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The decades-long financial fraud game is coming to an end. The government money pumping schemes that artificially prop up economies they locked down to fight the COVID War has dried up.
And, now, with interest rates rising the money junkies on The Street are in panic.
Speaking of which, since the Panic of ’08, the Bankster Bandits—fronting as “central banks” that are in full control of the money supply—have been rigging the system in front of everyone’s eyes.
But, with a society in which the masses are more concentrated on their favorite sports teams and glued to the mainstream “news” of the latest trials and tribulations of their favorite “celebrities,” the general public is ignorant of the facts of why and how their lives and livelihoods are being destroyed by those “officials” in charge.
Remember when the money junkies that created the Panic of ’08 crisis with their derivative and subprime mortgage scheme were deemed “Too Big to Fail” and they were bailed out by the government . . . as the victims of their dirty deals lost everything they had?
Do the mindless masses remember when the Federal Reserve pumped in nearly $30 trillion between 2007 and 2010 to bail their banker buddies out?
How about the crap spewing out of the mouths of those “officials,” like former Fed Head Brainless Ben Bernanke, who back in 2012, set a 2 percent target of inflation for raising interest rates?
A total lie . . . put in place to make the “little people” believe what those in charge are selling.
Yes, Ben Bernanke, the Fed Head who declared back in 2005, when the phony real estate market was being propped up with subprime mortgages, Brainless Benny was asked in a CNBC interview:
Q. “Tell me, what is the worst-case scenario if we, in fact, see [real estate] prices actually come down substantially across the country?”
A. “Well I guess I don’t buy your premise. It’s a pretty unlikely possibility; we have never had a decline in house prices on a nationwide basis.”
Then, on 28 February, as the subprime mortgage fiasco deepened and just months before Panic would hit The Street, Bernanke told Congress that “There is not much indication at this point that subprime mortgage issues have spread into the broader mortgage market which still seems to be healthy.”
Crime Syndicate
And on the phony 2 percent inflation target to raise rates, in Europe with inflation running at 7.4 percent and the U.S. at 8.3 percent, not one rate hike by the European Central Banksters in 11 years and just a .75 percent hike by U.S. Feds.
Of course, there is a lot more of their egregious game rigging schemes, such as the Feds pumping $7 trillion into the repo markets between September 2019 and January 2020 so The Street’s money junkies could keep playing the markets.
Also forgotten was how the U.S. equities were in crash mode in December 2018, with the Dow diving some 7 percent by the third week, registering its worst weekly performance since October 2008 panic . . . and how President Donald Trump pressured Fed Head Powell to lower interest rates to pump the markets back up.
Game Town
As we have detailed for a year-and-a-half, the U.S. and E.U. Bankster Bandits claimed that inflation was temporary and transitory. In fact, the ECB had actually projected that inflation would rapidly fall back to their 2 percent phony target this year.
Again, were they lying or are they really that stupid?
In either case, they should be chastised for their incompetence.
On the ECB front, yesterday, its leader, Christine Lagarde, the former head of the International Monetary Fund (or is it the International Mafia Federation?) said the bank would begin to end their negative interest rate scam that has been going on for eight years and bring rates up to about zero by September.
Yes, zero interest rates! And on that little note, the euro moved up against the dollar.
And as the former head of the IMF, Lagarde and team tell nations who borrowed money from them that interest rates should be one percent above the inflation rate. Therefore, using the mandates the money lenders enforced on those they loaned money—like Argentina whose interest rates are 44.5 percent—the EU interest rates should be 8.3 percent and not zero by September.
But the Banksters are held unaccountable for their actions and maintain their monetary control over the universe.
More Pure Bullshit
As we have reported for over a year and a half, Fed officials have said repeatedly that inflation above 2 percent will be small and temporary as supply chains and the economy in general recover.
For more pure bullshit, the “Honorable” U.S. Treasury Secretary Janet Yellen yelled over one year ago, on 5 May 2021, “I don’t think there’s going to be an inflationary problem, but if there is, the Fed can be counted on to address it.”
Yellen was 100 percent wrong, inflation was, and is, an ongoing “problem” and it took the Fed nine months to even slightly “address it.” Yet, despite the totally inaccurate trend forecast, the mainstream media praises Yellen and this is the person that is the head of the U.S. Treasury.
