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7 November 2023, Homepage Featured, TRENDS ON THE U.S. ECONOMIC FRONT – Nov 7 2023

ECONOMIC UPDATE – MARKET OVERVIEW

November 7, 2023November 7, 2023
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ECONOMIC UPDATE – MARKET OVERVIEW

Worried about the economic future, what to invest in, and what to do?

Never before in modern history will it be so important to look beyond the economic perimeter and understand the crucial megatrends shaping the future. 

Despite this month’s equity market bounce-back—minus a few wild cards such as the Bankster Bandits “Plunge Protection Team” rigging the markets, a dramatic lowering of interest rates and/or other fake market rigging and economic boosting scams—we maintain our forecast that the worst socioeconomic and geopolitical crisis has begun and the worst is yet to come.

Again, as we note above, “The world is going to shit in front of the eyes and ears for all to see and hear.” 

Remember the great Tony Bennett love song, “I left my heart in San Francisco?”   

Now it’s “My heart breaks in San Francisco.”

Thanks to the arrogant political scumbags who launched the COVID War at the start of the new year 2020 and locked down the city and the ball-less little geeks who told all their workers to work at home, the place has turned into a hell hole. 

For three years—week after week in your Trends Journal we had forecast this would destroy not only San Francisco, but cities across the globe.  

Here is today’s “big news” Fox headline:

Restaurants shut down ‘every week’ on once booming San Francisco street: ‘Drug abuse and vandalism’

Valencia Street businesses have fallen ‘30% and 50% compared to summer 2022,’ per the report.

Again, the devastation inflicted upon the lives and livelihoods of billions caused by the politicians’ three-year COVID War is incalculable. But now, all those that did not see it coming are making a big deal out of what is happening without pointing fingers at and condemning the power-hungry low-life politicians and the bureacraps that made it happen. 

This was the front-page cover of yesterday’s New York Post: 

LEAN STREETS

NYC’s post-COVID recovery among worst, foot traffic down 33%

Foot traffic in New York City’s business districts is still down 33% from what it was before the COVID-19 pandemic—one of the lowest recovery rates in the country, a new survey reveals. New York’s 66% recovery rate ranked 54th out of 66 cities surveyed.

Foot traffic in New York City’s business districts is still down 33% from what it was before the COVID-19 pandemic—one of the lowest recovery rates in the country, a new survey reveals.

They go on to note that “remote office work has caused a dramatic drop in foot traffic in Gotham’s business districts.”

Duh, no shit? Really? We had only forecast this for over three years ago that the lockdowns would make remote work a new way of life and that there would be an Office Building Bust and that businesses that depended on commuters would go out of business as fewer people went back to the offices. See:

Worldly Worries

We note the COVID War, brought to you by Beijing in January 2020 on its Chinese Lunar New Year, “The Year of the Rat,” because, again, the damage that it has inflicted on the lives and livelihoods of billions across the planet is incalculable. And the Chinese, who imposed three years of zero-COVID policy are paying the price.

Yesterday, Beijing reported that its October exports drop was worse than what The Street had forecast, falling 6.4 percent in dollar terms from a year ago. 

On the upside, imports rose by 3 percent from last October, while the overall GDP of the world’s second largest economy in the third quarter was 4.9 percent… just a fraction off its 5 percent target.

Doing what they can to increase domestic sales, the government is pumping in more fake money. CNBC reported last week that “Chinese authorities late Tuesday announced one of the biggest changes to the national budget in years, along with the issuance of 1 trillion yuan in ($137 billion) in government bonds.”

Try as they may, it will do little to regenerate the economic growth they had before the COVID War. 

Indeed, no longer reported by the Chinese government is the youth unemployment rate (16 to 24) which hit a record-high 21.3 percent in September.

And as we have detailed weekly, the Chinese economy from top to bottom, from real estate to luxury goods and financial investments are going down.

Again, old news to Trends Journal subscribers, but front-page news in the mainstream media, today The Wall Street Journal headline is:

Foreign Firms Stop Reinvesting In China, Pulling Billions Out

SINGAPORE—For years, foreign companies plowed the profits they made in China back into China, using the cash to finance new hiring and investment as its giant economy expanded rapidly.

Now, as growth slows and tensions between Beijing and Washington rise, they are pulling those profits out.

Foreign firms yanked more than $160 billion in total earnings from China during six successive quarters through the end of September, according to an analysis of Chinese data, an unusually sustained run of profit outflows that shows how much the country’s appeal is waning for foreign capital. The torrent of earnings leaving China pushed overall foreign direct investment in the world’s second-largest economy into the red in the third quarter for the first time in a quarter of a century.

