Market Review & News

Market Review & News


INTRODUCTION

 

Semi-Annual Review:

Welcome to the first half of 2017. The team at EssenceFX would like to thank all our readers for their continued patronage and support towards our reviews.

First and foremost, we’d like to bring to your attention our now well-established 2016 outcome predictions by reiterating on certain previous statements made and questions thrown; our aim here at EssenceFX is to provide everyone with complete and unbiased news coverage and this is to show all our readers that we believe strongly in preserving a clear long term research direction. Therefore, reinforced again below are our key themes for 2016 (with main points highlighted in bold):

  1. In an era driven largely by sovereign fund movement and other large capital flows, fundamental and technical indicators seem to show decreasing reliability in aiding one to anticipate market directions. It has become near impossible to gauge a clear picture on the global economy without pivoting the importance of global political risk, large capital flowsand its influence towards behavioral finance”.
  1. Conventional research and media, and now even regulated financial indicators often times tend to underplay or even hide the importance of certain key issues which will impact the economy. Whether this is done to preserve global political harmony, or to preserve the financial interest of certain large parties; this act of withholding or underplaying information is damaging on all retail trade positions”.
  1. Where has the money gone? ; Are we at war? ; Who’s allied with whom? ; Can prices keep on going up ahead of income? ; Who are the game changers? ; Will there be a single world currency? ; How manipulated are global asset prices? ; Why are alternative asset classes rallying? ; Why is stagflation no longer a myth? ; What’s driving privatization?”

 (For the full 2016 second half review, please click HERE)

 

In reference to our 2016 research focus and questions thrown; moving along 2017, the research team here at EssenceFX would like to enlighten our readers on how these points have been revolutionized and show our readers how it would ultimately link towards our opined three main key economic / social themes for this year:

  1. Elite governance through fund flows – “Elite Theory”.
  2. The amplification of the “Gen Z” focused “Psychological Warfare”.
  3. The total “Tech Sector” takeover” –“Technocracy

At this stage, there is some likeliness that we’ve confused you a little (or a lot) by our main themes but that’s alright because we’re here to clarify. How will we do this? That’s right! Just as how we did last year; The team at EssenceFX would like to invite you to think of potential answers to these questions and consider these following scenarios while we present to you the current global economic subthemes; the driving forces in which we here at EssenceFX believe is relevant to our three main key economic / social themes moving along 2017. Kindly take note while going through on how they magically somehow intertwine with the bigger picture!

 

Scenario #1:

Are migrants really to blame for the loss of domestic jobs? There seems to be much market talk now about the possibility of an Italiaxit, Swexit, D***…(okie we shall stop sounding absurd by abbreviating further) ..erm Denmark, Greece, The Netherlands, Hungary, France, and at worse Germany to leave the European Union mainly as we see it, playing in to the widely spread media narrative on the loss of jobs domestically. In a smaller scale view, Trump invoked “populism” puts forth a psychological breakthrough which sets good precedence for potential recurrence in the European Union; a valueless statement by us if left merely as such.

However on a bigger picture, does anyone notice how this has been spread by mainstream media as more of an issue compared to the loss of jobs due to our advancements made in technology? There has been ongoing expansion of robo factories, there are now robo financial advisors, and there is now an industry called 3D printing for example, yet we hear very little of these. In addition, notice how trading blocs are continued to implicitly be formed i.e the TPPA deal had it gone through did not include China; BRICS for example on the back of China, have been weaving deeper connections amongst one another appearing as a silent implicit counter faction against NATO; China in particular, is seen to recently forge stronger alliance. Therefore let us ask you once again; if the elites ideally have the final say in deciding what’s best for the country (and their self-interest), coupled with their capitalist driven initiatives to rely more on automation via technology (to for example, protect their cost competitiveness), then ideally who’s to blame for the loss of jobs really?

