Now here this, now here this: The Greatest Recession has begun and the banking crisis that Jamie Dimon of JPMorgan Chase said was over after the Feds made a sweetheart deal with him to buy out First Republic Bank will worsen.

But of course, it won’t become “official” until the official pieces of bullshit say it is.

Remember how they lied and/or were too stupid to admit that inflation was real as it was spiking? From the U.S. Fed to the European Central Bank they said inflation was just “temporary” and then, as it kept spiking, the “officials” declared it was just “transitory.”

This is the story, and these are the facts.

When the politicians launched the COVID War in 2020, they pumped in countless trillions of dollars to artificially pump up sinking economies that were a direct result of their draconian lockdown mandates which, as we have greatly detailed, destroyed the lives and livelihoods of billions across the globe.

Another part of the crime syndicate that imposes their dictates on the plantation workers of Slavelandia, the Central Bankster Gangsters lowered interest rates to zero and/or kept them in negative territory so the “Bigs” who control the equity markets could get bigger.

Don’t believe that conclusion? 

Wonder why merger and acquisition activity hit an all-time high in 2021 and why the billionaires, according to Oxfam, got $27 trillion richer in the two years following the start of the COVID War… while the plantation workers of Slavelandia got poorer. 

Need more proof?

Isn’t the refugee crisis lovely as millions try to escape extreme poverty, government corruption, crime and violence and risk their lives to seek refuge in countries that they believe are “democracies” where they can earn a living?

How about the $17.05 trillion debt burden of “average” Americans of which they owe an average of some $6,000 on their credit cards… which is now nearly $5 trillion of their debt burden. And to make it clear that it is a crime syndicate, this is what the money mafia in control of credit cards is charging the plantation workers of Slavelandia according to CNBC: “Both the Citi® Diamond Preferred® Card and the Citi Simplicity® Card have an intro APR offer of no interest for 21 months on balance transfers from the date of your first transfer (after, a 17.99% – 28.74% variable APR on the Citi Diamond Preferred and a 18.99% – 29.74% variable APR on the Citi Simplicity).” 

The Numbers Don’t Lie: Politicians and Bureaucrats Lie

Over in Europe, a survey of purchasing managers indicates that the Purchasing Managers Index (PMI) slumped to 44.6 this month… the fastest pace of decline since the politicians launched the COVID War back in 2020. A level below 50 signals contraction.

In the U.S., the May manufacturing PMI contracted from 50.2 in April to 48.5 in May. Indeed, these are prime examples of not only the economic contraction but also the job losses in sectors that pay higher salaries than in the service sector economy.

And the facts of recession are felt by the working class. 

According to a Federal Reserve survey released on Monday, 35 percent of American adults said they were in worse financial shape in 2022 than a year earlier. About 55 percent said their budgets have been squeezed “a lot” as a result of inflation. To illustrate the real poverty level of the plantation workers of Slavelandia, because of inflation—paying more to buy less—their savings are depleted, with only 63 percent saying they could cover an unexpected $400 in expenses. 

According to government data, with interest rates rising, small U.S. businesses, unable to borrow at high costs, fired nearly 350,000 workers in March, racking up the highest level of firings since the COVID War lockdowns of May 2020. Indeed, a Goldman Sachs survey of some 10,000 small businesses showed that 77 percent said there was “a stunning shift” in accessing capital from a year ago. 

Making a bad situation worse, a National Federation of Independent Business survey found that small business optimism hit its lowest level since 2012. 

Again, and again, and again, as we had long forecast, the socioeconomic and geopolitical implications of sharply rising interest rates would take several months to hit… and that time is now. 

Here are just a few of the headlines making the news that are old news to Trends Journal subscribers… since we long warned of the economic dangers ahead:

• Office Stocks are Pummeled As Vacancies Rise, Rents Fall (The Wall Street Journal, 23 May 2023)
• Container Shipping Has Cratered – Slowdown in orders from big importers has brought prices to ‘unsustainable’ levels. (The Wall Street Journal, 23 May 2023)
• Nearly 20 million households are behind on their utility bills (CNN, 23 May 2023)
• Lowe’s cuts full-year sales forecast, as spending on do-it-yourself projects weakens (CNBC, 23 May 2023)
• Jamie Dimon warns souring commercial real estate loans could threaten some banks (CNBC, 23 May 2023)
• US Economy Headed for Downturn in Second Half of 2023, Forecasters Say (Bloomberg, 19 May 2023)
• ‘It’s going to be ugly’: This CEO has issued a dire warning about US real estate (YAHOO, 21 May 2023)

Providing trend forecasts that give you History Before it Happens®, each of these headlines above are old news for Trends Journal subscribers.