The outflows add to pressure on the yuan when the central bank is battling to slow its decline as investors sour on Chinese stocks and bonds and new investment in China is scarce. The yuan has depreciated 5.7% against the…

So there you got it. Besides Beijing’s zero-COVID policy destroying the nation, with interest rates way down in China and high in the U.S. and EU, the big investors are putting their money as safe-haven assets in the West. And as WSJ notes, “Chilly relations between Beijing and the U.S.-led West have pushed global companies to rethink their supply chains and exposure to China.”

And then, of course is the growing tension between the U.S. and its “allies” who demand that China do not take over Taiwan… which is also making investments in China risky. “Recent surveys of U.S., European and Japanese companies in China show executives are souring on new investments there,” and “foreign direct investment in China was negative in the third quarter, with outflows of capital exceeding inflows by $11.8 billion—the first negative quarter in balance-of-payments data that start in 1998.”

Ukraine War

After being a front-page headline since February 2022 when the Ukraine War broke out, now with the Israel War making the headlines, the economic damage inflicted upon the public as a result of the sanctions America and its allies put on Russia which spiked oil, gas and other commodities prices… is long forgotten. 

And beyond the inflationary pressures that have resulted, the wide range of socioeconomic and geopolitical implications as a result of the Ukraine War, while not being reported, was in fact the beginning of WWIII.

Again, as we note above, “The world is going to shit in front of the eyes and ears for all to see and hear.”

Israel War

Making a very bad WWIII situation worse, now there is the Israel War which officially began on 7 October when Hamas attacked Israel. Again, what led up to the Hamas attack, what was going on for some 75 years since Israel became a state is ancient history for the masses, the politicians and the mainstream media. But as you well know we have been detailing in The Trends Journal for decades and we had forecast Middle East Meltdown as one our Top Trends for 2023.

So where is the economy going? Along with much of the world, if the current trends are not reversed, it will go to hell… along with WWIII going nuclear.

Tracking Trends is the understanding of where we are and how we got here to see where we are going.

And as we have briefly detailed in this week’s ECONOMIC UPDATE, but greatly detailed in The Trends Journal, 2020 was the year the world changed with the COVID War, then declined more with the Ukraine War – the start of WWIII—and now the Israel War. 

TREND FORECAST: Considering what in the world is going on, we maintain our forecasts that gold and cryptocurrencies, especially bitcoin, will be the premier safe-haven assets. 

And as we have briefly detailed in this week’s ECONOMIC UPDATE, but greatly detailed in The Trends Journal, 2020 was the year the world changed with the COVID War. And now, with the Ukraine War which was the start of WWIII—and now the Israel War—it continues to dramatically change on a steep downside.

LAST WEEK: FRIDAY RALLY CAPS “BEST WEEK OF THE YEAR”

All three major U.S. stock indexes posted big gains Friday, lifting the Standard & Poor’s 500 index to its best week since November 2022 and giving both the Dow Jones Industrial Average and the NASDAQ their “biggest weekly percentage gains of the year,” The Wall Street Journal reported.

Investors were cheered by three key developments.

The U.S. Federal Reserve paused its campaign of rate increases and chair Jerome Powell hinted the campaign might be over. 

Also, the October jobs report showed hiring slowed, indicating that inflation might be cooling without crashing the economy into a recession, increasing the chances of the hoped-for “soft landing.”

In addition, the treasury announced it needed to borrow less long-term debt than it had predicted.

For the week, the Dow jumped 4.68 percent, the NASDAQ rocketed up 5.71 percent, and the S&P swelled by 5.29 percent.

Ten of the S&P’s 11 sectors advanced. Only the energy sector retreated, sliding on Brent crude oil’s price, which fell back into the mid-$80s.

“The jobs report was a Goldilocks report,” Anthony Saglimbene, chief market strategist at Ameriprise Financial. “We may be getting a soft landing.”

On Friday, interest-rate futures traders were giving odds as high as 95 percent that the Fed would not raise rates at its December meeting, up from 79 percent a day earlier, according to CME Group.

The 10-year treasury note’s yield dropped from 4.846 percent on 27 October to 4.557 on 3 November, its sharpest weekly fall since March.

High yields on government bonds have lured investors out of stocks, offering them returns near 5 percent with virtually no risk. Also, high bond interest makes it more expensive for companies to borrow, raising the likelihood of less growth and smaller profits.

As bond yields fall, stocks once again become more attractive.

Gold’s continuous contract varied little over the week, beginning above the $2,000 milestone at $2,005.60 and edging down to $1,999.90 at 5 p.m. U.S. EDT on 3 November.

