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What wonderful news for the billionaires who own The Street. Equities spiked last Friday on the wonderful news that the job numbers are weakening and wages for the plantation workers of Slavlandia are declining.
Here is The Wall Street Journal headline: Dow Jumps 700 Points On Signs of Moderating Wage Gains.
Isn’t that great! According to a LendingClub report, 63 percent of Americans are living paycheck-to-paycheck… and now with wages declining more can join the Hard Times Club.
So, the reason for the “good news” of lower earnings having accelerated the markets was that now, with the Federal Reserve’s “Mission Accomplished,” the central Banksters would not keep raising interest rates… this and the money junkies playing the markets will get the cheap monetary methadone to keep them on their high:
“Investors are celebrating the fact that the average hourly earnings number was less than expected,” says Michael Arone, chief investment strategist at the State Street Global Advisors. “There were readings that wage inflation would remain hot.”
The Wall Street Journal, 7 Jan 2023
Yes, gamblers that the media calls “investors” are celebrating hard times for the masses so they can keep making more and the rest of society makes less.
Money Talks, Bullshit Walks
Despite the hard facts and pure data indicating a deep economic contraction—especially in emerging markets—that has been escalated by the COVID War and the Ukraine War… the mass media that continually sells fear, hate, and hysteria… also sells hype.
This is the headline of today’s Financial Times:
“Stocks and currency boosted by data hinting at shallow eurozone recession • Unemployment hits record low • German factories boost output • Figures defy energy pessimism.”
“Data hinting”? “Defy energy pessimism”?
One month of data and the rest of the year ignored. Forecasting the trends shaping the future is far beyond their capabilities. “Eurozone unemployment hit a record low, while German factory output rose in November, boosting hopes of a milder economic downturn in the bloc,” FTwrote.
And as for inflation, they keep promoting the line that prices are not rising as fast as they were. True, but prices are still rising much more than wages, and, even though inflation is not at its peak, the high prices for most commodities, services, basic goods, and housing will not dramatically fall… and, in fact, remain much higher than before the COVID War was launched in 2020.
Most importantly, what is driving down inflation are lower energy prices… which in Europe are still very high. Also, we forecast energy prices will remain high and have a strong potential to increase more as the Ukraine War continues, and our 2023 Top Trend “Mideast Meltdown” intensifies.
Not Good News
While the FT is pumping up “Happy Days are Here Again,” today, this is from Bloomberg: “World Bank Cuts 2023 Forecasts and Warns of Global Recession”
The World Banksters predict global GDP growth of 1.7 percent for the year, which is the slowest pace since 2009—the depths of the Panic of ’08—and the 2020 COVID War recession.
They say advanced economies of the U.S. and Eurozone will see only 0.5 percent growth (which we disagree with, it will be much lower) while they expect a new global recession less than three years after the last one.
The World Bank said, “Given fragile economic conditions, any new adverse development—such as higher-than-expected inflation, abrupt rises in interest rates to contain it, a resurgence of the COVID-19 pandemic or escalating geopolitical tensions—could push the global economy into recession.”
TREND FORECAST: The damage that the COVID War has inflicted on the lives and livelihoods of billions across the globe is incalculable. The world has changed. The businesses that have gone out of business will not be back in business. There will be more consolidation with the few owning most and most people will be working for the few with low wages and minimal benefits.
America is no longer “The Land of Opportunity.”
Nightlife is no life as more people are afraid to go out because they fear COVID and/or with wages down they can’t afford a night on the town.
And as crime keeps rising, so too does the fear index. For example, overall crime in New York City jumped up nearly 25 percent last year and subway crimes increased by about 30 percent in 2022.
In many cities across the globe, once-packed downtowns are no-towns … at night.
With remote work now a part of the New World [DIS?] Order, the Office Building Bust, one of our Top Trends for 2023, barely makes the mainstream news.
And, the media keeps blaming the economic decline and other negative implications on “The Pandemic.”
NO! It is not “The pandemic” that killed businesses and sucked the joy out of life. It was—and continues to be—power-hungry politicians and their arrogant bureaucrats who locked down society without providing a scintilla of hard scientific evidence to support their draconian mandates.
