As we have long reported, and as the facts and data prove, from the Fed Banksters, to arrogant “government officials” to low-life “lawmakers” (i.e. political pieces of crap), the equity markets are a rigged game that the “insiders” get rich playing. We update these overt atrocities in this week’s Trends Journal. (See, “SPECIAL REPORT: GOVERNMENT OFFICIALS GET RICHER ON THE JOB WHILE ETHICS OFFICES SIT AND WATCH”).
Thanks to the mentally ill freaks running and ruining life on earth, the world is headed for a socioeconomic and geopolitical crisis unprecedented in modern history.
China, the world’s second-largest economy that was once thriving, is in decline. We’ve long noted that Beijing was Ground Zero in the COVID-19 War and launched draconian lockdown mandates during their Lunar New Year, the “Year of the Rat, back in January 2020… that Western “democracies” embraced.
Following China’s President Xi Jinping securing a third term as supreme ruler of the Communist Party, U.S.-listed Chinese stocks plunged to their lowest level since the Panic of ’08. Xi barely mentioned anything about the economy during the 20th Congress of the Chinese Communist Party, and yet spooked the markets, causing tens of billions of dollars in market value to evaporate on Monday.
The Nasdaq Golden Dragon China Index slumped more than 14 percent, hitting its lowest close since April 2013. According to Dow Jones Market Data, $73.4 billion in market cap vanished since Friday’s close. Recording its biggest one-day decline since the Panic of ’08, Hong Kong’s Hang Seng Tech index plunged nearly 10 percent following the news that China’s Gross Domestic Product—which was held back before the CCP meeting—rose just 3.9 percent year on year.
As we have been reporting, China expected 5.5 percent GDP growth for 2022, but Xi’s “zero-COVID” policy has been disastrous for Beijing’s economy, which is headed to a 30-year low.
Again, as with other nations, the COVID War has not only destroyed the income stream, it has sucked the joy out of life. Once a nation of travelers, the people have been forced to not only stay on the mainland, but the “zero-COVID” policy limits interstate travel as well.
Retail sales in September grew just 2.5 percent, and their real estate sector, which accounts for some 30 percent of China’s GDP, keeps sliding down. Property sales measured by floor area slumped 22 percent while new real estate construction declined nearly 40 percent from last year.
In the U.S., for the fourth month in a row, factories and service sectors continue to weaken. The purchasing manager’s index fell from 49.5 in September to 47.3 in October. A reading below 50 signals contraction.
S&P Global reported that among major companies, “The resulting degree of confidence was among the lowest in survey history,” and it was the sharpest decline since the depth of the Great Recession in 2009.
Falling deeper into contraction, their flash services activity index fell from 49.3 in September to 46.6 in October, while the flash manufacturing PMI hit a 28-month low at 49.9 in October. Again, a reading below 50 signals negative growth.
Over in Europe, S&P Global’s composite purchasing managers index, which measures activity in both the manufacturing and services sectors, registered its fourth-consecutive month of decline, falling from 48.1 in September to 47.1 in October.
S&P Global also reports that German factories made the biggest output cuts since the early part of the COVID War, while its composite PMI also fell to its lowest level since May 2020.
The news has been horrible, and yet the Dow Jones Industrial Average is up 8.52 percent in the last month and the S&P 500 is up 5.25 percent during the timeframe.
Why? Because the rich keep getting richer.
As The Wall Street Journal headline read today, Wealthy Consumers Are Still in a Spending Boom:
“Wealthier households own most of the stock market. They may also hold the keys to a stock-market rebound—in the form of their own spending.”
Indeed, as we have reported, as the lives and livelihoods of billions across the globe were economically, spiritually, mentally, physically and emotionally devastated by the COVID War that politicians launched over two years, the 10 richest men doubled their fortunes while incomes of 99 percent of humanity fell.
TREND FORECAST: As we noted some three weeks ago, with the midterm elections coming up in the U.S. on 8 November, when the U.S. Feds meet next Tuesday and Wednesday, they may not raise interest rates .75 percent despite inflation rising to 8.3 percent in September and the annual inflation rate for the United States at 8.2 percent.
However, while they may indeed raise interest rates .75 basis points next week, their message will be that the rise in rates has done its job, inflation is easing and so too will further interest rate hike ease.
