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Trump`s tax cuts and reforms are working, and 4,1 percent growth means the strongest growth rate since the third quarter of 2014

America is growing fast. The United States are growing faster than China. The U.S economy advanced an annualized 4,1 percent on quarter in Q2 of 2018, while China grew by «only» 1,8 percent. That`s a bomb.

The Chinese economy advanced 6,7 percent YoY in June quarter of 2018. Last year, the economy expanded by 6,9 percent, beating the government target of around 6,5 percent and following a 26 year low of 6,7 percent in 2016. But, the United States can come up to that level very soon.

Trump`s tax cuts and reforms are working, and now we can all see right in front of us. The U.S economy advanced in the second quarter of 2018 and it will continue. This is just the beginning. The growth can reach 6 percent and compete with China.

The U.S exports jumped 9,3 percent (3,6 percent in the previous quarter), and imports rose at a much slower pace. 0,5 percent compared to 3 percent. The impact from trade was 1,06 percent, which is much better than -0,02 percent in the first quarter, and this is the highest contribution since the last three months of 2013.

4,1 percent growth means the strongest growth rate since the third quarter of 2014 amid higher consumer spending and soybean exports while business spending slowed. Spending of durable goods rebounded 9,3 percent compared to -2 percent and rose faster for nondurable goods; 4,2 percent compared to 0,1 percent and services; 3,1 percent compared to 1 percent.

Larry Kudlow said in his speech today that this is just the beginning. They have fixed a world broken trade system, and business investment is booming. 9 to 10 percent in the beginning of this year.

This is important because it is the key to productivity which is the key to growth which is the key to real rising wages. Big corporations like Apple are also coming back to the U.S.

This is a boom that is sustainable, Kudlow said.

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The global economy is more globalized today than during the peak of the early 20th century but will the open global economic order endure?

Globalization is one of the main reasons why President Trump was elected. He is now a President in the U.S because he often talked about their existing trade agreements, threatened to slap taxes on U.S companies investing overseas, renegotiate or withdraw from NAFTA, abandon support for the TPP, label China a currency manipulator and establish tariffs to name a few things.

President Trump did a lot of important things on his first 100 days and there is more to come. Welcome to the new world. A new era started when Mr Trump was elected.

The U.S is the world`s largest economy measured in market dollars. It is also the third most populated. Therefore, a withdrawal from the global economy is measurable, but America is not as globally integrated as we might think.

The U.S is the third biggest exporter, yet exports account only 13% of GDP. Main exports are capital goods (39%) and industrial supplies (28%). Others include: consumer goods (12%); %).automotive vehicles, parts and engines (10,5%); foods, feeds and beverages (7%).

Main exports partners are: Canada (19%), Mexico (14%), China (7%), Japan (4%), Germany (3%) and the United Kingdom (3%).

Exports of goods and services rose to an all-time high of USD 200,2 billion in November 2017.

The United States is also the world`s second largest importer. Main imports are; capital goods (29%) and consumer goods (26%). Others include: Industrial supplies (24%); automotive vehicles, parts and engines (15%); foods, feeds and beverages (5%).

Main Import partners are: China (19%), Canada (14,5%), Mexico (12%), Japan (6%) and Germany (5%).

Imports of goods and services rose to an all-time high of USD 250,7 billion in November 2017.

The United States has been running consistent trade deficits since 1976 du to high imports of oil and consumer products. The biggest trade deficits were recorded with China.

The U.S recorded a current account deficit of -2,60% of the country`s GDP in 2016. It reached an all-time high of 0,20% when Former President Ronald Reagan was inaugurated in 1981, but it declined all the years under his presidency.

 

 

 

Other countries can retaliate against Trump`s protectionist policies and that can start a trade war. But so far, so good. With an all-time high in Exports and Imports, Mr Trump must be doing something right.

