What we have long forecast is now clear reality. Equity markets and economies should have been in crash-mode two years ago when psychopathic, power-hungry politicians across the globe locked down economies to fight the COVID War.
Think about it! When in the history of the world, has this happened?
To illustrate the insanity of their actions and the general public’s mental state, when the COVID War started people flocked to the stores to make sure they could get enough toilet paper to wipe their ass.
One after another—name the nation—ignorant, arrogant political freaks declared, without a scintilla of hard data or scientific evidence, that their draconian measures would “flatten the curve.”
Two years later their moronic mandates have “flattened” the lives and livelihoods of billions… and now the game is over… that is, until they come up with new schemes undreamed of to re-rig the game.
With inflation hitting decade highs across the globe, the countless trillions governments and central banks pumped into the system to artificially inflate economies and equities has ended.
Or has it?
In the U.S., the Fed is expected to raise interest rates four times this year. But go back just six months ago, the word on The Street was that the Fed wouldn’t increase interest rates until 2023. That was based on the lie and/or stupidity from the Fed-Head, Jerome Powell, that inflation was only “temporary.”
But now with equities kicking off a not “Happy New Year,” going down for the fourth week in a row, will the central banksters cut back expectations for interest rate hikes this year and let inflation keep rising?
Again, while the banksters and the Presstitutes keep blaming inflation on supply chain disruptions—while that is part of what is driving prices up—the major inflation drivers are governments and central banks’ unprecedented money pumping schemes and record-low interest rates.
The facts are there and we reported them extensively: From record-breaking merger and acquisition activity last year that made the Bigs Bigger, to stock buybacks… and record low mortgage rates that juiced the high-flying housing market… it was cheap money that ballooned economies and equities. Indeed, on the housing front, the S&P CoreLogic Case-Shiller U.S. National Home Price Index shows that home prices rose 18.8 percent year-over-year in November.
Therefore, when the central banks and government money pumping schemes end—really end, not just slightly “taper”—equities and economies will crash.
Totally ignoring the fact that rising interest rates and governments cutting back the cheap money flow will slow economic growth, yesterday, the International Monetary Fund blamed supply chain disruptions and rising inflation for cutting back their 2022 global growth forecast.
TREND FORECAST: Ending its two-day meeting tomorrow, the Federal Reserve will issue its policy statement that The Street anticipates will have them raising interest rates to fight inflation.
To put this into perspective, remember the decades long bullshit by the U.S. and EU Banksters that when inflation hit above 2 percent, that would signal the need to raise interest rates? With America’s consumer price index hitting 7 percent in 2021, the largest 12-month gain since 1982, and the EU Euro area annual inflation up to 5.0 percent… Neither have pushed up rates, yet. And they are not being chastised for their inactions that have, as we have clearly detailed, enriched the rich. These are just a few of our articles that state the facts:
- “Plantation Owners of Slavelandia Get Richer, Slaves Get Poorer”
- “Spotlight: Bigs Keep Growing Bigger”
- “COVID WAR: Rich Got Richer, Poor Got Poorer”
- “America Pumps Up the Rich, China Pushing Them Down”
- Vax Makers: The Billionaire Club Gets Richer
- “A Modest Tax Proposal for Billionaires”
So will they raise interest rates dramatically?
With equities moving into correction territory and an economic slowdown on the near horizon, their words may not mirror their deeds. Thus, interest rates may not rise as high and fast as expected.
This will in turn be bullish of safe haven assets such as gold, silver and bitcoin.
The Market Front
The three major U.S. stock indexes trampolined Monday, plunging from the opening through the morning, then bouncing back up through the afternoon to end the day with gains.
At around noon ET, the Dow sank 3.25 percent and the Nasdaq slumped nearly 5 percent. But it ended its six day losing streak, with Dow Jones Industrial Average losing up 99 points, or 0.29 percent.
The Standard and Poor’s 500 edged up 12 points, growing by 0.28 percent. The forlorn NASDAQ even squeezed out a 0.63-percent gain, adding 86 points.
Was the plunge protection team called in to save the day?
Yes, is our guess. It was one of the sharpest turnabouts in Dow history.
Yet, the line being fed by the business media was that investors (gamblers) saw the plunge as a chance to grab bargains.
Are the equity markets ready to crash? Gregory Mannarino contends that “For the stock market to “crash,” we would need to see instability in the debt market—which is just not there right now.” See MARKETS: This IS NOT The Big One in this issue.
