Who will win the currency war?

Let`s face it; there is a war out there. Not World War I or World War II, but a currency war that started five years ago. Who was the winner in WWI? And who was the winner in WWII? And who do you think will win the currency war that is going on now?

This currency war is also known as competitive devaluation. Countries compete against each other to achieve a relatively low exchange rate for their own currency. As the price to buy a particular currency falls so too does the real price of exports from the country. Imports become more expensive.

Stack of $100 bills

(Picture: U.S Dollar)

Employees in domestic industry will face a boost in demand for their products and services from both domestic and foreign markets, but the price will increase for imports and that can harm citizens` purchasing power, and that in turn can lead to a reduction in peoples standard of living.

The problem is when all the central banks are doing the same and this situation can lead to a general decline in international trade, which can harm all countries.

The world`s biggest financial center Singapore is the latest to take part of this currency war. The Singapore dollar tumbled to a four-year low against the US dollar after the Monetary Authority unexpectedly stymied currency appreciation.

Singapore is a compact financial center, uses exchange rates instead of lending rates to control its currency, as it is a very trade-oriented economy. The bank also reduced its inflation target, forecasting a negative 0,5 percent in consumer prices for 2015.

The reserve Bank of India also decided to cut reserve rates by 25 basis points to lower the inflation, they may again lower its lending rate next week. India, Japan and Russia have all seen a drop in the value of their currencies. Nine countries eased policy in January alone.

What is their goal? Their goal is to weaken their currency and gain an economic edge.

Japan is still «printing» money and ECB announced a week ago a €1,14 trillion quantitative easing plan and that sent the euro down to an 11-year low. The Swiss National Bank took precautions a week before that by removing the peg between the Swiss franc and the euro, and that sent the currency soaring 15 percent in a few seconds.

A negative interest rate of 0,25% a year on deposits means putting Swiss francs in a bank account will cost you 0,25% more than keeping them under the mattress. The plunge in the Russian ruble this year is down about 50% against the U.S dollar.

Check out the Japanese yen, which is down 25% over the past two years. It`s down about 20% against the U.S dollar since the summer. It is cheaper to buy a new iPhone in Tokyo and have it shipped over than it is to buy one in the U.S.

A cheap renminbi was a cornerstone in the Chinese industrial revolution, but renminbi has increased about 20% in the past four years because of the plunge in the yen. A weaker yen is good for Japanese jobs and industry because it makes foreign imports more expensive in Japan, while making Japanese exports cheaper abroad.

They all want to make their own currency cheap to boost exports and inflation.

But how can someone win if everyone is weaken their own currency against everyone else?

If you are familiar with fx trading, you know that if you buy one currency, you sell another at the same time, for example EUR/USD. If euro goes down, USD goes up, but both can`t go up or down at the same time. Here is the point.

Everyone can`t win and some of them have to lose, but who?

The U.S dollar have so far been a safe heaven and is getting stronger every day. So far, a great winner. Yen and Euro have been big losers. The U.S dollar soared while others plunged. This is expensive for U.S exporters, and Fed will probably do something very soon to fight back. This is a zero-sum game.

For the first time in history, all the worlds central banks are «printing money» as all the countries have generally preferred to maintain a high value for their currency. Countries have generally allowed market forces to work, or have participated in systems of managed exchanges rates. An exception occurred when currency war broke out in the 1930`s. As countries abandoned the Gold standard during the Great Depression, they used currency devaluations to stimulate their economies.

Since this effectively pushes unemployment overseas, trading partners quickly retaliated with their own devaluations. The period is considering to have been an adverse situation for all concerned, as unpredictable changes in exchange rates reduced overall international trade.

According to economist Richard N. Cooper, a substantial devaluation is one of the most «traumatic» policies a government can adopt (1971). It almost always resulted in crises of outrage and calls for the government to be replaced. A strong currency was commonly seen as a mark of prestige, while devaluation was associated with weak governments.

President Barrack Obama has defended the QE program, saying it would help the U.S economy to grow, which is good for the rest of the world. ECB will start their new QE program in a few weeks and if the economy improves in order to avoid inflation, there may be a promise to destroy any newly created money.