And among the oldest of what is “news” today in the WSJ is the Office Building Bust which we had forecast would occur in March of 2020 when politicians forced people to work-at-home and closed down entire cities. 

Now, the WSJ reports that the New York office firm SL Green Realty stock, at $23.36, is at around the same price as it was back in 1997 when the firm went public. Vornado Realty Trust, which owns prime office buildings in New York, Chicago, and San Francisco, has seen its stock plummet from near $70 a share three years ago to $13.68 yesterday.

And as we have long warned, with tenants leaving and less money coming in, the higher interest rates rise, so will the cost of servicing their debt, because many of the firms are saddled with floating loans… which have floated higher as interest rates keep rising. 

What we had forecast, the WSJ is now saying—that this is “one of the worst stretches for the office market since World War II.”

Moody’s estimates that some 84 percent of firms with commercial mortgage-backed securities will have problems refinancing their debt load. The WSJ also notes that “Since the start of 2020, as of last week, shares of office REITs have declined 48 percent,” while “Over that same period, the S&P 500 index was up 37 percent.”

And now JPMorgan’s Dimon has made the news saying that the office building crisis will worsen and that despite the bet on The Street that the Feds will not raise interest rates, he says “I think everyone should be prepared for rates going higher from here. You should be prepared for 6 or 7 percent.”

TREND FORECAST: Again, as we have greatly detailed, the banking crisis will continue to worsen as companies default on their commercial business sector loans of which some $1.5 trillion—that are mostly held by small and medium size banks—come due in the next two years. And if Jamie Dimon is correct and interest rates keep rising, the Office Building Bust will be a crash that will be heard around the world. 

LAST WEEK: STOCKS END HIGHER DESPITE RETREATING ON FRIDAY

Although markets slumped Friday after debt-ceiling negotiations bogged down, all three major indexes ended the week higher than they began.

The Dow Jones Industrial Average rose 0.3 percent over the week. The NASDAQ climbed 2.9 percent. The Standard & Poor’s 500 index added more than 1.5 percent.

Early in the week, markets grew optimistic about the debt talks after House speaker Kevin McCarthy indicated a deal was in sight. Later, when no progress materialized and Republicans briefly left the discussions, the markets’ mood soured.

Also, 19 May comments by U.S. Federal Reserve chair Jerome Powell hinting the central bank might not raise interest rates at next month’s meeting deflated short-term treasury yields on Friday.

His remark also sent interest-rate futures traders scurrying. The day before, they were increasing their wagers that the Fed would raise rates in June.

“Our policy rate may not need to rise as much as it otherwise would have,” Powell said, now that banks are cutting back lending in the wake of recent bank industry turmoil. Less lending should slow growth and throttle back inflation, having the same effect as a rate hike.

In addition, regional bank stocks slipped Friday after treasury secretary Janet Yellen told an 18 May meeting of the Bank Policy Institute that some of those banks might need to be sold to larger institutions.

However, share prices of ailing PacWest and Western Alliance banks gained 24 and 30 percent, respectively, last week. PacWest reported its deposits were growing again; Western Alliance stocks were buoyed by the Fed’s willingness to lend to ailing banks, The Wall Street Journal said.

The KBW Bank Index jumped 5.8 percent last week, turning in its best week of the year.

Despite a continued strong labor market, respectable corporate earnings reports, and consumers’ determination to keep spending, the fear of a recession lurks over the market, the WSJ noted. 

“Markets are up, the VIX [volatility index] is down, and this debt-ceiling debate is right on our doorstep,” Mike Bailey, research chief at FBB Capital Partners, said to the WSJ. “The tactical setup from here is pretty bad.” 

