Where are the global economies and equity markets going?
They, as well as the lives of billions, are going to Hell, right in front of the eyes and ears of all who have the courage and dedication to watch, look, and listen.
CNBC’s top article to start the day was titled, “Jamie Dimon rips central banks for being 100% ‘dead wrong’ on economic forecasts.”
The article quoted the JPMorgan Chase CEO who said, “Prepare for possibilities and probabilities, not calling one course of action, since I’ve never seen anyone call it.” He also said, “I want to point out that the central banks 18 months ago were 100% dead wrong. I would be quite cautious about what might happen next year.”
He “never saw anyone call it”?
The Trends Journal must have called it 100 times—not to mention the dozens of times Gerald Celente mocked the Feds and the ECB when they insisted that inflation was “temporary,” and, as it continued, claimed it was “transitory.”
We even joked at the time that in this Woke World, they’d start referring to inflation as “transgendertory.”
Dimon, who has admitted to five separate criminal felony charges brought by the U.S. Department of Justice, said “this omnipotent feeling that central banks and governments can manage through all this stuff. I’m cautious.”
Dimon also said he does not believe the Fed’s next move after its 1 November meeting will make an iota of a difference for the economy.
“Like zero, none, nada,” he said.
TREND FORECAST: We disagree with Dimon and so do many of the banks whose profits are down double digits from last year as people yank their money from banks and invest in U.S. Treasuries (the 10-year Treasury note hit 5 percent yesterday, the highest since the onset of the Panic of ’08 and money market funds.)
And as Wall Street on Parade has noted, “Higher interest rates would further dampen demand for loans at regional banks, which are already seeing lackluster demand for loans as interest rates have risen to 17-year highs. Higher rates would also worsen the unrealized losses that most banks, big and small, are experiencing on their holdings of debt securities.
World War III
And while the gamblers on The Street are mostly concerned about the bottom line, as we had forecast when Russia launched its military operation against Ukraine on 24 February 2022, World War III has begun.
Making a very bad situation worse, the Israel War was officially launched when Hamas launched an attack that killed some 1,400 Israelis.
Israel has launched major bombing attacks on Gaza, which has killed over 5,000 Palestinians and destroyed some 42 percent of the buildings in the most densely populated enclave on the planet.
Therefore, not only will the war destroy Israel’s economy which had been going down as a result of the 39 weeks of Judicial Reform protests that the Jewish press such as Times of Israel and the Jerusalem Post called a “civil war.”
If it continues on its current track, it will result in an economic “shot” that will be heard around the world.
On the human “shot” side, UN Secretary General Antonio Guterres said yesterday that Israel’s bombing of Gaza are “clear violations” of the law and called for an “immediate humanitarian ceasefire.”
As we had forecast in one of our Top Trends for 2023, “Middle East Meltdown,” on 3 January 2023, we warned that war would break out in the Middle East this year and we warned that should the U.S. and Israel have a military exchange with Iran, oil prices will spike above $130 per barrel and crash global equity markets and economies.
We have detailed extensively the Israel War in this and previous Trends Journals. We note this because while hedge funds, private equity groups, venture capitalists and equity market gamblers are most concerned about where equities are going and how best to play them, none of it will make any difference if there is no Peace on Earth and WWIII escalates into a nuclear exchange.
As we note, those who view the world through the eyes of their profession and self-interests are blinded by the future. To forecast trends it is essential to understand that all things are connected…and as Chief Seattle said, “All things are connected like the blood which unites us all.”
Therefore, it is important to understand as best as possible the geopolitical as well as socioeconomic trends shaping the economic future… and to do so, one must look at the current events forming future trends for what they are, and not the way you want them to be.
With Ukraine losing the war against Russia and the Israel War heating up and no end in sight, we forecast that there is an increasing probability of a major false flag event and/or some type of nuclear exchange that will dramatically escalate WWIII.