A reason for preferring devaluation common among emerging economies is that maintaining a relatively low exchange rate helps them build up foreign exchange reserves, which can protect against future financial crises.

The battle goes on between the Fed and the rest of the world`s foreign central banks. It`s war.

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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Biotech boom only at stage 1

I wrote about the health-care boom on 8 January 2014. An article titled; Health-care bull. I talked about the health-care boom and the sector you should be in. I also talked about the oil price and said it could plunge and  Opec can face huge problems.

Saudi billionaire businessman Prince Alwaleed bin Talal said a few days ago that no one anticipated that the oil price was going to plunge, and people who said that the oil would plunge is not telling the truth, he said.

Prince Alwaleed bin Talal is an expert on oil. Not trading, I guess. Many saw that plunge coming.

But, I`m not gonna talk about oil today, because the oil sector is not hot now. What`s really hot is the health-care sector. Let`s take a look at a biotech stock today, which is Gilead Sciences Inc (GILD).

Gilead is a research-based pharmaceutical company that discovers, develops and commercializes medicines. Gileads`s primary areas of focus include human immunodeficiency virus (HIV)/AIDS, liver diseases, such as hepatitis B and C and cardiovascular/metabolic and respiratory conditions.

Gild2

(Picture: Gilead Sciences Inc)

The company has operations in North America, Europe and Asia-Pacific, and among the most known products they have is Tamiflu. They acquired Pharmasset Inc in January 2012, and on February 2013, they acquired YM BioSciences Inc.

Gilead signed an exclusive Hepatitis C deal with pharmacy-benefits manager EnvisionRx. Right before the deal it was a big price war between Gilead and AbbVie, but Gilead won. This is the fourth deal with PBM, and that`s three more than AbbVie which has only one.

EnvisionRx will be offering Gilead`s products called Harvoni and Sovaldi on its formulary. AbbVie`s product Viekira Pak will only be prescribed as an exception in rare cases. competitive price, the safety and efficacy profile of Gileads`s HCV products have solidified EnvisionRx`s choice to place Gileads`s products in an exclusive position.

Harvoni, which is an enhanced version of Gilead`s blockbuster drug Sovaldi, cost $94,500, while Viekira Pak costs $83,300. The price is for a 12-week treatment course, and both companies drugs have proven their efficacy, but Harvoni has least side-effects and requires lesser dosage than Viekira Pak.

Most of Gilead`s financial performance has been driven by the success of their products Sovaldi and Harvoni, but they have competition with AbbVie. A few weeks ago AbbVie signed a contract with the U.S`s largest pharmacy benefit manager Express Scripts (ESRX).

Harvoni`s easier compliance and better safety profile can give Gilead an edge over their competitor Viekira Pak. Data shows that their product has not had any major impact on Harvoni, and investors are still bullish. The stock is trading at $103,03 today. The price was about $16 in January 2010. Up over 543% since 2010. EPS is 5,65 and market cap is 164,34 billion.

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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Tech Rally today

Nasdaq had a bad day yesterday and slid -1,89%, but the major index is the only one that is in positive territory for the year. One of the biggest losers on Nasdaq yesterday was Microsoft. Down -9,25%.

Microsoft reported earnings of 72 cents per share on $26,47 billion in revenue for the second fiscal quarter, but the revenue was better than analysts estimations. The negative is the weaker than expected Windows non-Pro revenues which is down -13% YoY, and the commercial license declined 2%.

msft

(Picture: Microsoft down -9,25%)

CEO Satya Nadella said it doesn`t take much longer time to successfully transition from a licensing sales focused firm into a software as a service firm. Microsoft`s cloud business doubled and came in on $5,5 billion i sales. Xbox sales fell to 6,6 million units (from 7,4 million) in sales.

Caterpillar was another big company that slid yesterday. Down -7,18%. The company delivered a shockingly weak outlook for this year and investors got scared. It seems like Caterpillar is in big trouble.

Analysts expected earnings of $1,55 a share but it fell about 20%, landing on $1,23 a share. Its Q4 operating profit slumped 27% YoY. Lower oil prices is negative for their construction business. Caterpillar lowered its 2015 sales expectations for mining and construction equipment, and that was not music in investors ears.

