|
|
ECONOMIC UPDATE
As we would say in The Bronx, “Bullshit has its own sound.”
And the ongoing bullshit spewing out from The Street, which pushed equities higher over the past four sessions, was that inflation in the United Soviet States of America (U.S.S.A.) was on a downtrend and happy economic days are here again:
Stocks Rise Before Inflation Data
S&P, Dow and Nasdaq Composite notch
their fourth consecutive day of gains
Stocks rose ahead of inflation data that are expected to show further cooling of consumer prices.
– Wall Street Journal, 13 September 2022.
Or how about this from today’s Financial Times:
Consumers’ inflation and home price expectations ease
US consumers’ economic outlook eased further in August as inflation and home price growth expectations declined, an improvement that is still unlikely to lead the US central bank to loosen monetary policy at its next meeting.
Analysts polled by Reuters expect August’s consumer price index to register a reading of 8.1 percent year on year, down from 8.5 percent in July.
Thus, with the belief of lower inflation on the near horizon, equities kept moving higher as fear eased that the Bankster Bandits, i.e. U.S. Federal Reserve, would only raise interest rates .50 basis points rather than .75 basis points when they meet next week.
Instead, despite sharply falling gas prices which had economists surveyed by Dow Jones predicting a 0.1 percent decline for overall inflation and a rise of just 0.3 percent for core inflation… month over month, headline inflation rose 0.1 percent and core inflation rose 0.6 percent.
Costing more to live in an apartment or home, shelter costs went up 0.7 percent for the month. The price for buying a new vehicle and receiving medical care both rose by 0.8 percent.
Hitting Americans in their stomachs, the food at home index, which represents grocery prices, shot up 13.5 percent over the past year… the sharpest spike since 1979.
TRENDPOST: Year on year, overall inflation is up 8.3 percent… yet U.S. Fed interest rates are just 2.50 percent. And even with a 75 basis point rise, real interest rates, when taking inflation into account, will still be deep in negative territory. Thus, even with rates still relatively low, the artificially pumped up economies and equities will deeply dive without more cheap money.
Deep Down
Before today’s inflation data was released, Dragflation—rising inflation, declining economic growth—was hitting Wall Street and Main Street. And now, the worst is yet to come.
FactSet reported that analysts had lowered their third quarter growth projections by 5.5 percent… the sharpest cut since the second quarter of 2020, when the world’s dictators (aka politicians) locked down the plantation workers of Slavelandia to fight the COVID War and brought economic activity to a halt.
Bad to Worse
Totally absent in the mainstream business media inflation overview is how and why inflation keeps spiking. Not a peep of the more than $14 trillion that Washington and the Federal Reserve pumped into the economy and the Wall Street Gang to artificially prop up the economy they killed when they launched the COVID War!
Not a word about the zero interest rate policy that artificially boosted the housing markets.
There’s also silence about the massive sanctions imposed on Russia by the United States and NATO and how their pumping scores of billions to ramp up the Ukraine War have sharply driven up a series of commodity prices that have hit consumer’s pocket books.
TREND FORECAST: Week after week, we have provided hard data which accurately illustrates the dire socioeconomic and political straits that lie ahead.
The reality is front and center on Main Street and will be hitting Wall Street, driving all indexes deep into bear territory as the Federal Reserve keeps raising interest rates to bring down inflation… measures they should have imposed a year-and-a-half ago when inflation began to rise.
However, as we have greatly detailed, across the Western bloc, the Banksters and government rulers denied inflation was rising, calling it temporary and transitory which the mainstream media supported… blacklisting those of us who provided facts that it was real and would continue to escalate.
Again, the outcome is clear and simple. The higher and faster interest rates rise, the deeper the equity markets and economies—that were artificially boosted with cheap money, artificial money—will decline.
The hardest hit will be the commercial business sector as the work-at-home trend becomes a permanent part of workforce culture, as companies downsize to save rental expenses… and go out of business as economic conditions deteriorate.
And, as Gerald Celente has warned, the deeper the economy falls the higher crime and violence will rise: “When people lose everything and have nothing left to lose, they lose it.” And as a result of the COVID War, which we had long warned about when politicians launched it, the data proves, with crime rates sharply rising… people have lost it.