Also extensively detailed in this and previous issues of the Trends Journal, we had long forecast that inflation is a hot trend that will keep rising, and despite the Fed claiming they have the “tools” to deal with it, the only tool they have is to raise interest rates which the artificially inflated equity markets and economy cannot deal with.
Thus, as we repeatedly note, the more interest rates rise, the deeper equities and the economy will fall.
Today, for example, with mortgage rates double what they were year-to-date, the U.S. Census Bureau reported that newly built homes sales slumped over 16 percent in April from March . . . and are down nearly 27 percent from last April.
And then, of course, but barely a peep from the Presstitute media, is the coming collapse of the commercial office building sector and more diving mall properties.
What is the new ABnormal from the money printing gang? Gregory Mannarino drives it home with his article in this week’s Trend Journal, “The Dawn of a New Financial System.”
SPECIAL REPORT
THE WEEK THE 13-YEAR BULL MARKET ENDED
After rising relentlessly since March 2009, the longest bull market in U.S. history came to an end last week.
It paused for four weeks in late February and early March 2020 when the COVID virus arrived and politicians locked down the nation to “flatten the curve.”
But despite the destruction of millions of businesses, lives and livelihoods caused by the draconian lockdown mandates, equities roared back for another 25 months and, at one point, 13,000 additional points, before encountering bumping into two hard realities: artificially low interest rates and cheap money are ending, and the inflation those policies helped to fuel is out of control.
The end began with a weakening in tech stocks in late March as the U.S. Federal Reserve raised its base interest rate by a measly .25 basis points.
Tech stocks’ values are often based on prospects for future earnings, which take a hit if higher interest rates on debt consume more of tech companies’ revenues.
Then, effective on 5 May, the Fed pushed interest rates up another 50 basis points. Keeping the selloff going, risky assets of all varieties began to slide.
SPACs, cryptocurrencies, meme stocks, and anything that was not a reliable store of value lost investors in droves, as we reported in our “Economic and Market Overview” of 17 May, 2022.
Last week, the fears that led investors to forsake the tech stocks they loved during the stay-at-home COVID War spread. Retailers saw share prices fall as slumping first-quarter earnings reflected shoppers’ defensive response to inflation: they traded down from brand names to generics; Walmart found them buying fewer items per visit.
Those are indications that the post-COVID spending boom is winding down, which will spread weakness across the economy.
With more than two-thirds of the U.S. economy relying on consumer spending, fund managers saw the writing on the wall and fled to cash in the greatest amounts since the terrorist attack in September 2001.
These factors have edged the U.S., and the world, closer to recession.
The same factors have plundered the accounts of retail investors, those individuals playing the stock markets by themselves.
The average individual investor’s portfolio has given up 28 percent of its value this year, according to Vanda Research, which found the outlook among retail investors to be “extremely bearish,” as we reported in “Retail Investors Leaving Equity Markets” (17 May 2022).
“You feel helpless,” one retiree who has counted on returns from stocks told The Wall Street Journal. “I don’t want to go back to work at 66.”
After our overview of last week’s stock market debacle, we detail these various elements that signaled the end of the greatest U.S. bull market in history.
LAST WEEK: THE CRASH CONTINUES
U.S. equity markets struggled to gain ground on Monday and Tuesday.
Then came Wednesday.
The Dow Jones Industrial average lost more than 1,600 points on the day; the NASDAQ shed more than 600 after Target and Walmart reported dismal first-quarter results.
Both exchanges perked up on Friday afternoon, with the Dow reclaiming about 800 points and the NASDAQ more than 300.
However, the late rallies were unable to save the week.
The Dow added 0.1 percent Friday but ended the week down 2.3 percent to close its eighth consecutive negative week. The NASDAQ, burdened by tech companies, gave up another 0.3 percent Friday, off 3.8 percent for the five-day stretch, the WSJ reported.
The Standard & Poor’s 500 index scratched out a fractional gain Friday but shed 2.8 percent for the week, dropping it 20 percent from its January 4 record high, putting it just over the edge into a bear market.
The NASDAQ and S&P each recorded their seventh straight week in the red, the worst such stretch since the dot-com bubble popped in 2001, according to the WSJ.
