Media and Entertainment Crash — Banks Affected — No More Lockdowns in UK — National Socialism and Fascism — Letter From a Doctor — US Stock Market Valuation — Coinbase Fined —

MEDIA AND ENTERTAINMENT CRASH

Last week, BOOM pointed out that the US stock markets were bought vigorously last Friday 26th March at exactly 2.49 pm by what seems to have been a centrally controlled buying agent with overwhelming purchasing power. It rescued the market from what appeared to be a serious slump as the week’s trading entered the last hour. However, BOOM also pointed out that there was an exxception in one sector — the  media and entertainment sector.

Subsequently, it has been revealed that a highly leveraged investment fund called Archegos Capital Management run by an investor called Bill Hwang suffered a massive margin call on that day. The rumor is that it was an $ 80 Billion margin call but this is impossible to verify. This resulted in the collapse of the shares in two very large US media and entertainment companies, Discovery and ViacomCBS.  It also had a similar effect on two large Chinese companies, Baidu and Vipshop.

During the trading week period from 22nd March leading up to Friday 26th March —

Discovery shares fell by more than 50 %   (NY Stock Code: DISCA)
ViacomCBS shares fell by  60 %    (NY Stock Code: VIAC)
Baidu Shares fell by 34 %    (NY Stock Code: BIDU)
Vipshop shares fell by 44 %  (NY Stock Code VIPS)

So — why were those shares NOT purchased at 2.59 pm last Friday 26th March by the centrally controlled buying agent? Remember that they bought ALL the other sectors in the US stock markets.  THAT is a key question to ask.

It reveals that the centrally controlled agent made a clear decision to NOT buy those shares while it was buying everything else in a bid to desperately support a falling broad market. The agent’s very existence was betrayed by such a conscious decision. We can all now conclude that such an agency exists without doubt. Some call it the Plunge Protection Team. Its job is clearly to protect US stock prices when they come under heavy selling pressure. That is not capitalism. That is central command and control.

THE BANKS AFFECTED

Something else of great interest happened on the following Monday when trading resumed. The shares of two large international banks suddenly dropped sharply and continued to fall through the week. Thay appear to have been lenders to Bil Hwang at Archegos Capital Management.

The Swiss bank, Credit Suisse, saw its shares fall by  22 % through the week.
The shares of Nomura, a large Japanese bank, fell by 20 %.

BOOM asks the uncomfortable questions. Are we witnessing another Ponzi scheme unraveling? Is this a Madoff situation? How much did Bill Hwang borrow to fund his investments? What else did he invest in? Are other banks exposed to the risk? If so, which ones? Is this a systemic threat to the banking system or the stock market in general?

Today, it has been reported that Bill Hwang was a friend of Cathie Wood at ARK Investment Management. Is this of any concern? Could Bill Hwang be an investor in ARK’s mutual funds and ETF’s?

COVID DEVELOPMENTS

An interesting development to take note of on the Covid front is the report that Dr Chris Whitty, the UK Chief Medical Officer, has made a speech where he said that we will all have to learn to live with Covid and accept it as a permanent, seasonal infection, not unlike Influenza (before it disappeared).

QUOTE:  “Prof Whitty also said that it was sensible to keep an “open mind” on whether the AstraZeneca vaccine caused blood clots until it was proven otherwise.

He said that it was impossible to prevent variants from coming into the UK, and argued that shutting the borders would be unlikely to prevent new infections.

Lockdowns are unlikely to be needed again as Britain learns to treat coronavirus like flu, Prof Chris Whitty has said.

The chief medical officer said that up to 25,000 people die in a bad flu year without anyone noticing and that accepting some Covid deaths would be the price of keeping schools and business open and allowing people to live a “whole life”.

“Covid is not going to go away,” he said. “You’ve got to work out what’s a rational policy to this and here I would differentiate quite a lot between a pandemic environment and what you get with seasonal flu.

