Financial Analysis – Week 24, 2021

Jun 22, 2021

Market Overview

 

financial-analysis-week-24-2021

 

The World

Global debt growth:

Year 0  –  0 debt

2000  –  total debt of $ 100,000 billion

2000-2021  –  total debt of $ 300,000 billion

 

I estimate that the global debt is around 700,000 billion dollars.

 

USA

The extent to which markets have lost all connection with real economic indicators is the best example of what happened last week, when Fed governors considered raising the interest rate, due to high official inflation of 5.0% and negative interest rates.

Some governors have called for interest rates to start rising from 2022, but most have maintained that this will happen in 2023.

The indication of an increase in interest rates in 2023 led to a significant strengthening of the dollar and a fall in the value of gold and bitcoin, because investors, convinced of the policy of strengthening interest rates, began to transfer their investments to the dollar, which strengthened.

We see how inflation is officially rising and how the losses, due to low interest rates, are increasing.

The Fed continues to insist that inflation is a passing thing and that there is no need to panic.

I’m not sure the Fed knows what it’s doing.

 

What will mean the announcement to increase interest rates?

 

On the large increased debts of the state, companies, and the population, these will be new large levies, which will lead many to bankruptcy.

We will see who will be able to withstand this new interest burden.

Monetary policy cannot be guided by tricks and speculations, as the Fed does, temporary improvements are false and great disappointment and sobriety will follow.

 

US debt is rising.

 

Russia

Price growth in June + 6.2%

 

France

Local elections. Despite the great announcement of Le Pen’s victory, that did not happen.

Conservative Republicans won -27.2%, Le Pen – 19.3%, and Macron was defeated and received only -11.2%

The second round of elections is on June 27, 2021.

 

China

The interest rate on one-year loans is 3.85%.

The interest rate on a five-year loan is 4.65%.

 

Germany

The year-on-year increase in producer prices – 7.2%.

 

Japan

The central bank lowered the key interest rate to minus 0.10%.

 

Stocks

Stock exchange indexes slightly down:

DOWJ – 34,385

DAX – 15,645

S&P 500 – 4,226

 

Stocks bubble continues to inflate.

 

Gold

After a big drop to $ 1,765, gold is rising to $ 1,785 in the recent few days.

The speculative fall in the price of gold, due to the statement on interest rates, is temporary.

Stay calm and buy gold while its price is low.

 

Silver

It dropped to $ 25.76 / ounce

 

Oil

Growth continues at a record $ 74.94 / barrel.

 

USD

The dollar unnaturally strengthened – 1.1911.

 

Russian ruble

The ruble fell slightly against the dollar – 73.1012.

Ruble remains unchanged against the euro – 87.0563.

 

Bitcoin

Further down to $ 31,586.

China continues to put great pressure on the crypto market.

The National Bank of China has threatened large banks and investors not to use bitcoin.

Chinese authorities have closed 26 bitcoin mine locations due to high electricity consumption.

 

 

Branko Dragaš                        

Investment banker

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Market Overview