10 MM Dying in China — US Bond Prices Surging — US Commodity and Energy Prices Falling — Poland Unhappy with Germany and Ukraine — Curious History of Transnistria — New China Policies- [01-08-2023]
Direct from BOOM Finance and Economics at the links below
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THIS WEEK’S EDITORIAL
10 MILLION DYING IN CHINA: China has a population of approximately 1.4 billion people. That is 1,400 million. Every year, they have about 10 million deaths - Shock horror. Don’t tell the politicians running Western nations or our mainstream media. If they learn that 10 million Chinese are dying and they think there is a vote to be won, they will immediately ban all imported products and tourist arrivals from China because of the “threat” of imminent death.
After all, that many deaths must surely indicate some serious public health risk?
Excuse BOOM’s cynicism, but this is the logic being applied in previously sane nations such as the United States, the UK and Australia. Yes, the Empire of Lies is worried that the data concerning deaths from Covid coming out of China is way too low to generate a sufficient “threat” narrative and panic response.
Thus, they are accusing China of telling lies about the death numbers, obfuscating the truth. Using that invented narrative; they have decided to change their national arrivals policies based upon that invented narrative and not upon any actual valid data. This is the Pot calling the Kettle black.
“We think you tell more lies than us” (!) “How dare you” (!) — Hardly a solid foundation for setting national policies. This is yet another example of why it is important to never allow politicians anywhere near medical matters, especially those which involve viruses or so-called “vaccines” that don’t prevent transmission.
US BONDS SURGING, STOCKS TO FOLLOW: BOOM has been expecting a consolidation of support in the US stock and bond markets. Just 2 weeks ago, in the Christmas Day editorial, BOOM wrote — “For the US equities markets to run higher from here, they must find support between now and New Year's Day or very early in 2023. BOOM is expecting that to happen. However, expectation must be confirmed by price action. Price performance of equities and bonds immediately after the 1st January will be critical for BOOM readers to watch.”
BOOM was the only analyst on the planet who predicted the bottom of the US asset markets in October. That is a fine performance, but one cannot rest on one’s laurels. Price action must confirm expectations.
Last Friday in New York and Chicago, Bond prices markedly surged upwards on improved optimism that the Fed may be close to its peak of monetary tightening. Wages growth data was weak and so was services data – both indicating that the economy is, indeed, slowing. The Bond markets were especially noteworthy. Prices surged across all bond categories. Junk bonds, Municipal Bonds, Investment Grade corporate bonds, Inflation Protected bonds (TIPS) and Sovereign Treasury bonds all rose strongly in price during Friday’s trading session. The major stock indices all showed strength as well. The buyers seem to be coming back and the sellers appear to be exhausted.
Of course, these are only short term signals at present but BOOM is quietly confident that his New Year message of optimism to readers is well founded. Further positive price action from buyers is required throughout January to confirm the defeat of sellers. Watch closely but now confidently.
US COMMODITY AND ENERGY PRICES FALLING: Commodity prices continued to weaken in the United States as expected last week. These price falls are further evidence of the US economy weakening due to falls in demand. Lower commodity prices are therefore (paradoxically) indicators of future strength in the stock and bond markets.
· West Texas Light Crude fell 8% over the week.
· Natural gas fell 17% — a staggering fall.
· Gasoline fell 9.4%
· Brent crude oil fell 8.6%
· Sugar fell 5.4%
· Wheat fell 6.12%
· Soybeans fell 2.07%
· Corn fell 3.6%
· Livestock fell 2.7%
· Lumber fell 3.4% now one quarter the price in May 21, 18 mths ago.
Two major commodities rose in price during the week. Copper rose by 2.6% while Gold rose by 2.4% but there was no enthusiasm for Silver which was flat on the week.
POLAND UNHAPPY WITH GERMANY AND UKRAINE: In regard to the Ukraine war, there were two surprising developments last week. The leaders of Poland were rebuffed brusquely in a single sentence by Germany in response to their efforts in seeking reparations payments for the damage done by the Nazis in World War Two.
Poland sees this as a major insult from Germany. This festering sore will not go away. This conflict will weaken NATO accordingly and disrupt the European Union. As a result, anti-Russia sentiment may weaken inside Poland. After all, the USSR came to their rescue in 1945.
The other development of note also concerns Poland. The Polish Prime Minister, Mateusz Morawiecki, expressed strong anti-Nazi views in regard to the current government of Ukraine. Again, this is all about what happened in Poland during World War 2.
At a Press conference, he said that “There can be “no nuances” when it comes to the glorification of WWII Nazi collaborator Stepan Bandera in Ukraine”. He went on to say that Poland “would not show any leniency to those who do not want to recognize terrible crimes committed by Ukrainian nationalists against Poles during WW2”. Morawiecki stated strongly “There can be no nuance here. There will be no leniency for those who refuse to admit that the “terrible genocide” Poles suffered at the hands of the Ukrainian nationalists during WWII was “something unimaginable“.
POLAND VERSUS UKRAINE: Between 1942 and 1945, members of the Ukrainian Insurgent Army (UPA) reportedly (Source Wikipedia) hacked 100,000 Polish victims to death and drowned women, children and the elderly in wells in the Volhynia region of what is now north-west Ukraine.
The Volhynia region is South of Belarus and East of Poland. It is about 20% of the land mass of Western Ukraine. Within the territory of Volhynia is located a region called Little Polisie (Little Poland). At one time, all of Volhynia was part of the Pale of Settlement designated by Imperial Russia on its south western border.
In 1569, Volhynia was organized as a province of the Polish–Lithuanian Commonwealth. During this period many Poles and Jews settled in the area. The Roman and Greek Catholic churches became established in the province. In 1795, Volhynia was annexed as the Volhynian Governorate of the then Russian Empire. It covered an area of 71,852.7 square kilometers. The Soviet Union annexed Volhynia to Ukraine after the end of World War II.