The exchange began to soften in March when investors worried that looming interest-rate hikes by the U.S. Federal Reserve would devalue tech companies’ shares. The value of tech stocks is buoyed by expectations of future earnings, which shrink if companies have to pay more interest on debt.
Now major retailers are seeing profits shrink as inflation and shortages push up their costs. As those costs pass through to consumers, those shoppers begin to pinch pennies, as we report in “Major Retailers Take a Drubbing” in this issue.
From there, the sell-off spread.
“Even shares of energy companies, which have benefited from surging oil prices, fell alongside the broader market,” the WSJ reported. “There are few, if any, safe parts of the stock market.”
“In a very short period of time, we have moved from [the COVID infestation] to an inflation scare to, now, very serious concerns about growth,” strategist Brian Levitt at Invesco said to the WSJ.
The chance of a U.S. recession in the next two years has risen to 35 percent, according to Goldman Sachs.
TREND FORECAST: We disagree with Goldman Sachs. The United States, as with nations around the world, will dive into Dragflation, not just a recession. GDPs will decline as inflation rises and currencies will keep declining in value. And, the deeper currencies dive and the higher inflation rises, the higher gold and silver prices will rise.
In the Game
In past recessions, stock markets plummeted some 30 percent from their highs. The U.S. equity market will not stabilize until The Street believes the Fed has tamed inflation and economic growth has rebounded.
And, the lower stocks go, the more investors snap up government bonds.
Yields on the 10-year treasury note ended Friday at 2.785 percent, down from 2.854 on Thursday. As more investors buy notes, yields fall.
Benchmark Brent crude oil’s price added 55 cents Friday to close at $112.55. West Texas Intermediate, the U.S. reference for pricing, ended the week at $110.24.
When the two oils’ prices are this close together, it usually signals higher oil prices ahead.
May gold closed up a fraction at $1,846.
Bitcoin opened the week at $30,412, bounced through the week, and sank to $28,859 Friday at 5 p.m.
Overseas, other markets also rallied Friday.
Europe’s Stoxx 600 added 0.73 percent. Japan’s Nikkei grew 1.27 percent and the KOSPI in South Korea took on another 1.81 percent.
The Hang Seng index in Hong Kong rose 2.96 percent. China’s SSE Composite bumped up 1.60 percent and the CSI Composite climbed 1.95 percent.
YESTERDAY: HAPPY DAYS ARE HERE AGAIN?
The Dow Jones Industrial Average rose 618.34 points, or 1.98 percent. The tech-heavy NASDAQ also jumped 180.66 points, or 1.59 percent.
The Standard & Poor’s index increased 72.39 points, or 1.86 percent to close at 3973.75.
The benchmark 10-year Treasury note’s yield jumped seven basis points on Monday to 2.866 percent and the yield on the 30-year Treasury bond also moved seven basis points higher to 3.072 percent.
Although investors were happy about a much-needed positive day in the market to start the week, there is real worry that stocks will continue to experience violent swings as the media promotes the rise in COVID cases (not deaths), the Monkeypox scare, the Ukraine War continuing to rage . . . and inflationary pressures hitting Americans hard.
The S&P came close to entering an official bear market on Friday after shedding 20 percent of its gains since January. After Monday, the index was off about 17.2 percent from its high from earlier in the year.
The Street is waiting for Wednesday when the Federal Reserve Bank will release its minutes from a meeting that was held in May, when the bank decided to raise interest rates in the U.S. by 50 basis points, which marked its biggest rate jump in over two decades.
TREND FORECAST: Gerald Celente has been critical of Fed Head Jerome Powell for not acting fast enough to raise interest rates to help tame inflation.
Celente and the Trends Journal had forecast the inflation trend which Powell denied, saying inflation was temporary and then transitory. Celente has pointed out that there are also outside factors that are out of the control of even the most experienced trader, like China’s COVID lockdowns, supply chain disruptions, and the Ukraine War.
The Fed Heads and business media are wrong about stagflation. It’s Dragflation. Economies won’t be stagnant, they will drag down as inflation rises.
Elsewhere, the European Stoxx 600 was up 1.3 percent on Monday after the European Central Bank President Christine Lagarde announced that it will most likely lift its deposit rate out of negative territory by the end of the third quarter. The ECB’s deposit rate is currently -0.5 percent, which means private banks are charged a fee to keep cash at the central bank.