On the technical side, the CBOE Volatility Index, also known as the “fear index,” surpassed 38 shortly after 11 a.m. on Monday, its’ most extreme signal in more than a year.
The markets’ performance was a dramatic reversal from last week’s.
In the five trading days ending Friday, 21 January, the Dow, NASDAQ, and S&P all sagged for the third consecutive week this year as anxious investors revised their portfolios ahead of the U.S. Federal Reserve’s interest rate hikes, which will number at least three, possibly four, this year by most estimates.
Keeping the trend going that we have been reporting, market players shied away from smaller tech stocks and so-called “growth” companies not showing a profit, sending the NASDAQ down 11 percent to trigger a correction, defined as a decline of at least 10 percent from a recent high.
A bear market, which we anticipate, will occur when equites fall 20 percent or more.
The NASDAQ has dropped four weeks in a row, with it and the S&P closing their worst week since March 2020 when politicians launched the COVID War; the Dow turned in its weakest week since October 2020.
Last week, the Dow slid 1.3 percent, the NASDAQ plummeted 7.55 percent, and S&P gave up 1.9 percent.
The yield on the benchmark 10-year treasury note dipped to 1.747 on Friday, its biggest single-day slip since 3 December, then recovered to 1.769 on Monday ahead of the U.S. Federal Reserve’s Wednesday meeting, at which officials are expected to decide when to raise interest rates.
Overseas, the Stoxx Europe 600 lost 1.8 percent to end last week; China’s Shanghai Composite Index and Japan’s Nikkei both declined 0.9 percent.
On Monday, ahead of U.S. stocks’ opening plummet, the Stoxx 600 shed 3.81 percent. However, the Nikkei gained 0.24 percent and the Shanghai index added 0.04 percent.
Cryptocurrencies in general went downhill. Ether retreated by 15 percent; Bitcoin ended below $36,700 at 5 p.m. EST on 21 January, its lowest point since last 25 July (see related story in this issue).
Following yesterday’s wild Wall Street ride, Hong Asia-Pacific stocks tumbled with China’s Shanghai Composite falling 2.58 percent, the Shenzhen Component was down 2.83 percent, South Korea’s Kospi slumped 2.56 percent, Hong Kong’s Hang Seng index was off 1.67 percent and Japan’s NIKKEI fell 1.67 percent.
In Europe, brushing off the fears of Russia invading Ukraine, which was the big news over the weekend, equites recouped some losses from Monday’s sharp sell-off, with equites closing moderately up.
TREND FORECAST: Following the European markets close, on the Ukraine font, the White House says a Russian invasion of Ukraine is “imminent.” At a news conference today, Joe Biden’s press secretary Jen Psaki stated, “When we said it was imminent, it remains imminent”
Again, minus a false flag or some dirty behind the scene deal by Ukraine and its “allies” that will provoke a Russian response, we maintain our forecast that there will be no invasion of Ukraine by Russian forces.
In the U.S., mirroring Monday’s down and up reversal, earlier today the Dow was down over 400 points with the tech-heavy Nasdaq falling nearly 3 percent. By 2 PM the Dow was down just 29 points and within an hour it spiked-up nearly 200 points.
At the end of the day, the Dow closed down just 66 points. Well off its low, but still sinking, the S&P 500 closed down 1.2 percent and the Nasdaq continued its losing streak, falling 2.28 percent.
Did these market swings make sense, or did the plunge protection team push equities up from their lows?
GOLD/SILVER Beyond the equity markets melting down, inflation rising and fears that central banks raising interest rates will crash economies, gold prices are also rising on the fear that Russia is ready to invade Ukraine.
With Washington stating that an invasion by Russia is “imminent,” gold was up some $5 per ounce, closing at $1,847 per ounce while silver slipped down 0.629 cents to close at $23.89 per ounce.
Again, minus a staged false-flag event, or some dirty behind the scene deal by Ukraine and its “allies” that will provoke a Russian response, we maintain our forecast that there will be no invasion of Ukraine by Russian forces.
TREND FORECAST: We maintain our forecast that should interest rates radically rise, it will crash the greatly overvalued equity markets which have been artificially propped up with cheap money. And when Wall Street crashes, Main Street will crash with it. Thus, there will be strong demand for safe-haven gold and silver assets.
And while we had forecast a sharp rise in interest rates to strongly bring down inflation, the volatile equity markets may slow the speed of interest rate hikes.
However, what goes on behind the scenes is not transparent. Therefore, we truly suspect the plunge protection team has pushed equites higher after their recent plummets. If the markets were melting down even before interest rates rose, there would be pressure from The Street to slow down the rate hikes.
