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In dumbed-down America, where nearly 45 percent of the people get what they call “news” from mainstream corporate TV and swallow the crap spewing out of the mouths of Presstitutes—media whores who get paid to put out by their corporate pimps and government whore masters—the vast majority have no clue of what in the world is going on.
And those that do watch TV news are the dead heads that politicians lie to and easily lead. Just ask the warmonger former President Richard Nixon who’s “Operation Freedom Deal,” “Operation Menu,” (aren’t those nice names to murder people?) and his prolonged wars against Vietnam, Cambodia, and Laos killed over three million people: “The American people don’t believe anything until they see it on television.”
Add to that another 30 to 40 percent who don’t even watch, look or listen to the “news”… and it is perfectly understandable why most people live in their own little worlds and follow their leaders.
Take the economy, for example, as we detail in this and previous Trends Journals: While the vast majority of Americans—from upper-middle class to lower class—are living paycheck to paycheck, those who do tune into to the “news” hear that the economy is moving up and inflation is going down.
Just ask the only 63 percent of all adults who, according to the Federal Reserve, can cover an unexpected $400 expense. As for credit card debt at nearly 1 trillion dollars and rising, this is the first time their debt has not decreased following a holiday season.
Not only are the plantation workers of Slavelandia feeling it in their pocket books, they feel it in their heads. Today, the Conference Board reported that its consumer confidence index fell to 102.3 in May from 103.7 in April. This is the fourth time in the past five months that overall U.S. consumer confidence has slumped… particularly for older Americans.
The “expectations index” which measures how consumers feel about income, business and labor conditions in the next six months fell to 71.5 this month, down from 71.7 in April.
The Conference Board notes that a reading under 80 often signals a recession in the coming year, and “While consumer confidence has fallen across all age and income categories over the past three months, May’s decline reflects a particularly notable worsening in the outlook among consumers over 55 years of age,” said their senior director of economics, Ataman Ozyildirim.
Reality of TV
Again, while most “adults” especially males (or whatever men are being called today by politicians, teachers, bureaucrats and other brainwashers) know the batting averages of every baseball player this season, they don’t have a clue of the socioeconomic and geopolitical trends shaping the future.
Take a trip to the world’s fourth largest economy, Germany.
Once upon a time, we the little people of Slavelandia were taught by our teachers, the government, and the mainstream business media that two consecutive quarters of negative Gross Domestic Product was called a recession. With its GDP down 0.5 percent in the fourth quarter of 2022 and now down 0.3 percent in the first quarter of this year, Germany is “officially” in a recession.
And while Dragflation was one of our TOP TRENDS 2022, and we warned of a future of declining GDP and rising inflation, none of the mainstream media Presstitutes would report on our trend and instead pumped out the bullshit spewing of the mouth of the hack playing Deputy Finance Minister of Germany who warned the nation was heading to stagflation: stagnant GDP and rising inflation. Last September Florian Toncar warned that “there is an increasing risk of stagflation.”
Wrong! By the inflation and GDP data, Germany is suffering from Dragflation: declining economic growth and rising inflation.
Germany’s consumer price index increased 7.2 percent in April compared with April 2022 while the nation’s annual inflation rate is at 7.6 percent. And again, not only is the country “officially” in recession, household consumption fell 1.2 percent last quarter which is more data confirming our forecast of Dragflation: declining economy, rising inflation.
Again, this is the fourth largest economy in the world and it signals the economic conditions of Europe where consumer prices increased 7.6 percent on year in the EU.
TRENDPOST: Refusing to report the hard facts and indisputable “Dragflation” data last Thursday, the Financial Times quoted Salomon Fiedler, an economist at German investment bank Berenberg, who predicted German GDP would “stagnate” in the second quarter followed by “slow growth” for the rest of the year.
TRENDPOST: Across the 20-country Eurozone, factory production has sunk to its lowest in 36 months, dating back to the beginning of the COVID War.
S&P Global’s purchasing managers index (PMI) for manufacturing in the region slipped to 44.6 this month after registering 45.8 in April. Readings below 50 signal contraction.