And now the mainstream media that brings in customers by promoting fear, hate, and hysteria is selling the new XBB.1.5 COVID variant. Masking up in public has now become a common part of the culture and of everyday life. Science fiction has become the new reality: “New covid variant quickly growing in United States,” was the headline Sunday in Jeff Bezos’s Paper, The Washington Post.
LAST WEEK: JOBS REPORT SENDS DOW UP 700 POINTS
The Dow Jones Industrial Average flew up 700 points on Friday after the U.S. labor department reported slowing growth in both wages and the number of new jobs.
The economy added 223,000 new jobs, more than the 200,000 economists had predicted but fewer than in any previous month since 2020, according to The Wall Street Journal.
Wages grew at an annual rate of 4.6 percent, continuing to slide from a peak of 5.6 percent reached last March.
The report indicated corporate performance remains robust even as the U.S. Federal Reserve raised interest rates repeatedly over the last 10 months.
The news also boosted hopes that the U.S. economy would avoid a recession while still lowering the rate of inflation, The Wall Street Journal said.
“There is a real possibility of a soft landing,” Great Hill Capital chair Thomas Hayes told the WSJ.
The Dow was up 1.5 percent on the week, the NASDAQ expanded by 1.9 percent, and the Standard & Poor’s 500 index added 1.7 percent. All 11 of the S&P’s sectors saw gains.
“Investors are celebrating the fact that the average hourly earnings number was less than expected,” Michael Arone, chief strategist at State Street Global Advisors, said to the WSJ. “There was fear that wage inflation would remain hot.”
The numbers also eased fears that the economy was entering a wage-price spiral, in which the two push each other continually higher.
However, the economy is not yet on a glide path to that soft landing.
The Institute for Supply Management’s benchmark survey of business conditions in the services industry sank to 49.6 last month from 56.5 in November, a dramatic decline and the first since early in the COVID War.
Readings below 50 indicate contraction, a sign that the economic slowdown is taking hold in service businesses after a burst of growth following the COVID era.
Bond yields retreated under pressure from the news that wages and job creation have slowed.
The benchmark 10-year treasury note’s return slipped to 3.570 percent Friday after closing Thursday at 3.720 percent.
During last week, spot gold took on another 2.3 percent to $1,865 on 6 January.
Bitcoin rose 1 percent to trade at $16,819 at 5 p.m. U.S. EST on 6 January.
Brent crude oil slid 8.2 percent through the week to end at $78.56 at 5 p.m. U.S. EST on 6 January. West Texas Intermediate, which sets U.S. oil prices, dove 8 percent to $73.76.
Markets also were up overseas.
London’s FTSE grew by 2.5 percent and the European Stoxx 600 exchange jumped up 4.1 percent.
In South Korea, the KOSPI took on another 1.6 percent. Hong Kong’s Hang Seng index was up 4.7 percent. Mainland China’s CSI Composite added 2.7 percent and the SSE Composite ended the week 2.4 percent higher.
The outlier was Japan’s Nikkei 225, which lost 0.5 percent.
YESTERDAY: DOW DOWN SLIGHTLY AS FED INDICATES MORE TIGHTENING
The Dow Jones Industrial Average fell 112.96 points, or 0.3 percent, to end at 33,517.65 and the S&P 500 was down 0.1 percent, or 2.99 points, to close at 3,892.09 in what was another choppy day in the market. The Nasdaq was up 66.36 points, or 0.6 percent, to end the day at 10,635.65 points.
Mary Daly, the San Francisco Fed president, said yesterday that interest rates may have to go above 5 percent. She said it was “really too soon to declare victory” on inflation.
“It really is about incoming information,” Daly said. She said the central bank is “completely data-dependent.”
Nasdaq benefited from Tesla jumping 7.5 percent as recent price cuts are seen to be sparking demand.
In Europe, the British FTSE was up 25.45 points, or 0.33 percent, to 7,724.94. The STOXX 600 was up 3.93 points, or 0.88 percent, to 448.35. Stocks in Europe hit their highest levels since May 2022.
Japan’s Nikkei was up 153.05, or 0.59 percent, to 25,973.85, and Hong Kong’s Hang Seng was up 396.70, or 1.89 percent, to 21,388.34. The Shanghai Composite was up 18.45, or 0.58 percent, to 3,176.08. The Shenzhen Component was up 82.42, or 0.72 percent, to 11,450.15.