Brent crude oil’s price slipped 5 percent to trade at $84.89 per barrel at 5 p.m. U.S. EDT on 3 November. The Mideast war did not grow beyond Gaza and Israel, easing fears of escalation that could disrupt oil flows out of the region. West Texas Intermediate, the benchmark for U.S. prices, followed Brent lower, losing 4.5 percent to $80.51.

Bitcoin’s price stayed aloft through the week, gaining less than 0.1 percent and trading at $34,688.20 at 5 p.m. U.S. EDT on 3 November.

Abroad, stocks shared U.S. equities’ joy.

London’s FTSE went up 1.73 percent. The trans-European Stoxx 600 shot up 3.22 percent.

In Japan, the Nikkei 225 soared 4 percent and South Korea’s KOSPI gained 3.3 percent.

The  Hang Seng index in Hong Kong rose 2.55 percent. On the Chinese mainland, the CSI Composite added 1.2 percent and the SSE Composite 0.7 percent.

YESTERDAY: DOW JONES GAINS AS ALL EYES REMAIN ON FED

The Dow Jones Industrial Average closed up 34.54, or 0.10 percent, to 34,095.86 and the benchmark S&P 500 gained 7.64, or 0.18 percent, to 4,365.98. The tech-heavy Nasdaq was up 40.50, or 0.30 percent, to 13,518.78.

The feeling on The Street is still a wait-and-see approach to the Fed’s next move.

Elsewhere, London’s FTSE was unchanged at 7,417.76 and the benchmark STOXX600 inched down 0.16 percent to 443.52. The Asian markets were in the green, with Japan’s Nikkei up 758.59, or 2.37 percent, to 32,708.48 and South Korea’s Kospi was up 134.03, or 5.66 percent, to 2,502.37. Hong Kong’s Hang Seng was up 302.47, or 1.71 percent, to 17,966.59. China’s Shanghai Composite was up 27.61, or 0.91 percent, to 3,058.41 and the Shenzhen Component was up 217.67, or 2.21 percent, to 10,071.56.

TRENDPOST: Never mentioned in the mainstream is the fact that the commercial real estate bust is going to crash the banking system. Nobody wants to go back into an office to have to talk with coworkers you don’t even want to email. 

WeWork, once the Silicon Valley darling that was once New York City’s largest tenant, could be days away from declaring bankruptcy.

“Some landlords might quickly accept lower rents from WeWork as part of a bankruptcy reorganization and keep doing business with any new entity that emerges, but others might have to fight in court to get anything,” The New York Times reported.

This shows the desperation levels that these landlords face as the entire industry falters. 

OIL: Brent crude futures settled 29 cents, or 0.34 percent, to $85.18 a barrel and U.S. West Texas Intermediate closed the day up 31 cents, or 0.4 percent, at $80.82. 

Oil prices were impacted by Saudi Arabia and Russia’s decision to implement cuts in the market supply. Riyad announced it will continue its cut of 1 million barrels per day and Moscow will cut 300,000.

TRENDPOST: As Israel’s bombardment of Gaza continues, the oil market remains very volatile. But the market seemed to interpret comments from Hamas leader Sayyed Hassan Nasrallah as not interested in widening the conflict in the region. 

Oil traders also have the belief that the Federal Reserve will take its foot off the gas and ease with rate hikes after October showed a slowdown in job growth—with just 150,000 new jobs added. Gerald Celente has long noted that the only reason the U.S. dollar is so strong is because of high interest rates, once they come down—the dollar will fall, making oil all the more attractive to foreign buyers. 

Celente said, “If Brent crude goes to $130 a barrel, the equities market and economies globally will crash. 

GOLD: Spot gold fell 0.7 percent to $1,979.19 by 2:41 p.m. ET after hitting $2,000 level on Friday. U.S. gold futures settled 0.5 percent lower at $1,988.60, according to Reuters.

TRENDPOST: The $2,000-mark continues to be a big hurdle for the precious metal. Gerald Celente has said gold prices should be much higher, but there have been a confluence of issues keeping the price from skyrocketing. The market optimism that there will not be a regional war in the Middle East means investors may not be attracted to its safe-haven appeal. The Presstitutes in the mainstream are also selling the bullshit that there could be a “soft landing.” Watch for gold to stay in the high $1,900 range until there is a significant false flag in either Ukraine or Israel.

BITCOIN: The world’s most popular cryptocurrency was down $5.60, or 0.02 percent, to $35,032.50 as of 5 p.m. ET.

Bitcoin benefited from signals that the Fed could pause future rate hikes after the jobs data on Friday. The crypto has gained over 25 percent in four weeks.