Investors focused on the debt ceiling drama could be ignoring larger warnings among fundamentals, David Spika, chief investment officer at GuideStone Capital Management, pointed out in a WSJ interview.

“Even a technical default wouldn’t last long,” he said. “We’re much more concerned about what’s happening in the economy.”

In spite of Powell’s comment, the yield on the two-year treasury—which is especially sensitive to changes in interest rates—closed Friday at 4.287 percent, rising from 4.269 percent Thursday. 

The benchmark 10-year note ended the week at 3.690 percent, ticking up slightly from 3.647 percent the day before. Yields rise as securities’ prices fall. 

Comex gold’s continuous contract fell 2.1 percent through the week to trade at $1,980 at 5 p.m. U.S EDT on 19 May.

Brent crude oil , the global price benchmark, was up 2.3 percent for the week, reaching $75.58 per barrel at 5 p.m. U.S EDT on 19 May. West Texas Intermediate, which sets the U.S. domestic oil price, rose through the $70 mark, gaining 2.4 percent to $71.55. 

Bitcoin slipped 1.2 percent to $26,843 at 5 p.m. U.S EDT on 19 May.

Overseas, the London FTSE 100 flatlined through the week. The all-Europe Stoxx 600 was up 0.7 percent. 

The Nikkei 225 in Japan continued its winning streak, adding 4.2 percent. (See “Japan’s Stock Market Climbs to 33-Year High” in this issue.) South Korea’s KOSPI index jumped 2.5 percent.

The Hang Seng index in Hong Kong slipped 0.4 percent. China’s CSI Composite moved up 0.1 percent and the tech-focused SSE Composite gained 0.4 percent.

YESTERDAY: RATE HIKES, DEBT CEILING = DOUBLE HEADACHE ON WALL STREET 

The Dow Jones Industrial Average lost 140.05 points, or 0.42 percent, to 33,286.58 and the benchmark S&P 500 was up 0.65, or 0.02 percent, to 4,192.63. The Nasdaq was up 62.88, or 0.50 percent, to 12,720.78.

As usual, stocks were moving tentatively as The Street considers the Fed’s next move and tries to get a sense of the debt ceiling debate. 

The National Association for Business Economics released a survey yesterday that showed economists now believe the Fed will start to ease its monetary tightening in the first quarter of 2024, which is three months later than how they responded in February. 

Neel Kashkari, the Minneapolis Fed president, said it was a “close call” when considering whether to raise interest rates in June.

President Biden and Speaker Kevin McCarthy met at the White House on Monday evening and expressed optimism that a deal could be reached to raise the debt ceiling before the government runs out of money to pay all its bills by 1 June. 

“We don’t have an agreement yet,” McCarthy said after the meeting, according to The New York Times. “But I did feel like the discussion was productive.”

TREND FORECAST: The debt ceiling news is just a lot of noise. Congress will increase the debt ceiling before the U.S. defaults on its loans because, like everything in D.C., it’s all about politics and publicity. Biden will get to prove he can work with “non-MAGA” Republicans, and McCarthy can give in to the president in the name of “patriotism.”

Congress enacted $3.4 trillion in additional borrowing when Washington locked the country down during the COVID-19 outbreak, and the trend has just worsened. 

The Committee for a Responsible Federal Budget said the Biden Administration has enacted policies that will add more than $4.8 trillion to deficits between 2021 and 2031, “or nearly $2.5 trillion when excluding the effects of the American Rescue Plan.”

The committee noted that the Trump administration added $7.5 trillion during President Donald Trump’s time in office. The national debt is $31.46 trillion. 

And as for how much the Federal Reserve will raise interest rates next month, it’s a guessing game. As we note in this issue’s ECONOMIC UPDATE section, contrary to what The Street is guessing that with the Fed’s benchmark rate at 5-5.25 percent, the highest in nearly 16 years, Jami Diamond says they will keep raising interest rates. 

Thus, the equation is simple. The higher interest rates rise, the deeper the economy and equity markets will fall. And when they pause their rate hikes, equities and gold prices will move higher. 

Elsewhere, London’s FTSE was up 14.12, or 0.18 percent, to 7,770.99 and the benchmark STOXX600 gained 468.91, or 0.06, or 0.01 percent.

