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ECONOMIC UPDATE
It’s one sick joke the politicians keep playing, the Presstitute media keeps selling, and the people keep swallowing.
Two and a half years ago, January 2020, the Year of the Rat, the COVID War was launched in China. Following their draconian lockdown mandates to kill the coronavirus, Italy’s political dictators were the first to march in lockstep with the Chinese way… and the rest of the world, including so-called “Democracies,” quickly started to march in lockstep with the fascist/communist dictates.
The socioeconomic, geopolitical, physical, mental, and spiritual damage these political dictators inflicted upon the world—and the long-lasting implications—is incalculable.
And, rather than blame those little boys and girls that the obedient masses bow down to and obey—such as presidents, prime ministers, governors, mayors, arrogant “health officials” and other stooges that enforced their useless, murderous mandates—they now blame the massive damage on “the pandemic.”
A prime minister of propaganda, The New York Times, which arrogantly touts that the crap they sell such as war, hate and hysteria as “All the News That’s Fit to Print”… is, and was, a prime promoter that it was “the pandemic” that has caused the current hardships, and not those politicians who are factually responsible.
Here is yesterday’s front page story headline in “The Paper of Record,” or more accurately, the Toilet Paper of Record: Stars Return to Fill the Stage, But Gaze at Many Empty Seats.
“Stars?” Actors, singers, comedians are brightly shining “Stars” in the world in which the masses know the cast of every big movie, the batting averages of every baseball player, which team is first to last and by how many games… and the list goes on with each “sport” at home and abroad.
The article goes on to state that “Fewer than half as many people saw a Broadway show during the season that recently ended than did so during the last full season before the coronavirus pandemic” and that “Many regional theaters say ticket sales are down significantly.”
No, not before the “coronavirus pandemic.” That is an outright lie.
More accurately, the neon lights were shining bright on Broadway before a mob of power-hungry political freaks, like New York’s Governor Andrew “Daddy’s Boy” Cuomo who won an Emmy Award for his lockdown bullshitting skills and the jerkoff ex-Mayor Bill DeBlasio imposed their made up mandates that lacked a scintilla of hard science.
They and others across the globe are responsible for the socioeconomic, geopolitical, mental, physical, and spiritual devastation that has destroyed the businesses, lives and livelihoods across the globe…NOT THE CORONAVIRUS PANDEMIC.
Getting Worse
As we have extensively detailed in The Trends Journal since the COVID War was launched, the countless trillions pumped into economies and equity markets to artificially boost them by politicians and central banksters would not only provide a temporary lift, their measure would be severely damaging.
According to a new survey as detailed in The Wall Street Journal, business activity in the U.S., Europe, and Japan fell in August while prices shot up and consumer demand fell.
Yes, but only we, The Trends Journal, are calling it what it is, “Dragflation: Economy drags down as inflation goes up. But despite our sending out tens of thousands of press releases detailing Dragflation realities, it is blacklisted by the mainstream media.
Also, adding to the higher prices are the sanctions imposed on Russia by the United States and its NATO allies.
There was also a sharp drop in business activity in August. It was expected to rise to 49.2 percent but the S&P Global survey with the composite purchasing managers index for the economy—which measures activity in both the manufacturing and services sectors—fell to 45.0 in August, down from 47.7 in July.
A reading below 50 indicates a contraction; a reading above that level indicates growth.
Touting the bullshit line that the coronavirus was responsible for the sagging numbers rather than the politicians that inflicted the damage, the WSJ claimed that this “was the lowest reading since May 2020, early in the pandemic.”
Again, not “early in the pandemic,” but rather early in the lockdowns and massive draconian mandates imposed on businesses, lives and livelihoods that have changed the course of history.
And like the rest of the mainstream media, with two consecutive quarters of contracting gross domestic product and near record high inflation, WSJ refuses to call it what it is: Draglation.
S&P Global also noted that so far in August, the PMI for U.S. services providers fell to 44.1, from 47.3 in July and U.S. manufacturers’ output contracted for a second straight month.
Over There
On the European side, WSJ reported that S&P Global said its composite purchasing managers index for the eurozone fell to 49.2 in August from 49.9 in July, reaching an 18-month low, with manufacturing output down for a third-straight month.