Inflation in the EU hit 7.4 percent in April but Lagarde said if inflation comes down to 2 percent, “a progressive further normalization of interest rates towards the neutral rate will be appropriate.”
Europe is feeling the same pressures that the U.S. markets have faced and Citigroup CEO Jane Fraser told CNBC that Europe is vulnerable to a sizeable downturn and believes the continent will face a recession.
BITCOIN: Bitcoin climbed higher on Monday and hovered near 29,300 during much of the day. Scott Minerd, Guggenheim’s chief investment officer, told CNBC in an interview that the cryptocurrency could fall to $8,000, which would represent about a 70 percent plunge from its current price.
“When you break below $30,000 consistently, $8,000 is the ultimate bottom, so I think we have a lot more room to the downside, especially with the Fed being restrictive,” Minerd told the network.
GOLD: Gold futures were nearly flat early Tuesday as the dollar index was also down 0.3 percent at 102.60. The index rose by about 16 percent to a two-decade high over the 12 months to mid-May.
Gold prices have begun to see positive momentum due to the recent retreat in the dollar and U.S. Treasury yields. There has been some chatter among analysts that the dollar may have more to fall as the ECB begins to normalize its monetary policy and even raise interest rates sometime this summer. But as we note above, ECB raising interest rates from negative to zero is not “normal.”
Yet, analysts have warned that the U.S. dollar has further ground to lose as the monetary policy gap between the Federal Reserve and the ECB starts to narrow.
OIL: Prices in the oil market were largely flat, with world-standard Brent crude settling up 0.7 percent, or 87 cents a barrel. U.S. West Texas Intermediate crude also gained $0.01 to $110.29 a barrel.
Shanghai has announced that it hopes to ease COVID-19 restrictions in the commercial hub on 1 June, which will benefit the oil market. China is the world’s largest oil importer, Reuters reported.
Fatih Birol, the executive director of the International Energy Agency, told CNBC in Davos that she hopes that the increase in oil demand from the U.S., Brazil, and Canada will be “accompanied by the increase coming from the key producers in the Middle East and elsewhere.”
“Otherwise, we have only one hope that we don’t have big trouble in the oil markets in summer, which is hoping … that the Chinese demand remains very weak,” she said.
Over in Asia, the benchmark Nikkei 225 Index closed the morning session up 0.98 percent, or 262.49 points, to close at 27,001.52. The Hang Seng Index fell 1.19 percent, or 247.18 points, to 20,470.06. The Shanghai Composite Index also increased 0.56 percent, or 11.09 points, to close at 1,994.76. The Shenzhen Component Index declined 0.06 percent to 11,447.95.
TODAY: THE UPS AND DOWNS
Market disruptions ranging from supply-chain demands, inflation, central banks, COVID-19 lockdown in China, and the Ukraine War sent U.S. stocks on a rollercoaster ride on Tuesday—that saw the Nasdaq Composite take another beating.
The Dow Jones Industrial Average, down 1.6 percent earlier in the session, ended the day up 48.38 points. The S&P 500 0.81 percent, and the Nasdaq Composite fell 2.35 percent.
Technology stocks were bludgeoned after Snap Inc., the social media company, issued a profit warning on Monday that it will miss its targets for revenue and adjusted earnings in the current quarter. The stock fell 43 percent, its largest decline on record, and shook up the entire sector. Google’s stock slid nearly 5 percent, and Meta Platforms fell 8.4 percent.
U.S. stocks were also negatively impacted by concerns that the Federal Reserve’s plan to tighten monetary policy will send the economy into a recession. Bill Ackman, the hedge fund billionaire, told CNBC Tuesday that inflation in the U.S. will stay at historic levels until the Fed acts more aggressively when it comes to interest rates or “the stock market crashes, catalyzing an economic collapse and demand destruction.
“If the Fed doesn’t do its job, the market will do the Fed’s job, and that is what is happening now,” Ackman said. “The only way to stop today’s raging inflation is with aggressive monetary tightening or with a collapse in the economy.”