If other countries don`t like the U.S liberal economic order, they can repudiate global norms and institutions that underpin the globalized economy. There is no doubt that emerging markets have benefited most from the open global economy, and we can clearly see members of the TPP seek to patch together the deal without the U.S.

But what happened to the first wave of globalization? The historical origins of globalization are the subject of ongoing debate. Let`s take a look at the globalization in the modern era. There are three epochs characterised by greatly increased international integration.

Europe and North-America were strongly affected by internationalization from 1860 to 1914. The flow of goods accelerated and capital moved freely between countries. Financial integration was more pronounced that it is today. Even international migrants was greater than it is today.

60 million people left Europe to seek their fortunes in the New World.

Important drivers behind the first wave of globalization were both the new technology and the fact that many countries began to embrace liberal trade policy after years of protectionism.

During the period 1500 – 1800, world trade increased by about 1% per year. After 1820 it increased by 3,5% and during the nineteenth century as a whole, trade in Europe increased by 40%. Great Britain was the world`s leading economy and the basis for the European free trade system was 1860 free trade pact between Great Britain and France.

Many other European countries subsequently aligned themselves with this free trade system.

Great Britain had introduced the gold standard in 1816 and during the nineteenth century the English pound sterling was the generally accepted currency of international business and many other countries introduced the gold standard.

Great Britain was the economic leader, but that Empire ended after World War II. The second wave og globalization started at the end of World War II and the new economic leader was USA. The American Empire started.

In the first wave we saw innovation of telegraph, steam engine, electricity and internal combustion engine. In the second wave jet plane was introduced. So was television, communication, satellites and container traffic.

The third wave started around 1980. It was a digital revolution and it refers to the advancement of technology from analog electric and mechanical devices to the digital technology available today. Advancements during the Third wave include the personal computer, the internet, and information and communications technology (ICT).

Now, we are here: the Fourth Industrial Revolution.

The fourth wave builds on the Digital Revolution, representing new ways in which technology becomes embedded within societies and even human body. It is marked by emerging technology breakthroughs in a number of fields, including robotics, artificial intelligence, nanotechnology, quantum computing, biotechnology, the Internet of Things, #D printing and autonomous vehicles.

The founder of WEF (World Economic Forum) Klaus Schwab is expected to see the heavy implementation of several emerging technologies with highly potential of disruptive effects.

Globalization collapsed after World War I, but resurgent after World War II. The breaking of globalization`s first wave a century ago is proof that the forces of global economic integration are neither irresistible nor irreversible.

Americas view on globalizations future has changed. For all I know, maybe Trump and his team are much less assured that the open global economic order will endure. The global economy is more globalized today than during the peak of the early 20th century.

Whether that implies globalization has reached unsustainable levels, or that no such levels exist, remains to be seen.

International trade has grown faster than total production. Ben Bernanke once said that he can do something with the monetary policy but he cannot do something with the productivity.

We are now living in a truly exciting phase of global economic development.

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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Japan`s Megabanks are up about 50% since the election

This week is a week for a special focus on the banks around the world. Today, I will take a closer look at the banks in Japan.

Japans interest rate peaked in the 70s and 80`s at about 9%, and it went down to 6% in 1991. Then it started to fall down with the stock market. As you may know, Japan has printed tons of money and a great recovery has never happened.

 

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Japan are in a very special situation. The Bank of Japan left the interest rate unchanged at -0,1% at its December 2016 meeting, as widely expected. In addition; policy makers also decided to maintain its 10-years government bond yield target around 0% and viewed a moderate recovery trend in the economy had continued while exports has picked up.

With regard to the amount of JGB`s to be purchased, the Bank will conduct buying at more or less the current pace. An annual pace of increase of about 80 trillion yen.

The biggest banks in Japan are up about 50% since the election.

On top of all this, Japan will continue with its craziness and monetize about $670 billion`s worth of bonds per year.Wow!

Japan`s economy has continued its moderate recovery trend, and overseas economics have continued to grow at moderate pace, although emerging economies remain sluggish in part. In this situation exports have picked up.