And thanks to the sanctions imposed on Russia by the U.S. and NATO, the gas prices keep spiking higher and the economy falls lower: Dragflation! Business activity in Europe fell for a second month in a row.
Again, towing the “Pandemic” bullshit line, WSJ wrote that the “PMI for Germany pointed to the sharpest decline in business activity since June 2020, while the measure for France pointed to the first decline in activity since the first wave of the pandemic.”
No, NOT SINCE THE FIRST WAVE OF THE PANDEMIC, you PRESSTITUTES, but from the “first wave” of the draconian lockdowns that were based on political science and dictatorial aggressiveness… not hard science and indisputable data.
Bad to Worse
Thanks to a surge in gas prices and a declining economy (despite EU interest rates at zero percent), the euro slumped to its lowest level since 2002 yesterday. Thanks to the sanctions NATO and the U.S. imposed on its biggest gas supplier, Russia.
Hitting more than 14 times its average of the past decade, yesterday, the benchmark TTF gas price in Europe spiked over 10 percent to a high of €292.50 per megawatt hour. It eased a bit but still hit its highest closing price on record. In the UK, gas prices for next-day delivery surged as much as 33 percent to £4.80 a therm ($57 per million BTU).
Thus, there are more pressures for Dragflation: Rising European TTF prices as the economic growth declines.
The S&P Global’s surveys also noted that private sector activity in Japan and Australia also retracted in August.
Zoomtowns
Remember the record low housing inventory as people fearful of getting the coronavirus fled highly populated areas, moved to exurban areas, escaped to states with less COVID mandates… and as more people worked from home they upgraded their dwellings?
Those times are gone.
According to the latest data, the supply of unsold new homes is its highest since March 2009… a period of deep economic-downtime during the Great Recession. July new home sales crashed 12.6 percent, a much bigger fall than was expected. Year over Year sales have collapsed 29.6 percent.
Dropping for 6 consecutive months, sales of existing homes in July were down 5.9 percent from June. This was the sixth straight month of a decline, with a 20.2 percent drop from a year earlier. But while existing sales were down, according to the National Association of Realtors the median price last month was $403,800, up 10.8 percent from July 2021.
CNBC notes that “homebuilder sentiment has turned negative and buyers are canceling contracts in the face of interest rates that have jumped to 5.72 percent from below 3.3 percent heading into 2022.”
TREND FORECAST: It’s Dragflation in the housing market: Sales dropping, prices of homes rising. Overall, we forecast that as economic conditions deteriorate, home prices will also fall. How far and how fast depends on how high and how fast the Federal Reserve raises interest rates. Simply, the higher and faster interest rates rise, the faster and deeper housing prices will fall.
Also, should the Fed relax its interest rates hikes, home prices will decline just slightly.
But as we have also forecast, the big real estate crash on the near horizon is in the commercial office building sector in Manhattan, San Francisco, Chicago, Cleveland and other major cities in the United States and abroad where strict COVID War rules were imposed and masses of commuters stopped commuting. Therefore, the wider and longer the work-at-home trend persists, the deeper the commercial real estate sectors affected by this trend will fall.
We forecast that the resistance to RTO (return-to-office) is a new 21st century way of life. With more employees working from home, less rental space is needed which means higher profit margins for businesses that pay less for less space.
Indeed, mirroring what we have long forecast since the COVID War began and the work-at-home trend accelerated, this is the headline in today’s Financial Times: “Apple staff cite ‘exceptional work’ from home as they resist back-to-office order.”
LAST WEEK: RATE JITTERS SINK STOCKS
On Friday, U.S. equity markets closed their first negative week in the last four as investors’ uncertainties rose around the U.S. Federal Reserve’s pace of interest rate increases, The Wall Street Journal reported.
Investors had felt some confidence that the Fed would raise interest rates only a half point at next month’s meeting.
However, minutes of the July meeting indicated that members of the central bank’s Open Market Committee still feel the need to respond aggressively to inflation.
Also, on Thursday James Bullard, president of the Federal Reserve Bank of St. Louis, said he would favor another three-quarter-point hike in September.
