It’s a numbers game. And of course like most games, those dealing the cards can rig the game.
Oh what wonderful news last week. With more jobs created than The Street anticipated, equity markets soared on the “news” that despite the Bankster Bandits raising interest rates for the 10th time in a row, nonfarm payrolls increased 253,000 for April.
Forget the fact that the Presstitutes basically ignored the facts that the Bureau of Labor Statistics bureaucrats slashed March’s job count from 165,000 to just 71,000. And remember the strong February job numbers that also pushed equites up? No, of course not, who would remember that back then the government said 248,000 new jobs were created but in fact only 78,000 were.
Yes, they jacked up interest rates 10 times since March 2022 bringing the current rates to 5 percent to 5.25 percent in their effort to fight inflation… inflation that the Fed and U.S. treasury secretary said was just temporary and then transitory.
And of course, whether they lied about inflation or were too stupid to see it was real, the Feds are blaming rising wages for inflationary pressures rather than their zero interest rate policy and Washington’s pumping in several trillion dollars to fight the COVID War… which spiked inflation and created HYPER-bubbles, as Gregory Mannarino notes in his article in this issue, “Gap Between the Stock Market, Reality, and Everything Else Is Near Insanity.”
As we have noted when they began the rate hike, the higher interest rates rise the deeper the economy will fall… but it would take many months for the economic damage to hit Main Street. That time is now.
Today for example, the Mortgage Bankers Association (MBA) reported that mortgage credit availability slumped to its lowest level in a decade as it fell nearly 1 percent in April to 99.6.
MBA’s Vice President and Deputy Chief Economist Joel Kan said that “Mortgage credit availability declined in April to the lowest level since January 2013, reflecting the tightening in broader credit conditions stemming from recent banking sector challenges and an uncertain economic outlook,” and that “The contraction was driven by reduced demand for loan programs such as certain adjustable-rate mortgages loans, cash-out and streamline refinances, and those with lower credit score requirements.”
And on a grander and more economically devastating scale, as we had long warned but is now just making the news, is the Office Building Bust.
Again, we had forecasted this trend when politicians launched the COVID War and forced people to stay home and not go to work. As a result, the work-from-home trend is now part of “normal” life for many and as the economy slows down those renting office space want less of it.
Buried on page 27 in Sunday’s New York Times, the headline read:
“Available for Lease in Manhattan: A Record 94 Million Square Feet of Office Space.”
They noted that “Before the pandemic, office buildings drove a significant share of the city’s economy,” but the “entire ecosystem collapsed during the early months of the pandemic as office workers shifted to remote work,” and “that retreat has led to the high vacancy rate.”
But again, according to the numbers, it was not a “pandemic,” but rather draconian lockdown mandates based on political science and not hard science. The numbers don’t lie but the politicians, bureaucrats and Presstitutes lie by calling it a pandemic and not blaming those who caused the coming economic disaster.
This is a headline from last Friday’s Financial Times: “WHO declares COVID-19 pandemic is over after three years and 20 mn deaths.”
FT goes on to note that the World Health Organization (WHO) “began using the word ‘pandemic’ in March 2020 as countries around the world imposed strict lockdowns … though the term bears no legal meaning.”
“No legal” meaning = bullshit.
They made this crap up to spread fear and control.
There was no “pandemic” then or now.
By the end of March 2020, there were 4,776 COVID deaths, according to Our World data… out of a world population of nearly 8 billion. And as we have greatly detailed in The Trends Journal since they launched the COVID War, those dying from the coronavirus were elderly and immunocompromised individuals.
And as for 20 million deaths, FT said, WHO’s director-general, Tedros Adhanom Ghebreyesus, believes that the “true figure” is not the 6,870,704 deaths officially reported but “probably at least 20 mn deaths.”
“True figure” made up by some arrogant bureaucrat that is totally made up?
Indeed, they make this shit up and we are supposed to believe it. Again, the term “pandemic” bears no legal meaning,” yet that is what everyone is now calling it despite the fact that out of a population of 8 billion, by the numbers 99.91 percent of the people survived the COVID War.
We note this because rather than blaming the disastrous Office Building Bust on those who launched the COVID War, the media blames it on a non-existing “pandemic”… and the general public repeats what the media and politicians dish out.
Therefore, on the Office Building Bust, according to commercial real estate data compiled by Trepp, landlords have to refinance nearly $140 billion of office mortgages in 2023 and a half trillion in the four years following. And with interest rates going up and more tenants slimming down office space and/or not renewing leases, as we have long noted, there will be slews of banks also going bust as loan defaults escalate. Indeed, Goldman Sachs research shows that the small and medium size banks hold nearly 70 percent of commercial real estate loans.