 

Scenario #2:

In regards to what we said last year, how measurable is our view on the threat of privatization to date? Here’s a snippet from KPMG’S 2014/2015 Privatization Barometer report: “Call it “Britain and (especially) China lead the world in a new privatization wave”. The 42-month period between January 2012 and August 2015 saw governments around the world raise over $812 billion (€644 billion) through privatizations, dwarfing the total for any comparable previous period, and the global value of privatizations for the first eight months of 2015, $213.4 billion (€188.2 billion), implies that the full-year 2015 total will be by far the highest on record—perhaps exceeding $300 billion for the first time ever. China was, by far, the leading privatizing country during both 2014 and 2015, raising $73.6 billion (€55.7 billion) during 2014, and an astonishing $133.3 billion (€123.0 billion) through August 2015—mostly during the raging bull market that peaked in May 2015. The United Kingdom was a distant second-leading privatizing country both during 2014 [$17.2 billion (€13.0 billion)] and during January-August 2015 [$14.6 billion (€12.2 billion).

That’s right. This is exactly what’s happening today yet, very little of it is reported or emphasized on over conventional media. Given such information, would you now like to now guess how the IPO trend has been like in 2016? If you voted ‘steadily decreasing’, then you are correct. According to the EY Global IPO Trends Report, in 2016 there were 1,055 IPOs globally which raised US$132.5b, in 2015 there were 1,258 IPOs raising US$197.1b, and in 2014 there were 1,206 IPOs with US$256.5b worth of capital raised. How do you think the trends for privatization and opportunities for new equities investments would be like in 2017? Behold the amplification of the ‘SOE’ model. J

 

Scenario #3:

Do you realize how long your kids are spending on their, what we’d term as ‘internet integrated’ devices? The collective answer from various sources which we’ve been able to gather: Approximately 5-7 hours per day. We think “Black Mirror” is a pretty nice series and let us explain this observation further. The digital domain is the preferred medium for Generation Z and in time, studies have shown that the digital domain will soon shape the way they live, play, and eventually work. Therefore, while ‘financial warfare’ has played a notable part in almost 10 years since the 2008 crisis, the team strongly believe that ‘psychological warfare’ will be the elite’s new area of focus for the upcoming decade. Once again, the Americans and Chinese take on the global centre stage.  According to Newzoo.com as of October 2016, China and the United States are almost head to head in terms of gaming revenues categorized by country with US$24.3 billion and US$23.5 generated respectively. While only Japan ranks at a notable yet far off US$12.4 billion, other countries rank pale in significance.

Why such strong emphasis on gaming? Let us redirect you to our “Black Mirror” opening. Creator Charlie Brooker places forward this question ‘if technology is a drug – and it does feel like a drug – then what, precisely, are the side effects?’  In a parallel perspective renowned author Simon Sinek argues that we’re raising an entire generation on dopamine driven by technology whereby the human effort is substituted by an intangible abstract replacement. Therefore this leads us to our final question: If there was a directed effort by certain parties to condition desired behavioural patterns through such stimulus, then what would be the end result on our children is such a tech driven society? Given that 100% of generation Z are connected for 1+ hours per day and a whopping 46% are connected for 10+ hours per day, and 54% of generation Z play video games for at least one hour per day by a study conducted by Northeastern University, coupled with the finding that 75% of teens want to convert their hobbies to full time jobs, there are now universities promoting courses termed as ‘Esports’ – ones which recognize gaming as a career. If game time increases in significance in our children’s lives moving forward, won’t they not be heartily conditioned to live in an alternate reality then? ‘Google Blocs’ for one allows you to claim territories akin to a real time map. Time Warne’s acquisition by AT&T for one would integrate as how some termed as a “mobile environment to drive demand for his company to invest in 5G, which will deliver 1 GB speeds in mobile technology” – we view this as deeper content control purely. How far will the politically tech driven industries and its various innovations shape our 2017 and future? Do stay tuned to find out!