“This feels like a re-evaluation of whether there has been enough financial tightening—and, if there hasn’t, could we get more pain from central banks having to do more?,” John Roe, chief of multi asset funds at Legal & General Asset Management, commented to the WSJ.
The Dow Jones Industrial Average ticked down 1.2 percent over the week. The NASDAQ was off 2 percent and the Standard & Poor’s 500 index gave up 1.3 percent.
The yield on the benchmark 10-year treasury note moved up to 2.987 percent on Friday from 2.879 percent the day before as investors planned for another Fed rate hike in September.
Also on Friday, the WSJ Dollar Index grew by 0.5 percent, its biggest weekly gain since March 2020.
Higher U.S. interest rates lure yield-seeking investors and the dollar is seen as a safe store of value during economic turbulence.
Gold drifted down last week, ending at $1,760 at 5 p.m. U.S. EDT.
Brent crude for September delivery slipped 0.7 percent to $96.72 at 5 p.m. U.S. EDT on Friday. U.S. benchmark West Texas Intermediate retreated 0.8 percent to $90.27.
Bitcoin was unable to hold onto recent gains, surrendering 11.8 percent to $21,271 at 5 p.m. U.S. EDT on Friday.
Abroad, Japan’s Nikkei was among the few bright spots, rising 1.1 percent for the week.
The pan-European Stoxx 600 lost 1 percent. South Korea’s KOSPI shrank by 1 percent on continuing worries about exports’ future.
The Hang Seng in Hong Kong was smaller by 1.3 percent, the SSE Composite slid 0.3 percent, and the CSI Composite gave back 0.7 percent.
YESTERDAY: SELLOFF WITH FED RATES IN MIND
Having its worst day since June, stocks in the U.S. ended its four-week stretch of gains on Monday as traders prepare for the Federal Reserve’s next moves as Fed Head Jerome Powell is expected to give a speech later this week about rates in Jackson Hole, Wyoming.
The Dow Jones Industrial Average sank 643.13 points, or 1.9 percent, to close at 33,063.61, with the benchmark S&P 500 shedding 90.49 points, or 2.1 percent, to 4,137.99. The NASDAQ Composite also fell 323.64, or 2.5 percent, to 12,381.57. The declines are the biggest two-day drop by the NASDAQ and S&P since June.
Friday is looming large in the U.S. market because besides Powell’s speech, traders will also be receiving the Commerce Department’s personal consumption expenditures index, which reflects changes in the prices of goods and services purchased by consumers in the U.S.
In June, the index hit its highest yearly gain in four decades when it rose 6.8 percent. The Fed’s decisions on future rate hikes often weigh heavily on these numbers because they are considered an inflation gauge since they measure changes in the prices of various goods and services purchased by Americans.
The Wall Street Journal Dollar Index, which measures the U.S. dollar against other currencies, reported a seventh consecutive day of gain, rising another 0.5 percent as the euro fell, reaching parity with the dollar.
One of the big movers on The Street was Netflix, which fell $14.62, or 6.1 percent, after analysts at CFRA Research said investors should sell, the Journal reported.
The 10-year Treasury yield was trading above 3 percent, which marked its highest level since the end of June.
But looming in everyone’s mind is what Powell will say in Jackson Hole, and whether he will indicate that the Fed will raise interest rates another 75 basis points.
It’s at best a guessing game whether the Fed will either raise interest rates by 50 or 75 basis points in September.
Yet, as we note, with annual inflation rising to 8.5 percent in July and the hoax that the Fed long contended that it would begin to raise interest rates when inflation hit 2 percent, it’s a joke that the overnight rate is 2.25 to 2.50 percent.
Yet, even at this low interest rate when compared to the inflation rate, the fear on The Street is that if interest rates hit 4 percent it will hit the equity markets hard. According to a J.P. Morgan Wealth Management study published yesterday, some 88% of investors (i.e., gamblers) are worried about inflation and interest rates rising higher.
Elsewhere, the European market was in the red on Monday with the FTSE 100 down 16.58 points, or 0.22 percent, to 7,533.79 and the STOXX 600 down 4.19, or 0.96 percent to 433.17.
