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ECONOMIC UPDATE – MARKET OVERVIEW

June 21, 2022June 21, 2022
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ECONOMIC OVERVIEW

Stay in the mainstream, stay stupid, stay out of touch. 

Yes, moronic masses swallow the crap and obey what their governments—run by imbecilic, arrogant, mentally ill politicians—flush into the mainstream that their media whores sell. 

And by following their leaders and obeying their orders, not only has freedom been stolen, the future has been paved with poverty and misery.

Life, already a daily challenge in so many ways, spiked lower when China launched the COVID War in 2020, on Lunar New Year, The Year of the Rat, locking down cities and imposing unprecedented draconian mandates… that not only persist but have worsened.

Following the path of Communist rule, Italy’s politicians, keeping the fascist spirit of Mussolini alive, declared they were in complete control of the people’s lives and imposed upon them unprecedented, unscientific mandates to fight the COVID War.

One after another, across the globe, the message was the same: Stay in your homes, don’t go to work, don’t go to school, close down your businesses, don’t travel… “We’re fighting the COVID War.”

Yes, one after another, politicians spewed out their warmongering fear:

  • President Donald Trump, “It’s a war. I view it, in a sense, as a wartime president.” (18 March 2020);  
  • Vice President Joe Biden, “This a crisis. We’re at war with a virus.” (14 March 2020); 
  • NY Governor Mario Cuomo, “The soldiers in this fight are our health care professionals. It’s the doctors, it’s the nurses, it’s the people who are waiting in the hospitals… they are the soldiers who are fighting this battle for us.” (30 March 2020);
  • NYC Mayor Bill DeBlasio, “We have to understand this is pure war footing.” (16 March 2020); 
  • France President Emmanuel Macron, “We are at war… The enemy is Invisible, and it requires our general mobilization.” (16 March 2020); 
  • Britain Prime Minister Boris Johnson, “We must act like any wartime government and do whatever it takes to support our economy.” (17 March 2020);  
  • South Korea President Moon Jae, “The entire country has entered war against infectious disease.” (3 March 2020);  
  • China President Xi Jinping, “A people’s war.” (13 March 2020);  
  • UN Secretary Antonio Gutierrez, “We are war with a virus and not winning it… This war needs a war-time plan to fight it.” (26 March 2020);  
  • U.K. Health Secretary Matt Hancock, “We are in a war against an invisible killer, and we have to do everything we can to stop it.” (16 March 2020).
  • World Health Organization Director General Tedros Adhanom Ghebreyesus, “We are at war with a virus that threatens to tear us apart.” (26 March 2020)

Saluting those in charge, the mainstream media parroted their leaders’ war declarations along with their so called “health experts” of what to do and how to do it to “stay safe.” And the majority—with an untarnished track record of supporting every war their “leaders” declare—obeyed government orders and marched off to fight the COVID War. 

Stupid Jerks!

And for all of those, such as the Trends Journal, who challenged them with the facts of who was dying from COVID and why—and that their mandates were not based on science but rather political science—the politicians and Presstitutes denounced us as “conspiracy theorists” and imposed strict censorship. 

In the “Land of the Un-Free” and “Don’t Think For Yourself,” the only stream for We the People to follow is the mainstream. If you don’t obey, you will pay.

Not only did the masses march off to their “leaders” orders… those refusing to get the drug dealers’ Operation Warp Speed gene therapy jab injected into their body were fired. No Jab, No Job. See:

If you did not get the shot in the arm, you were not permitted to travel or enter buildings and offices. 

Beyond the fear and hysteria that politicians and Presstitutes continually sold in championing the COVID War that sucked the joy out of life, the economic damage they have inflicted is unprecedented. 

Besides the COVID War having destroyed billions of lives and livelihoods across the planet, who would have ever believed that people would not want to go back to work?

After being forced to stay at home to fight the COVID War, people assessed how miserable their lives were when they worked full-time at jobs that did not satisfy them financially or mentally, so they dropped out of the mainstream workflow.

From hospitality to healthcare, and from construction to aviation, “Help Wanted” is the sign of the times. 