In Asia, the Nikkei was up 278.47, or 0.90 percent, to 31,086.82 and South Korea’s Kospi was up 19.29, or 0.76 percent, to 2,557.08. Hong Kong’s Hang Seng was up 227.60, or 1.17 percent, to 19,678.17. In China, the Shanghai Composite was up 12.93, or 0.39 percent, to 3,296.47 and the Shenzhen Component was up 35.68, or 0.32 percent, to 11,127.04. 

OIL: Brent crude was up 44 cents, or 0.58 percent, to $76.02 and West Texas Intermediate was up 42 cents, or 0.59 percent, to $72.12.

“Crude prices are in no man’s land as energy traders look to see what happens with both debt ceiling talks and with US and China tensions,” Edward Moya, senior market analyst at data and analytics firm Oanda, told Reuters. 

Oil was also up against the U.S. dollar that increased in value against other currencies. 

TRENDPOST: Oil prices continue to be our wildcard and—given the tensions in the Middle East, an expanding Ukraine War, and economy-killing interest rate hikes, all bets are off in the global oil market. 

However, on the economic front, with the global slowdown accelerating, oil prices will weaken… until OPEC+ sharply cuts supply to levels that are greater than demand. 

GOLD: The yellow metal was down $7.60, or 0.39 percent, to $1,973.90.

Allison Enck, RBC Capital Markets senior associate, told Kitco that the debt ceiling is the top catalyst that could send gold prices higher—despite the Fed’s next short-term move.

“While an eventual resolution would mean such flows are short-lived (and may eventually normalize closer to our high scenario at least), in the near term, we believe gold looks like the best hedge in the more immediate offing,” she told the outlet. 

TRENDPOST: Gold is still our favorite safe-haven asset, but it is facing some pressure due to the strong U.S. dollar and signals that the Fed could remain hawkish in its approach to interest rates. 

Everett Millman, the Gainesville Coins precious metals expert, repeated what Gerald Celente has said for months. He told Kitco that it takes 12-18 months for rate hikes to “really start showing up in economic data. The Fed has been hiking aggressively in a pretty short span of time, and we won’t see results until the second half of this year.”

BITCOIN: The world’s most popular crypto was up $114.50, or 0.43 percent, to $26,867.10. 

David Duong, the head of institutional research at crypto exchange Coinbase Global, told Barron’s that Bitcoin has been “relatively well supported by the 100-day moving average (DMA) over the last week, it has been trending sideways and price action was rather lackluster.”

“If Bitcoin does get rejected [around $27,200], it should bring the lower Bitcoin range back into play with the … target around $24,000,” he said.

Glassnode tweeted that bitcoin’s “7-day price range (3.4%) #Bitcoin has consolidated within is one of the tightest over the last 3yrs. It is comparable to Jan 2023, and July 2020, both of which preceded large market moves. This suggests high volatility is likely on the horizon.”

TRENDPOST: There’s growing speculation that a debt ceiling deal could hurt bitcoin prices. CoinDesk noted that the theory is that once a debt deal is reached, the Treasury Department will likely issue government bonds with higher yields to build back its cash balance. Bitcoin is known to move in the opposite direction of bond yields, the report noted.

TODAY: DEBT CEILING NEGOTIATIONS STALL, RAISING NEW WORRIES ON THE STREET 

The Dow Jones Industrial Average shed 231.07 points, or 0.69 percent, today to close at 33,055.51 and the S&P 500 was off 47.05, or 1.12 percent, or 1.12 percent, to 4,145.58. The tech-heavy Nasdaq Composite was down 160.53, or 1.26 percent, to 12,560.25. 

Traders were weak-kneed today while considering the debt ceiling fight in Washington and the Fed’s next move to bring down inflation. 

TREND FORECAST: This is just more political theater. A deal will be made. The Federal government never defaulted, which would be catastrophic for the economy.

Yet, it is good for media hype: The Drudge Report’s top story today showed a black-and-white image of Speaker Kevin McCarthy and President Joe Biden with the headline, “NOWHERE NEAR DEAL.” 

Elsewhere London’s FTSE was down 8.04, or 0.10 percent, to 7,762.95 and the benchmark STOXX600 was up 2.81, or 0.60 percent, to 466.10. 

