hired from mid summer this year and that they will fuel the new housing building boom from then onwards for many years as they find more permanent employment. This is a dynamic situation. It’s always hard to be sure of economic forecasts and the egg must come before the chicken. So as this year progresses, we must watch closely for a further fall in youth unemployment and a rise in secure full time employment. That will tell us that the economy is in strong repair mode and that the BOOM thesis of US recovery is intact.

And, by the way, US housing inventory is at a record low of 1.9 months supply (six months is regarded as normal). Also, before last week’s correction, lumber prices doubled in the last 4 months. Both these facts support the BOOM housing boom thesis.

CORONA CASES PLUNGE WORLDWIDE

Coronavirus cases and deaths attributed to Covid 19 are also now plunging both around the planet and in the US. That plunge began around 8th January with the peak of case numbers worldwide occurring on January 15th in mid winter — well before the vaccines could have had any significant effect. BOOM suspects that this fall in “cases” is being caused by changes in the number of amplification cycles being done in the PCR Tests for Covid.  If lower cycle numbers are used in the labs, then false positive results will fall (it’s as simple as that). Even Anthony Fauci has admitted that in the past.

The WHO released an announcement on that matter on 13th January 2021, advising lab staff to take more care in the interpretation of weak positive results. And, finally, in response to a huge uproar from medical and scientific experts worldwide (not reported in the mainstream media), the WHO advised laboratory technical staff to provide the Ct value in the report to the requesting health care provider. The Ct value is the number of amplification cycles done on the sample.

You can read that WHO release here —
WHO Nucleic acid testing (NAT) technologies that use polymerase chain reaction (PCR) for detection of SARS-CoV-2 : https://www.who.int/news/item/20-01-2021-who-information-notice-for-ivd-users-2020-05

Deaths per day (attributed to Covid 19) peaked globally on January 27th and have been plunging ever since. Again, the impact of PCR Testing methodology must be questioned.

The US numbers reflect the global picture. The Deaths per day numbers attributed to Covid in the US peaked on January 12th — the day before the WHO issued their Notice to Lab Staff worldwide. Deaths attributed to Covid in the US since then have dropped sharply.

Regardless, all of this is very good news for the global economy and the US economy. Such dramatic collapses in so many nations cannot be due to any vaccination effect as far as BOOM can tell.

There are other possible explanations for the collapse in case numbers and deaths worldwide. Perhaps herd immunity in many nations reached a level sufficient to stop the virus in its tracks all at the same time? Perhaps masks finally had a dramatic effect in all those different nations at exactly the same time? Perhaps lockdowns suddenly worked? Maybe the so-called new “Covid Variants” are much less aggressive — all of a sudden.  Those explanations all seem improbable to BOOM.

BOOM prefers the theory that the epidemic of false (or incorrectly interpreted) PCR test results simply came to an end when the WHO called “Halt”.

To check the global collapse of Covid new cases and deaths per day charts, go to the Link provided. Collapse patterns exist in the 25 of the Top 30 nations listed on the basis of “Total Cases”. The exceptions are Brazil, Peru, Chile, Czechia and France. In Iran, daily new cases are rising while deaths per day attributed to Covid are falling. In Iraq, the new cases are sharply rising while the deaths per day numbers are flat.

The most striking collapse patterns can be seen in the UK and South Africa.

The top 5 nations on a Cases per Million Population basis are Andorra, Gibralta, Montenegro, Czechia and San Marino.

The top nations on a Deaths per Million basis are Gibralta, San Marino, Belgium, Czechia and Slovenia. The UK is number 6.

Worldometers:  https://www.worldometers.info/coronavirus/

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.

CLICK HERE FOR PODCASTS:   OUR BRAVE NEW ECONOMIC WORLD

EMAIL: gerry {at} boomfinanceandeconomics.com

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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.”

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MOLS Denmark

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