Good news is coming later today. First of all; Alibaba is coming out with the second report as a public company. The Chinese e-commerce giant is expected to post a quarter of tremendous growth. EPS is expected to grow 39% YoY! It`s also expected a massive 48% improvement in YoY revenue!

It is expected to see Tmall and Taobao to deliver strong revenue momentum on the back of higher e-commerce penetration in China. Alibaba has an ongoing international expansion and the stock is up 3,3% in three months.

ATH is 119,15 which is from 10 November last year. The stock was down -1,01% yesterday, and there are some short interest in the stock right now. The opening trade is now $102,94. 52-week low is registered as $82,81. Outstanding shares are 2,465,006,000. The stock is priced richly with Alibaba`s market cap now over $250 billion, but the market is looking for huge surging numbers which could validate the company`S valuation.

Yahoo! Is set for a rally today, trading up about 8% AHT. The company is spinning off Yahoo`s $39 billion stake in Alibaba Group Holding. The anticipated decision announced yesterday will enable Yahoo to avoid paying billions of dollars in future taxes.

A newly formed entity called SpinCo will inherit ownership of the company`s 384 million shares in China`s Alibaba Group Holding when the tax-free spinoff is completed toward the end 2015. Owner of Yahoo shares will receive stocks in SpinCo, which is designed as an investment company.

The old giant is struggling to grow and the firm earned $166 million, or 17 cents per share. Down -52% from the same periode last year. Yahoo`s revenue dipped 1% to $1,25 billion, and investments in Alibaba and Yahoo Japan is the main reason Yahoo`s stock has more than trippled last years.

They have a 36 stake in Yahoo Japan, worth about $7 billion. The Alibaba investment is worth far more than their own online services, and their competitors like Facebook and Google have grabbed a big piece of the digital marketing budget.

Have a closer look at Apple today. The stock is also set for a rally. Up about 7% ATH. Revenue rose to $74,6 billion from $57,6 billion a year earlier. Profit of $18 billion is the biggest ever! Apple reported net profit of $18,02 billion, or $3,06 per diluted share, compared to $13,07 billion, or $2,07 per share a year earlier. Apple faced a clear headwind from a strong dollar.

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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Holocaust Memorial Day

Today it is 70 years since the Holocaust (the catastrophe). Six million Jews were killed by the Nazi regime and its collaborators. An additional five million non-Jewish victims of Nazi mass murders are included by some historians bringing the total to approximately eleven million. This is humanity at its worst!

From 1941 to 1945 Jews were targeted and methodically murdered in a genocide, the largest in modern history, and part of a broader aggregate of acts of oppression and killings of various ethnic and political groups in Europe by the Nazis.

WannseeList

(Picture: List of Jewish populations by country used at the Wannsee Conference in 1942)

Every arm of Germany`s bureaucracy was involved in the logistics of the genocide, turning the Third Reich into «a genocidal state». Non-Jewish victims of broader Nazi crimes include Gypsies, Poles, communists, homosexuals, Soviet POW`s and the mentally and physically disabled.

A network of 42,500 facilities in Germany and German-occupied territories were used to concentrate, confine, and kill Jews and other victims. Between 100,000 and 500,000 were direct participants in the planning and execution of the Holocaust.

Nazism is the ideology and practice of the German Nazi Party and state. It is sometimes applied to other far-right groups. Usually characterised as a form of fascism that incorporates scientific racism and antisemitism. The full name of Hitler`s party was Nationalsozialistische Deutsche Arbeiterpartei (National Socialist German Workers` Party; NSDAP).

Nazism subscribed to theories of racial hierarchy and social Darwinism. Germanic people were depicted as true «Aryans» and the «master race». Opposed to both capitalism and Marxism, it aimed to overcome social divisions, with all parts of a homogeneous society seeking national unity, and what it viewed as historically German territory as well as additional lands for expansion.

The term «National Socialism» arose out of attempts to create a national redefinition of «socialism», as an alternative to both internationalist Marxist socialism and free market capitalism.
The Nazi Party was founded as the pan-German nationalist and antisemitic German Workers` Party on 5 January 1919. By the early 1920`s, Adolf Hitler assumed control of the organisation.