And for all those who are too blind to see, just take a trip on the unfriendly skies. 

Despite airline travel being down some 13 percent last week compared to 2019, when there was no COVID War being fought, this past weekend in the U.S.S.A. more than 20,000 flights were delayed or canceled.

The reason for the flight mayhem is a shortage of baggage handlers, airport staff, flight crews and pilots. 

What caused the job shortage? Why are they not being filled?

It’s all because the COVID War ignited The Great Resignation. Last year, 71 million people quit their jobs and the “Forever Resignations” continue, with 4.4 million Americans quitting their jobs in April, according to the Bureau of Labor Statistics.   

But the connection between the airline Armageddon and The COVID War that launched the Great Resignation is not mentioned by the Presstitutes who just keep sailing down the mainstream. 

Even small businesses are having a hard time hiring workers. Companies with up to 50 employees saw their head counts decline in three of the past four months, according to ADP. 

As reported today in The Wall Street Journal, a survey conducted for them by Vistage Worldwide, found that 63 percent of small-business owners said that hiring challenges are affecting their ability to operate at full capacity.

High Times

Yes, it was the COVID War that has caused this hiring crisis that is essentially ignored by the same media whores who kept selling the Bankster bullshit that inflation was “temporary” and “transitory” and only quote the same cast of “economic experts” that are members of “The Club”…  while chastising those of us who see it for what it is and not what we want it to be as “gloom and doomers.”

And for some more of the inflationary evidence that was created by the Banksters and governments injecting cheap money to artificially inflate Wall Street and Main Street with record-low interest rates and trillions of “stimulus” dollars, for the plantation workers of Slavelandia, the median existing-home sale price in the U.S. home spiked to $407,600 in May. 

TRENDPOST: Politicians and “mainstream economists” like to blame the Ukraine War for spiking inflation and energy prices due to supply chain issues and sanctions imposed on Russia. But to make this perfectly clear, as we had noted, inflation was spiking long before the Ukraine War and the continuing spike in U.S. home prices have zero to do with the invasion.

On the downside, with housing prices rising—along with mortgage rates which are more than double the average 2.65 percent rate last year—sales of existing homes in May dropped 3.4 percent and were down 8.6 percent from May 2021.

With prices spiking higher, in a May survey conducted by Fannie Mae, just 17 percent said it was a good time to buy a home. Down from 35 percent from May 2021, it hit a record low from data going back to 2010… The Great Recession.

The share of first-time buyers in the market fell to 27% in May, from 31% a year earlier. About 25% of May existing-home sales were purchased in cash, up from 23% in the same month a year ago, NAR said.

And as a result of the COVID War, which the mainstream ignores, less homes are being built because home builders can’t find workers and supply-chain disruptions. According to the National Association of Home Builders, U.S. home-builder confidence slumped in June to the lowest level in two years.

Last week the U.S. Commerce Department reported that housing starts fell 14.4 percent in May from April, and residential permits, which are a key indicator for future home construction, dropped 7 percent.

TREND FORECAST: It is all about the bottom line. And the bottom line of cheap money is falling out. Therefore, the equation is simple. The higher banks raise interest rates and the less money governments pump into their economies, the deeper equity markets and economies will fall.  

And while inflation in some sectors will ease, we still maintain our forecast for rising inflation and declining economy which equals “Dragflation”… and not the “stagflation” being sold to the public, since many GDPs will not stagnate, they will decline as inflation climbs higher. 

Where will the equity markets go? What will go up and what will go down? Read Gregory Mannarino’s article, “Central Banks Are Now Taking ‘EMERGENCY MEASURES’ To Stabilize the Debt/Credit Markets.”

LAST WEEK: MARKETS TANKED ON INFLATION, RATE FEARS

Last week, the Dow Jones Industrial Average and NASDAQ each lost 4.8 percent, sinking the Standard & Poor’s 500 index by 5.8 percent, dropping the S&P into a bear market and booking the index’s worst week since March 2020 when the COVID War began.

Ten of the S&P’s 11 sectors have fallen at least 15 percent from their recent highs and seven are down 20 percent or more, crossing the threshold into bear markets.

