Galactic Economic Outlook – Star Wars: The Force Awakens

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Star Wars tops entertainment headlines as the perennial favorite gets a thumbs-up from audiences around the world. As a cultural phenomenon with an international audience its record-breaking ticket sales comes at a time of diverging global social mood. Bitcoin’s prospects amid the current mood trend are examined.

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Economic Indicators

World Indexes and Forex Rates

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Commodities

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In the Calendar This Week

Mon 21 December
N/A

Tue 22 December
US Final GDP q/q (actual:2.0% expected:1.9% previous:2.1%)
New Zealand Trade Balance (actual:-779M expected:-812M previous:-905M)

Wed 23 December
UK Current Account (actual:-17.5B expected:-21.3B previous:-17.5B)
Canada GDP m/m (actual:0.0% previous:-0.5%)
US Core Durable Goods Orders m/m (actual:-0.1% expected:0.1% previous:0.5%)

Thu 24 December
US Unemployment Claims (actual:267K expected:270K previous:272K)
Japan Household Spending y/y (actual:-2.9% expected:-2.1% previous:-2.4%)

Fri 25 December
N/A

Making The News

Despite a seemingly impossible task, and at risk of complete failure, Lucas Film and Disney were able to deliver on fans’ expectations, encompass 30 years of galactic history, and also successfully set up the movie franchise for another trilogy.

Note to readers: there are no intended spoilers in the article text, but if you have not yet seen the movie you will want to avoid “Final Thoughts” at the bottom of the page.

Big Deal

Star Wars is back. And, some say, in the best way possible.

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The movie grossed $247mil in opening weekend box office sales – an all-time record.

At the time of writing (Dec 25), Star Wars: The Force Awakens has generated $765mil revenue from worldwide tickets sales after a two-week run in theaters. Although worldwide sales are not setting any record, the movie will release in China during January 2016, and combined with repeat viewing, sales may yet push TFA to beat Avatar’s $2.8bil revenue.

Old Deal

Ironically, Disney’s stock price took a hit of 4% last week as concerns over Disney’s ESPN franchise increase. The (cable) sports network delivered an average of 45% of Disney’s annual operating profits. However, a growing trend away from cable subscriptions amongst US consumers is putting question marks over ESPN’s ability to remain profitable or even sustainable.

Big Favorite

Nonetheless, the singular success of Star Wars: TFA continues blazing across headlines and in the hearts and minds of both stalwart and new fans. The exuberance and hope with which audiences have spent money during uncertain economic times speaks volumes about the sentiment – and wider social mood – that surrounds Star Wars. The question of what exactly it means remains open, and here are some socionomic thoughts:

Social Mood

During times of positive social mood, media and culture that reflects the optimism, hope and aspiration of society tend to “blockbust”. Similarly, the same franchises can flop during times of pervasive negative mood when audiences prefer movies themed in sympathy to their mood. A good example is the popularity, during the 1920s, of Superman who fell out of favor, during the Great Depression’s 1930s, to the more psychologically complex and nocturnal Batman.

The original Star Wars film came out of the inflationary recession of the 1970s to unprecedented popular reaction. It was as if the world embraced the escape (to a “galaxy far, far away“) and the archetypal tale of Good overcoming the Dark side.

Episode 7, similarly, promises audiences that “The Force Awakens” and the review consensus is that the movie is a retelling of “A New Hope” with some old characters and some new characters inheriting the torch. On the one hand, the overwhelming audience response could be an indication of a rising positive social mood, and on the other, the reaction may be interpreted as a yearning for escapism from prevailing negative social mood to a less complicated world.

Mood Riffs

social_moodAccording to this article, there are two concurrent moods existing in the world today: negative mood across most of the globe (with either real or prospective economic recession) and positive mood in the US, where there is an economic resurgence.

Positive Mood In The US

With the US able to raise interest rates – for its own good and, arguably, to the detriment of most other countries – we may be at the start of a new era of positive social mood in the US.

The mood seems to already be established, as expressed in (mostly) positive consumer sentiment and popular culture expressions such as “The Martian” (expansionism via space exploration) and Star Wars: The Force Awakens, which embodies a “new hope” of optimism and is breaking box office records as evidence of the psychology it embodies.

Emerging Markets Downbeat

The US has made a resurgence and may soon reclaim its former status as “the world’s only superpower”. China, by retrospectively embracing western capitalism, was always going to be one step behind the creators of the global capital finance system.

At the first sign of weakness (a slowdown in demand for Asian exports), the US captains of finance were able to turn the tables to their advantage. Whether this had been a deliberate and pre-calculated move on the part of the US, or a strange confluence of circumstances, it is difficult to see China – and even the BRICS collective – achieve any significant economic growth in the new era of US economic and psychological hegemony.

Hold US Dollar and Bitcoin

As we see in the charts, the US dollar has already begun a long-term rally. Other central banks can only devalue their currencies in an attempt to remain competitive – not versus the US – but in a side-show where their country economies are in competition with each other.

In this new dispensation, Bitcoin could conceivably be dominated by US interests too. Capital flight risk forces Chinese authorities’ hand in restricting bitcoin usage, and a depreciating yuan could, eventually, leave Chinese miners unprofitable. Consider, too, that the next block-reward halving in mid-2016 will force seismic shifts in the mining industry.

Blockchain Embrace

Meanwhile, the optimism and growth manifesting in the US has embraced the blockchain and Bitcoin, and combined with the coming block-reward supply halving, the implication is a long-term rally for bitcoin price, too.

We cannot be sure who exactly is buying in the CNY exchanges. On the surface one could say it is Chinese investors fleeing yuan depreciation and capital controls. However, the largest Wall Street shadow banks also have branches in China, and it may be their whale activity that was responsible for driving the year-end advance in those mainland exchanges. If it is Chinese money, then the first restrictions against Bitcoin should see Chinese investors sell bitcoin with urgency.

Risks Remain

While there is positive mood in the US, the long-term trend for bitcoin and the dollar should remain up. Any disruption (and reversal) to this long-term trend will most likely come from outside of the US where credit default risk will only continue increasing. A critical debt default, somewhere, will be sufficient to send the credit dominoes falling – and they all, in the end, lead back to the US and its Federal Reserve.

So, a time of change. Enforced by the engine of markets: social mood. The larger risk to the world economy persist, and its Achilles Heel remains credit deflation – a risk that is sustained by negative sentiment in the majority of the globe.

May the Force Be With You.

Final Thoughts…

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This analysis is provided by xbt.social.

Global Economic Outlook is published every Monday on CCN.LA Readers can follow Bitcoin price analysis updates every day on CCN.LA

Disclaimer

The writer trades Bitcoin. Trade and Investment is risky and subject to probability and market changes. CCN.LA accepts no liability for losses incurred as a result of anything written in this report.

Charts from TradingView, financial data & cartoon from Investing.com, Star Wars poster courtesy of Disney, image from Shutterstock.

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