The PMI for services also lost ground but settled at a still-robust 55.9.
The gap between the two PMIs is the widest since 2009, S&P noted.
While Germany registered its strongest service economy since August 2021, it was countered by its sharpest drop in factory output since last November.
Goods and services both grew in France, but at the slowest pace in four months.
Therefore, manufacturing’s decline, not spending on consumer goods, is what is driving down the momentum of Germany’s economy.
More Fear and Hysteria
For the past few weeks, the big “news” that would determine the future of America on the economic and equity market front is Congress coming to agreement with President Biden on the “debt ceiling.”
How about an economic Tower of Babble?
What a sick joke. While the hype will continue, we maintain our forecast that an agreement will be made and America will not default on its payments.
While the current U.S. debt level is reportedly at $31.4 trillion, when Social Security, Medicare, Medicaid and other costs are added, the liability number is pushed closer to $230 trillion. And it is estimated that in the next 10 years Social Security will run out of reserves and the hospitalization part of Medicare won’t have any money in three years.
And that was an estimate made four years ago, before countless trillions were pumped into the economy to fight the COVID War. Now the total debt number is estimated to be in the $260 trillion range. The national debt is out of control and it will keep rising.
TRENDPOST: Raising the debt ceiling is nothing more than a sick joke brought to you by the mentally deranged politicians running and ruining the nation.
Yes, they will raise the debt ceiling, while at the same time they will raise the U.S. defense budget to nearly $1 trillion next year.
To put the fake game into reality, what individual or business could spend hundreds of percent more than they make each year and stay in business?
No one except Uncle Sam.
And, not being reported, or barely, is the fact that the higher the Federal Reserve raises interest rates, the more it costs to service the debt load that is weighing down America.
The Bottom line
The bottom line around the world is all about interest rates.
Again, the higher interest rates rise the more it costs governments and those with floating and variable loans to service their debt.
So, the big guess on The Street is will the U.S. Federal Reserve raise interest rates another 25 basis points when they meet on June 13th and 14th or will they pause? The same concern is also ringing across Europe when the European Central Bank bandits meet the day after the U.S. Federal Reserve meeting next month.
On the U.S. side, with America’s GDP up 1.3 percent on an annualized rate, and the Commerce Department reporting that the Personal Consumption Expenditures price index increased 4.4 percent for the 12 months ended in April, up from a 4.2 percent increase in March… according to the CME FedWatch Tool, 66 percent of the futures traders are betting that the Feds will jack up interest rates another 25 basis points in June.
And, with the economic data stronger than anticipated, the market players are also betting that the Fed will not cut rates in 2023… which is an about face from projections earlier this year when they expected rate cuts to begin in the summer.
Over in Europe, while the European Central Bank slowed the pace of its interest rate hikes earlier this month, they are signaling more hikes ahead: “We are not pausing—that is very clear. We know that we have more ground to cover,” ECB President Christine Lagarde told a press conference on 4 May.
Selling the line that to get inflation down to their “made up” 2 percent target, current interest rates were not yet “sufficiently restrictive.”
TRENDPOST: Yes, as we have greatly detailed for a decade, the 2 percent inflation target was first invented by the U.S. Feds. As Wikipedia notes:
Since then, the numerical target of 2% has become common for major developed economies, including the United States (since January 2012) and Japan (since January 2013). In 2021, the ECB tweaked its inflation target to a symmetrical 2%.
Thus, on the real economic level, considering that Euro area annual inflation was 7.0 percent in April 2023, and the ECB main deposit rate is only at 3.25 percent, real interest rates are deep in negative territory.
TREND FORECAST: The higher interest rates rise, the deeper economies will fall. It takes many months before the impact of rising interest rates actually hit the economy and that time is now. Also, the higher the U.S. interest rates rise, the stronger the dollar will climb and that will in turn put downward pressure on gold prices since gold is dollar based. Therefore with other nation’s currencies weakening against the dollar, it will cost more to buy less.
Hikes Coming
In April, inflation came in stronger than economists had expected and consumer spending, adjusted for inflation, grew by 0.5 percent after flat-lining in March.