The S&P’s index of consumer discretionary stocks has crumbled by 33 percent, the tech sub-index has spun down 28 percent, real estate has given up 25 percent, and consumer staples are off 10 percent.

The S&P’s energy sector is the only one still buoyant. Although it dropped by 13 percent last week, its share price edged up past $648 on 8 June, its highest in a year, The New York Times noted.

Investors fear softness in consumer spending, which we report in “Retail Sales Slip in May as Prices Continued Their Rise” in this issue.

Markets also fear that the U.S. Federal Reserve will raise rates so high so fast that the economy will tip into recession, which is defined as two consecutive quarters of contraction.  

The Fed’s recent rate increases have driven mortgage rates to their highest in 13 years, halting the housing boom, as we report in “Mortgage Rates Rise at Fastest Pace in 35 Years” and “Housing Boom is Officially Over, Zandi Says” in this issue.

On Friday, the yield on the benchmark 10-year treasury note edged down to 3.238 percent. Yields fall as securities’ prices rise.

Gold closed the week up a fraction at $1,841.

Brent crude oil lost 7.5 percent on the week, closing Friday at $113.12 over fears that central banks’ higher interest rates will slow the economy and cut oil demand. U.S. price benchmark West Texas Intermediate’s price dropped 9 percent to $110.48.

Bitcoin continued its slide, falling almost 9 percent to trade at $20,554 at 5 p.m. U.S. eastern time on 17 June. It briefly sank below $18,000 in weekend trading.

Overseas, the European Stoxx 600 index dove 4.2 percent as Western central banks boosted interest rates, as we report in “Central Banks in Europe Suddenly Hike Rates, Sinking the Dollar” in this issue. 

Japan’s Nikkei 225 gave up 4.2 percent after the central bank announced it would not lift its key interest rate and would continue its daily bond purchases to hold yields at 0.25 percent. (See “Yen Slides Further as Bank of Japan Holds to Negative Interest Rate” in this issue.)

The South Korean KOSPI retreated 4.6 percent over fears for the future of the country’s export-dependent economy if a recession occurs. Hong Kong’s Hang Seng bounced through the week, ending virtually flat at 21,162.

On China’s mainland, the SSE Composite and CSI Composite indexes both rose 1.9 percent as the nation’s economy continued to reawaken after anti-COVID lockdowns were lifted.

YESTERDAY: BITCOIN STEADIES AT $20,000, BANKS IN EUROPE LEAD GAINS

Many financial eyes, especially those of the Metaverse, have been glued the cryptocurrency bitcoin in recent weeks due to turbulent price swings that saw the world’s largest crypto fall as low as $17,663 on Saturday night—representing a more than 70 percent drop since its highs in November.

Bitcoin steadied at about $20,000 per coin on Monday. Some observers said that although they are relieved that the price is back up above the $20,000 mark, there is a chance that this is a “dead cat bounce.”

The overall crypto market capitalization is roughly $877 billion, Coinmarketcap said. The peak was when the crypto market hit $2.9 trillion in November.

ProShares on Monday announced that it launched the first short bitcoin exchange traded product in the U.S., The Financial Times reported. Michael Sapir, chief executive of ProShares, which has $62bn under management, told the paper, “We are optimistic that there will be interest in the fund, particularly given what has happened in the market in the past few months, and particularly the past week.”

He said U.S. investors who believe the price will continue to fall have “very limited and complicated ways of obtaining short exposure.”

U.S. markets were closed Monday for the Juneteenth holiday.

Elsewhere, the Stoxx Europe 600 rose 1.0 percent to its lowest closing value in over a year and the FTSE, the U.K. benchmark, gained 1.5 percent. Banks led the way and jumped 3.3 percent.

There was no glaring news that sent stocks higher and some economists said the price increases were due to the fact that there was no crushing news that things have gotten worse. European stock prices have been impacted by soaring inflation and energy prices, supply chain issues due to COVID-19 lockdowns in China, and central bank monetary tightening to fight the inflation.

