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The Ukraine War has changed the course of history.
Tracking trends is the understanding of where we are, how we got here, and where we are going.
The “how we got here” is clear and simple: Near zero interest rates = cheap money artificially propped up equities and economies as we have greatly detailed in the Trends Journal… week after week, month after month, year after year.
In the first three weeks of January, before the Ukraine War ignited, the phony equity markets that had been injected by the Fed Banksters into Wall Street were drying up.
The big fear, after the Fed Banksters lying for nearly a year that inflation was “temporary,” then “transitory,” was that interest rates would rise and the money junkies could not afford to pay for their heavy doses of monetary methadone.
Where We Are Going
Then, as the Ukraine conflict heated up, equity market turbulence spread across the globe. For the month of February, the Dow cast off 4.3 percent. The NASDAQ bounced through the month inside a roughly 200-point range and ended February essentially flat.
Since the new year began, the NASDAQ was down over 12 percent, the S&P over 8 percent… their worst drop since the COVID War was ramped up back in March two years ago.
Last Week
U.S. equities slid through the early part of last week, with the Dow casting off as much as 2,000 points by Thursday when Russia invaded Ukraine, then rallied at week’s end as investors felt more comfortable edging back into riskier assets from stocks to Bitcoin after Russia said it was open to negotiations to settle the conflict.
Investors channeled $3.6 billion into exchange-traded stock funds, helping to resurrect index values.
For the week, the tech-laden NASDAQ jumped 1.6 percent. The Dow Jones Industrial Average added 834 points on Friday, its best one-day gain since November 2020, to close the week virtually flat.
The Standard & Poor’s 500 index squeaked out a 0.8-percent rise, although it remains squarely in a correction, having fallen more than 10 percent from its January high mark.
Friday’s recovery was aided by The Street’s hope that the war in Ukraine will imbue the U.S. Federal Reserve with caution: instead of raising interest rates by a half-point at this month’s meeting, chances are now much greater that the Fed will bump its rate by a quarter-point.
Other markets recovered late in the week as well.
Russia’s equities market bounced up 19 percent on Friday after plunging Thursday; the ruble added 3 percent after shedding 8 percent against the dollar on the day of the invasion. As this week began, the ruble crashed and trading on Russia’s stock market was canceled; see “WAR IN UKRAINE ECONOMIC OVERVIEW” in this issue.
The Europe-wide Stoxx 600 rose 3.3 percent Friday but was 3.3 percent poorer for the week. The Nikkei 225 gained 1.9 percent. China’s CSI 300, covering both the Shanghai and Shenzhen markets, climbed back 1 percent after sliding on Thursday. The Hang Seng index in Hong Kong was off 0.6 percent for the week.
After soaring on the day of the invasion, prices for Brent crude and natural gas slackened (see related story in this issue).
Yesterday
This week started off on a down note.
Stocks struggled to find a path on the fifth day of the war in Ukraine, finally closing mixed amid grim news about the conflict, continuing worries about inflation, and lingering uncertainty over the U.S. Federal Reserve’s next move.
With the Ukraine war heating up, the word on the Street is that the Fed will be less aggressive in raising interest rates later this month.
However, now, with inflation gaining speed as nations impose more sanctions on Russia, should they not raise interest rates strongly as inflation moves higher, with an abundance of cheap money still flowing, inflation will spike higher. (See “WAR IN UKRAINE ECONOMIC OVERVIEW” in this week’s Trends Journal.)
Currently, there is fear of escalating war, false flags that will ignite more military incursions, miscalculations that will make bad situations worse and cause a spike in market volatility.
Yields on 10-year treasuries edged up 0.02 to 1.859 percent.
Abroad, the pan-European Stoxx 600 was off 0.1 percent. The Nikkei 225 climbed 1.68 percent, China’s CSI 300 bumped up 0.45 percent, and Hong Kong’s Hang Seng index gave up 0.7 percent.