Oil stocks brought down the market over growing concerns that central banks will take bolder action to bring down surging inflation. There is concern that there will be weakening global demand.
Citi also warned that inflation in the UK could hit 18.6 percent in 2023.
Benjamin Nabarro, Citi’s chief UK economist, said the bank updated its inflation profiles and now expects “CPI and RPI inflation to breach 18 percent and 21 percent in Q1-23,” The Evening Standard reported.
In Asia, the Nikkei fell 135.83 points, or 0.47 percent to 28,794.50 and South Korea’s Kospi fell 30.19 points, or 1.21 percent, to 2,462.50. China’s Shanghai Composite rose 19.72, or 0.61 percent, to 3,277.79, and the Shenzhen Component Index rose 1.19 percent to 12,505.68. The Heng Seng Index also fell 116.05 points, or 0.59 percent, to 19,656.98.
The big news out of China was the decision by its central bank to cut its one-year lending rate by 5 basis points in an effort to support long-term borrowing. China is also being impacted by a record-setting drought. The New York Times noted that power shortages in Sichuan have forced the shutdowns of factories, impacting automotive and electronic sectors.
GOLD/SILVER: Gold was trading down 0.7 percent to $1,735 per ounce as it faced serious headwinds with a surging U.S. dollar and an upcoming Jay Powell speech that could very well indicate a hawkish approach by the Fed to bring down inflation that remains high in the U.S.
Trends Journal readers know that the higher the U.S. dollar is matched up against foreign currencies makes gold a less attractive investment for foreign buyers since gold is dollar based. Thus, the lower their currency sinks, the more it costs them to buy gold. When gold is up against high interest rates, the non-yielding asset also becomes less attractive compared to Treasuries.
In August, the 10-year Treasury’s yield has moved from 9 basis points to 40 basis points.
September Comex silver futures were down $0.369 on Monday to $18.69 an ounce.
TRENDPOST: As we have noted, gold has struggled to move past the $1,800-an-ounce mark amid market uncertainty. Carsten Fritsch, precious metals analyst at Commerzbank, said in a report that gold is doing a lot better than one would expect given the current environment, according to Kitco.
“Despite all the complaining about the disappointing gold price development in recent months from an investor’s point of view, it should not be forgotten that gold is still the best performer this year compared to other asset classes,” he said in his report.
“Gold is currently trading 4.5 percent below the level at the beginning of the year. In the case of U.S. bonds, the corresponding loss amounts to 9.5 percent due to the sharp rise in yields, if the T-Note future is used as a reference. The equity markets have lost around 14 percent since the beginning of the year as measured by the MSCI World, the bitcoin price even more than 50 percent,” Fritsch added.
OIL: Oil prices had a bumpy day on Monday due to concerns that the U.S. central bank will continue to raise interest rates by 75 basis points to bring down inflation.
Brent crude fell 54 cents to $90.23 a barrel and West Texas Intermediate fell a few cents to settle above $90 per barrel.
Oil had been trading lower until Prince Abdulaziz, the Saudi energy minister, said OPEC+ has the ability to cut production. He told Bloomberg in an email, “The paper and physical markets have become increasingly more disconnected.”
He stated that futures prices “don’t reflect the underlying fundamentals of supply and demand, which may require the group to tighten production when it meets next month to consider output targets.”
TRENDPOST: Oil traders are considering additional monetary tightening by central banks across the globe and exactly what kind of role extreme weather will have on major economies like the U.S. and China.
Neal Dingmann, the managing director of Truist Securities, told Yahoo! that oil could drop to about $80 per barrel this year, before jumping to $110 early next year.
BITCOIN: Bitcoin continued its downward trend on Monday and was trading in the $21,230-per-coin range. Many crypto buyers are considering the next few days to be something of a holding pattern before they get a better sense of the Fed’s next rate hike.
Coinbase’s David Duong told FXStreet that the cryptocurrency will likely “retest support at $20,830 and $19,230 over the coming few weeks.”
TRENDPOST: The Trends Journal has noted that bitcoin tends to do well when the U.S. dollar is weakened, but the dollar is continuing to gain in value compared to other currencies. Bitcoin will also face pressure, like gold, from the 10-year Treasury yield that climbed above 3 percent for the first time in a month.
