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Back in 1932, when the Great Depression had hit America, the Democratic candidate running for President of the United States, Franklin D. Roosevelt, declared the hit tune “Happy Days are Here Again,” as the party’s official campaign anthem. It was a huge hit, and in 1986 it was awarded by the American Society of Composers, Authors and Publishers (ASCAP) as the “Most Performed Feature Film Standards on TV.”
Here are some of the lyrics:
Happy days are here again
The skies above are clear again
So let’s sing a song of cheer again
Happy days are here again
All together shout it now
There’s no one
Who can doubt it now
So let’s tell the world about it now
Happy days are here again
Your cares and troubles are gone
There’ll be no more from now on
From now on (here is the song.)
Indeed, from the Roaring 20’s to Swing, from immigrants to the upper class, from black to white, the United States of America was the Land of the Free and the Home of the Brave.
That was then, a time when America was a world leader in sound and style and the message of the nation was to lift the spirit and warm the soul.
Those Happy Days are gone. The skies are cloudy. There are no songs of “cheer again”… it’s one bad Rap.
The U.S. has been in a long decline, but the COVID-19 lockdowns were the final nails in the emotional coffin. Joy and spirit in the country were extinguished when states and cities imposed draconian mandates on We the People in their fight to win the COVID War.
Now, even with today’s economic conditions, far above the Depression doldrums, the heart of the nation has sunk into sadness:
Pessimistic Mood Deepens
Americans are deeply pessimistic about the U.S. economy and view the nation as sharply divided over its most important values, according to a new Wall Street Journal-NORC Poll.
The findings are from a Journal survey conducted with NORC at the University of Chicago, a nonpartisan research organization that measures social attitudes. The survey found Americans in a sour mood and registering some of the highest levels of economic dissatisfaction in years. The pessimism extended beyond the current economy to include doubts about the nation’s political system, its role as a global leader and its ability to help most people achieve the American dream. (Wall Street Journal, 7 June 2022)
Yes, for some 83 percent of those polled who feel the state of the economy is poor or not so good… the American Dream has turned into a nightmare.
Over one-third of those polled said their financial situation is unsatisfactory.
Bingo! The Wall Street Journal reported that was the highest level of dissatisfaction since it began the poll a half-century ago.
And, as for the middle class shrinking, just 27 percent said they have a good chance of improving their standard of living, which was a 20-point drop from last year’s poll. Adding to the Happy Days are NOT Here again, 46 percent see no hope that their living standards will improve.
Worse than during the Great Recession of 2007-2009 when, 33 percent of those polled said their financial conditions have deteriorated over the past two years, now nearly 40 percent feel they have fallen into the financial doldrums.
For 60 percent of those polled, the American dream is dead… it’s a nightmare.
What is their view of what destroyed the state of the nation?
The WSJ quoted Robert Benda, a 69-year-old retired telecommunications worker who said, “I’m angry. Our government is doing what’s right for their special-interest groups, and everybody else be damned.”
We note these findings to illustrate the great divide between Wall Street and Main Street. What is going on in the equity markets is a gambler’s game that has little connection to the plantation workers of Slavelandia.
The WSJ-NORC poll also noted that as a result of high inflation —spending more to buy less—people have dug deep into their savings, which, according to Gregory Mannarino will get worse so, “PREPARE YOURSELVES FOR THE NEXT INFLATION WAVE” (in this issue).
Indeed, today, regular gas in the U.S. hit a new record and got closer to the $5 per gallon mark. Jumping 62 cents in the past month, the AAA said the national average price for regular gasoline costs $4.92 a gallon.
In its report to clients, the Goldman Sachs gang upped its forecast for Brent Crude from $125 a barrel to $140 a barrel between July and September.
What is missing from the “news” is that while oil is hitting the business and consumer sectors hard, when the Panic of ’08 hit, Brent was selling at 145 a barrel…. yet, the economic implications of its rising prices were not as severe as they are today.
Misery Loves Company
Adding to the economic misery which drags down the human spirit, today, the World Bank warned the world that it is heading into 1970s era stagflation and cut its global growth forecast from 4.1 percent to 2.9 percent.
“The war in Ukraine, lockdowns in China, supply-chain disruptions, and the risk of stagflation are hammering growth. For many countries, recession will be hard to avoid,” said David Malpass, the president of the World Bank.
Passed over by Malpass was the global COVID lockdown that began in 2020 that destroyed hundreds of millions, if not billions, of lives and livelihoods.