The National Socialist Program, adopted in 1920, called for a united Greater Germany that would deny citizenship to Jews or those of Jewish descent, while also supporting land reform and the nationalisation of some industries.

In Mein Kampf (1924), Hitler outlined his antisemitism and anti-communism at the heart of his political philosophy, as well as his disdain for parliamentary democracy and his belief in Germany`s right to territorial expansion. Nazism is neither left- nor right-wing, but syncretic.

Jew_Killings_in_Ivangorod_(1942)

(Picture: Executions of Jews by German army mobile killing units (Einsatzgruppen) near Ivanhorod, now Ukraine. The photo was mailed from the Eastern Front to Germany and intercepted by a member of the Polish resistance)

The concept of the Aryan race, which the Nazis promoted, stems from racial theories asserting that Europeans are the descendants of Indo-Iranian settlers, people of ancient India and ancient persia. Johann Gottfried Herder argued that the Germanic peoples held close racial connections with the ancient Indians and anciant Persians, who he claimed were advanced people possessing a great capacity for wisdom, nobility, restraint, and science.

A French racial theorist and aristocrat, blamed the fall of the ancien regime in France on racial degeneracy caused by racial intermixing, which he argued destroyed the purity of the Aryan race, a term which he reserved only for Germanic people. Gobineau`s theories, which attracted a strong following in Germany, emphasised the existence of an irreconcilable polarity between Aryan (Germanic) and Jewish cultures.

Nazism`s racial policy positions may have developed from the views of important biologists of the 19th century, including French biologist Jean-Baptiste Lamarck, through Ernst Haeckel`s idealist version of Lamrckism and the father of genetics German botanist Gregor Mendel. Haeckel`s book was banned in the bookstore by the Nazi party.

Chamberlain`s work (1899) praised Germanic people for their creativity and idealism while asserting that the Germanic spirit was threatened by a «Jewish» spirit of selfishness and materialism. Chamberlain met Hitler in 1923, whom he admired as a leader of the rebirth of the free spirit.

In Germany, the idea of Jews economically exploiting Germans became prominent upon the fundation of Germany, due to the ascendance of many wealthy Jews into prominent positions upon the unification of Germany in 1871.

Empirical evidence demonstrates that from 1871 to the early 20th century, that German Jews were overrepresented in Germany`s upper and middle classes, while they were underrepresented in Germany`s lower class and particularly in the field of work of agricultural and industrial labour.

German Jewish financiers and bankers played a key role in fostering Germany`s economic growth from the 1871 to 1913, and such Jewish financiers and bankers benefited enormously from this boom, in 1908 amongst the twenty-nine wealthiest German families with aggregate fortunes of up to 55 million marks at the time, five of which were Jewish, and the Rothschild were the second wealthiest German family.

The predominance of Jews in German`s banking, commerce, and industry sectors in this time period was very high with consideration to Jews being estimated to have accounted for 1 percent of the population of Germany.

This overrepresentation of Jewish in these areas created resentment by non-Jewish Germans during periods of economic crisis such as in response to the 1873 stock market crash that resulted in a severe depression.

The 1973 stock market crash and ensuing depression resulted in a spate of attacks on alleged Jewish economic dominance in Germany, and antisemitism surged.

Einsatzgruppe_A

(Picture: Einsatzgruppe A; members execute Jews on the outskirts of Kovno, 1941-1942)

The Protocols of the Elders of Zion (1912) was an antisemitic forgery created by the police of the Russian Empire. Antisemitic believed it was real, and the Protocol became widely popular after World War I.

The Protocol claimed that there was a secret international Jewish conspiracy to take over the world. Alfred Rosenberg introduced the protocol to Hitler, and from 1920 onward, Hitler focused his attacks on claiming that Judaism and Marxism were directly connected; that Jews and Bolsheviks were one and the same, and that Marxism was a Jewish ideology. Hitler believed that the Protocols were authentic.

Johann Gottlieb Fichte accused Jews in Germany of having been, and inevitably continuing to be, a «state within a state» that threatened German national unity. Fichte promoted two options to address this: the fist was the creation of a Jewish state in Palestine to impel the Jews to leave Europe.