TREND FORECAST: Despite high interest rates that have propped up the U.S. dollar and brought down gold prices, the world’s #1 safe-haven asset has spiked over $150 in just a few days after the October 7th Hamas attack on Israel. Down from its recent highs, as we go to press, spot gold is at $1,973 per ounce. Should the Israel War escalate into Lebanon, Syria and Iran, we forecast gold prices will spike several hundred dollars per ounce.
TRENDPOST: To illustrate the lack of information of what in the world is going on and what’s next to all those who tune into the mainstream media, the Ukraine War that Kyiv is losing, is barely making the news. Indeed, not a mention of it in today’s Wall Street Journal
And, as for how bad the economic future is, yesterday China’s CSI 300 index, which is a major benchmark, fell to a four-year low. Of course, this comes as no surprise to Trends Journal subscribers. We had forecast a major Chinese economic decline as a result of Beijing’s zero-COVID policy that locked down the nation for three years and destroyed the lives and livelihoods of hundreds of millions.
LAST WEEK: HIGH INTEREST RATES, MIDEAST WAR SPOOK INVESTORS
Stock markets around the world ended last week down on worries that the Mideast war will drive up oil prices and lead to other forms of chaos.
In the U.S., that concern was compounded by high bond yields luring investors away from equities and uncertainty about the U.S. Federal Reserve’s meeting next week, at which it will decide whether to raise interest rates yet again.
For the week, the Dow Jones Industrial Average lost 2 percent, the NASDAQ 3.5 percent, and the Standard & Poor’s 500 index 2.7 percent.
So far this earnings season, 17 percent of S&P companies have reported. Among them, earnings are up 4.9 percent compared to last year and 73 percent of companies have bested analysts’ estimates.
“The expectation of a strong earnings season is already priced into the market and there’s downside risk if companies disappoint,” Dana D’Auria, Envestnet’s co-chief investment officer, told The Wall Street Journal.
Fed chair Jerome Powell has hinted that the central bank could pause its campaign of rate hikes. Bond yields that are at their highest in more than a decade are cooling the economy as effectively as another rate hike by the central bank would, he suggested.
The 10-year U.S. treasury bond’s yield ticked down to 4.924 percent from Thursday’s close at 4.987 percent after breaking briefly above 5 percent that day for the first time since 2007, data service Tradeweb reported. The yield on the 30-year bond closed the week slightly above 5 percent.
High interest rates slow the economy generally and weigh on prices of stocks and other investments, the WSJ noted.
Amid current uncertainties, investors have yanked so much cash out of junk bonds, international stock funds, and other riskier investments that Bank of America (BoA) has issued an “extreme bearish” assessment of market sentiment.
In the past, that has been a signal for bargain hunters to buy stocks: share prices have risen in the three months following such a dark reading, BoA analysts wrote in a note.
Gold’s continuous contract gained 3.1 percent over the week to trade at $1,993.10 at 5 p.m. U.S. EDT on 20 October. Investors have shifted some assets to gold as a safe place to wait for the Mideast war to play out.
Brent crude oil’s price for December delivery rose 1.7 percent for the week to $92.51 at 5 p.m. U.S. EDT on 20 October, despite losing altitude on Friday as traders calmed after seeing no escalation in the Mideast war. West Texas Intermediate’s November price edged up less than 1 percent to $88.08.
Bitcoin added 3.3 percent through the week to arrive at $29,501.50 at 5 p.m. U.S. EDT on 20 October.
Abroad, investors retreated from equities.
The London FTSE 100 lost 2.6 percent. The trans-European Stoxx 600 was down 3.5 percent.
The Japanese Nikkei 225 shrank by 2.2 percent. South Korea’s KOSPI index retreated 2.7 percent.
The Hang Seng in Hong Kong gave back 3.5 percent. Mainland China’s CSI Composite dropped 4.2 percent and the tech-heavy SSE Composite 3.5 percent.
YESTERDAY: DOW DOWN AGAIN AS ISRAEL WAR RAMPS UP
The Dow Jones Industrial Average fell 190.87 points, or 0.58 percent, to 32,936.41 and the S&P 500 was down 7.12, or 0.17 percent, to 4,217.04. The tech-heavy Nasdaq Composite was down 0.78, or 1.58 percent, to 49.82.