 

Scenario #4:

How much of a discord can you spot between the American and Chinese policies? There are ample angles and various arguments which can be formed based on this but let us focus on and map it out briefly by discussing these key elements of policy stemming from perspectives of:

  1. Economic – China’s strategic devaluation of their currency
  2. Environmental – China’s green energy initiative and infrastructure investments
  3. Technological – Virtual + real world integration (as previously discussed)
  4. Political – The growing alliance; amidst China’s exclusion from the TPPA
  5. Social – The growing prominence of high quality China goods

 

Let us keep this brief and focused and perhaps just enlighten everyone an economic sense, since it correlates the most with our subject of interest: currencies. There is long talked history on how China pushes their goods globally via manipulation of their currency. Interestingly, when the Federal Reserve was busy printing fresh credit and continued injecting it into their system (at the expense of an ever-growing and constantly revised ridiculous debt ceiling), China’s dumping of cheaper goods into the US economy in particular has worked towards their advantage; excess ‘credit’ has been sucked away from US and has flowed into China’s economy. China now holds more than 1 trillion worth of U.S debt; a nuclear bomb over the entire American economy which they can tactically chose to destruct in time. How and why would they do this? (btw which once again when googled, little or almost no available info is addressed from the likes of the mainstream) The preferred answer by us here at EssenceFX to that question is when they’ve well refined their 10 key industries for 2025. Notice something fun here? That’s right, these targeted industries heavily correlate with the top 5 American export sectors. What happens to the U.S if they were to be declared bankrupt due to failure to commit to such debt? That’s right, their export demand would then flow to China. How much is this exactly? Well do add up the values from the table here. Think Samsung and Iphone. The literal ‘destruction’ of one device eventually lead to a spike of demand for the other. Surely, there would be no need for us to elaborate on this further? ;)

 

Scenario #5:

Have you realized the amount of contradictions the mainstream media has tried to or have successfully sold to you over these past few years? Here’s the list of perverted financial instruments and the arguments which followed them:

  1. Oil
  2. Gold
  3. Bonds
  4. Currency
  5. Equities 

 Let us start with the markets being we’d say definitely negative for a Brexit outcome and Trump presidency. Keep this in mind. Now, let us move on to the price of oil. Have you noticed what the media has been selling you about the price of oil for let’s say these past three years? i.e the price for oil per barrel to be 100? 20? 50? Whatever the figure may be, we must already realize that reliance on such forecast appears to be rather ‘academically comical’. There seems to be more and more evidence pointing towards mainstream media towards herding the masses towards one direction and then gearing them to accept a surprised heartache. For gold, it used to be the hottest thing to sacrifice alternative investment avenues post Brexit and pre-Trump and back then however now, gold has come tumbling down by quite a fair bit. Bonds ventured to formerly unheard of, negative territory as insurers for example, continue to hold them to comply with their investment mandates. However, was that really what brought them deeper into the negative zone? No matter because even that has been elevated now based on ‘fresh optimism’. The rally of the American Indices, namely the Dow Jones index and the S&P500 continued to steamroll it’s way upwards despite these negative news cues breaking new highs. Corporate leverage has seen to grow tremendously and U.S continue to struggle with achieving their targeted growth level as well but that seems to have no significance in regards to the pricing in to these securities. The Swiss Bank for one, has emerged as one of the largest US equity buyers for 2016. Finally, the GBP and JPY in our opinion, was subject to and continues to be subject to heavy manipulation. Hence in our written piece HERE, we point that the GBP flash crash was NOT due to a ‘fat finger’ rather a colossal institution amendment to their portfolio (the JPY for that matter too). The fun part about these large movements is that it happened in the span a mere week or for some cases, the matter of hours and minutes. In addition come year end, some of these anomalies have seemed to have reversed themselves. This 2017, we view more of these to take place.

 

Scenario #6:

Have you noticed the difference in values and mentality between the demographic cohorts Gen X and the growingly significant Gen Z?

If you haven’t then we’d like to get you to check out this video together with us to take note of the psychological differences between the generations. With all that has been mentioned, I suppose ‘dopamine’ should be a much highlighted term in all keypoints mentioned in the video. Hence, we here at EssenceFX has chosen to explain the points in our own was as follows:

  1. Technology – main thematic / propagated tool 
  2. Parenting – as conditioned via ‘consent’ – will be explained below
  3. Impatience – a spill over effect of the controlled environment and technology
  4. Environment – as set by the regulating elites, (after point number 2 below)

Imagine a world without Facebook likes. Imagine a world without virtual payment systems. Imagine parenting without the use of any electronic devices. Imagine a world without google. Lastly, imagine a world without capital controls. While the baby boomers would be able to take this to be a norm, those who edge closer towards generation Z would deem such a world as impossible. For example, likes on Facebooks have led to the birth of career bloggers and social influencers, two terms which generate modern day income. Applications like ebay allows one to be a seller on their own personal domain with instant realization of trade credit. Computers are now a thought subject in school (with some universities as mentioned go as far to promote ‘esports’ as a career). With central banks as watchdogs, there is a limit on the amount of money one can remit out of a country.