The other option was violence against Jews, saying that the goal would be «….to cut off all their heads in on night, and set new ones on their shoulders, which should not contain a single Jewish idea».

Tsarist exiles flooded into Munich and Berlin and spread theories about a worldwide Jewish Bolshevik conspiracy. Hitler`s own antisemitism was deepened and intensified by extensive conversations with Fyodor Vinberg, a Russo-German member of the organisation called Aufbau Vereinigung composed of White Russian emigres.

The Nazis argued that capitalism damages nations due to international finance, the economic dominance of big business, and Jewish influences. This Nazi propaganda was spread to the working class as anti-capitalism.

Hitler said in 1927: «We are socialists, we are enemies of today`s capitalistic economic system for the exploitation of the economically weak, with its unfair salaries, with its unseemly evaluation of a human being according to wealth and property instead of responsibility and performance, and we are determined to destroy this system under all conditions.»

Hitler told a party leader in 1934; «The economic system of our day is the creation of the Jews». He also told Benito Mussolini that «Capitalism had run its course». He argued that the only means to maintain economic security was to have direct control over resources rather than being forced to rely on world trade. He claimed that war to gain such resources was the only means to surpass the failing capitalist economic system.

Joseph Goebbels claimed in his diary in the 1920`s that if he were to pick between Bolshevism and capitalism, he said «in final analysis», «it would be better for us to go down with Bolshevism than live in eternal slavery under capitalism.»

The author Oswald Spengler published his book «The decline of the West» in 1918. According to Spengler, the Western world is ending and we are witnessing the last season – «winter time», of the Faustian civiliation. Western Man is proud but tragic figure because, while he strives and creates, he secretly knows the actual goal will never be reached, he said.

We are all different and unique and a society that has no room for difference has no room for humanity. You can’t build a society on hate!

This is insane!

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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Anti-Bail out party Syriza wins

The Anti-bail out party Syriza wins in Greece, and people call the left-wing party Syriza leader Alexis Tsipras a liar or Harry Potter, because they don`t know where he is going to get the money from. Tsipras says austerity era is over for Greece.

Syriza`s pledges is to rise the minimum wage by 29 percent and abolish property tax. In addition they will renegotiate write down on Greece`s debt. The coming weeks will be hectic for Syriza and the European Central Bank I think. The period of time between now and the end of february will be a key pivot point.

greece_flag

The growth so far in the U.S has not been what people expected. The growth is very slow. In Japan they say that QE doesn`t help. In the U.S they say that the economy is looking good now, but a record number of people are still on food stamps. What about the Eurozone?

Greece remains saddled with €240 billion in debt and it is not possible for them to pay. They have tried many different things to get back on track but without luck. They tried to rise the tax and do some cuts, but that was not enough to save them from a deep recession.

The new government will face a big problem from day one, as the creditor states have frozen $8,8 billion in loan disbursements. The present government has reached a $17,4 billion ceiling for bond sales. Eurozone finance minister will extend negotiations until September. Germany has warned the new government that it must live up to its commitments to its creditors.

The Athens stock exchange (ASE Index) is down 3,2% with big losses fro Piraeus Bank (OTC: BPIRY) which is down -14,61%. Large Cap Index is down -5,6%. Alpha Bank (OTC: ALBKY) is down -4,41%. Eurobank Ergasias SA (OTC: EGFEY) fell -4,19%. National Bank of Greece SA (NYSE: NBG) is down -7,74%.

Greece`s government bonds also fell after concern eased that a Syriza victory would trigger a euro exit. Weak economic indicators combined with Syriza can put more pressure on Greek stocks. Euro rebounds and all the global stocks are trading up today. The Stoxx Europe 600 rose 2,02% today and ended at 372,39 points.

Many people in Greece said they voted on Syriza because they want a change. They think that Syriza will change Greece and the rest of the world. The economy has collapsed, so there has to be a change. Big change.

Deflation and a collapsed economy is not only the problem in Europe today. Another problem is that people in Europe have hated each other for thousands of years. How can you succeed in a country with so much hate?

Tomorrow it is 70 years since Holocaust.

A big shame in Europe!

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

 

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