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Remember, tracking trends is the understanding of where we are, and how we got here… to see where we are going. As Friedrich von Schiller said back in 1790, “In today already walks tomorrow.” And as we say at the Trends Journal, “Current events form future trends.”
By using our Globalnomic® system of trend forecasting, we make connections between different fields. “All things are connected, like the blood which unites us all,” said Chief Seattle.
And as we say, “Opportunity misses those who view the world through the eyes of their profession.” Therefore, when forecasting GDPs, equities, commodities, etc., by taking the Globalnomic® perspective, we look beyond a narrow economic spectrum.
We are in the midst of a socioeconomic and geopolitical crisis that is unprecedented in human history.
How We Got Here
As every conscious adult knows, even in the best of times “life” has its tough times.
But what life used to be before the Chinese launched the COVID War in January 2020—and when Italy and the rest of the world followed their orders and marched off with them to fight the virus—compared to what we are living today… life back in 2019 was Heaven on Earth.
Across the globe, with few exceptions, when the sun goes down streets are empty… nightlife is dead. Bars, clubs, disco’s etc. are a shadow of what they used to be.
Office buildings are lucky to be half filled. Businesses that depended on commuters are out of business. Crime rates and suicide death rates are skyrocketing. As Gerald Celente had forecast when the COVID War was launched, “When people lose everything and have nothing left to lose, they lose it.”
And lose it they have. The U.S. Centers for Disease Control and Prevention reported that gun homicides in America hit a 25 year high. Thus, the higher the levels of violence, the higher the risk of injuries and the greater the fear of people going out late at night… or taking mass transit.
Back in the days when Baby Boomers were teens and young adults, the nightly message on TV was, “It’s 10 PM, do you know where your children are?”.
Now that age segment is at home, glued to their Metaverse world of no humanity.
Society as we once knew it was killed by little political freaks and their arrogant low-life team of “health experts” who, without a scintilla of scientific data, imposed unprecedented draconian lockdown mandates to “flatten the curve” in their losing fight to win the COVID War.
What the imbeciles “flattened” was the human spirit. And rather than killing the coronavirus, they destroyed the lives and livelihoods of hundreds of millions of people—possibly billions—across the planet.
And while there is street traffic during the day, in cities big and small, it’s a fraction of what it used to be as more people work from home, commute less and are constantly bombarded by the media with COVID Fear and Hysteria… they are afraid to go out and party.
The unprecedented mandates imposed by political dictators have changed the world for the worse.
On the better part, hundreds of billions of people are now working at home rather than commuting to work… wasting precious time and life to get back and forth.
On the downside, as we have extensively reported and forecast, with office occupancy rates way less than half of what it used to be, all the businesses that depended on commuters and the landlords that rented out office space to tenants… have been hit hard. Thus, there will be an office rental bust that will drive landlords into deep debt and foreclosures.
In fact, on the overall commercial real estate side, the investment bank UBS estimates that some 50,000 U.S. retail stores will go bust over the next five years. We forecast that as a result of geopolitical factors, it will be almost double that.
China vs COVID
The toll of the COVID War is global. And China, the nation that launched it on Lunar New Year 2020, The Year of The Rat, is now at full force in the fight to kill the coronavirus … which is killing its economy and much of the world’s.
As a result of its six week round of draconian lockdowns which choked supply chains and rising inflation dampening consumer spending in Europe and the U.S., Chinese export growth slumped last month. After growing almost 15 per cent in March, exports increased just 3.9 per cent in April from a year earlier—the slowest rate since the COVID War began in 2020.
And with export growth the dynamo that drove the Chinese economy up over the last two years, now diving, it will be a key damaging factor to its economy.
Yet, despite the dire data, rather than ease lockdown pressures, the communist dictator Chinese President Xi Jinping has ramped them up in his fight to win the COVID War.
Speaking out against the lockdowns, the head of the World Health Organization warned on Tuesday that China’s zero-tolerance COVID-19 policy is not sustainable given what is known of the disease.
Misery Loves Company
As Gerald Celente has said, “When all else fails, they take you to war.” And just as the psychopathic freaks brought the world the COVID War in 2020—which spiked inflation and sunk nation’s GDPs—with economic disaster racking equity markets, now too (as we detail in this and previous Trends Journals), they have taken us to WWIII.
The socioeconomic and geopolitical consequences of this war that has begun will be deadly.
Again, as we have extensively detailed, before Russia invaded Ukraine, the United States, NATO and Ukraine brushed off Moscow’s calls for negotiations to settle the issues that ignited the conflict. And while we are totally opposed to Russia’s invasion, we have reported on why Russia attacked… facts that are ignored by the Western media.
