A clear picture of how strange the world is right now.
I’ve got a couple of fun pieces for you today, that show you just how crazy the world is right now.
First up, if this chart doesn’t make you spit out your coffee, you’re not getting it.
This is a stock market index constructed by Goldman Sachs. It takes major companies on the US market, in ‘innovative’ industries, that are losing money. That is, they’re not profitable.
And look at what’s happened.
What’s the sound-effect here? Ka-boom doesn’t even seem to cut it.
There has been an incredible boom in prices of these ‘growth’ stocks – stocks that are tipped to one day be major players and incredibly profitable, but aren’t there just yet.
But of course they’re booming. The future looks so bright. Covid is sorted, the world’s economies have fully bounced back, global trade tensions are sorted, and the political landscape is stable.
I mean, no it’s not. None of that’s true. The world is in no way a 10x better place to be doing business now than in March.
But that hasn’t stopped these speculative stocks booming.
So is anything driving the boom. Well, a lot of it is hype, but it’s also comes down to super-cheap interest rates and money printing.
Up next – an irrational property boom?
The other chart that’s a bit coffee-through-the-nose is this one.
This is the coal price. But you can see there’s two separate prices. The blue line is Australian free-on-board price (before it leaves Australia). And the red line is the Chinese delivered sea-borne – the price it is by the time it lands in China.
Right now, there’s a massive disconnect.
Why? Because China is still throwing a hissy fit and embargoing Aussie coal boats.
That hasn’t really hurt Australian exporters, because there will always be other markets for their product if China won’t take it.
But it has hurt Chinese consumers and the Chinese economy by driving energy prices higher.
I’m calling that an own-goal.
At any rate, with trade tensions pushing commodity prices higher, Australia is on the grateful end of another commodity boom, with iron ore prices in particular through the roof.
So we’re potentially seeing a rehash of the dot-com bubble, and trade-tensions are sending a massive income shock right into the heart of the Australian economy.
Strange, strange times we’re living in.