Now our forecast, minus our having forecast this, is now the talk of the mainstream.
Today CNBC wrote:
“Taken together, the yield and major index moves are signs of investors ‘doubling down on expectations of an easier Fed,’ said Cliff Hodge, chief investment officer at Cornerstone Wealth.
“Hodge said economic data released Tuesday is also a point of hope for investors looking for the Federal Reserve to change course on interest rate hikes as the central bank tries to bat down inflation.
“‘The market is just starting to get some indication that economic data moving forward is likely to slow,’ Hodge said. ‘The knock-on effects from there, perhaps, gives the Fed a bit more breathing room.’”
And on Bloomberg yesterday, their headline was “HSBC’s Major Raises Prospect for Ultra-Low US Rate Increases.”
TREND FORECAST: The lower U.S. interest rates fall, the deeper the now- strong U.S. dollar will sink. This will be of benefit to deeply indebted emerging markets whose currencies have dramatically declined against the dollar and whose debt is dollar based.
Lower interest rates will also benefit the U.S. government that is $31 trillion in debt and companies who will pay less interest on their loans.
The weaker dollar will also prove positive for gold whose value has been artificially depressed by a strong dollar since bullion is dollar based and is non-yielding. Yes, considering the dire socioeconomic and political realities, gold prices should be in the $2,000 per ounce range.
And minus a wild card, such as a dramatic escalation of WWIII, a nuclear explosion, etc., lower interest rates will prove positive for equities and real estate. On the downside, inflation will continue to spike as more cheap money is pumped into equities and economies.
In fact, Gregory Mannarino has identified what we have and gives his assessment of what to expect in his article, “Fed BLINKS! But Will It Last?”
LAST WEEK: STOCKS SOAR ON FRIDAY TO END THE WEEK IN POSITIVE TERRITORY
All three major stock indexes jumped last week, fueled by strong earnings reports and growing speculation that the U.S. Federal Reserve may begin to slow its pace of interest rate increases. (See “Fed Mulling a Slower Pace of Rate Increases” in this issue.)
On Friday, the Dow Jones Industrial Average rocketed up more than 748 points. The NASDAQ added almost 245 points, and the Standard & Poor’s 500 index rose just under 87 points.
The Dow and S&P posted their best weeks since June, the NASDAQ its best since July.
However, the net profit margin for S&P companies will decrease for the fifth consecutive quarter, analysts told The Wall Street Journal.
For the week, the Dow gained 3.3 percent, the NASDAQ 2.6 percent, and the S&P 2.9 percent.
The yield on the benchmark 10-year treasury note moved down on Friday to 4.212 percent, still near its high for the past 10 years. The two-year treasury note’s yield, which is more responsive to expectations about interest rates, slipped Friday to 4.489 percent. Yields fall as bond prices rise.
Spot gold inched up 0.4 percent to $1,657 by 4 p.m. U.S. EDT.
Brent crude oil for December delivery rose 1 percent to $93.50 by 5 p.m. U.S. EDT. West Texas Intermediate, the benchmark for U.S. prices, slid 1.5 percent to $85.05.
Bitcoin dropped 2.1 percent on the week to $19,147.30 at 5 p.m. U.S. EDT.
Abroad, the U.K.’s FTSE 100 index managed a gain of 1.6 percent for the week. Stocks were churned by concerns over who would replace ousted prime minister Liz Truss.
On Friday, the yield on the 10-year government bond shot up to 4.05 percent from 3.860 percent the day before. Yields rise as prices fall.
The all-Europe Stoxx 600 index grew by 1.3 percent, Japan’s Nikkei 225 eked out a 0.3-percent increase, and the South Korean KOSPI added 2.1 percent.
Chinese markets failed to follow other markets upward.
The Hong Kong Hang Seng gave up 1.6 percent, the CSI Composite dropped 2.1 percent, and the SSE Composite edged down 0.6 percent.
The markets slipped on Xi Jinping’s re-election and consolidation of power, which is more likely to mean a continuation of rolling zero-tolerance anti-COVID lockdowns as we have reported.
DOW JUMPS ON RUMORS THAT FED WILL GO SOFT ON INTEREST RATES
Again, Trends Journal subscribers read “History Before it Happens®.”