Fed officials have indicated that future rate hikes are in the cards, which could also bring down the value of cryptos.
TODAY: TURBULENT TIMES FOR THE MARKET
The Dow Jones Industrial Average fell 154.02 points, or 0.47 percent today, to close at 32,909.59, and the benchmark S&P 500 was off 9.26 points, or 0.22 percent, to close at 4,218.73. The NASDAQ Composite was down 0.27 points, to close at 12,381.30.
The Street was dealing with clear signs that there is a global economic slowdown as investors wait to hear Fed Head Jay Powell’s comments later this week in Jackson Hole, Wyoming. A report released today by S&P Global showed a second month of contraction due to high inflation, supply chain issues, and material shortages.
The composite purchasing managers index for August also fell to 45 this month, which marked its lowest point in over a year and a half. A reading below 50 means a contraction in activity.
“The rate of contraction also outpaced anything recorded outside of the initial pandemic outbreak since the series began nearly 13-years ago,” a statement read.
TRENDPOST: Gerald Celente has noted that the contraction and economic hardships faced by many Americans is not the result of “the pandemic.” It is the result of power-hungry politicians who killed businesses and the human spirit for about two years.
These lockdowns did nothing to prevent deaths, and just inflicted more stress on the public. It will take years to fully understand the toll these lockdowns had on the mental and physical health of societies. Now, the same central banksters who called inflation “transitory” while this magazine was ringing the alarm bells are those society is relying on to save the economy.
Siân Jones, senior economist at S&P Global Market Intelligence, said in a statement, “Gathering clouds spread across the private sector as services new orders returned to contractionary territory, mirroring the subdued demand conditions seen at their manufacturing counterparts.”
Mark Haefele, UBS’s Global Wealth Management chief investment officer, said in a note to clients that his bank believes the equity market will remain volatile “as investor sentiment oscillates between hopes that the Fed will succeed in steering the U.S. economy to a ‘soft landing,’ and fears that it will not.”
One of the biggest movers on The Street today was Twitter after a whistleblower emerged and accused the company of “extreme, egregious deficiencies” in its effort to fight spam and hackers. A spokeswoman for the company accused Peiter Zatko of selling a false narrative to gain attention and “inflict harm on Twitter.”
The New York Times reported that Zatko is expected to provide a deposition in Elon Musk’s legal fight with the company after the Tesla chief accused Twitter of elevating its price on the backs of fake users.
GOLD/SILVER: Gold was up $12.20, or 0.70 percent, to $1,760.60 an ounce, and silver traded up 0.0117 percent, to $18.995 an ounce.
Gold was up after the U.S. dollar cooled today which makes a gold investment more attractive to investors. The dollar was down 0.5 percent.
Edward Moya, a senior analyst with OANDA, told CNBC that the data released today showed the “economy has weakened quickly, opening the door to the idea that the Fed might not be that aggressive, further helping gold.”
The yield on the 10-year Treasury climbed to 3.048 percent, which is usually a bad sign for gold. But the data released could force the Fed’s hand to get a little more dovish on interest rate hikes, which could be good for gold.
TRENDPOST: Gold is seen as a safe-haven investment during turbulent times, and foreign investors could turn to it as the globe sinks deeper into recession, tensions between China and Taiwan remain high, and the Ukraine War continues.
Gerald Celente said the price of gold should be much higher than it is currently trading due to economic turmoil and uncertainties. We maintain our forecast that 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: Oil was trading higher today, with Brent crude up $3.69, or 3.82 percent, to $100.17 a barrel, and West Texas Intermediate was also up by $3.26, or 3.61 percent, to $93.63 per barrel as of 4:30 p.m. ET.
Oil prices were up today after indications from Saudi Arabia that OPEC+ could cut its output due to the slowing global economy and if Iran rejoins the world market by signing back on the U.S. nuke deal.
Bob Yawger, director of energy futures at Mizuho, said the Saudi oil minister, Abdulaziz bin Salman, is a “little bit beside himself,” according to Investing.com. “He was stressing the point that the dynamics were a bit out of whack with reality.”