On Monday, at Russia’s annual Victory Parade to celebrate the defeat of Germany in WWII, its President Vladimir Putin said his country was forced to “strike back preemptively” against Ukraine, and that just as Soviet forces did in the second world war, they were “fighting on their own land” in the current conflict with Ukraine.
Referring to troops in the eastern border region of Ukraine where a reported 15,000 people were killed by Ukraine forces following the U.S. staged 2014 coup that overthrew the democratically elected president Victor Yanukovych, Putin said, “The Donbas militia and the Russian army are fighting on their own land, which the heroes of the Great Patriotic War defended to the death.”
Making a bad situation economically worse, again, as we have greatly detailed, President Joe Biden and NATO imposed sanctions on Russia that have hit We the People much harder than Moscow.
According to the Democracy Institute/Express.co.uk poll published last Saturday, some 53 percent of Americans finally agreed with what we had warned: The sanctions hurt the U.S. more than the Russians. With gas prices soaring and the price of nearly everything rising, 43 percent said they’re “OK” with Ukraine losing the war and 56 percent disapproved of Biden’s handling of foreign matters.
Yet, despite America going down economically, President Biden pumped in $4 billion worth of weapons to Ukraine, and Defense Secretary Lloyd Austin, who sat on the board of directors of Raytheon, America’s #2 defense contractor, said he would “move heaven and earth” to keep the Ukraine war going until they beat Russia.
And besides Biden’s push to send $40 billion to Ukraine (pushed up from $33 billion by Democrats), yesterday he signed the Lend-Lease Act of 2022, that allows the Washington Gang to send unlimited quantities of lethal weapons to Kiev… for which they will never pay back. Indeed, the latest estimates are that Ukraine’s economy will dive 30 percent this year.
Happy Inflation Days
And as for the sanctions on Russia and their cost, according to research by Tom Krebs, an economics professor at Mannheim University who is an adviser to the German government, the country’s economy will lose some 12 percent of its annual output if they shut down Russian natural gas supplies.
Having received 55 percent of its gas from Russia before the Ukraine War, Krebs said, “An instant and complete stop of Russian natural gas imports would, in combination with the already agreed coal embargo and the forthcoming oil embargo, probably amount to an economic slump comparable to the decline in GDP during the 2009 financial crisis or the 2020 corona crisis.”
TREND FORECAST: Overall, and across the globe, again as we have detailed in Trends Journals, 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.
LAST WEEK: Equity markets stumbled through a chaotic week.
The Dow Jones Industrial Average soared almost 900 points Wednesday on news that the U.S. Federal Reserve raised interest rates by only a half-point. But then fearing that interest rates would continue their rise, the Dow dove more than 1,500 points over the next two days as investors took a cold view of the coming of the end of cheap money and rising debt levels.
Finally, the Dow closed Friday just 73 points below its opening the previous Monday.
For the week, the Dow lost just 0.3 percent.
Also last week, the NASDAQ shed another 1.4 percent as interest rates climbed, darkening the outlook for the tech stocks that dominate the index. It was the index’s fifth straight weekly loss of at least 1 percent, the longest such stretch since August 2002, according to Dow Jones Market Data.
The Standard & Poor’s 500 index lost 0.6 percent from Monday through Friday.
More than 95 percent of the S&P’s individual stocks lost ground on Thursday, the third such mass loss in three weeks and a feat not matched since March 2020, the Susquehanna Financial Group noted.
The Dow has fallen 9.5 percent this year, the NASDAQ 22 percent, and the S&P 13 percent.
When an index falls 10 percent from its most recent high, it officially enters a bear market.
While stock prices were falling, bond prices were as well.
Yields on the 10-year treasury note, which rise as note prices fall, passed about 3.12 percent last week, their highest since November 2018. (See related story in this issue.)
Brent crude oil climbed back to $112.39 as the Ukraine war dragged on, the European Union talked more urgently about banning Russian oil, and oil majors continue to refuse to expand production. (See related story in this issue.)
Gold slipped 1.5 percent, closing at $1,881.
Bitcoin rose to just below $40,000 early in the week, then plunged on Thursday with stock prices, closing the week near $36,000, losing about 6.5 percent on the week overall.
By the end of last week, Bitcoin had lost about 47 percent of its November high value of $68,991 and 17 percent of its market value since 31 March, data firm CryptoCompare said.
The digital icon has given up 21 percent of its market value this year, the same contraction as the NASDAQ… both of which are officially in “bear territory.”
As more professional traders have taken up crypto, digital assets’ price movements have more closely aligned with conventional assets such as tech and growth stocks, the WSJ pointed out.
Also, crypto has suffered along with other riskier assets as investors have sought safety in bonds and similar instruments, the WSJ noted.