Asia was mixed, Japan’s Nikkei was down 129.05, or 0.42 percent, to 30,957.77 and South Korea’s Kospi was up 10.47, 0.41 percent, to 2,567.55. 

Hong Kong’s Hang Seng was down 246.92, or 1.25 percent, to 19,431.25. In China, the Shanghai Composite was down 50.23, or 1.52 percent, to 3,246.24 and the Shenzhen Component was down 114.46, or 1.03 percent, to 11,012.58.

TRENDPOST: Gerald Celente has long said the credit crunch and Fed overnight rate increase does nothing but make the Bigs Bigger while crushing We the People of Slavelandia.

Small businesses are seeing interest rates on their credit lines double while the Bigs are issuing public bonds with yields about 1 percent higher than last summer. The WSJ, citing Leveraged Commentary & Data, noted that bonds issued by companies with top credit ratings paid an average of 5.3 percent in interest and they’re taking advantage of the demand.

The paper noted that Meta Platforms issued bonds for the second time in its history this month, and raised $8.5 billion at rates ranging from 4.6 percent—due in five years.

It is worth noting that big companies often raise funding by issuing public bonds, while small businesses rely on bank loans. The paper said the results of higher interest rates are already being felt by small businesses with fewer than 250 employees. These companies accounted for 81 percent of the layoffs in March, the report said.

OIL: Brent crude was up $1.01, or 1.33 percent, to $77 a barrel and West Texas Intermediate, the U.S. benchmark, was up $1.03, or 1.43 percent, to $73.08.

Prices were up today on news from the U.S. Energy Information Administration said it anticipates demand in the second half of the year to eclipse supply by almost 2 mb/d.

Prince Abdulaziz bin Salman, the Saudi Oil Minister, told oil speculators to “watch out.”

“Speculators, like in any market, they are there to stay,” he said during the Qatar Economic Forum in Doha. “I keep advising that they will be ouching. They did ouch in April. I don’t have to show my cards, I’m not [a] poker player, but I would just tell them, watch out.”

OPEC+ drew criticism from the U.S. when, in April, it announced plans to cut production, which boosted prices amid concerns of a banking crisis emerging in the U.S. and recessionary pressures. 

TRENDPOST: Bin Salman told reporters that China continues to play a major role in the oil market and—unlike the EU—there will be “no decoupling in any sense.”

The U.S. is pressuring EU countries to decouple from China amid ongoing tensions over Taiwan and Ukraine. 

China is expected to move even closer to Russia after the G7 summit in Hiroshima that identified Beijing as Public Enemy #1. 

“China is ready to double down on its relationship with Russia following the G7 summit because the central theme of that summit comprised not only Russia’s invasion of Ukraine but also China and how the West should deal with it,” Alexander Korolev, a senior lecturer at the University of New South Wales in Australia, told The New York Times.

GOLD: The precious metal was up 10 cents, or 0.01 percent, to $1,977.30 as of 4:19 p.m. ET. 

Gold prices struggled against the strength of the U.S. dollar and the yield on the U.S. 10-year Treasury, which was up to 3.723 percent. The yield on the 2-year Treasury reached 4.387 percent – its highest level since March. 

A strong dollar and high Treasury yields makes the yellow metal lose some of its luster. 

TREND FORECAST: As we have detailed in this Trends Journal, the Greatest Recession has begun. And the higher the Federal Reserve raises interest rates the deeper the economy and gold will fall. However, when the commercial office building collapse collapses and more banks go bust, gold prices will spike to new highs. And, when the Federal Reserve lowers interest rates, gold prices will rise.

BITCOIN: The world’s most popular crypto was up $328.60, or 1.22 percent, to $27,183.30 as of 4:21 p.m. ET. 

Prices benefited today from the idea that a debt-ceiling deal will be reached in Washington.

TRENDPOST: The world’s most popular crypto was up $328.60, or 1.22 percent, to $27,183 following a report that it got its first set of global rules from the International Organization of Security Commission. And Hong Kong announced they would soon accept license applications for crypto exchanges to operate in the region. 

On the downside, Edward Moya, senior market analyst for foreign exchange market maker Oanda, told clients that a U.S. default could tank cryptos.