Also, the deeper economic conditions fall and the higher social unrest rises, the louder war drums beat, as they are in the War between Ukraine, NATO and the U.S. vs. Russia. As Mr. Celente notes: “When all else fails, they take you to war.”
LAST WEEK: STOCKS END FIRST POSITIVE WEEK IN A MONTH
After sliding early in the week, equity prices rose through Friday, led by consumer products makers, financial services firms, and manufacturers.
For the week, the Dow Jones Industrial Average grew by 2.7 percent, the NASDAQ added 4.1 percent, and the Standard & Poor’s 500 index rose 3.6 percent.
Much of the buying was done by bottom-feeders picking up bargains after three straight weeks of losses, The Wall Street Journal said.
Also, earnings among U.S. corporations have largely held steady, lending encouragement to stock buyers.
“I don’t see an earnings collapse,” Jack Ablin, Cresset Capital’s chief investment officer, told the WSJ. However, “if we go into a recession, it’s a different matter.”
The dollar lost ground, with the WSJ Dollar Index slipping 0.7 percent.
The dollar has been holding firm as the euro is squeezed by soaring energy prices and Japan’s yen has fallen victim to rock-bottom interest rates held firm by the country’s central bank.
Gold’s continuous contract bounced through the week, ending essentially flat at $1,727.
Brent crude’s price slid on Tuesday and Wednesday, stabilized on Thursday, and rallied to $92.15 by 5 p.m. U.S. EDT. West Texas Intermediate, which sets U.S. oil prices, bumped up to $86.79.
Oil prices firmed after OPEC+ announced a largely symbolic production cut, which we report in “OPEC+ Trims Production in Warning to West” in this issue.
Bitcoin rallied on Friday, adding 8 percent by 5 p.m. U.S. EDT on 9 September and rising to $21,508.
The yield on the benchmark 10-year treasury note rose from 3.291 percent Thursday to 3.321 percent Friday.
Yields have risen for six consecutive weeks, a sign of traders’ optimism about the U.S.’s economic future, the WSJ noted.
Still, investor sentiment remains darkly bearish, according to a Bank of America analysis.
To get control of inflation, central bankers in Europe and the U.K. have indicated a willingness to raise interest rates high enough to cause a “growth recession.” The degree of the U.S. Federal Reserve’s rate hike due this month is far from certain.
Also, Britain and Europe are in a full-blown energy crisis, with recessions virtually certain, and China continues rolling anti-COVID lockdowns across large portions of the country’s manufacturing regions.
Despite those clouds, China’s stock indexes rose last week.
The SSE Composite expanded by 2.5 percent, the CSI composite 2 percent, and Hong Kong’s Hang Seng index edged up 0.5 percent.
The all-Europe Stoxx 600 gained 1.2 percent and the Nikkei 225 in Japan rose 2.4 percent.
South Korea’s KOSPI index slipped 1.8 percent last week.
YESTERDAY: ALL EYES ON CPI DATA
The Dow Jones Industrial Average was up 229.63 points, or 0.7 percent to 32,381.34 on Monday and the S&P 500 was also up 43.05 points, or 1.1 percent to 4,110.41. The NASDAQ Composite also rose 154.10 points, or 1.3 percent to 12,266.41.
Traders expressed optimism that inflation in the U.S. already maxed out. That, combined with the end of earnings season, means most investors will just monitor the Federal Reserve’s next move. The U.S. consumer-price inflation data will be announced on Tuesday.
“If inflation moderates quicker than expected, I think the Fed can get more comfortable that their job might be closer to being done than they originally thought,” Stephanie Lang, chief investment officer at Homrich Berg, told The Wall Street Journal.
The CPI data will influence the central bank’s next move on how to tackle inflation, which is at 8.5 percent in the U.S. The bank’s next monetary policymaking meeting is set for 20 to 21 September.
The New York Fed’s Survey of Consumer Expectations for August, which was released Monday morning, found that Americans believe inflation will hit 5.7 percent in a year, and 2.8 percent in three years. In July, Americans were pessimistic about inflation and told the survey that they believe inflation will still be around 6.2 percent a year from now and 3.2 percent in three years.
Analysts say there’s evidence that there is optimism because the price of gas at the pump is down, along with the price of oil.