The tiny “monetary tightening” the Fed has already imposed is hitting the housing market. The U.S. Census Bureau reported sales of newly built homes plunged 16.6 percent in April from March. The decline from April 2021 is even more dramatic at 26.9 percent.
There were 591,000 units sold during the time frame, which is far short of the 750,000 that was expected. The median price of a new home was also up 20 percent from last year.
Mortgage News Daily reported that interest rates for mortgages have skyrocketed. The average 30-year fixed loan was 4.88 percent at the beginning of April, and is now at 5.41 percent… double their price from a year ago.
TREND FORECAST: We have presented in great detail the fact that the global economy is drowning due to COVID-19 lockdowns, the Ukraine War, and central banks moving to take control of soaring inflation. Fed Head Jay Powell recently said Americans should be prepared to feel some pain. He was not kidding. The Trends Journal is the only news outlet reporting that the U.S. is facing Dragflation.
Overall, and across the globe, again, as we have detailed in the Trends Journal, as a result of the sanctions and the Ukraine War from crude oil to sunflower oil, from wheat to potassium chloride—prices have spiked to record highs. Therefore, the longer the war rages and the tighter the sanctions get, the higher prices will rise and the deeper economies will decline: Dragflation… economies shrink as prices rise.
As the old saying goes; “It’s the economy, stupid,” and as we have continually noted, with median household income down some 3 percent in 2020 and still falling, while Main Street feels the economic pain, they will realize how bad the economy really is when Wall Street crashes.
The S&P Global surveys found that business activity in the U.S., and across the globe has slowed to a crawl due to supply-chain concerns and rising prices for raw materials.
Elsewhere, Europe’s Stoxx 600 was down 4.96 points, or 1.14 percent percent on Tuesday and Britain’s FTSE 100 shed 29.09 points, or 0.39 percent. South Korea’s Kospi was down 41.51. points, or 1.52 percent.
Japan’s Nikkei 225 was down 253.38 points, or 0.94 percent. China’s benchmark Shanghai Composite Index was down 75.93, or 2.41 percent. Hong Kong’s Hang Seng index was down 357.96 points, or 1.75 percent, finishing the trading day at 20,112.10.
Beijing, a city of 21.5 million people, recorded 48 new COVID-19 cases and yet the Chinese government is quarantining sections of the city. The country is continuing its “Zero-COVID” approach, which economists say will continue to lead to supply-chain hardships and be a drag on the global economy.
Today, George Soros, the finance billionaire, repeated what Gerald Celente, the publisher of the Trends Journal has been saying for months, that the world economy could very well be headed into a depression.
GOLD/SILVER: Gold continues to be an attractive investment as a safe haven and was up $17.20, or 0.9308 percent to $1,865 per ounce. The U.S. Dollar Index was down 0.30 percent to 101.77.
Silver was up 1.80 percent to $22.115. Silver has struggled at the $22 mark.
TREND FORECAST: For gold to maintain strength, prices must stay in the high $1,900 per ounce range and when they solidify above $2,200 per ounce, gold will spike to new highs.
OIL: Brent crude rose 14 cents to $113.56 a barrel and West Texas Intermediate was down 52 cents to $109.77 per barrel.
U.S. Energy Secretary Jennifer Granholm said Tuesday that the White House has not ruled out employing export restrictions to ease soaring domestic fuel prices, Reuters reported.
Americans are expected to disregard high gas prices this Memorial Day weekend and travel is expected to be the busiest in two years, analysts say.
BITCOIN: Bitcoin had another choppy day and was up $212.40 per coin by 4:29 p.m. ET, hitting 29,304.70. Bitcoin is down about 50 percent since its high in the past six months.
Ray Dalio, the billionaire investor, told CNBC in an interview Tuesday that bitcoin is like digital gold.
“I think a digital gold, which would be a Bitcoin type of thing, is something that, probably in the interest of diversification of finding an alternative to gold, has a little spot relative to gold and then relative to other assets,” he said.
He also said, “Cash is trash.”
TREND FORECAST: Bitcoin is in danger territory. It has been stuck in the $29,000-30,000 range for over two weeks. We had long 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.
On the upside, we maintain our forecast that bitcoin will find strength to hit new highs when it breaks above $55,500 per coin.
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.
(For more crypto trends and forecasts, please see our TRENDS IN CRYPTOS section.)