“Every year, somewhere between 7,000 and 9,000 citizens die of flu, most of them very elderly, and every few years you get a bad flu year where 20,000 to 25,000 die of it. The last time we had that was three years ago and no one noticed it.

“So it is clear we are going to have to manage it, at some point, rather like we manage the flu. Here is a seasonal, very dangerous disease that kills thousands of people and society has chosen a particular way round it.” UNQUOTE

Source:   No more lockdowns – Britain will treat Covid like flu, says Chris Whitty

https://www.msn.com/en-gb/health/medical/no-more-lockdowns-%E2%80%93-britain-will-treat-covid-like-flu-says-chris-whitty/ar-BB1fdbDj

Some are wondering if Dr Whitty is taking such a position to perhaps protect himself from future legal challenges. It seems to be a remarkable change in tune.

NATIONAL SOCIALISM AND FASCISM

Benito Mussolini, the Italian dictator, defined his Fascism as “a merger of state and corporate power”. He also defined fascism with just one word — corporatism. Adolf Hitler worked closely with Germany’s large corporations during the 1930’s and provided lucrative government contracts to them for the manufacture of the weapons of war.

When the State grants legal immunity to products produced by corporations and then vigorously promotes those products, then surely it is in an alliance with those corporations? Are we now living in Fascist, Totalitarian states? And is this why we are seeing authoritarianism from governments in so many nations?

Are national governments favoring large corporations over small businesses in a panic reaction to Covid 19? In national lockdowns, coffee shops and restaurants have been banned from opening while the business operations of many large corporations have continued unhindered. In some countries, sporting events with large crowds (often a form of big business) are taking place while cultural and religious events have been banned.

Of course, some large corporations have been severely affected by lockdowns and Covid 19. A clear example is in the airline industry. But plenty of other large corporations have benefited handsomely from lockdowns and government support.

BOOM is always very suspicious of governments actively promoting the products of private corporations. Corruption risk looms large in such situations. This is a subject that requires more thought and discussion but don’t hold your breath. Hitler and Mussolini would both be smiling in their graves if such was indeed happening.

LETTER FROM A DOCTOR

“Vaccination has become a political act.”

“Politicians have co-opted all knowledge, expertise and science and weaponised it beyond recognition. Big Pharma has captured governments. Mainstream media has uncritically lapped and regurgitated it up for our constant delectation. There is no alternative perspective. World medical experts have been propagandised and censored out of existence.”

The Letter:  https://off-guardian.org/2021/04/01/bipolar-corona-politics-positive/

US STOCK MARKET VALUATION

The US stock market valuation (Market Capitalization) to GDP ratio is now approaching 2.0.
Prior to the Dot Com Crash in the year 2,000, the ratio stood at around 1.44. prior to the Crash of 2008, it was around 1.1.

So, it is at the highest level it has ever been in 40 years. This prompted a central banker to take note by saying —

“I’m concerned about excess risk-taking and if that excess risk-taking goes too far, whether it creates excesses and imbalances, that could ultimately create challenges,” Federal Reserve Bank of Dallas President Robert Kaplan said in an interview.

It was an odd statement, deliberately vague. After all, the Federal Reserve is not likely to raise short term, overnight rates to cap asset prices, is it? But what if the ratio gets to 3 or 4 or 5?

The Reserve Bank of New Zealand, however, has recently been instructed to take into account house prices when setting monetary policy. That is a big change in central bank guidelines.

Maybe the New Zealand central bank knows something the US central bank doesn’t?

COINBASE FINED

Last week, the Commodity Futures Trading Commission issued an order against Crypto digital asset exchange operator Coinbase Inc., based in San Francisco, California, for reckless false, misleading, or inaccurate reporting as well as wash trading by a former employee on Coinbase’s GDAX platform.

“Reporting false, misleading, or inaccurate transaction information undermines the integrity of digital asset pricing,” said Acting Director of Enforcement Vincent McGonagle. “This enforcement action sends the message that the Commission will act to safeguard the integrity and transparency of such information.”

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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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.”

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.

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