To understand North Western Ukraine, you must understand Polish history in Volhynia and the Kingdom of Galicia as well. It existed from 1199 to 1349, predominantly located in modern-day Ukraine but with parts in Belarus, Poland, Moldova, and Lithuania.
And to understand South Western Ukraine, you need to also know about Transnistria.
THE CURIOUS HISTORY OF TRANSNISTRIA: Transnistria is an unrecognized breakaway state that is internationally recognized as a part of Moldova. However, it is also an unrecognized, independent Presidential Republic with its own government, parliament, military, police, postal system, currency, and vehicle registration. Its authorities have adopted a constitution, a flag, a national anthem, and coat of arms. Transnistria controls most of the narrow strip of land between the Dniester river and the Moldovan–Ukrainian border. It is officially designated by the Republic of Moldova as the “Administrative-Territorial Units of the Left Bank of the Dniester”.
A three-party Joint Control Commission (Russia, Moldova, Transnistria) supervises the security arrangements in the demilitarized zone, comprising 20 localities on both sides of the river. The territory’s political status remains unresolved.
Most Transnistrians have Moldovan citizenship, but many also have Russian, Romanian, or Ukrainian citizenship. The main ethnic groups are Russians, Moldovans/Romanians, and Ukrainians.
A cease-fire agreement in 1992 between Moldova and Transnistria established a Russian peace-keeper presence in Transnistria and a 1,500-member Russian military contingent is still present. The Russian army has had a military base and a large ammunition dump there for the last 30 years.
Believe it or not, Transnistria has its own central bank, the Transnistrian Republican Bank, which issues its national currency, the Transnistrian rubla.
FALLING CPI INFLATION: German inflation data came in lower than expected last week. In the UK, the BRC shop price index showed a slight slowing. However, there was a more marked decline in non-food prices. UK durable goods prices have had the most rapid disinflation since 2010 as demand has weakened. Agricultural prices in the UK have also been falling in recent months.
All of this is to be expected. The UK and EU economies simply cannot grow wages sufficient to fuel persistent CPI inflation in the situation they find themselves in. It is very similar to the US where wages growth is stagnant. Weakening US, UK and EU economies are now past the peak of CPI inflation. Their respective central banks must now sit on their hands and do nothing for a few months. More interest rate rises should be off the table.
Friday’s data for average hourly earnings for all employees on the US private non-farm payrolls rose by only 0.3% in December, following a downward revision to a 0.4% gain in the prior month. This was the smallest growth in average hourly earnings in four months. In December, average hourly earnings of private-sector production and non-supervisory employees rose by only 0.2%.
CHINA: On 30th October, BOOM’s firm editorial advice to China was “to abandon all Zero Covid policies immediately and to again encourage wealth creation for all of its citizens. It can limit excessive wealth through taxation but to discourage everyone is not good policy. It must abandon all connections to the World Economic Forum and its anti-human ambitions. The injectable “vaccines” that cannot work against respiratory viruses and are promoted by the World Economic Forum must be abandoned. Klaus Schwab and his guru, Yuval Harari, must be denounced. This is the pathway forward to a healthy and wealthy China. Economic productivity will be restored.”
Since then, China has abandoned its “zero-covid” policies and it has begun to encourage wealth creation again. Its break away from the World Economic Forum must occur next.
In regard to wealth creation, China has now again begun incentivising the ownership of homes. According to a Bloomberg Report last week, “China is planning to relax restrictions on developer borrowing, dialing back the stringent “three red lines” policy that exacerbated one of the biggest real estate meltdowns in the country’s history.“
Also according to the Bloomberg report, “other recent measures aimed at boosting home ownership include:
• Lower mortgage rates for first-home buyers if newly constructed house prices drop for three consecutive months
• A nationwide cap on real estate commissions to boost demand
• Allowing private equity funds to raise money for residential property developments
• Pledging 200 billion yuan ($29 billion) in special loans to ensure stalled housing projects are delivered
• A 16-point plan unveiled in November that ranged from addressing the liquidity crisis to loosening down-payment requirements for home buyers”
In response to these changes in policy settings, the Shanghai and Hong Kong stock markets are showing strength since early November, rising steadily. Confidence has returned.
BOOM’s advice from 30th October has clearly been acted upon by the Chinese government and they have lit a positive flame under the Chinese economy. They have abandoned the ill-informed zero-covid policies and restarted the quest for home ownership.
But the policy re-alignment is not yet complete. China must now abandon the World Economic Forum (WEF) and denounce it publicly. Why? Because the people of China are hard-working and ambitious. Their Yang energy is a positive force which must be encouraged for the economy to do well.
The Transhumanism of Klaus Schwab and Yuval Harari is a deeply negative life force, destructive in the long run to all human endeavours. Humans are not machines and must never be regarded as machines. BOOM expects that China will soon show great leadership to the world in moving away from the negative influences of the WEF. Many other nations will follow. The dignity of the Chinese people and their work to create a better future are at stake here. Turning away from the WEF will be a decisive, historical event that will strengthen China, its economy and its place in global Geopolitical leadership.
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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"From April 23, 2022, instead of one reserve army, there were two reserves in the Polish Armed Forces: passive and active. Next year, 250,000 reserve servicemen, who actually have nothing to do with the army, are likely to receive notice of actual conscription. As a result, thousands of Polish men of military age have begun to leave for other EU countries. This trend is already widespread and causes both approval and criticism, according to Dziennik Polityczny.".
Either Poland is getting ready for a "coalition of the willing" against Russia, or to recover Western Ukraine from UkroNazis.