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STOCKS END WORST WEEK IN SEVEN MONTHS
Last week, U.S. equity markets slumped to their worst weekly performance since February, with the Dow Jones Industrial Average and Standard & Poor’s index dropping 0.8 percent and the NASDAQ, dominated by tech stocks, off 0.9 percent.
As we had forecast since the media began selling the Delta variant fear and hysteria in July and politicians instituted more COVID War mandates… it would negatively impact economic growth.
It’s now “official” since The Wall Street Journal reported last week that the markets are sliding because investors’ fear that COVID’s surging Delta variant could weigh on the economic recovery and slow this year’s economic growth.
A dismal August jobs report showing the economy created just 235,000 jobs last month worsened market jitters, as did news that companies were once again curtailing business travel, the producer price index jumped 0.7 percent in August, and consumer sentiment crumbled to its lowest level in a decade, as we reported in “Consumer Sentiment Tanks” (17 Aug 2021).
The S&P 500 closed Friday at 4,458 and yesterday it edged higher, closing at 4468.73.
While the tech-heavy Nasdaq slipped 9.91 points yesterday, the Dow was up 261 points.
With Delta variant fear still spreading, today, the Dow opened up 100 points but closed down 292 points, the S&P fell 25.68 closing at 4,443 and Nasdaq was down 0.45 percent. So far, the major averages are all down at least 1 percent this month.
The “big” news of the day was that the August Consumer Price Index was up 0.3% month-to-month… 5.3 percent from a year earlier. Totally absent from the mainstream media coverage is that the inflation spike, which Fed Chair Jerome Powell and the other Fed hacks said was “temporary”… is false. As we have forecast, the globe is entering a period of Dragflation: sinking economies, currency devaluations, weakening wages… and rising inflation.
And what is a major factor that will also devalue currencies? Read all about it in Gregory Mannarino’s article, The Debt Hyper Bubble Must and Will Grow Exponentially.
TREND FORECAST: The S&P index has roughly doubled in value since its March 2020 low and is up 19 percent this year. It could end this year at 4,250, about 5 percent below its 2021 high so far, Bank of America analysts noted, according to the WSJ. However, we forecast the markets are poised for a decline into bear market territory by years end.
GOLD: On the inflation news, which the media tried to downplay since it came in at 5.3 percent and not the Street’s estimate of 5.4 percent annual growth, today, gold moved up $13 to close at 1,807.70 per ounce. With equity markets going down and inflation going up, gold’s betting that the Fed won’t be tapering or raising interest rates this year, and will, at best, slowly taper and raise rates a quarter of percent next year.
BITCOIN: While the coin had some volatile moves over the past three weeks, climbing above $50K per coin and hitting the low $40,000 per coin range, it is still trading in the $46,000-$47,000 per coin range that it has been at for the past few months.
We maintain our forecast for Bitcoin to dive deeply if it goes below $25,500 per coin and rise sharply if it breaks strongly above $50K per coin and steadily maintains the above mid-$50K range.
We also maintain our forecast that a major factor in forecasting the future price of bitcoin and other crypto currencies is dependent on government regulations. Thus, the more regulation, the lower the value of the coins, the less regulation, the higher the prices rise, especially as more small time traders keep jumping into the crypto market. What is also of concern in the U.S. now, is if Washington enforces proposed cryptocurrency tax regulation.
And today, Securities and Exchange Commission Chair Gary Gensler is testifying before the U.S. Senate Banking Committee to discuss the agency’s oversight on cryptocurrencies.
However, in the long term we still forecast growing strength as more businesses accept cryptocurrencies, especially bitcoin, and more equity market firms invest in the crypto sector.
For more on bitcoin and other cryptocurrencies, please see our “TRENDS IN CRYPTOS” section.
OIL: Oil prices rose yesterday and today, following OPEC’s release of its monthly report on Monday that forecasts global oil demand in 2022 will exceed pre-COVID War highs. Today, Brent Crude was up 21 cents, closing at $73,78 per barrel and West Texas Intermediate was up 17 cents, closing at $70.67 per barrel.
This, combined with difficulties to return to full oil production following the havoc Hurricane Ida wreaked on the Gulf Coast and new concerns of another storm hitting Texas… oil prices are hovering near a six-week highs.
However, prices are still down some $4 per barrel from the 2021 highs. Therefore, minus a wild card event, be it man made such as military tensions in the Middle East or by Nature, we forecast oil prices will remain in the $70 to $80 per barrel range for the foreseeable future. Even with a sharp economic down turn, we forecast general inflationary pressures will keep many commodity prices high.