Elsewhere, the European market was in the green on Monday with growing confidence about U.S. inflation figures and recent reported gains by the Ukrainian military against Russia. The FTSE was up 121.96 points, or 1.66 percent, to 7,473.03, and the STOXX 600 was up 7.38 points, or 1.76 percent to 427.75.
FTSE hit a two-week high despite data showing that the British economy contracted by 0.2 percent in July, according to the Office for National Statistics. The British consumer is dealing with inflation at 10.1 percent and the average Brit is seeing an 80 percent increase in their annual energy bill, which is hurting their spending power, which is a drag on the economy.
In Asia, the Nikkei was up 1.16 percent to finish the day at 28,542.11. South Korea’s Kospi and the Chinese markets were closed due to a holiday.
Japan’s Nikkei was up due to a confluence of good news, ranging from reports that Tokyo will scrap its cap on daily visitors next month, and the hopes that the U.S. will see positive CPI data.
TRENDPOST: Right in front of the world’s eyes for all to see, but blind to the facts, is how rigged the stock market game is. China is still locking down, Europe is looking to put price caps on Russian oil, and we’re relying on the same central Banksters who called inflation “transitory” for the better part of a year, to be the ones to save the economy.
Goldman Sachs is reportedly planning on cutting hundreds of positions within the firm as its deals business dried up the past year. A person with direct knowledge of the situation told CNBC that Goldman will reinstate a tradition of “annual employee culls, which have historically targeted between 1 percent and 5 percent of lower performers, in positions across the firm.”
OIL: Brent crude was up $1.16, or 13 percent to $94.00 a barrel on Monday and West Texas Intermediate was up about $1, or 1.1 percent, to $87.78. Reuters, citing the U.S. Department of Energy, reported that U.S. emergency oil supplies hit their lowest level since October 1984 on 9 September.
Jennifer Granholm, the head of the department, told the news outlet that there’s a chance that more oil could be released from the reserve after the program—which was announced six months ago to offset rising prices—ends in October.
Gas prices at the pump in the U.S. averaged $3.74 on Friday, which marked a 25 percent drop from June, when the average price was $5.02 a gallon.
TRENDPOST: Janet Yellen, the U.S. treasury secretary, told CNN on Sunday that the price of gas prices could pop in the winter, if the EU puts a price cap on Russian oil exports.
She said with the EU dramatically cutting back on Russian oil purchases to the point that they “will mostly stop buying” from Moscow, plus a ban on providing services that allow Russia to ship oil by tanker, “It is possible that that could cause a spike in oil prices.”
“It’s a risk, and it’s a risk that we’re working on the price cap to try to address,” she said.
We note the words and deeds of the former Fed Head who is now in control of the U.S. Treasury to illustrate the arrogance and ignorance of those leading the charge to death, suffering and destruction.
Yes, the harder and longer the Ukraine War rages and the deeper the sanctions that are imposed on Russia, the higher gas and oil prices will rise. But for Yellen and all the other Bankster bandits, hedge fund, private equity and other members of the Wall Street Gang—plus the heads of big business monopolies in control of manufacturing, service, retail and other sectors of the economy—their primary concern is the bottom line of how much they can make… not how much it costs to fill their car or heat their house.
GOLD: The precious metal was trading in the $1,740-per ounce range on Monday, hitting as high as $1,745.90 and as low as $1,735.10.
The precious metal still faces a strong U.S. dollar, but could get a lift if the inflation data comes in lower than expected, raising the chances that the Federal Reserve will ease its monetary tightening.
We have long noted that a strong U.S. dollar makes the metal a less-attractive safe-haven investment for foreign buyers. When gold is up against high interest rates, the non-yielding asset also becomes less attractive compared to Treasuries. The yield on the 10-year Treasury note rose to 3.361 percent on Monday, up from 3.321 percent on Friday.
TRENDPOST: Gerald Celente said the price of gold should be much higher than it is currently trading due to economic turmoil and uncertainties. However, as U.S. interest rates rise and the dollar gets stronger, non-yielding bullion prices will continue to weaken.
BITCOIN: The world’s most popular cryptocurrency bounced around on Monday after recent gains. Bitcoin was trading at about $19,433 late last week, and jumped to $22,326 Monday.