OIL: Crude oil prices were higher yesterday fueled by a weak dollar and hopes that China will continue to ease its COVID-19 restrictions. West Texas Intermediate Crude oil futures for next month were up $0.86 or 1.2 percent, to $74.63 a barrel. Brent was trading up 1.55 percent, near $80 per barrel.
Oil prices benefited from the U.S. Dollar Index dropping 0.82 percent and China’s reopening. Beijing is the world’s largest oil importer. The price of crude did not jump the way analysts expected due to lingering concerns about a global recession and hiccups in China’s reopening.
OilPrice.com noted that last week oil prices saw one of their biggest declines since 2016.
Analysts from Goldman Sachs say oil prices could hit $105 per barrel by the fourth quarter due to strengthening demand.
TREND FORECAST: Beyond Goldman Sachs’ forecast for stronger demand, we forecast Brent Crude will stay above $80 per barrel and may rapidly escalate should the Ukraine War intensify, winter weather turn colder… and our 2023 Top Trend, “Middle East Meltdown” heat up.
As we noted in “OPEC+ Cuts Daily Oil Output Limit By Two Million Barrels”(12 Oct 2022), oil-producing nations will do what they can to keep prices high.
GOLD: The yellow metal benefited from a weakening U.S. dollar and hit an eight-month high for a brief period yesterday.
TREND FORECAST: As we have forecast, gold prices have hit their bottom. And with interest rates and inflation rising across the globe which in turn will produce Dragflation—plus our forecasts for geopolitical conflicts to escalate—prices of the world’s most precious safe-haven asset, gold, will continue to rise… and by their purchasing deeds, many governments know it.
BITCOIN: The world’s most popular crypto has seen recent gains and was trading at about $17,400.
Crypto enthusiasts are eager to leave 2022 behind and look forward to some price stability in 2023.
Analysts at Eight Global told Kitco that the current price for bitcoin indicates that “there is still plenty of room to move up.”
“We can see two very clear zones on the chart, namely the demand zone around $16.9-17k and the supply zone of $17,350-17,550,” the statement said. “These are therefore the areas we will keep an eye on for longs and shorts, but as always we will only take a position when we have the right confirmations.”
TREND FORECAST: On the upside of bitcoin, after floating in the $16,000 per coin range for several months, it is now trading in the mid-$17,000 range which is a positive. Should it remain in that trade range and move up above $25,000 per coin, we forecast bitcoin prices will continue to rise.
On the downside, should it break down into the $15,000 per coin range, we hold to our forecast that it will decline to around $10,000 per coin.
TODAY: DOW JONES UP AS INVESTORS WAIT FOR INFLATION REPORT LATER THIS WEEK
The Dow Jones Industrial Average was up 186.5 points, or 0.56 percent, to end the day at 33,704. S&P 500 was up 0.70 percent to close at 3,919,25 and the Nasdaq saw another day of gains, rising 1.01 percent to close the session at 10,742.63.
Federal Reserve Chair Jerome Powell appeared in front of Sweden’s Riksbank and indicated that the central bank will continue to act on bringing down inflation.
The Wall Street Journal quoted Powell as saying that it is important for the bank to “stick to our knitting” and not “wander off.”
“Price stability is the bedrock of a healthy economy and provides the public with immeasurable benefits over time. But restoring price stability when inflation is high can require measures that are not popular in the short term as we raise interest rates to slow the economy,” Powell said.
In Europe, Britain’s FTSE was down 30.45, or 0.39 percent, to 7,694.49 and the STOXX600 also fell 2.64, or 0.59 percent, to 445.71.
In Asia, Japan’s Nikkei was up 201.71, or 0.78 percent, to 26,175.56 and South Korea’s Kospi increased by 1.12 points, or 0.05 percent, to 2,351.31. Hong Kong’s Hang Seng gave back 56.88 points to end the trading day at 21,331.46. In China, the Shanghai Composite was down 6.58, or 0.21 percent, to 3,169.51 and the Shenzhen Component was down 56.65, or 0.49 percent, to 11,506.79.
Asia’s benchmark index, the MSCI Asia Pacific index, entered a bull market this week as investors expressed optimism over China’s relaxation of its COVID-19 restrictions. The Hang Seng, at one point during trading, reached 47 percent higher than its value at the end of October.