For the past three weeks we have forecast that despite soaring inflation, the Federal Reserve would not keep raising interest rates at their .75 basis points rate. And while it may hike rates .75 basis points rise next Wednesday, we forecast they will announce that from this point forward, as we detail in the ECONOMIC OVERVIEW in this issue of The Trends Journal, lower rates are on the near horizon.
Thus, with low interest rates in the gamblers mindset, the Dow Jones Industrial Average was up 417.06 points yesterday, or 1.34 percent, to close the day at 31,499.62 and the benchmark S&P 500 was also up 44.59 points, or 1.19 percent, to close at 3,797.34.
The Nasdaq Composite was also up 92.90, or 0.86 percent, to 10,952.61.
Elsewhere, London’s FTSE was up 44.26 points, or 0.64 percent, to 7,013.99 and the STOXX 600 was also up 5.55, or 1.40 percent, to 401.84. In Asia, Japan’s Nikkei was up 84.32, or 0.31 percent, to 26,974.90 and South Korea’s Kospi was also up 23.04 points, or 1.04 percent, to 2,236.16. Hong Kong’s Hang Seng was down 1,030.43, or 6.36 percent, to 15,180.69. China’s Shanghai Composite shed 2.02 percent on Monday and the Shenzhen Component was down 2.05 percent.
Hong Kong’s Hang Seng was rattled by China’s Xi Jinping securing his third term as the country’s leader. Analysts see his Chinese Communist Party’s new Politburo Standing Committee as a sign that further crackdowns will occur even if it means economic hardships.
Li Qiang is seen as Xi’s Number Two. He is best known for overseeing Shanghai’s two-month lockdown during COVID-19 that crushed the economy.
The Hang Seng’s decline was its largest since November 2008.
“It appears that the leadership reshuffle spooked foreign investors to offload their Chinese investment, sparking heavy sell-offs in Hong Kong-listed Chinese equities,” Ken Cheung, chief Asian forex strategist at Mizuho bank, told CNN.
Rishi Sunak’s win to become Britain’s next prime minister was largely embraced by the European market. The pound was up against the U.S. dollar and Britain’s 10-year gilt yields were down 0.30 percent to 3.75 percent.
TREND FORECAST: All eyes are on what the Federal Reserve’s next move is going to be after its meeting on November 1 and 2. The theory on The Street is that the Fed will weigh Thursday’s CPI data in its decision making and likely raise rates by another 75 basis points. Gerald Celente, the trend-forecaster and publisher of the Trends Journal, disagrees and said a more dovish 25 basis point increase is much more likely.
“They kept pumping this money in to artificially prop up the equity markets and the economies because of the shitheads [politicians] who lost the COVID war. So, here’s our forecast: they’re going to raise interest rates 25 basis points. And what that’s going to do…it’s going to drive up the equity markets just in time for the midterm elections.”
OIL: Brent crude was down 3 cents, or 0.03 percent, to $93.47 per barrel and West Texas Intermediate also shed 20 cents, or 0.24 percent, at $84.85 per barrel.
The Biden administration is still reeling from OPEC+’s decision to cut oil production despite overtures from Washington to Saudi Arabia. Reports indicate that the animosity runs deep between President Joe Biden and Saudi Crown Prince Mohammed bin Salman. The U.S. is considering how to retaliate against Riyadh for the public snub.
Oil prices were down after it was revealed China has been buying Russian oil at a discount, but September numbers were lower than August, indicating a slowdown. Reuters reported that Russia’s Urals crude was selling $23.92 below Brent crude’s price. There’s concerns that future COVID-19 lockdowns can further hurt the Chinese economy and its demand for oil.
TRENDPOST: The Biden administration has failed at every turn in its response to the Ukraine War and moved China and Saudi Arabia closer to Russia. Moscow has more than enough energy supplies to fight a war through the winter months, while Ukrainians are seeking cold-weather gear.
GOLD: Gold was trading down on Monday in the $1,645 vicinity as Treasury yields continue to rise. The 10-year note rose to 4.231 percent, which the WSJ noted was its highest closing level since 2008. The yield was trading at 4.212 percent on Friday. Yields and bond prices move in opposite directions. We have long noted that the higher bond yields increase, the more the price of gold—a non-yielding asset—can suffer.