According to Cushman & Wakefield, nearly 19 percent of U.S. office space is available for rent… the highest number since the real estate service firm began measuring vacancy rates back in 1995.
Also just now making the “news”—after ignoring it as they did rising inflation—The U.S. Federal Reserve has just started issuing concerns over commercial office building loans. In the Financial Stability Report issued yesterday (three years behind our trend forecast), their survey of “market experts” cited worries in the commercial office building sector: “The Federal Reserve has increased monitoring of the performance of C.R.E. loans and expanded examination procedures for banks with significant C.R.E. concentration risk.”
And the “experts” they surveyed “saw real estate as a possible trigger for systemic risk, particularly in the commercial sector where respondents highlighted concerns over higher interest rates, valuations and shifts in end-user demand.”
TREND FORECAST: Again, they are three years too late on this trend forecast. The Office Building Bust has begun as has the recession. As interest rates go up business profits will decline, financial stress will increase and the deep-in-debt businesses and hedge funds that went on the cheap money borrowing spree during the COVID War will default on loans which will in turn bring down more banks.
LAST WEEK: BANK TROUBLES STILL WEIGH ON MARKET
On Friday, a strong jobs report and Apple’s robust first-quarter earnings drove the Dow higher, but not enough to turn the week positive.
Last week, the Dow Jones Industrial Average gave back 1.3 percent. The NASDAQ edged up 0.2 percent. The Standard & Poor’s 500 index shrank 0.7 percent.
Investors sold off bank stocks early in the week after First Republic Bank was seized by regulators and sold for pennies on the dollar to JPMorgan Chase. The seizure marked the largest U.S. bank failure since 2008.
Investors have become increasingly concerned about the impact of the U.S. Federal Reserve’s continuous stream of rate increases on the banking sector, The Wall Street Journal reported.
Markets remained jittery about the banking industry’s stumbles, the WSJ said, even after JPMorgan helped clean up First Republic’s mess and share prices rose Friday for the wobbly lenders Pac West—said to be negotiating its purchase by another bank—and Western Alliance.
News that the economy added 253,000 jobs “does justify a bit of a rally,” Interactive Brokers chief strategist Steve Sosnick told the WSJ. “If it doesn’t take recession off the table, it certainly pushes it back.”
The job market’s continued strength could persuade the U.S. Federal Reserve to raise its base rate again in June, although markets are still pricing in a pause by the Fed for the indefinite future.
The yield on the two-year treasury bond, which is sensitive to rate changes, moved up to 3.929 percent Friday from 3.727 percent Thursday. Yields rise as bond prices fall.
The 10-year treasury note’s return rose from 3.350 percent Thursday to 3.445 percent.
Interest-rate futures markets are giving 75-percent odds that the Fed will cut its key interest rate by September, despite chair Jerome Powell’s repeated insistence that will not happen.
Gold’s continuous contract gained 1.7 percent on the week, with the metal trading at $2,024.90 at 5 p.m. U.S. EDT on 5 May.
Brent crude was down 5.1 percent to trade at $75.80 at 5 p.m. U.S. EDT on 5 May.
West Texas Intermediate, the benchmark for U.S. oil prices, fell 6.2 percent to $71.34. It dipped below $70 briefly on 4 May and rallied the next day on the strong U.S. jobs report.
Bitcoin’s value grew by 5.2 percent to $29,614.90 at 5 p.m. U.S. EDT on 5 May.
Abroad, the London FTSE lost 0.7 percent. The all-Europe Stoxx 600 gained less than 0.1 percent.
The Nikkei in Japan rose 2.3 percent and South Korea’s KOSPI index took on another 0.6 percent.
In China, Hong Kong’s Hang Seng index added 0.5 percent. The mainland’s CSI Composite grew by 1.7 percent and the SSE Composite climbed 2.4 percent.
YESTERDAY: DOW DOWN SLIGHTLY AS TRADERS EYE REGIONAL BANKS, UPCOMING CPI DATA
The Dow Jones Industrial Average gave back 55.59 points yesterday, or 0.17 percent, to close the day at 33,618.69. The benchmark S&P 500 closed 1.87 points higher, or 0.045 percent, to 4,138.12, and the tech-heavy NASDAQ was up 21.50, or 0.18 percent, to 12,256.92.
Gamblers on The Street seemed to be taking their time to consider data from last week while they wait for Wednesday’s CPI report for April. FactSet’s consensus forecasts expects the CPI data from April to show a 5.0 percent increase in inflation from 2022, which is still well above the Fed’s desired rate of 2 percent.