Yes, all “manmade”—and in the new Woke World, “womanmade”— events and occurrences that have destroyed the hearts, souls and economies across the globe.
TREND FORECAST: We totally disagree with the World Bank forecast. There is no risk of 1970s “stagflation.” Economies will not “stagnate” as inflation rises. World economies will enter into “Draglation”: economies will drag down as inflation rises.
And, despite our sending out massive press releases to the print and broadcast media warning of Dragflation, they refuse to acknowledge this trend and keep selling the stale stagflation tale.
Money Game
The future of the equity markets and economy will be determined (minus a wild card) by how high and how fast the Federal Reserve raises interest rates.
Now, as reported in the Wall Street Journal, the outlook on The Street is that the Feds may slow its pace of interest rate hikes.
Steve Englander, head of North American macro strategy at Standard Chartered told WSJ yesterday that “The market went through six weeks of thinking the sky’s the limit for the Fed. I think the dollar has topped out.”
WSJ went on to note:
“The muddied outlook represents a shift in markets, after investors bet that a rapid pace of rate increases would drive the dollar higher throughout the year. Many expected a strong dollar to hurt U.S. multinationals, by making their products more expensive for foreigners, with companies including Microsoft Corp. noting a strong dollar’s hit on revenue in recent reports. JP-Morgan analysts said the dollar’s rise is hurting the U.S. manufacturing sector, which is slowing hiring to compensate for fewer exports.”
TREND FORECAST: The markets are waiting for Friday’s inflation numbers. Lower inflation may slow the pace of Fed interest rates rises which will push equities higher as well as being positive for the housing market since mortgage rates won’t move higher.
Unless there is an immediate peace deal to stop the Ukraine War and ease sanctions imposed on Russia, inflation will continue to rise. And with tensions heating up in the Middle East—Israel continue its bombs-away assault on Syria, with Israeli jets striking a town near Damascus—oil prices will continue to rise, further pushing up inflation.
Should inflation numbers come in weaker than expected this Friday, considering the fundamentals driving up inflation, we forecast it will be a temporary weakening.
LAST WEEK: INFLATION, INTEREST RATE OUTLOOK WEIGHED ON EQUITIES
After rising the previous week, all three major U.S. stock indexes rode last week down as inflation remained strong and expectation that the cheap money will dry up as the U.S. Federal Reserve is expected to raise its key interest rate by a half-point this month.
Indeed, nearly each day, equities are on an up and down swing as The Street waits to see what the next Fed move will be. And as we note above, Friday’s inflation numbers will indicate what direction rates will move.
The Dow Jones Industrial Average was off 0.9 percent for the week, its smallest weekly shift in the past month. The NASDAQ shed 1 percent; the Standard & Poor’s 500 gave up 1.2 percent.
The S&P’s energy sector added 1.4 percent for the week as oil and gas prices grew.
The index recently traded at 20 times earnings, below 23.5 where it ended last year but still above its 18.7 10-year average, data service FactSet reported.
The three indexes all fell on Friday after the U.S. labor department reported that the economy added 390,000 jobs in May.
The number bested analysts’ forecast of 328,000 jobs but May’s result showed a slowdown in hiring, due to inflation and because the economy is approaching full employment.
The unemployment rate last month was 3.6 percent.
“Numbers this strong would likely reverse any hopes the Fed would consider a pause in rate hikes after the June and July increases,” economic consultant Tom Essaye said to CNBC.
The benchmark 10-year treasury note’s yield edged up from 2.914 on Thursday to 2.955 Friday. Yields rise as securities’ prices fall.
Oil prices grew. Brent crude futures broke through $121 a barrel late Friday, with U.S. benchmark West Texas Intermediate’s price close behind, just above $120.
Gold bounced through the week, ending essentially flat at $1,854.
Bitcoin lost more than $2,000 on Wednesday, bottoming at $29,570. It struggled through the week but failed to recover, pricing at $29,510 at 5 p.m. EDT Friday.
“You have this really strong U.S. economy right now but we have this really high inflation not coming down,” Frank Oland, Danske Bank’s chief strategist, said to the WSJ.
“Eventually, that will bring consumers to the point where they say, ‘let’s look at our budget and maybe tighten a bit’,” he added. “If everyone holds back, you’re moving toward recession.”
Abroad, the European Stoxx 600 was down 1.1 percent for the week but Asian markets were up.
Japan’s Nikkei gained 2.5 percent. The South Korean KOSPI added 1.5 percent. The Hang Seng index in Hong Kong rose 2 percent; so did China’s SSE and CSI composite indexes.