Traders in Europe are waiting for the U.K.’s producer price index due on Wednesday, which is expected to jump. Retail sales numbers are also expected later this week and they are expected to show shoppers spending less.

Catherine Mann, the Bank of England interest-rate setter, also said that the bank should raise rates faster because the pound’s value is contributing to inflationary pressures due to an increase in import costs. She said money could flow from the U.K. to the U.S. due to the higher interest rates in the States and it is important for the bank to be competitive.

“In my view, a more robust policy move … reduces the risk that domestic inflation already embedded is further boosted by inflation imported via a sterling depreciation,” Mann said, according to The Guardian.

GOLD: Spot gold shed 0.2 percent on Monday to about $1,839 per ounce, as of 1:40 PM ET due to continued pressure from an elevated dollar. U.S. gold futures were flat at $1,840.30.

As the Trends Journal pointed out, gold loses its appeal when the dollar is strong and central banks hike up interest rates. Gold yields no interest.

TODAY: DOW UP NEARLY 642 POINTS, ONLY A PAPER MOON?

The Dow Jones Industrial average jumped 642 points today to end the session 2.15 percent higher at 30531.77. The benchmark S&P 500 also saw a 90 point increase to close at 3764.84.

The Nasdaq Composite was up 270.95, or 2.51 percent to 11069.30. 

The market was closed on Monday for a federal holiday and the price jump was embraced by traders coming off last week’s deep declines after the Federal Reserve announced that it will raise interest rates by 75 basis points to tackle surging inflation. 

Investors are trying to determine what the increase means for stocks and whether the day’s gain is a true bounce. Banksters from Goldman Sachs said in a note to investors on Monday that they see a 30 percent probability of a recession over the next year. They previously put the number somewhere around 15 percent. Mike Wilson, the Morgan Stanley chief U.S. equity strategist, also told CNBC that the odds of a recession is at about 50 percent. He believes that stocks can fall another 20 percent if a downturn continues.

The S&P, which was down nearly 6 percent last week and over 20 percent off its highs, saw all 11 of its sectors in the green. Energy companies saw some of the most significant gains, including Exxon Mobil that was up nearly 7 percent and Diamondback Energy, which was up over 8 percent. 

“Do I think we have hit bottom? No. I think we are going to see more volatility, I think the bottoming process will likely take some time,” Kristina Hooper, chief global market strategist at Invesco, told Reuters. “But I do think it is a good sign to see investor interest.”

Fed Head Jerome Powell will testify before Congress later this week and investors will try to get a sense of whether or not he will commit to hiking interest rates another 75 basis points during next month’s FOMC meeting. 

TREND FORECAST:  The Trends Journal has long warned subscribers that the central bank Banksters were either too stupid to see inflation rising, or are totally in the game of rigging the markets, and were fully aware that the higher interest rates reach, the harder the market will fall. 

As we continue to note, while the average person feels the economic pain as inflation rises and it costs them more to buy less, the true levels of economic devastation will not be realized by the general population until Wall Street crashes. Therefore, the Bankster Bandits and The Wall Street White Shoe Boys will do all they can behind the scenes to delay the market crash.  

Europe’s Stoxx 600 was up 1.46 points, or 0.36 percent to 408.60, and Britain’s FTSE 100 was up 0.42 percent to 7152.46. South Korea’s Kospi was also up 17.90, or 0.75 percent to 2408.93. Japan’s Nikkei jumped 475.09 points, or 1.84 percent to end at 26246.86. It was a volatile day in the European market with stocks suffering their sixth-consecutive session with losses. 

The Stoxx 600 is down 17 percent after touching its all-time high in January. Stocks in Europe saw their third straight trading day of gains after getting pounded last week due to inflation concerns. 

Despite the positive day in Europe, concerns remain given the soaring prices of energy since Russian sanctions were imposed. Germany’s Bundesverband der Deutschen Industrie, an industry association, said Tuesday that a recession in Berlin is inevitable after cutting its economic growth forecast to 1.5 percent for this year. Prior to the Ukraine invasion, the growth forecast for Europe’s biggest economy this year was at 3.5 percent. The association blamed Russian gas supply issues.