The extent of the implications of the new age landscape and the values it brings along can be a largely debatable subject. However, in relation to our forecast, EssenceFX would like to bring your attention to the the staggering psychological difference, or rather we think better said, the  change of mind set between the value the younger generation places on gold compared to the older generation. With the ongoing developments in cryptocurrency and permissible blockchain, we’d think it’ll only be a matter of time before a central bank pledges allegiance to a virtual reserve currency. This will be little of an issue as credit based spending, mobile wallets, gaming credit, virtual bidding (the closest best thing to barter) and other terms virtual hold stronger relevance to the younger generation as compared to gold alone. Therefore although we are strongly bullish over the medium term on gold, we strongly think that gold will die completely as an asset class over the longer term. The signals towards is subtle yet we think largely applicable. The IMF integrating the Chinese Renminbi into the SDR to make it a more inclusive currency basket (yet at the same time, oddly not fulfilling criteria’s for inclusion https://wealth.goldmoney.com/research/goldmoney-insights/gold-sdr-brics), the support Microsoft is extending towards Bitcoin (article), and Google’s lobby for ‘open coin’ are clear code red signals pointing towards a complete shift towards digitalized currency. In addition, the previous official talks about it eerily correlates 18 years ago on November 8th 2000, the same date last year on when Trump claimed his victory. How would you take it; would you go ‘physical’ or go ‘virtual’? 

 

Scenario #7:

In your opinion, what determines wealth of a country and the health of its economy?

 

I guess some might have guessed the amount of natural resources available: i.e oil, metals, land, water, etc. Perhaps some may have said financial reserves?; the idea of countries having ample holdings of gold and currency in their national reserves. How much of a surprise would it be to you if we were to say, perhaps Sierra Leonne should rank as one of the world’s top 10 economies if based on this order? How much of a surprise would it be to you if we were to say, that among the largest economies in the world, almost none of them share your perceived criteria’s but instead; they are heavily burdened by debt. Please do let us enlighten you with this video and next, do check out this link HERE

It’s a no brainer to many today that even the most perfect computer security systems are capable of being hacked. It is also no surprise through the many recessionary cycles we have faced in history, that government policy is always far from being bullet proof. Following this argument, the question we would like to post forward is this: 'why are we still adhering to a 1929 Keynesian economic school of thought, when government debt continues to balloon to levels once unheard of before, and with (let us be very deeply honest here) no intention whatsoever of repaying back such debt. While barter always offered unrivalled interaction of ‘value’ as determined by actual demand and supply; fiat based transactions always fell short. Instead, they pervert the whole idea of equitable outreach. Clearly, the only relevance the Keynes economic model is still good for (and is also why it is continued to be relied on) is because as quoted: "Keynesianism appealed to two overriding motivations of government officials: i) their need to appear indispensable, and; ii) their urge to wield power. Keynesianism dangled these ideas before the political class, who in turn responded like salivating dogs. Therefore, the simple determinant on which country lies economically ahead of another is purely “supremacy”. Have a look at the list of countries in terms of debt as well as resources and compare and contrast their state of welfare to one another. You’ll get what we mean; growth opportunities almost never hold strong significance for resource rich, low debt, and underdeveloped countries yet stagflation in developed nations, is what continues to make the headlines.

 

We are the 99%.

The inflation narrative which has been blatantly accepted by is continued to though and is still being passed down to our children. This has resulted in enormous wealth creation for the elites.

The zero-sum game has resulted in too huge of a poker table for the average person to buy-in. Can one actually beat the ‘house’ with the amount of ‘free chips’ they have access to?

The inflation narrative cannot possibly go on forever given the GINI disparity; which kicks middle classes of society into a lower income bucket. Like what Pink Floyd said, will you just be “Another Brick in The Wall” or will you start to question further via tuning in to our further updates and by watching videos like this?

The choice is yours. Happy 2017 everyone! =)