Some bitcoin traders expressed optimism that the crypto hit its bottom and that it could be enjoying overall market optimism with the upcoming Ethereum Merge and is set to take place on 14 September.
Bank of America announced in a research report on Friday that the Merge from proof-of-work to proof-of-stake could “generate a higher-quality yield (lower credit and liquidity risk) as a validator or through a staking service rather than on block-box lending/borrowing applications may also drive institutional adoption,” CoinDesk reported. Ether has been up about $75.94 over the past five days.
The Merge is seen as a test for the entire sector and observers will watch to see if it will go smoothly.
TRENDSPOST Gareth Soloway, a popular crypto-trader who has a significant following of about 154,000 on Twitter, told Be In Crypto, “If things don’t go well, you could see a dump in Ethereum’s price.”
“However, I’m of the belief that they’ve prolonged The Merge to double check, triple check, quadruple check that it’s going to go smoothly,” he said.
He warned investors to be careful not to jump into Ether too quickly after The Merge.
“Once you get outside of that, then I would be very careful. I wouldn’t be someone who would be buying on the completion of The Merge,” he said.
TODAY: STOCKS HAVE WORST DAY IN YEARS… WORST IS YET TO COME
The Stock Market took a beating today—its worst day since June 2020— after new signs show the Banksters at the Federal Reserve are not doing enough to tame surging inflation in the U.S.
The Dow Jones Industrial Average plummeted 1,276.37 points, or 3.94 percent, to 31,104.97 and the S&P 500 also shed 177.72 points, or 4.32 percent, to close down 3,932.69 points. The NASDAQ Component was down 632.84 points, or 5.16 percent, to 11,633.57. It was the worst day of 2022 for all three indexes.
As we noted above, the U.S. Labor Department’s Consumer Price Index showed prices rose by 8.3 percent in the 12 months ending in August, which was higher than traders had been anticipating. The jump was blamed on increases in medical, food, and shelter prices.
TRENDPOST: Trends Journal subscribers know that we have criticized Jay Powell, the Federal Reserve chairman, and U.S. Treasury Secretary Janet Yellen for claiming for over a year-and-a-half that inflation was “temporary” then “transitory,” and only admitting to it when it could no longer be denied.
Also, as we had noted, they were either too stupid to see the facts, or were lying about inflation’s spike so they could keep interest rates at historic lows to keep artificially pumping up equity markets and the economy.
The two-year Treasury yield was up to 3.754 percent… a new high since November 2007, just before the Panic of ’08! The 10-year Treasury yield rose to 3.422 percent from 3.361 percent, which is a sign that investors believe the Fed will keep raising interest rates.
The European market was also spooked by the CPI data out of the U.S. and gave up previous gains. The FTSE was down 87.17 points, or 1.17 percent to 7,385.86, and the STOXX 600 fell 6.32 points, or 1.48 percent, to 421.43.
Stocks were trading slightly up when the CPI data was released which sent them tumbling.
European investors believe the central bank will act more aggressively to bring down inflation in the U.S. and Fed Head Jerome Powell is expected to announce another 0.75 percentage point hike after the upcoming September meeting.
The British pound also fell against the U.S. Dollar and currently exchanges at a rate of 1.15 USD.
Patrick Armstrong, the chief investment officer at Plurimi Wealth, told Reuters that the Federal Reserve is essentially the central bank to the world.
“When it’s draining liquidity, that has got impacts for asset valuations everywhere,” he said. “Interest rate sensitive stocks in Europe (such as) the tech stocks were really hit hard. Higher interest rates really changes the potential growth for those kind of companies.”
Asian markets closed prior to the release of U.S. inflation data. Thus, China’s Shanghai Composite was up 1.74 points to 3,263.80 and the Shenzhen Component was up 45.68, or 0.38 percent to 11,923.47. Hong Kong’s Hang Seng was down 35.39 points, or 0.18 percent to 19,326.86. South Korea’s Kospi was up 65.26 points, or 2.74 percent to 2,449.54. Japan’s Nikkei was up 72.52, or 0.25 percent, to 28,614.63.
Chinese President Xi Jinping is expected to attend the Shanghai Cooperation Organization later this week and will have a lot on his itinerary, including a meeting with Russian President Vladimir Putin. The event will take place in Uzbekistan. The plenum will focus on energy and trade among the group’s eight members that include China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, Uzbekistan, India, and Pakistan.