TREND FORECAST: We have long noted that gold prices have been depressed due to a strong dollar and monetary tightening by the Federal Reserve, which makes the precious metal less attractive for foreign investors. The benchmark 10-year Treasury note yielded 1.5 percent at the close of 2021. Gold was selling for $1,791.97 an ounce at the time.
Therefore, for the short term, the higher interest rates rise, the deeper gold will fall. But now with our forecast for a slowdown in interest rate hikes on the near horizon, gold prices will rise as the dollar weakens and inflation ticks up.
BITCOIN: The world’s most popular crypto had an uneventful day and was down about $49.00 per coin, or about 0.25 percent, to $19,281.
Crypto traders noted that Rishi Sunak, the soon-to-be prime minister in Britain, is seen as a major advocate for digital currency and once—as Chancellor of the Exchequer—said it was his hope to turn the United Kingdom into a crypto hub, according to CoinDesk.
“It’s a positive for crypto and the general economy,” Ian Taylor, director of CryptoUK, told CoinDesk.
While in his previous post, he commissioned the Royal Mint to begin issuing NFTs, or non fungible tokens, that initiative was not completed. Coin Telegraph also noted that he has been interested in forming some kind of regulatory framework for crypto assets.
TREND FORECAST: We’ve long noted that bitcoin has been scratching and clawing to climb out of the $19,000-$21,000 price range, but has been unable due to economic uncertainties around the globe. The dollar has been strong and Treasuries have challenged cryptos that are non-yielding assets. While some crypto traders seem to be seduced by Sunak’s interest in cryptos, government regulation could add another negative jolt to the price.
TODAY: DETACHED FROM REALITY, U.S. STOCKS CONTINUE TO RISE
The Dow Jones Industrial Average had another strong day today and was up 337.12 points, or 1.07 percent, to 31,836.74 and the benchmark S&P 500 was also in the green, rising 61.77 points, or 1.63 percent, to 3,859.11. The tech-heavy Nasdaq Composite was up 246.50 points, or 2.25 percent, to close at 11,199.12.
Stocks were on a two-session winning streak as Treasury yields fell. The 10-year note was down 12 basis points to 4.108 percent and the 2-year yield was down 3 basis points to 4.468 percent. Gerald Celente has said the Fed will go dovish on interest rates after its 1-2 November meeting to help give Democrats the edge before the midterms.
Weeks after Celente’s forecast, The Wall Street Journal reported that there is desire in the Fed to “slow down the pace of increases soon to stop raising rates early next year to see how their moves this year are slowing the economy.”
The Fed has raised interest rates to between 3 percent and 3.25 percent. The Federal Open Market Committee meets eight times a year to determine the federal funds target rate.
Economists polled by Reuters said they expect the Fed to raise interest rates by 75 basis points after the November meeting and said the central bank should pause once inflation is cut in half. Inflation in the U.S. came in at 8.2 percent in September.
TREND FORECAST: As we thoroughly detail in this Trends Journal, we forecast the Feds may only raise interest rate up to .50 basis points next week to juice equity markets ahead of America’s mid-term elections on 8 November, since “It’s the economy, stupid.” Furthermore, if they do raise rates by .75 basis points next week, we forecast the message from the Fed Head will be lower rate rises in the future.
TRENDPOST: Alphabet shed about 5.73 percent in after-hours trading after reporting weaker-than-expected earnings and Microsoft also shed $6.16 per share in after-hours trading after its cloud revenue came in lighter than expected.
We have noted that tech companies are preparing for softer demand and, in some cases, have announced restructuring. We have long noted that the world is headed into Dragflation: Declining economic growth and rising inflation.
Elsewhere, Britain’s FTSE was almost even, down 0.51, or 0.01 percent, to 7,013.48 and the STOXX600 was up 5.77, or 1.44 percent, to 407.61.
In Asia, Japan’s Nikkei gained 275.38, or 1.02 percent, to 27,250.28 and Hong Kong’s Hang Seng, which was bludgeoned yesterday, continued its losing streak and was down 15.10, or 0.10 percent, to 15,165.59. South Korea’s Kospi was down 1.09 points, or 0.05 percent, to 2,235.07.
In China, the Shanghai Composite was down 1.27, or 0.043 percent, to 2,976.28, and the Shenzhen Component was down 54.80, or 0.51 percent, to 10,639.82.