Overseas, the European Stoxx 600 lost 1.91 percent amid a miasma of unchecked inflation, soaring energy costs, sagging economic performance, and the ongoing Ukraine war.
South Korea’s KOSPI lost 1.23 percent while the Nikkei 225 in Japan added 0.69 percent.
Hong Kong’s Hang Seng shrank 3.81 percent, the Chinese CSI Composite gave back 2.53 percent, and the SSE Composite surrendered 2.16 percent.
Chinese markets were battered by the country’s ongoing lockdowns, government statements that they would continue, and weakening economic performance. (See related stories in this issue.)
TREND FORECAST: For more than a year, we have forecast that when the Fed raises its key interest rate to 1.5 percent or beyond, equity markets will turn down dramatically.
Now that the Fed’s fund rate is hovering between 0.75 percent and 1.00 percent, that downturn has begun and will continue until the equity and housing markets reconnect with economic realities, no longer shielded by the Fed’s unrealistically low interest rates and incessant purchases of mortgage bonds.
YESTERDAY: With inflation fears growing and the Ukraine war getting hotter, U.S. equities got battered on Monday with the Dow Jones Industrial Average falling nearly 2 percent and the Nasdaq diving 4.29 percent. The Standard & Poor’s index was down 3.2 percent… closing below 4,000 for the first time since March 2021.
Companies across the economic spectrum lost value, with the energy sector off 8.3 percent on worries that China’s lockdowns, and a broader global slowdown, would cut demand for fuel.
The 10-year Treasury note’s yield slipped to 3.080 percent after ending last week at 3.124 percent.
Bitcoin has lost almost 25 percent of its value in the last seven days, falling to $30,832 at 5 p.m. EDT on Monday as a range of other digital currencies also sank.
“This is significant repricing, this is significant dislocation and this is all being spurred and driven by Federal Reserve policy,” Jeff Kilburg of Sanctuary Wealth told CNBC. “The only way I see us finding the bottom in equities short-term, the only way I see markets healing is if the Fed has the ability with the tools in their toolbox to calm down interest rates. The 10-year note needs to go back under 3 percent.”
Treasury Yields Keep On Keeping On
Yields on medium-and long-term treasury securities rose again Friday on good jobs news.
Interest on the benchmark 10-year treasury note settled at 3.124 percent, climbing from 3.066 percent the day before to its high point since November 2018 and near its best rate in a decade.
The yield rose as the U.S. labor department reported 428,000 new jobs in April, exceeding analysts’ averaged predictions of 400,000.
Wages rose 0.3 percent, less than the 0.4 percent analysts had foreseen.
Rising wages are a key factor in inflation.
Yields had jumped Thursday after U.S. Federal Reserve chair Jerome Powell told a press briefing that the Fed was not considering a three-quarter-point rate hike at its July meeting.
Bond yields have been rising in tandem with investors’ estimates of the degree to which the U.S. Federal Reserve will raise its key interest rate in the months ahead in its attempts to tackle inflation, The Wall Street Journal said.
The market in interest-rate derivatives shows that investors expect the Fed to peg its rate close to 3.25 percent next year.
CNBC blared a headline that read, “Tech Giants Lost More Than $1 Trillion in Value in the Last Three Trading Days.”
The report pointed out that the jump in interest rates have taken the wind out of the sails of major tech stocks like Netflix, which has lost 71 percent year to date; Snap, which is down 50 percent; Uber which is down 45 percent; Facebook which is down 42 percent; Amazon which is down 35 percent; and Google which is down 22 percent.
The report used Apple as an example of the pain in the sector. The company lost $220 billion in value since the close of trading on Wednesday, when Jay Powell, the Fed chair, declared that inflation was running too high and that there were no plans for a rate hike more than half of a percentage point.
The report went on to say that investors have all but abandoned these companies for “safer pockets of the market, including staples like Campbell Soup, General Mills and J.M. Smucker.”
Elsewhere, the European Stoxx 600 fell 2.76 percent in its fourth consecutive session of losses, marking its worst day since March.
TRENDPOST: The end of the COVID era has deflated stocks that did well during lockdowns, particularly tech stocks. Indeed, Amazon’s share price dropped 14 percent on Friday, indicating that rising prices and general caution are leading consumers to scale back their online shopping. The company recorded its first quarterly loss in seven years.
The WSJ said there is a 28 percent probability of a recession in the U.S. sometime in the next 12 months—up from 18 percent in January.
Comex gold for June delivery shed about $24.00 to $1,858, down 1.3 percent. With currencies across much of the globe still in decline, the dollar hit a 20-year high of 104.187, which marked a year-to-date increase of about 8.23 percent. World-standard Brent crude closed at $105.94 a barrel, with U.S. benchmark U.S. West Texas Intermediate crude fell $1.25, or 1.2%, to $101.84 a barrel.