As we point out in this week’s issue, Russia has already cut off some European countries from its gas supply and dramatically reduced flows to others. These countries blamed Russia of weaponizing its gas supply. European countries are rushing to get their storage facilities to about 90 percent by November. They are at about 55 percent capacity now. 

Christine Lagarde, the European Central Bank president, announced Monday that the risks to financial stability in Europe have “perceptibly increased” since January. 

“While the correction in asset prices has so far been orderly, the risk of a further and possibly abrupt fall in asset prices remains severe,” she said. 

Stocks in China were higher on Tuesday, with the Shanghai Composite was down 0.26 percent to close at 3306.72. The Shenzhen Component fell 63.27 points, or 0.51 percent to about 12423.86. Hong Kong’s Hang Seng gained 395.68 points, or 1.87 percent, to close at 21559.59. 

Traders, like those elsewhere, continued to express concerns about recessions due to central bank moves to combat inflation. Mizuho Bank’s Tan Boon Heng said in a note to investors that “market moves by and large bear the hallmarks of measured short covering after the brutal sell-off last week, not unbridled strengthening.”

GOLD/SILVER:  Gold was down 0.2825 percent to 1835.20 per ounce at 3 p.m. ET on Tuesday as U.S. Treasury yields rose. 

The 10-year Treasury note increased by 6 basis points to 3.3 percent and the 30-year Treasury bond also saw its yield increase by 7 basis points to 3.368 percent. The higher yields and recent interest rate hikes by the Federal Reserve was blamed for taking some of the wind out of gold’s sails in recent weeks. As the Trends Journal has long pointed out, gold prices are vulnerable to higher Treasury yields and interest rates. 

The strength of the U.S. dollar compared to other currencies has also made gold a less appealing option for foreign investors. The U.S. dollar is trading at its highest level ever against the South Korean won, for example, and the Japanese yen crashed to 1987 levels today. 

TREND FORECAST:  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: Oil was up 0.931 percent on Tuesday to 110.58 per barrel. Brent crude was up 0.27 percent to 114.43 per barrel and West Texas Intermediate was trading 0.931 percent higher at 110.58 as of 3 PM ET. 

Treasury Secretary Janet Yellen said a day earlier that Washington and its allies are discussing a price cap on Russian oil with the intention of pushing down the price of Russian oil and depress Russia President Vladimir Putin’s revenues. European countries, which are more reliant on Russian energy, are skeptical of the plan. 

One German official told Bloomberg that Yellen’s idea is interesting, but would require reworking EU sanctions, a process that may be too complicated to implement. 

President Joe Biden also said Monday that he may seek a “gas tax holiday” to ease high fuel prices while the national average price for regular gasoline hovered around $5 per gallon. Suspending the federal gas tax would require Congress’ approval and lower the cost per gallon by 18.4 cents.

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 continued its move upward on Tuesday after some panic selling over the weekend and was trading at 21135.20 per coin as of 3:17 p.m. ET.

The world’s most popular crypto has lost more than half its value since November when it hit $68,982 per coin.

Crypto traders said that they are prepared for more volatility and do not necessarily believe that the coin reached its nadir. They are monitoring the macro environment and future moves by central banks to raise interest rates. These rates set by the Fed can impact cryptos because of an increased competition for capital. Speculative investments, like cryptos, tend to lose. These rising rates are seen as altering the risk-reward calculation for major investors and hedge funds.

TREND FORECAST:  We had long forecast, the downward breakout point is when prices fall below $25,000 per coin. They are now below that breakout point, thus bitcoin could fall back to $10,000 per coin or lower. On the upside, we maintain our forecast that bitcoin will find strength to hit new highs when it breaks above $55,500 per coin.

We have long noted that cryptos would be hurt when governments act to regulate these trades. Christine Lagarde, the European Central Bank president, called for new oversight during an appearance at the European Parliament. 

She told parliament that since “decentralized finance” risks financial stability, it should be fully covered in a second regulatory framework, rather than just limit itself to financial intermediaries, Fortune reported.

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