TRENDPOST: The reality on the ground is much different than what we are seeing in the global markets, and it is just a matter of time before stocks begin to reflect the concerns shared by workers across the world who face rising inflation, a souring housing market, and soaring energy bills. As we report, protests have broken out in France and Germany, Italy and they will continue to escalate as economic conditions further deteriorate.
OIL: Prices were little changed today as traders continue to consider global economic risks and OPEC+ output levels. Brent crude was down 31 cents, or 0.33 percent, to $92.95 per barrel and West Texas Intermediate was up 41 cents per barrel to $84.99 as of 4:07 p.m. ET.
The U.S. dollar index was down 0.9 percent, making oil less expensive for overseas buyers.
Vandana Hari, founder of oil market analysis provider Vanda Insights, told Reuters that much of the “souring outlook on demand has already been baked in” to prices “so any further downward pressure may be slow acting.”
Fatih Birol, the head of the International Energy Agency, said in Singapore today that the world is “in the middle of the first truly global energy crisis.”
TRENDPOST: Oil prices face several issues ranging from China’s COVID-19 lockdowns, the Ukraine War, rising interest rates, slowing economies, and geopolitical tensions between Washington and Riyadh.
The Biden administration has tried to blame OPEC+ for cutting supply and driving up prices, but the price of oil is lower today than before OPEC+’s production announcement. The oil cartel said it will cut its crude oil production target by 2 million barrels per day.
There has also been tension between the Biden administration and Big Oil, which has seen its second-largest profits amid the economic hardships many Americans face.
Bloomberg noted that Exxon, Chevron, Shell, and TotalEnergies will report $50.7 billion in combined earnings last quarter. Abhi Rajendran, adjunct research scholar at Columbia University’s Center on Global Energy Policy, told the news outlet, “It’s definitely awkward.”
“These companies won’t want to be beating their chest over strong business results that are coming at the expense of consumers and a difficult economic environment,” he said.
Exxon Mobil Corp., Chevron Corp., Shell Plc, TotalEnergies SE and BP Plc will report combined earnings of $50.7 billion in the third quarter, down from the second quarter’s record of more than $62 billion, according to data compiled by Bloomberg.
GOLD: The precious metal benefited from a weaker dollar and lower Treasury yields and was trading up $4.10 per ounce, or 0.25 percent, to $1,658.20 as of 4 p.m. ET. Silver was also up 0.186, or 0.97 percent, to $19.36 an ounce.
Gold, which is a non-yielding asset, performs better in the foreign market when the U.S. dollar is depressed and when Treasury yields come down. Both came down today.
Gerald Celente has said the price of gold should be much higher due to economic and political uncertainties. And when U.S. interests come down, gold will go up as the U.S. dollar goes down.
BITCOIN: Crypto traders have taken to social media to express new-found enthusiasm over the cryptocurrency and insist that it is a good time to buy these coins at a discount. Bitcoin passed $20,000 for the first time in 20 days.
The world’s most popular crypto was trading up $918.90, or 4.75 percent, to $20,242.50 per coin as of 4 p.m. ET.
Bitcoin has been trading in the $19,000-$20,000 range and has hit resistance at the $21,000 mark. Much has already been said about crypto-friendly Rishi Sunak’s appointment as the new British prime minister.
The House of Commons, Britain’s lower house, voted today to recognize cryptos as financial instruments and products.
“The substance here is to treat them [crypto] like other forms of financial assets and not to prefer them, but also to bring them within the scope of regulation for the first time,” Andrew Griffith, a parliamentarian, said, according to CoinDesk.
The Trends Journal has warned that government regulation will eventually hurt cryptos. Part of their appeal is that they are unregulated. Odell, a popular crypto Twitter account, appears to agree with us, and posted, “This new British prime minister is no friend of bitcoin, the “news” accounts are misleading you for engagement. He wants total control and surveillance of money.”
Despite the macroeconomic pressures, bitcoin enthusiasts, known as HODLers, have been loyal and have not parted with coins. About 78 percent of bitcoin supply has not moved in at least six months despite the massive losses, Will Clemente, the co-founder of Reflexivity Research, said.
TREND FORECAST: If the Federal Reserve announces any interest-rate hike less than .75 basis points, watch for bitcoin to head to the $25,000-$30,000 range on optimism and the likelihood of Treasury yield declines. If stocks take a hit after the November announcement, watch for bitcoin to return to its $19,000 range.