The 10-year Treasury yield was down to 4.84 percent after crossing the 5 percent threshold earlier in trading, while the 30-year fell to just below 5 percent.
The Israel War has sent a chill through the markets with fear of the worst is yet to come. On the economic side, market players are awaiting the Commerce Department’s third-quarter gross domestic product report due out on Thursday. The expectation on The Street is that the GDP data continues to show a rapid growth of over 4 percent, despite monetary tightening and high interest rates.
The Street is pricing in a 97 percent chance that the Fed keeps interest rates in place during its next meeting.
Elsewhere, London’s FTSE was down 27.31, or 0.37 percent, to 7,73.83, and the STOXX600 was also down 0.55, or 0.13 percent, to 433.18.
Japan’s Nikkei was down 259.81, or 0.83 percent, to 30,999.55 and South Korea’s Kospi was down 17.98, or 0.76 percent, to 2,357.02. Hong Kong’s Hang Seng was down 123.76, or 0.72 percent, to 17,172.13. In China, the Shanghai Composite was down 43.77, or 1.47 percent, to 2,939.29 and the Shenzhen Component was down 144.38, or 1.51 percent, to 9,425.98.
OIL: Brent crude futures closed the day down $1.89, or 2.05 percent, at $90.27 a barrel, while U.S. West Texas Intermediate crude futures fell $2.11, or 2.4 percent, at $85.97.
The Israel war has driven up oil prices in recent weeks, but diplomatic efforts in the region calmed some fears of a production crunch.
“Israel agreed to hold off its attack on Hamas following pressure from the U.S.,” ANZ Research analysts said, according to Reuters. “This eased concerns that the Israel-Hamas war would spread across the Middle East and disrupt supplies.”
U.S. President Joe Biden also announced last week that Washington will suspend sanctions on Venezuelan crude, which could add an additional 200,000-300,000 barrels per day out of the South American country.
TRENDPOST: Even before the Israel war, The Trends Journal warned that oil prices remain a wild card. If the war expands, prices would skyrocket.
CNN, citing “U.S. intelligence,” reported late Monday that “Iranian-backed militia groups are planning to further ramp up attacks against American forces in the Middle East.”
John Kirby, the coordinator for Strategic Communications at the National Security Council in the White House, told the network that the U.S. has been watching the development closely.
“That will continue, and we’ve sent a strong signal to Iran through the additional military capabilities that we’re putting in the region that we have national security interests writ large across that region, and we’re going to protect and defend them as well.”
The U.S. is escalating the situation in the Middle East, and it will be up to other powers to calm the situation.
GOLD: Spot gold fell 0.5 percent at $1,971.3743 per ounce by 4:11 p.m. ET. U.S. gold futures were down 0.5 percent to $1,983.20, according to Reuters.
The precious metal was down despite the British pound and euro gaining on the U.S. Dollar.
As we have noted, gold prices spiked nearly 10 percent after the October 7th Hamas attack on Israel, and investors are bright eyed in their search for safe-haven assets. While eyes will be on Friday’s PCE price index report, to get a sense of the Federal Reserve’s next move, the Israel War will overshadow the numbers if it escalates into Syria, Lebanon and Iran… which will dramatically drive up gold prices.
TRENDPOST: Gerald Celente has said gold prices should be going up because smart people see the danger on the horizon, if the world does not demand peace.
BITCOIN: The world’s most popular cryptocurrency breezed past $35,000 yesterday, only to come back down slightly as more people believe a bitcoin ETF approval is in the future in the U.S.
The Coin Telegraph reported that bitcoin has struggled to “establish a clear, bullish momentum” after passing $30,000 since May 2022. There is a risk of some consolidation in the near term.
TRENDPOST: The surging debt load in the U.S. and uncertainty in the stock market have made bitcoin an attractive investment. Watch for demand to stay elevated because of geopolitical uncertainty. Bitcoin went up in the days after Russia’s invasion of Ukraine only to flatline in the following weeks.