Spending on services increased last month. Business investment in factory machinery rose unexpectedly.
Again, as we detail above, the news shifted speculators’ views that the U.S. Federal Reserve will pause its campaign of rate increases when it meets on 14 June.
The Personal Consumption Expenditures Price Index, the Fed’s preferred gauge of inflation, grew by 0.4 percent last month, four times larger than it did in March. (See “Inflation Rises Unexpectedly in April” in this issue.) Therefore the higher upside of inflation, the higher the Fed will raise interest rates.
In Europe, the U.K., and U.S., yields on short-term government securities have begun rising again as investors switch their bets from an economic downturn to central banks continuing to boost their key interest rates.
The U.S. needs to hold interest rates higher longer to bring inflation to heel and reach the Fed’s 2-percent annual target rate, the International Monetary Fund said in a statement last week.
Inflation’s persistence means that “central banks can’t undo any of their inflation-fighting rate hikes any time soon,” Blackrock analysts wrote in a new note to clients.
LAST WEEK: STOCK PRICES RECOVERED AS DEBT DEAL NEARED
The “debt ceiling” news was reported positive after the schemers of Washington leaked to the Presstitutes that a deal was made between the Republicans in Congress and President Joe Biden to raise the nation’s debt limit. That helped stocks regain ground Friday that they lost Tuesday and Wednesday when the debt ceiling scam agreement looked far away.
Friday’s rally trimmed the Dow Jones Industrial Average’s loss for the week to just 0.94 percent after rising 1 percent Friday.
The NASDAQ shot up more than 2.4 percent through the week, notching its fifth consecutive positive week and its best beginning to a year since at least 1993.
The Standard & Poor’s 500 index managed a 0.3-percent gain over the five trading days.
“If the market felt the [debt] deal wasn’t going to get done, we would have started to see a precipitous selloff by this point,” Brett Bernstein, CEO XML Financial Group, told The Wall Street Journal.
Tech stocks drove NASDAQ’s rise, fueled by enthusiasm for chip companies that could reap windfall revenue and profits from artificial intelligence (AI). (See “Investor Frenzy for AI Stocks Fuels Rise in Indexes” in this issue.)
Nvidia, which currently dominates the market for AI-related chips, posted a 2.5-percent increase in its stock price Friday to $389 a share, lifting the company closer to a trillion-dollar market value.
Chip maker Marvell Technology’s share price rocketed up 32 percent after posting earnings that were stronger than predicted.
The PHLX Semiconductor index jumped 11 percent for the week.
Nvidia’s performance “was almost unprecedented in the magnitude to which it beat expectations,” he added. “It really shows how immediately monetizable the demand is.”
Treasury bond yields moved higher Friday after reports showing both inflation and consumer spending rose in April. (See related stories in this issue.)
Two-year treasury bonds’ return rose to 4.587 percent Friday from 4.508 percent Thursday. Two-year bonds closely reflect investors’ outlook for interest rates.
The benchmark 10-year note ticked up to 3.820 percent Friday from 3.814 percent Thursday. Yields rise when securities’ prices fall.
Speculators in interest rate futures are trimming their bets that the U.S. Federal Reserve will cut rates this year and increasing the odds that the Fed will boost its rate again next month. (See “Markets See Fed Raising Interest Rate Again in June” in this issue.)
The notion that the Fed will cut rates this year has partially rested on the idea that the U.S. will enter a recession, forcing the Fed to reduce rates to goose the economy.
The Fed meets again on 14 June to decide whether to raise its key federal funds rate yet again.
Last week, Comex gold edged down 1.6 percent to $1,946.10 at 5 p.m. U.S. EDT on 26 May.
Benchmark Brent crude oil rose 3.1 percent over the week, gaining ground on Friday as the apparent U.S. debt deal eased fears of a global economic setback. It traded at $75.80 a barrel at 5 p.m. U.S. EDT on 26 May.
West Texas Intermediate, the standard for U.S. oil pricing, gained 2.8 percent to $72.87 per barrel.
Bitcoin sagged over the week, trading down less than 0.1 percent at $26,801 at 5 p.m. U.S. EDT on 26 May.
