Chinese New Money Surge

Gerry Brady March 1, 2019 11 No Comments

A Picture Speaks a Thousand Words

In March 1911, in the Syracuse Advertising Men’s Club, Arthur Brisbane wrote: “Use a picture. It’s worth a thousand words”.

Arthur Brisbane is a man of very great importance in world history but almost nobody knows of him. This week’s editorial takes his advice. We hope you find the pictures of great interest. Please note that the Red Arrows indicate PAST price action (not future). No predictions are implied from past action.

Arthur Brisbane (Died December 25, 1936) was one of the best known American newspaper editors of the 20th century as well as a successful real estate investor. He was also a speech writer, orator, and public relations professional who coached many famous business people of his time in the field of public relations, particularly Henry Ford, Thomas Edison and John D. Rockefeller. His syndicated editorial column had an estimated daily readership of over 20 million, according to Time magazine.

Chinese Surge

Last week, Avestix informed you about the huge increase in money supply in China that occurred in January. This was triggered by over 1 Trillion Yuan of central bank “stimulation” to the banking sector. This amount of stimulation can generate up to 10 Trillion Yuan of fresh new credit if sufficient borrowers can be found. That is almost US$ 2 Trillion of credit expansion, literally in one hit. This is the Chinese Aggregate Social Finance graph that illustrates what happened.

There is the power of central planning in action. It is clear that the Chinese authorities have decided to speed the economy back above its current GDP growth rate. Last week, we pointed out the huge impact of this on Iron Ore prices. This week, let’s look at the impact on other markets.

The Short Term Copper price chart over 6 months

The Industrial Metals ETF in New York — again, over 6 months

The Shanghai Stock Market Index over 6 months — up 20 % since January 1st

The Hong Kong Stock Market Index over 6 months – up 16 % since 1st January

The Russian Stock Market Index over 6 months — up 18 %

The Thailand Stock Market Index over 6 months

The South Korean Stock Market Index

And, finally, the Australian Stock Market Index — again, over just 6 months

In economics, things work until they don’t. Until next week!


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Charts: Charts from The red arrows are drawn by Avestix and indicate price pulse directional dominance. Arrows indicate PAST price action (not future). No predictions are implied from past action.

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