The Asian benchmark is up 3.9 percent since 1 January, which is about two percentage points higher than the S&P. Both suffered their worst years since 2008 and shed about 19 percent last year.
TRENDPOST: Last week, The Trends Journal laid out its TOP TRENDS of 2023, which included “MARKET MELTDOWN, ECONOMIC CALAMITY.”
We noted how stocks lost more than $30 trillion in 2022, their worst year since the Panic of ’08. Yes, forecasting the Panic of ’08, the Trends Research Institute, the publisher of The Trends Journal, took out that domain name in 2007.
Powell said the Fed’s role is not to wade into political discussions, but rather stick to economic management. But it seems as though the Fed’s true talent is in the political arena, not in economics.
We’ve long noted that Powell and his other Central Banksters, bullshitted for almost two years that inflation was “temporary,” and then “transitory,” and that in 2018, when the markets were tanking in December, then President Donald Trump pressured Powell to lower interest rates. Obeying the Commander in Chief, in January 2019 Powell announced lower interest rates were coming and it juiced up the equity markets.
OIL: Brent crude, the world’s oil benchmark traded flat, closing at 79.65…per barrel. West Texas Intermediate was up 63 cents, closing at $75.26 per barrel.
TREND FORECAST: Oil prices face several issues ranging from China’s COVID-19 lockdowns, the Ukraine War, rising interest rates, slowing economies, and geopolitical tensions.
China has indicated that it will reopen the economy and a weakened U.S. dollar often helps oil prices. But while the situation in China seems to be improving, the tension in the Middle East is hitting a fever pitch.
As we note in this week’s issue, Washington and Riyadh have buried the hatchet after the oil-output disagreement late last year because of the growing threat of Iran and its proxy fighters. Israel also continues to fan the flames with bombing campaigns in Syria.
The Trends Journal maintains its forecast that the oil market remains a wildcard and can easily skyrocket.
Oil, Gas, and Inflation
Unseasonably warm weather and a slowing global economy have undercut prices for gasoline and natural gas in Europe and the U.S.
Europe’s benchmark natural gas price fell 10 percent on 4 January alone, reaching €64.20 per megawatt-hour, compared with a high of €340 in August 2022.
Also on 4 January, Brent crude’s price sank to $78.40 at one point, an intraday decline of 5 percent.
In the U.S. on 4 January, gas at the price-setting Henry Hub pipeline junction in Texas traded at $4 per Btu, the price having fallen 40 percent in the preceding three weeks.
West Texas Intermediate grade crude oil, which benchmarks U.S. oil prices, was trading sideways just below $75, a level not seen since December 2021.
On 9 January, European natural gas rallied to €75.20. On 10 January:
● Brent crude’s price edged slightly higher to $79.80
● U.S. natural gas was priced at $3.915 per million BTUs
● West Texas Intermediate held at $74.85
Falling fuel prices have contributed to a slowdown in inflation’s pace in both regions, the Financial Times noted.
GOLD: The precious metal continued its upward momentum today and was up $3.50 an ounce, or 0.19 percent, to close the day at $1,881.30.
Gold usually reacts positively to a weakened U.S. Dollar Index and investors are shopping for safe-haven assets amid some global uncertainty. Gold buyers will be watching Thursday’s CPI numbers to get a sense of the Fed’s next move in fighting inflation.
TREND FORECAST: As forecast, when gold prices sank into the high $1,600 per ounce range last year, we said the prices had bottomed and gold prices would be rising. With no sign of the Ukraine War ending, amid a global slowdown, gold will continue to be a valuable safe-haven asset to any portfolio.
Like any asset up against a strong dollar and higher Treasury yields, the precious metal will not have a clear path to a higher value, but it will soar when the Ukraine War expands and officially becomes a world war, which seems increasingly likely as the U.S., Germany, and France all announcing they will send heavier equipment to Ukraine.
Also, when the U.S. Federal Reserve lowers interest rates, gold prices will continue to rise. Should the current trend lines continue, we forecast gold will break well above $2,000 per ounce this year.
BITCOIN: Is it June in January amid the crypto winter?
Bitcoin, the world’s most popular cryptocurrency, was trading up $244.80, or 1.43 percent, to $17,422.70 as of midday trading.
TREND FORECAST: (Please see Bitcoin trend forecast in our YESTERDAY market round up.)