Abroad, the London FTSE 100 was down 1.6 percent for the week. Europe’s Stoxx 600 index was off 1.5 percent.
In Japan, the Nikkei 225 continued to advance, rising 0.6 percent. The South Korean KOSPI added 0.7 percent.
The Hang Seng index in Hong Kong shed 4.4 percent. The mainland’s CSI Composite retreated 2.3 percent and the tech-centric SSE Composite gave up 2 percent.
YESTERDAY: WALL STREET PREPARES FOR BUSY WEEK AS TENTATIVE DEBT CEILING DEAL REACHED
The U.S. stock market was closed yesterday to mark the Memorial Day Weekend holiday, but investors were trying to digest news of a debt ceiling deal along with their hot dogs.
President Joe Biden and House Speaker Kevin McCarthy reached an agreement on Sunday, and will now need to convince their parties to suspend the debt limit. Biden is a Democrat and McCarthy a Republican.
“I feel very good about it,” Biden told reporters, The Wall Street Journal reported. “There is no reason it shouldn’t get done.”
TREND FORECAST: Again as we keep reporting, the U.S. debt ceiling crisis is nothing more than a sitcom being played by Congressional comedians and White House clowns.
They will make a deal and the bottom line is that the rich will get richer and the plantation workers of Slavelandia will pay the price.
As we keep noting, Americans continue to be crushed by high inflation and The New York Times reported last week that more Americans are turning to hardship withdrawals from their 401(k)s to help get through some challenging times.
The paper noted that Fidelity saw 2.4 percent of 22 million people take hardship withdrawals in the final quarter of 2022, which is up half a percentage point from a year earlier.
“Some of it is still spillover from the COVID pandemic. A lot of it is inflation—just the grind of daily life,” Craig Reid, national retirement practice leader at Marsh McLennan Agency, told the paper.
U.K. stocks and the FTSE were closed. In Asia, Japan’s Nikkei was down 409.50, or 1.46 percent, to 31,233.54, and Hong Kong’s Hang Seng was down 195.81, or 1.04 percent, to 18,551.11. In China, the Shanghai Composite was up 8.94, or 0.28 percent, to 3,221.45, and the Shenzhen Component was down 87.56, or 0.80 percent, to 10,822.09.
OIL: Brent crude was up 8 cents, or 0.10 percent, to $77.03 per barrel and the U.S. benchmark West Texas Intermediate was up 20 cents, or 0.28 percent, to $72.87 a barrel.
The possible debt deal was seen as a positive for oil prices, but the Fed’s likely push to raise interest rates was a drag on the market because it will strengthen the U.S. dollar against foreign currencies, making oil more expensive for foreign buyers.
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, Iran has lashed out at plans from the U.S. to increase its naval presence in the Strait of Hormuz and Israel has threatened to bomb nuclear facilities in the country, which would send oil prices soaring.
GOLD: The precious metal was down $1.90, or 0.10 percent, to $1,961.20 an ounce.
Gold took a hit on news that a debt ceiling deal looks like it could be in the works in Washington. Investors also think the Fed will continue to raise interest rates, which makes non-yielding assets like gold less appealing.
TREND FORECAST: See our gold forecast in the ECONOMIC UPDATE section of this issue’s Trends Journal.
BITCOIN: The world’s most popular crypto was trading up $317.23, or 1.03 percent, to $27,663.80 per coin at 3:11 p.m. ET.
Crypto traders were tentative and see the next Federal Reserve policy meeting in the middle of June as the next big news event.
TRENDPOST: 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. We have noted that bitcoin is still a cryptocurrency that many people, especially younger generations, will keep betting on. And, it staying strong in the $25,000—$27,000 range is positive for bitcoin.
TODAY: DOW LAGS AS INVESTORS WEIGH DEBT NEGOTIATIONS, FRESH ECONOMIC DATA
The Dow Jones Industrial Average closed the day down 50.56, or 0.15 percent, to 33,042.78 and the tech-heavy Nasdaq Composite was up 41.74, or 0.32 percent, to 13,017.43. The S&P 500 was marginally to 4,205.52.