YESTERDAY: MORE UPS AND DOWNS
The Dow Jones Industrial Average rose 16.08 points, or 0.1 percent. The tech-heavy NASDAQ was up 48.64 points, or 0.4 percent. The Standard & Poor’s index increased 12.89 points, or 0.3 percent to close at 4121.43.
Stocks started the day higher and were up more than 300 points in the early session, but came back down later in the day because of Fed rate rise uncertainty and the economic future.
We reported that both Jamie Dimon, the CEO of JPMorgan, and Elon Musk, the CEO of Tesla, both warned of economic danger ahead, and on The Street there is concern that any market rally would be a “dead-cat bounce.”
The benchmark 10-year Treasury note’s yield increased from 2.940 percent on Friday to 3.037 percent.
The big news on Wall Street Monday was reports out of China that Beijing was easing its COVID-19 restrictions. The country is also reportedly ending its probe into Didi, the ride-hailing company, which was seen by investors as a sign that Beijing could also be easing its crackdown on tech companies.
The WSJ reported that the yearlong probe will wrap up and the country will lift a suspension for new users. The paper said that the data probe was launched due to national security concerns. Didi’s shares popped 24 percent in the U.S. after the report was published.
Other tech stocks targeted by Beijing, like Alibaba, also saw gains.
Twitter shares fell 2.5 percent after Musk announced that he could back out of the deal to purchase the social media giant if it fails to provide data on how many accounts are fake.
Investors are also bracing themselves for the next inflation report, which is due on Friday. Economists believe consumer prices rose 0.7 percent in May, which is higher than the 0.3 percent in April.
The Federal Reserve has a meeting next week and the inflation reading will play a role in how aggressive it will act in raising interest rates. The market expects a 50 basis point increase in the next two meetings, but again, as we note, Friday’s inflation numbers will weigh on its rate rising decisions.
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 and U.S. Treasury Secretary 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 stagnate, they will drag down as inflation rises.
Elsewhere, the European Stoxx 600 was up 1 percent on news of China’s COVID-19 lockdown easing.
Beijing is a top metals consumer and Miners Rio Tinto and Glencore saw their stock prices increase by 1.6 percent and 4 percent, Reuters reported. Copper prices also jumped to a five-week high.
Investors in Europe will monitor Thursday’s European Central Bank policy meeting and U.S. inflation data due the following day.
BITCOIN: Bitcoin traded as high as $31,278.09 Monday but came back down to about $29,520. The cryptocurrency has shed about half its value since its peak in November, and has been stuck at around $30,000 for weeks. Ben McMillan, chief investment officer of Arizona-based IDX Digital Assets, told Reuters that retail investors believe the pain has been “already endured, and we’re closer to the bottom than we are to the top.”
“If you’re getting into crypto at these levels, a little near-term volatility could be worth a long-term payoff,” he said. “A lot of institutional investors are starting to look at crypto as a source of longer-term growth potential.”
GOLD: Gold futures dropped Monday due to a stronger U.S. dollar and higher bond yields. Spot gold fell 0.5 percent to $1,841.29 and gold futures were also down 0.4 percent. Gold prices will likely remain around that level until the inflation report comes out on Friday.
TODAY: MORE UPS AND DOWNS
It was another wild and crazy day in the market. The Dow Jones Industrial Average rose 264.36 points to close at 33,180.14. The S&P 500 gained 0.95 percent, and the tech-heavy Nasdaq Composite was up 0.94 percent.
Stocks opened the day lower, but rallied as the trading session continued despite a gloomy outlook for Target, which saw its shares fall 2.3 percent. The benchmark 10-year Treasury yield fell below 3 percent, which helped equities see increases. Investors are still cautious about the market, especially with the next round of inflation data due out on Friday.
With the Ukraine War still raging, central banks around the world raising interest rates, tensions rising in the Middle East, equities spiking up and down reflect the socioeconomic and geopolitical whirl wind.
Today, U.S. Treasury Secretary Janet Yellen, appearing at the Senate Finance Committee, now, after denying it for over a year-and-a-half, says that she believes inflation will remain elevated.
“We currently face macroeconomic challenges, including unacceptable levels of inflation,” she said.
She continued, “We’re seeing high inflation in almost all developed countries around the world and they have very different fiscal policies, so it can’t be the case that the bulk of the inflation that we’re experiencing reflects the impact of the [American Rescue Plan].”