CME’s FedWatch tool says the market sees an 85 percent chance that the Central Banksters keep rates in the 5 percent to 5.25 percent range. There is also a 31 percent chance of a rate cut in July.
The U.S. jobs report continues to be strong so investors were not so concerned about a looming recession, but the report’s strength raised worries that high inflation will continue to be an issue.
Traders also kept a close eye on regional banks. The KBW Nasdaq Regional Banking Index was down 2.8 percent on the day, according to The Wall Street Journal. These smaller/mid-size banks are working to prove to investors that they will not see clients pulling their deposits like the runs at First Republic and Silicon Valley Bank.
There continues to be looming risks for these banks as a newly released Federal Reserve survey found that banks are beginning to tighten their lending standards.
TRENDPOST: The Trends Journal has warned that the worst is yet to come. Bank loans play a major role in the economy and when they dry up, that means businesses can’t obtain capital to grow and individuals find it tougher to buy a house or car—further slowing the economy.
Jill Cetina, associate managing director of Moody’s Investors Service, told CNN the Federal Reserve’s quarterly Senior Loan Officer Opinion Survey may show that “there is some evidence that banks are experiencing stress.”
“I think we knew that before the survey, but now we have that quantified here with how it’s impacting lending,” she said.
Elsewhere, the market in London was closed yesterday after the coronation of King Charles over the weekend. In Asia, Japan’s Nikkei was off 0.71 percent, to 28,949.88. Hong Kong’s Hang Seng Index rose 1.2 percent to close at 20,297.03.
In China, the Shanghai Composite was up 1.81 percent to close at 3,395 and the Shenzhen Component up 0.4 percent to 11,225.77.
China’s market benefited from strong travel and spending data from the recent Golden Week holiday in the country.
OIL: Brent crude settled up $1.71, or 2.3 percent, to $77.01 and U.S. West Texas Intermediate was up $1.82, or 2.6 percent, to $73.16.
Tina Teng, a CMC Markets analyst, told Reuters that the rebound on Monday comes after recent data in the U.S. “eased concerns about an imminent economic recession.”
TRENDPOST: The Trends Journal continues to see oil prices as a wildcard because there are too many uncertainties about China’s reopening, the threat of recession in the U.S., and more OPEC+ output cuts. And of course, our trend forecast of a Middle East Meltdown will also drive up oil prices should Israel have a military confrontation with Iran.
Adding more heat to the Middle East fire, Israel launched Operation Shield and Arrow today. Its airstrikes in Gaza killed at least 13 people, including six women and four children, according to the Palestinian Ministry of Health.
GOLD: The precious metal rose 0.2 percent to $2,021.37 an ounce but is expected to face some short-term headwinds as the USD Index reached above 101.50 on expectations that the Fed will keep interest rates high due to continued high inflation.
A higher dollar value makes the precious metal less attractive to foreign buyers. Gerald Celente has long said the dollar’s strength is based on higher interest rates.
FX Street noted that gold buyers are also watching the U.S. debt ceiling discussions in Washington because an agreement to increase the country’s debt ceiling would flush “significant liquidity into the economy and would improve the appeal of the Gold price as safe-haven.”
Janet Yellen, the U.S. Treasury secretary, said Congress needs to do it job, otherwise the country will have an “economic and financial catastrophe that will be of our own making.”
She said earlier that the U.S. government could run out of money as early as 1 June.
TRENDPOST: The Trends Journal maintains that the price of gold will skyrocket when the Federal Reserve lowers interest rates – prompting the dollar to fall and become more attractive to the foreign market.
BITCOIN: The world’s most popular crypto fell below $27,500 yesterday a day after the popular exchange Binance halted bitcoin withdrawals twice over the weekend and briefly on Monday due to congestion issues.
Bitcoin reached as high as $29,800 on Saturday.
TREND FORECAST: Bitcoin has been hitting resistance as it approaches the $30,000 mark and the Binance issue last weekend, no doubt, reminded investors about the FTX collapse. Watch for the crypto to stay in the $27,000- $28,500 range. If the CPI data comes in hotter than expected, the crypto will fall to the $24,500 range and if the data is cooler than anticipated, the crypto will approach the $30,400 range.
TODAY: LITTLE CHANGE IN THE STOCK MARKET WITH ALL EYES ON TOMORROW CPI DATA
The Dow Jones Industrial Average closed down 56.88 points, or 0.17, to 33,561 and the benchmark S&P 500 was down 18.95, or 0.46 percent, to 4,119.17. The tech-heavy Nasdaq was down 77.36, or 0.63 percent, to 12,179.55.