TODAY: DOW ENDS 5-DAY LOSING STREAK
The Dow Jones Industrial Average was up 204.97 points today, or 0.62 percent, to 33,141.38 and the benchmark S&P 500 was up 30.63, or 0.73 percent, to 4,247.67. The tech-heavy Nasdaq was up 121.55, or 0.93 percent, to 13,139.88.
U.S. business activity increased in October to 51, from 50.2 in September. Economists were anticipating a 50 reading.
The 10-year Treasury yield was up to 4.84 percent, which was seen as a stabilization after hitting 5 percent for the first time since 2007 on Monday. Barron’s noted that the decline in yields was “music to the stock market’s ears, as lower yields make stocks a bit more attractive.”
While earnings season seems to be off to a strong start, there are questions lingering about the health of the market. A FactSet estimate noted that if you took tech stocks out of the equation, S&P 500 earnings “are on pace to have dropped 0.18 percent in the third quarter.”
Elsewhere, London’s FTSE was up 14.87, or 0.20 percent, to 7,389.70 and the STOXX600 was up 1.91, or 0.44 percent, to 435.09. In Asia, Japan’s Nikkei was up 62.80, or 0.20 percent, to 31,062.35, and South Korea’s Kospi was up 26.49, or 1.12 percent, to 2,383.51. Hong Kong’s Hang Seng was down 180.60, or 1.05 percent, to 16,991.53. China’s Shanghai Composite was up 22.95, or 0.78 percent, to 2,962.24 and the Shenzhen Component was up 57.93, or 0.61 percent, to 9,483.90.
OIL: Brent crude futures were down $1.63, or 1.8 percent, to $88.20 and U.S. West Texas Intermediate futures fell $1.71, or 2 percent, to $83.78, Reuters reported.
The oil market has been volatile in recent weeks as the threat of war spreading in the Middle East looms. But weak economic data from Germany and Britain raised concerns about demand.
Berlin’s purchasing managers’ index survey showed a contraction and Britain’s businesses reported another decline. Eurozone business activity declined in October to 46.5, below the September figure of 47.2.
“In the eurozone, things are moving from bad to worse,” Cyrus de la Rubia, chief economist at the Hamburg Commercial Bank, said. “We wouldn’t be caught off guard to see a mild recession in the eurozone in the second half of this year.”
TRENDPOST: The West’s sanctions against Russia continue to impact Europe, which is seeing higher energy costs before ever recovering from COVID-19 lockdown mandates that have left economies on the brink of disaster.
The U.S. dollar climbed in value against other currencies today, which also is a drain on oil purchasing, because it is more expensive on the international market. However, if Iran gets involved in the Israel War, we forecast Brent Crude will spike above $130 per barrel.
GOLD: Spot gold was up 0.1 percent to $1,975.39 per ounce and U.S. gold futures were 0.1 percent lower at $1,986.1.
Reuters noted that gold is up about 9 percent in the past two weeks—in response to Israel’s reaction to the Hamas attack on 7 October. The precious metal hit a five-month high of $1,997.09 on 20 October.
Some analysts say the “safe haven” appeal of gold may be waning, considering that investors are learning to accept tensions in the Middle East as par for the course.
TREND FORECAST: Gold will skyrocket if/when Israel decides to conduct ground invasion in Gaza. While The Street seems to be breathing a sigh of relief that a wider war could be averted, the rhetoric out of Israel seems to suggest otherwise.
Israel Katz, the Israeli energy minister, said Israel’s fight in Gaza is part of a “World War III against radical Islam,” according to RT, the Russian news outlet. As we go to press, the top story on WSJ.com is: “Iran-Backed Militias Stage Attacks As U.S. Supports Israel.”
BITCOIN: The world’s most popular crypto was trading up $840.60, or 2.55 percent, to $33,798.90 on the growing rumors that the U.S. will approve a spot bitcoin ETF.
TREND FORECAST: Bitcoin’s value would surely pop if the U.S. approves a bitcoin ETF. And as we have forecast, with bitcoin hitting its current rate, we maintain our forecast that it will continue to move higher…into the $40,000 per coin range.