TRENDPOST: Reports out today have been focused on the CPI data, but did not mention the dramatic impact that President Joe Biden’s Student Loan Forgiveness plan will have on inflationary pressures in the U.S.
The Committee for a Responsible Federal Budget warned that Biden’s order will cost up to $600 billion, and would tack on 0.15 percent on the personal consumption expenditure price index, an inflation indicator.
OIL: Despite the broad market sell off today, Brent Crude was only down 57 cents, or 0.61 percent, to $93.43 per barrel, and West Texas Intermediate was down 0.18, or 0.21 percent to $87.60 per barrel.
The strengthening of the already high U.S. dollar tends to hurt oil prices, since oil, as with many other commodities, is dollar based. Thus, the stronger the dollar, the weaker other currencies which means it costs more to buy less gas and oil. And with the high U.S. CPI data which means increased monetary tightening by the Fed, the dollar will rise higher and other currencies will sink lower. And the higher and faster the Fed raises interest rates the deeper the U.S. economy will sink, thus pushing oil demand lower.
Bloomberg reported last week that the White House could buy oil to refill the Strategic Petroleum Reserve if oil falls to around $80.
TRENDPOST: Oil prices will be volatile for the foreseeable future due to high inflation numbers, COVID-19 lockdowns in China, and the Ukraine War. Europe wants to cap Russian oil between $40 and $60 per barrel. Russia vowed to retaliate. Iran also wants to re-engage countries with its oil supplies.
Gas prices in the U.S. are down 25 percent from their peak of $5.02 in June.
TREND FORECAST: Again, as we keep noting, the longer the Ukraine War goes on, the higher oil and natural gas prices will rise. And, since they are at near record highs in Europe, the EU will suffer Dragflation worse than the U.S.: High inflation and negative GDP growth.
GOLD: Gold was down $28.60, or 1.64 percent to $1,712.00 as of 3:42 p.m. ET and silver was down 0.54, or 2.72 percent, to $19.32. As we have noted, gold faces new headwinds when the U.S. Dollar is strong because the precious metal becomes less attractive for foreign buyers.
Gold, a safe-haven asset, also responds negatively when interest rates increase in the U.S. Analysts say today’s CPI data could lead the Federal Reserve to increase interest rates by a full point after the next meeting.
TREND FORECAST: Gold prices will continue to face serious resistance and will likely remain at around the same levels they’re selling for now. We have noted that the economy is experiencing Dragflation and the only reason there has not been an equities market crash is because the game is rigged to benefit the Wall Street White Shore Boys. But investors seem to be sobering up to the realities that the inflation problem will not be a quick fix.
As we forecast, the deeper economies fall, the higher socioeconomic and geopolitical tensions will rise, so too will safe-haven assets such as gold and silver rise.
BITCOIN: Cryptocurrency investors were watching developments on CPI data out of the U.S. to determine if the central bank will continue to raise interest rates by 75 basis points over the next few months because higher interest rates make cryptos less attractive.
Bitcoin took a beating today, falling $1,530.60, or 6.83 percent to $20,870.80 per coin as of 12:30 p.m. Ethereum was also down $116.93, or 6.81 percent to $1,600.04.
Bitcoin fell $1,000 within minutes after the CPI data showed inflation last month was 8.3 percent. The crypto was rising on the buzz that inflation was going to come in lower, which would mean the central bank could ease its monetary tightening.
Besides the CPI data, the U.S. Dollar Index was trading up 1.13 percent to 109.56. As we have noted, cryptos have generally been lagging due to the macro environment and concerns about future moves by central banks to raise interest rates. Cryptos have also shown similar trends to tech stocks.
TREND FORECAST: We had long forecast, the downward breakout point is when prices fall below $25,000 per coin. They are now below that breakout point, thus bitcoin could fall back to $10,000 per coin or lower. On the upside, we maintain our forecast that bitcoin will find strength to hit new highs when it breaks above $55,500 per coin.
Izvestia, a Russian news company, said Moscow may start accepting bitcoin and other cryptos as payment for international trade next year, Bitcoin magazine reported.
Ivan Chebeskov, the director of the financial stability market for the Russian Ministry of Finance, was cited in the report.