The report noted that oil prices jumped to $147 per barrel due to a confluence of factors ranging from the Ukraine War and supply chain concerns. But oil has fallen in recent weeks due to economic uncertainties that have taken hold.
TREND FORECAST: Prince Abdulaziz told Bloomberg in the interview that the oil market is in a “state of schizophrenia” when considering output and demand. The Wall Street Journal noted that Abdulaziz’s comment shows that President Joe Biden’s recent trip to Riyadh did little to help sway the Kingdom to keep up the output to lower prices at gas stations across the U.S.
There is a global recession based on poor leadership during the COVID War and we are all paying for it now. The oil market will remain very volatile, with the wild card being Israel’s reaction if Iran rejoins the world’s oil market. We have noted that although oil prices continue to come down, a major shock could easily send prices up to the $125 per barrel range that would bring down economies and equity markets… as it did at the onset of the Panic of ’08.
The FTSE 100 was down 45.68, or 0.61 percent, to close at 7,488.11, and the STOXX 600 was down 1.82, or 0.42 percent, to 431.35. The Asian market was also in the red with the Nikkei down 341.75, or 1.19 percent, to 28,452.75, and the Hang Seng Index was down 153.73, or 0.78 percent, to 19,503.25. South Korea’s Kospi was down 27.16, or 1.10 percent, to 2,435.34.
In China, the Shanghai Composite Index was down slightly 1.57, or 0.048 percent, to 3,276.22. The Shenzhen Component Index was down 50.53 points, or 0.40 percent, to 12,455.15.
Markets are trending lower before U.S. Federal Reserve Chair Jerome Powell’s speech at the economic symposium on Friday in Jackson Hole, Wyo. Fed officials have indicated that the central bank will continue its hawkish approach to interest rates in an effort to bring down surging inflation. Thomas Barkin, the Richmond Fed president, said the central bank will look for front-loaded interest rate increases, even if it means risking a recession, Nasdaq.com reported.
China’s currency, the yuan, has been falling and hit a two-year low against the U.S. dollar. The Wall Street Journal reported that there’s concern about a slowing economy in China. The report noted that while the U.S. increases its interest rate, Beijing has cut its rate. The yuan traded at more than 6.86 to the U.S. dollar today.
BITCOIN: The world’s most popular cryptocurrency was trading up slightly—to $21,424.30 per coin—at 2:12 p.m. ET.
As we noted, bitcoin enthusiasts are waiting for Powell’s upcoming speech to get a sense of where it will be headed in the next few weeks.
But there is also some chatter that bitcoin’s price is being impacted by Mt. Gox, a defunct Japanese cryptocurrency exchange, that announced it will pay out 200,000 bitcoin to clients who were affected in a hack about 11 years ago, Capital.com reported.
About 850,000 bitcoins were lost to fraudulent withdrawals. The WSJ reported that the bitcoins will be repaid in a spinoff currency called bitcoin cash. In 2011, when these bitcoins were stolen, they were worth about $540 each, and they are now valued at more than 3,5000 percent higher since then, the WSJ reported. There’s concern that these owners will quickly sell these coins.
Either way, the jump in bitcoins could send the cryptocurrency’s price falling farther.
Dmitry Ivanov, CoinsPaid chief marketing officer, told Capital.com, “While selling off is billed to greatly depress the prices of bitcoin, the MtGox customers may choose to act in an unexpected way.”
“They may decide to HODL their coins until bitcoin grows back to the point where its price can be double what it currently is trading at,” he said. “The price of BTC is bound to react negatively if there is a selloff, and positively if they choose to wait for better prices.”
TREND FORECAST: The value of bitcoin will continue to hit resistance at the $24,000 to $25,000 range based on the likelihood that the Federal Reserve will continue its monetary tightening strategy to bring down inflation, which is still high.
Arcane Research noted that June saw a net outflow from exchanges of 119,000 bitcoin, “the highest outflow since November 2020,” Kitco reported. “July also saw massive outflows, with 96,000 bitcoin being withdrawn from exchanges. The exchange outflows have continued in August, with a net of 65,000 bitcoin withdrawn in the first 22 days of the month.”
Powell is expected to take a hawkish stance on Friday and don’t be surprised to see the crypto fall down to the high $19,000s.