But now, with markets showing resilience and strength (real or make believe), it will give the Fed clearance to quickly push rates up higher.
OIL: As Trends Journal subscribers well know, we have been long warning that Middle East military tensions would be a wild card that will drive up oil prices despite diminishing demand and oversupply.
Last week Brent Crude hit a seven year high at $88.63 per barrel following the Houthi attack on United Arab Emirates capital Abu Dhabi which resulted in three petroleum tanker explosions near state oil firm ADNOC’s storage facilities.
Later, an explosion in Turkey interrupted oil flows from Iraq’s Kurdish region and prospects increased that Russia’s oil exports could be shut off if the West imposes sanctions should Russia invade Ukraine.
In response to the UAE attack, the Ministry of Foreign Affairs said “We condemn the Houthi militia’s targeting of civilian areas and facilities on UAE soil today. We reiterate that those responsible for this unlawful targeting of our country will be held accountable.”
Keeping his word—as we note in this Trends Journal, “SAUDI-LED YEMEN SLAUGHTER ESCALATES”—in response to the Houthi strike, the Saudi team struck back, killing scores and wounding hundreds of Yemenis… which has kept oil prices near their current highs.
And now, also keeping oil prices high is the “Russia to Invade Ukraine” western governments Crusade:
“Oil prices rose over 2% on Tuesday on concerns supplies could become tight due to Ukraine-Russia tensions, threats to infrastructure in the United Arab Emirates and struggles by OPEC+ to hit its targeted monthly output increase.”— CNBC
Up about 50 percent last year oil is up another 12 percent so far this month. Still ranging near last week’s high, Brent Crude was up 2.18 percent today, closing at $88.14 per barrel while West Texas Intermediate rose 2.51 percent to close at 85.38 per barrel.
TREND FORECAST: We maintain our trend forecast that should military conflict erupt in the Middle East (and now Ukraine), and oil prices spike to above $100 per barrel, it will dramatically push inflation rates higher and will crash equity markets and the global economy.
Higher Prices Coming
Oil will reach $100 a barrel in this year’s third quarter, Goldman Sachs has predicted, and will average $96 this year before edging up to $105 in 2023.
Energy Aspects sees oil averaging $86 this year but reaching $112 next year.
The Organization of Petroleum Exporting Countries (OPEC) had agreed last July to add 400,000 barrels of daily supply to world inventories, which we noted in our “U.S. Markets Overview,” 20 Jul 2021.
However, only Saudi Arabia, the United Arab Emirates, and a few other members have contributed their share.
In December, Angola, Malaysia, and Nigeria all failed to produce enough to meet the target, leaving OPEC and Russia upping world supplies by only about 250,000 barrels a day, largely due to technical and operational difficulties, the Financial Times noted.
“In reality, OPEC+,” which includes Russia, “doesn’t have the spare capacity that they claim,” Sen said.
Last month’s lag means that the cartel is delivering 790,000 barrels a day less than it had agreed, according to the International Energy Agency (IEA).
OPEC+’s spare capacity may be only about 5 million barrels a day, the IEA estimates, and could shrink to less than 3 million in this year’s second half; Goldman sees the margin puckering to 1.2 million daily barrels this summer, a historic low.
The lack of spare capacity is a particular concern, as the U.S., Japan, and countries in Europe drew their reserves to historic low levels as prices shot up in the last half of 2021.
Those reserves are at their lowest since 2000, Goldman Sachs found.
“There could be a [supply] disruption of 1 million barrels a day,” Damien Courvalen, Goldman’s chief energy researcher, told the FT.
“That’s at least half your spare capacity,” he added. “Then you really have zero buffer left.”
BITCOIN: It wasn’t a great week for cryptocurrencies in general last week. Ether retreated by 15 percent; Bitcoin ended below $36,700 on 21 January, its lowest point since last 25 July (see related story in this issue).
Yesterday Bitcoin regained ground, rising almost to $37,000. As we go to press it is back to the 21 January level at around $36,700 per coin.
TREND FORECAST: As we have been noting for over five years, a major factor in forecasting the future price of bitcoin and other crypto currencies is dependent upon government regulations.
And last week, pushing prices lower, the U.S. Federal Reserve issued its study on the prospect of creating a digital dollar. Other nations also discussed taking measures that would restrict crypto growth. For more crypto trends and forecasts, please see our TRENDS IN CRYPTOS section.)