Prime Minister Shinzo Abe said the sales for American cars are poor, pushing back after President Donald Trump described the trade imbalance on vehicles as «unfair». Japan exported 1,6 million cars in 2015. Sales of American cars in Japan are almost non-existent, while only 19 000 cars were sold in Japan in 2015, trade minister Hiroshige Seko said.

The reason for the bad sale is competition and not tariff.

Despite all the noise from the U.S and Trump`s fiscal and trade policies, and a number of unclear factors like Brexit, trade deals and the global economic situation, Japan will see its economy grow in 2017 on the back of the weak yen and government steps to stimulate sluggish consumption, economists have said.

They predict that 2017 will be a positive year for Japan, and the government looks to craft more measures to help boost consumption.

A weaker yen against the dollar will also help boost Japanese exporters and their revenue.

Shinzo Abe will meet Donald Trump in Washington 10 February this year.

 

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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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Australia is expected to be the world`s biggest

China has a serious problem, and that is the pollution. You have probably been there, or seen some pictures from a very cloudy China? Some days in China is described as life threatening. People walk around in the city with masks and look like zombies from another planet.

LNG 3

The Chinese government need to do something very fast, and one thing they have decided to do is to slow down the crude oil consumption. Therefore, China`s demand for natural gas will increase and they need to pay a heavy price, simply because of the supply and demand in the market right now.

They need to buy more than they can produce, and that is a recipe for energy disaster for them, because they must import more natural gas, which gives the rest of the world an energy boom, and that is a game changer for the natural gas industry.

The Chinese government must act fast, because of the rising costs from pollution related illnesses. Their natural gas reserves aren`t the biggest problem for them, but their pipline infrastructure is weak, in addition to the location of the reserves and the inadequate technology to extract these reserves.

Exxon Mobile says in a study that China`s natural gas consumption will almost triple this decade to 14 Tcf (trillion cubic feet). China produced only 3,3 Tcf last year, while their consumption of natural gas was 5 Tcf, and the gap between supply and demand is growing fast.

It`s estimated that natural gas will provide 10% of all the energy used in China by 2020. Some of that will be made in China, but most of it will have to come from imports. If you think that this is a great opportunity, you have to think again, because who will profit from this boom? Putin`s Russia and Australia will!

Gazprom signed a 30-year deal to supply China with 1,3 Tcf of natural gas per year, starting in 2019, and that contract is worth $400 billion. The gas will come from Gazprom`s prolific fields in Siberia.

The Australian Woodside Petroleum will also profit from it, because they are close to China`s LNG operations that is already up and running. They have piplines on Australia`s West Coast, and they have invested over $200 billion in LNG operations. Australia is expected to unseat the current LNG leader, Qatar in the next few years.

Qatar is the world`s biggest supplier of LNG, and by 2020, the U.S will account for about 11% of the total LNG exports. Australia has a massive potential to become a big exporter of LNG, as they are Asia`s closest source of LNG. We are talking about South Korea, China and Japan, and that`s the main reason why Australia will become the world`s biggest supplier of LNG in a few years.

LNG exports will displace iron ore as the biggest source of Australia`s export growth in the next years. It`s expected that Australia will export 80 million tons of LNG by 2018. According to Australia`s Bureau of Resources and Energy Economics, earnings from LNG projects are forecast to increase five times. More than $49 billion through June 2018.

Australian gas output will rise to 100 million metric tons by 2018. It`s gas exports are expected to increase to 81% of production by 2018 (53% in 2012), they has more new LNG plants under construction than any other country, including the United States. The new projects will add 61,4 million tons of LNG capacity by June 2018, and they will have 85,8 million tons of capacity by that date. There are only 17,8 million tons of LNG capacity under construction in the U.S.
Another country`s that can become massive LNG exporters in the future is Canada and Africa. The problem in both country`s right now is their infrastructure. I will write about that later in a new article from shiny bull.

 

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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