Today
On the hopes that the situation in Ukraine was easing, Asia-Pacific markets rose today. But later in the day, as the heating up war reality set in, over in Europe, equity markets closed sharply lower with the Stoxx 600 down 2.2 percent.
In the U.S. it was a deep down day, with the Dow falling nearly 600 points, while the S&P 500 and Nasdaq fell 1.55 percent and 1.59 percent respectively.
GOLD/SILVER: As the fear of an escalating Ukraine war grew darker, it was a shiny day for gold and silver, with gold rising some $46 per ounce to close at $1,947 per ounce and silver jumping nearly 5 percent to close at $25.56 per ounce.
TREND FORECAST: Precious metals prices will gain strength as the Ukraine war escalates and investors seek safe haven assets… of which gold and silver are paramount. In addition, with fears that the war will heat up and the Federal reserve will hold back on quickly pushing interest rates higher, that too will be positive for gold and silver since the low interest rates will not keep inflation from rising.
And as we greatly detailed in our “War in Ukraine Economic Overview” in this issue, the Ukraine war will drive various commodities and goods higher which will in turn push inflation higher. And the higher inflation rises, so too will gold prices.
OIL: Oil prices benefited from investors’ uncertainty, with Brent crude’s nearest futures contract closing at $101; U.S. benchmark West Texas Intermediate ended Monday above $96. But today, with war tensions ratcheting up in the Ukraine and more sanctions being imposed upon Russia, Brent Crude spiked 8.4 percent to close at $106.65 a barrel and West Texas Intermediate rose 10.29 percent to close at $105.69 per barrel… both hitting seven year highs.
TREND FORECAST: As we have long forecast, when oil breaks past the psychological $100-a-barrel milestone and continues to climb, it will spike inflation, thus forcing central banks to radically raise interest rates to fight it… which will sharply drive down equity markets and economies as money becomes too expensive to borrow and the cost of servicing debt increases.
However, with the fear of the Ukraine War easing pressure to raise interest rates, inflation will continue to spike yet higher… as will oil prices. The oil spike will not be eased until war tensions ease.
We also noted that should Brent Crude hit $110 a barrel, inflation in the United States would exceed 10 percent on a year-over-year basis, according to RMS, as reported by CNN.
Should oil prices maintain or pass that level, it will push down economies and equity markets as it signals the beginning of Dragflation 2022… declining economies and rising inflation.
For more on the oil and trend forecasts, see “War in Ukraine Economic Overview” in this issue of the Trends Journal.
BITCOIN: Yesterday, bitcoin posted its best one-day jump since May, gaining 11 percent to break through the $40,000 mark and closing at $41,650 per coin. Today it was up 5.2 percent hitting $43,870 per coin as we go to press.
TREND FORECAST: While there is some speculation on The Street that bitcoin is moving up because the prices were too low, the major aspect for pushing prices higher, as we see it, are expectations that the Russian government will use cryptos to evade sanctions… and that with the banks in Ukraine and Russia freezing bank accounts and/or limiting withdrawals, people are buying cryptos so they can move their money out of their respective countries.
In the meantime, we maintain our forecast that bitcoin will find strength to hit new highs when it breaks above $55,500 per coin. We had also forecast, the downward breakout point would be hit should prices fall below $25,000 per coin. If they go that low, bitcoin could well fall back to the $10,000 range.
As we have been noting for over five years, a major factor in forecasting the future price of bitcoin and other crypto currencies is dependent upon government regulations.
TREND FORECAST: Just as Russia and Ukraine have imposed banking restrictions, so too has Canada with its Prime Minister Justin Trudeau invoking an Emergencies Act on the nation which froze assets of people who supported the trucker’s Freedom Convoy.
We note this to illustrate how quickly and easily governments can steal the public’s money at any time for any reason. Thus, you may consider having your money and assets where only you can get them when you want them.
(For more crypto trends and forecasts, please see our TRENDS IN CRYPTOS section.)