TREND FORECAST: Given its past timidity, the Fed is unlikely to raise interest rates high enough fast enough to halt inflation. If it did, the U.S. economy would be thrown into a recession and the rest of the world’s economy would follow.
We have pointed out that Fed Head Jerome Powell promised to try for a “soft landing,” but that is like taking comfort in the captain of a ship who just hit an iceberg who says leave it to him to change the course.
Economic growth fears loomed large in Europe ad central banks aim to bring down soaring inflation through monetary policy tightening.
Europe’s Stoxx 600 was down 0.3 percent and Britain’s FTSE 100 was down 0.12 percent to 7598.93. South Korea’s Kospi was down 44.31, or 1.66 percent.
Retail stocks in Europe have been taking a hit for the entire year and Target’s news that it will be forced to mark down items to get rid of inventory was another drag on the sector.
The retailers are working quickly to adapt to the changing demand of customers. CNBC pointed out that Gap said its shoppers are looking for more dresses and office clothing than the piles of hoodies that have been left over from the height of the COVID-19 outbreak. The report also pointed out that Walmart said families are spending less on discretionary purchases to help absorb the price of gas.
Germany’s industrial orders also dropped at a faster rate in April. Contracts for goods ‘Made in Germany’ fell by 2.7 percent in April while economists expected a 0.5 percent drop. The Ukraine War and supply chain issues weighed down on the German economy.
Japan’s Nikkei 225 was down up 28.06 points, or 0.10 percent. China’s benchmark Shanghai Composite Index was up 0.17 percent to 3241.76. The Shenzhen Component fell 2.55 percent and Hong Kong’s Hang Seng index lost 122.23 points, or 0.56 percent, finishing the trading day at 21531.67.
The yen fell further to below 132 to the dollar. The Associated Press said it was already at two-decade lows.
GOLD/SILVER: Gold up $11.40, closing at $1,852.20 an ounce and silver rose 0.158 cents to close at $22.21 per ounce. Gold, a safe-haven asset, increased based on inflation concerns. Treasury yields also fell from three-week highs, which increased demand for the metal.
TREND FORECAST: Both metals have been stuck in this trading range for weeks. And, 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. On the downside, should gold fall below $1,800, its bottom will be in the $1,730 range.
OIL: Brent crude was up $1.15 to $120.64 a barrel and West Texas Intermediate was also up 0.9451 percent to $119.60 per barrel. Goldman Sachs is now forecasting Brent crude oil prices will average $140 a barrel during the summer months, up from its prior call of $125 a barrel.
AAA said Tuesday that the national average price for regular gasoline increased 5 cents to a record of $4.92 a gallon.
TREND FORECAST: The picture is clear. The higher oil prices rise, the faster inflation will rise and the greater the pressure on central banks to raise interest rates. And the higher interest rates rise, the deeper equity markets and economies will fall.
BITCOIN: Bitcoin was trading down $317.50 today at $31,032.80 per coin at 4:09 p.m. ET. The cryptocurrency had a bumpy day and, for a time, dropped below $30,000 a coin.
As of 4:55 p.m. ET, the cryptocurrency was hovering around $31,308.10. The Trends Journal has reported that bitcoin lost more than half of its value since November when it hit $68,982 per coin.
Joe DiPasquale, the CEO of crypto fund manager BitBull, wrote to CoinDesk, “BTC remains weak until it conclusively breaches the $31k to $32k range. However, we continue to see some buying below $30K that is keeping the price afloat.”
The currency looked like it was on the rise over the past few days. On Friday, at about 4 p.m. ET, the coin was trading at $29,468 and by Monday at 2 p.m. ET, it was trading at $31,600 per coin.
The coin was on its way up when the Securities and Exchange Commission announced that it is investigating whether or not Binance’s BNB token could be categorized as a security, Bloomberg reported. Binance is the world’s largest crypto exchange. The overall cryptocurrency market cap now stands at $1.24 trillion. Bitcoin’s dominance rate is 46.4 percent, according to CoinTelegraph.
Binance allegedly processed at least $2.35 billion in illegal transactions tied to drugs, hacks, and fraudulent activity, Reuters reported.
Any governmental oversight risk for cryptos is a risk for users because one of the appeals of a decentralized currency is lack of government involvement. Bitcoin has been stuck around the $30,000 price point for weeks.
TREND FORECAST: 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. We had long forecast, the downward breakout point would be hit should prices fall below $25,000 per coin. If it goes 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.