Home prices in March showed a 0.7 percent year-over-year increase, according to the closely watched S&P CoreLogic Case-Shiller Indices.
TREND FORECAST: We have long noted as interest rates kept rising there would be a pullback in home sales, but there would not be a real estate bust. It is a supply and demand issue at this point. However, should mortgage rates continue to rise, housing prices will decline in many sectors of the nation.
The Dallas Fed also released its Texas Manufacturing Outlook Survey for May that found the business activity index fell 5.7 from April, to -29.1, its lowest reading in three years. Texas is seen as a bellwether because of its factory output and production of petroleum and coal products.
Elsewhere, London’s FTSE was down 105.13, or 1.38 percent, to 7,522.07, and the benchmark STOXX600 was down 4.24, or 0.92 percent, to 456.63.
In Asia, Japan’s Nikkei was up 94.62, or 0.30 percent, to 31,328.16, and Seoul’s Kospi increased 26.71, or 1.04 percent, to 2,585.52. Hong Kong’s Hang Seng increased 44.67, or 0.24 percent, to 18,595.78. China’s Shanghai Composite was up 2.76, or 0.09 percent, to 3,224.21 and the Shenzhen Component was up 47.46, or 0.44 percent, 10,869.55.
OIL: Brent Crude fell $3.18, or 4.13 percent, to $73.89 per gallon and U.S. West Texas Intermediate fell $2.90, or nearly 4 percent, to $69.77.
Oil traders are weighing some bearish signals in the market that include lower prices despite OPEC+’s decision to cut production. China’s post-COVID growth has also worried economists who now say annual 6 percent GDP increases could be a thing of the past for the country and could expect 2 or 3 percent.
But Goldman Sachs noted that there is still a chance oil hits $100 a barrel.
“Are we going to run out of spare production capacity? Potentially by 2024, you start to have a serious problem,” Jeff Currie, Goldman’s global head of commodities research, according to OilPrice.com.
TREND FORECAST: Oil prices continue to be weighed down by struggling economies, high interest rates, and an uncertain Chinese recovery. But one major catalyst could send prices soaring. Brent Crude will stay in the current $70-$80 a barrel range until OPEC+ to announces even more cuts.
And, as we keep noting, there are always the wild cards, such as war in the Middle East, a sharp escalation and spreading of the Ukraine War, etc.
GOLD: The precious metal was up $14.30, or 0.74 percent, to $1,958.60 an ounce after trading lower for most of the day but a weakening U.S. dollar, lower Treasury yields helped spur interest in the commodity.
While the precious metal hit a nine-week low overnight, as we have noted, central banks still see gold as a good long-term investment.
The World Gold Council noted that a recent survey found that 24 percent of central banks intend to increase their gold holdings in 2023 due to inflationary pressures, interest-rate concerns, and geopolitical turmoil.
TRENDPOST: Jim Wyckoff, senior analyst at Kitco Metals, said, in the near term, he expects gold prices to trade “sideways to lower until we see a fresh catalyst,” according to CNBC.
Peter Schiff, the founder of SchiffGold.com, said the debt ceiling deal that is close to passing in Congress shows Washington will “never rein in excessive government spending or deficits.
“The national debt will spiral out of control, with a sovereign debt and dollar crisis all but guaranteed. Gold should rally,” he posted on Twitter.
(See our Gold forecast in the ECONOMIC OVERVIEW section of this week’s Trends Journal.)
BITCOIN: The world’s most popular crypto was up 121.70, or 0.44 percent, to $27,866.50 as it continues to hit resistance at $28,000.
Investors are preparing for June to be a volatile month in June due to weeks of low volatility.
Javier Molina, an eToro markets analyst, said in a research note viewed by Barron’s, that it seems that recent buying pressure is “enduring the attacks of the bears.”
“The key area for new gains is marked by $28,500,” he said.
TREND FORECAST: The crypto will continue to struggle as the Fed continues to raise interest rates, thus making Treasuries more appealing to investors looking to take advantage of higher yields. However, as we note, bitcoin is still stable and should prices stay in their current range the upside is greater than the downside.