TODAY: DOW CONTINUES WINNING STREAK AS TREASURY YIELDS FALL

The Dow Jones Industrial Average closed the day down 56.74, or 0.17 percent, to 34,152.60 and the S&P 500 was down 12.40, or 0.28 percent, to 4,378.38. The tech-heavy Nasdaq Composite was up 121.08, or 0.90 percent, to 13,639.86. 

Treasury yields saw declines that propelled the S&P to its seventh-straight day of gains. The buzz on The Street is that the Federal Reserve could hold off on future rate hikes.

Elsewhere, London’s FTSE was down 7.72, or 0.10 percent, to 7,410.04 and the STOXX 600 was down 0.71, or 0.16 percent, to 442.81. In Asia, Japan’s Nikkei was down 436.66, or 1.34 percent, to 32,271.82 and South Korea’s Kospi was down 58.41, or 2.33 percent, to 2,443.96. Hong Kong’s Hang Seng was down 296.43, or 1.65 percent, to 17,670.16. The Shanghai Composite was down 1.14, or 0.04 percent, to 3,057.27 and the Shenzhen Component was down 15.06, or 0.15 percent, to 10,056.49. 

TRENDPOST: The central banksters are trying to make the case that a soft landing is possible.

Austan Goolsbee, the Chicago Fed president, said in an interview, “Over the next couple of months, we might equal the fastest drop in inflation in the last century. So we’re making progress on the inflation rate.”  

The Bigs continue to get bigger while the average American suffers. 

The Federal Reserve Bank of New York today announced that Americans now owe $1.08 trillion on their credit cards, which is $154 billion year over year. That means these debt holders have to shell out higher interest rate payments to satisfy their loans.

CNBC reported that just about one-tenth of credit card users find themselves in “persistent debt,” which means an individual is charged more in interest and fees each year than they pay toward the principal.

OIL: Brent crude closed the day down $3.57, or 4.2 percent, to $81.61 per barrel and West Texas Intermediate was down $3.45, or 4.3 percent, settling at $77.37.

Both Brent and WTI hit their lowest prices since July and were pulled lower because of China’s weak economic data. The International Monetary Fund warned that China’s housing sector is seeing prices fall and an increase in loan defaults. Gita Gopinath, the first deputy managing director of the fund, said that hopes for a recovery in the sector were thwarted by a second dip, The New York Times reported.

Exports from China also fell for the sixth straight month. Exports fell by 6.4 percent year over year last month.  

TREND FORECAST: Oil is a wild card. Should the Israel War escalate, Brent Crude will spike to well over $100 per barrel. And we maintain our forecast that if Brent hits $130 per barrel, it will crash equity markets and economies across the globe.

Indeed, the weak Chinese economic data is a glaring signal that the worst of the economic downturn has begun and an escalating WWIII will make a very bad situation much worse… thus, economies will not be able to cope with high energy costs.

GOLD: Spot gold was down 0.48 percent to $1,968.0988 an ounce and U.S. gold futures were down 0.8 percent to $1,973.50.

The precious metal fell to a two-week low as the U.S. dollar increased 0.48 percent. The expectation on The Street is that the Fed will keep interest rates in place. Once interest rates are lowered, watch for demand for the precious metal to increase. 

Gold prices increased since the start of the Israel war in Gaza—as investors looked for a safe haven investment—and hit a five-month high. 

TRENDPOST: It is worth noting that central banks continue to increase their gold reserves. The People’s Bank of China’s gold reserve rose by 740,000 troy ounces last month—which is about 23 tons, according to Bloomberg. The report noted that China now holds 2.215 tons of gold.

BITCOIN: The world’s most popular crypto was up $468.20, or 1.34 percent, to $35,527.60. 

Bitcoin is up nearly 27 percent for the month as investors expressed optimism that the Securities and Exchange Commission could be nearing the approval of a spot Bitcoin Exchange Traded Fund (ETF).

TRENDPOST: While an SEC blessing for a bitcoin spot ETF could offer some investors comfort, it is worth noting that The Trends Journal has long warned that government oversight is anathema to many long-term investors who see the crypto as a way to break from “the system.”

Arthur Hayes, the founder of BitMex, said in an interview that he is concerned if bitcoin ends up under the custody of a few institutions, U Today reported. 

The report said Hayes “suggested that these entities may prefer holding bitcoin in ETFs as it aligns with the state’s interests, particularly in terms of taxation through inflation and servicing mounting debts. However, in such a setup, Bitcoin essentially becomes a financial asset rather than the decentralized currency it was intended to be.”

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