The stock market is trying to get a sense of the health of regional banks, tomorrow’s CPI data, and whether or not the U.S. is going to miss its debt payment on 1 June.
John Williams, the New York Federal Reserve president, addressed the Economic Club of New York today and suggested that the Central Bank still considers inflation to be a problem.
“Although we have seen some signs of a gradual cooling in the demand for labor—as well as for some goods and commodities—overall demand [in the jobs market] continues to exceed supply,” he said.
The Fed has been credited by supporters for raising rates nine consecutive times without badly damaging the U.S. economy, but that lucky streak could be ending as inflation stalls and the overall economic outlook seems to be worsening.
Elsewhere, London’s FTSE was down 14.29, or 0.18 percent, to 7,764.09 and the STOXX600 index was down 1.53, or 0.33 percent, to 465.41.
In Asia, Japan’s Nikkei was up 292.94, or 1.01 percent, to 29,242.82 and South Korea’s Kospi was down 3.15, or 0.13 percent, to 2,510.06. Hong Kong’s Hang Seng was down 429.45, or 2.12 percent, to 19,867.58. China’s Shanghai Composite was off 37.33, or 1.10 percent, to 3,357.67 and the Shenzhen Component lost 100.75, or 0.90 percent, to close the trading day at 11,125.02.
The Hang Seng was the big loser after new data from China showed a slowing economy. Imports were down 7.9 percent last month, which was down 1.4 percent from March. Economists blame weakening demand and low commodity prices, according to The South China Morning Post.
TRENDPOST: The Trends Journal has warned readers that the economy is going to show its true cracks when landlords can no longer pay banks for mothballed office real estate in major cities that have become ghost towns.
MRI Springboard, the real-estate software provider, said pedestrian foot traffic in major urban downtowns across the U.S. was down about 25 percent in April compared with the same month in 2019, The Wall Street Journal reported.
“I think we’re in for quite a challenging time for downtowns and for retail in downtowns,” Diane Wehrle, marketing and insights director for MRI Springboard, told the paper.
OIL: Brent crude was up 28 cents per barrel today, or 0.35 percent, to $77.27 and West Texas Intermediate was up 37 cents, or 0.49 percent, to $73.52 a barrel.
Oil prices benefited from reports that the Biden administration plans to purchase crude to refill the U.S.’s Strategic Petroleum Reserve.
CNBC also noted that the Energy Information Administration said in its Short Term Energy Outlook that it expects “the seasonal rise in oil consumption and a drop in OPEC crude oil production to put some upward pressure on crude oil prices in the coming months.”
GOLD: The precious metal traded up 0.7 percent today closing at $2,034 per ounce.
Phillip Streible, chief market strategist at Blue Line Futures, told CNBC that gold-buyers will be keeping a keen eye on the CPI data and said a much weaker-than-expected reading could result in a significant rush into commodities “across the board and further liquidation in the dollar.”
That’s not even considering the growing possibility of the U.S. defaulting on its debt payments on 1 June, which would further erode the greenback.
TREND FORECAST: Watch gold skyrocket if tomorrow’s CPI data comes in cooler than anticipated which will mean the Fed will end its interest rate hikes. Therefore, as interest rates fall so too will the U.S. dollar. And the deeper the dollar falls, the higher gold prices will rise.
BITCOIN: The world’s most popular crypto was trading up $51.20, or 0.19 percent, to $27,726.70 as of 4:09 p.m. ET.
The crypto has been shaken recently by increases in the cost to make transactions. Decrypt, citing Bitinfocharts, noted that the current average price to make a transaction on the Bitcoin network is $31.14.
A Twitter user in El Salvador said she watched someone withdraw $100 from a bitcoin account and had to pay $20 in fees.
TRENDPOST: The Coin Telegraph wrote that it is becoming “increasingly hard to find a bullish voice when it comes to short-term BTC price action.”
Matthew Dixon, the CEO of Evai, a crypto ratings platform, agreed with our forecast that tomorrow’s CPI figures will either provide a short-term bump for bitcoin, or drag down the price. A higher-than-expected CPI reading will likely mean the Fed will be more aggressive with rate hikes, while a lower-than-expected reading could lower the value.
Like gold, bitcoin is a non-yielding asset so higher interest rates tend to support a strong dollar and make Treasuries more appealing as a safe-haven.
Currently bitcoin is in a holding pattern and Goldman Sachs survey shows crypto currencies are losing their luster among family office investors. Thus, it will take a spike up to get the luster shining again. Yet, among many investors—particularly the younger generations—bitcoin is still considered a safe-haven alternative in these times of economic uncertainty.