Investors are considering the continued coronavirus lockdowns in China, which is the world’s largest oil importer.
Bitcoin fell more than 10 percent on Monday, and fell below $31,000 per coin.
Citing CoinMarketCap, the WSJ reported that the crypto market had an active 24 hours, with almost $155 billion in market volume in that time frame. The global crypto market fell to $1.4 trillion, the report said.
China’s CSI SSE Composite dropped 0.80 percent, but the SSE Composite managed a 0.08 percent gain.
The Hang Seng index in Hong Kong was closed for a holiday.
TODAY: Stocks on Wall Street went on another rollercoaster ride on Tuesday as the market tries to stabilize amid fresh lockdowns in China, inflation concerns, rising interest rates and the continuing war in Ukraine.
Stocks bounced throughout the session on Tuesday. Stocks opened higher, but by late morning most of those gains were erased. The Dow, at one point, was up by more than 500 points but swung to a low of down 350 points.
The Dow Jones Industrial Average ended the day down 84.96 points, or 0.26 percent and the Nasdaq Composite added 114.42, or 0.98 percent. The S&P 500 rose 9.81, or 0.25 percent, to finish at 4,001.05.
The word on The Street was that investors were hoping for a rally after three-consecutive days of losses.
Adding to the downbeat today, U.S. Treasury Secretary Janet Yellen repeated what we had long warned: COVID-19 and Ukraine could continue to impact the global economy. “There is the potential for continued volatility and unevenness of global growth as countries continue to grapple with the pandemic,” she said.
The 10-year Treasury note fell back to 2.995 percent amid continued concerns about inflation and a potential economic slowdown lingered.
Europe’s Stoxx 600 was up 2.83 points, or 0.68 percent on Tuesday and Britain’s FTSE 100 added 26.64, or 0.37 percent.
South Korea’s Kospi was down 14.25 points, or 0.55 percent, and closed at its lowest level since Nov. 30, 2020. Japan’s Nikkei 225 fell 0.58 percent. China’s benchmark Shanghai Composite Index was up 31.70, or 1.06 percent. Hong Kong’s Hang Seng index was down 368.27, or 1.84 percent, finishing the trading day at 19,633.69.
Toyota, the car giant, announced Tuesday that 12 factories will be impacted by China’s COVID-19 lockdown. Toyota said that around 40,000 vehicles faced delays. The company also said that there could be a wider disruption and its global production target fell by 50,000 to 700,000 vehicles for the month.
Tesla has also paused most of its production at its Shanghai plant due to continued problems in securing parts, Reuters reported, citing an internal memo.
GOLD/SILVER: Gold was down $22.30, or 1.1891 percent on Tuesday and silver was also down 0.60, or 2.75 percent. The U.S. dollar was near its two-decade high this week, which impacted the price of gold because a strong dollar raises the opportunity cost of holding non-interest bearing bullion which loses out to interest-bearing assets.
TREND FORECAST: It is a simple equation. The higher inflation rises, the higher safe-haven assets gold and silver rise. And, when the Banksters raise interest rates, it will bring down Wall Street and Main Street very hard… and the harder they fall, the higher precious metal prices will rise. We maintain our forecast, that on the downside, should gold prices fall below $1,850 per ounce, prices can sink down to the low $1,710 per ounce level.
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 fell 3.57 percent to $102.37 a barrel and West Texas Intermediate fell $3.33 to $100.11 per barrel.
There has been a steep fall in demand in China due to the COVID-19 lockdowns. European countries are also trying to work out an embargo on Russian oil, which means prices could eventually end up rising. There is also growing consensus that the global economy is headed for a slowdown.
Yet, the price for regular gasoline is hitting Americans in the pocketbook as prices soared to $4.37 per gallon.
BITCOIN: Bitcoin stabilized on Tuesday and was hovering around $31,276.00, an increase of 3.98 percent.
It has been a bumpy year for the cryptocurrency and the coin is down about 55 percent from its high in November. CNBC, citing Glassnode, reported that about 40 percent of holders are currently under water.
Bitcoin is off nearly 55 percent from its November peak, and 40 percent of holders are now underwater on their investments, according to new data from Glassnode. The crypto has been down about 22 percent over the last five trading days.
Some people have been buying the crypto dip. Nayib Bukele, El Salvador’s president, posted on Twitter that San Salvador bought 500 bitcoins at an average price of $30,744 each.
TREND FORECAST: Bitcoin is reaching a crucial point. We maintain our trend forecast that when bitcoin solidly breaks above $55,500 per coin, it will head toward new highs. We have 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.