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INFLATION, RATE FEARS, UKRAINE JITTERS SINK STOCK PRICES
Inflation and Ukraine War.
Lies, damn lies and statistics.
On the inflation lies front, for nearly a year, the Fed Head Bankster, Jerome Powell, along with the former Fed Head and now U.S. Treasury Secretary, Janet Yellen, kept yelling that inflation was “temporary” and later, as inflation kept rising, said it was “transitory.”
Yes, lies, damn lies and statistics. They are not stupid, they knew inflation was real but ignored the inflation statistics to keep the cheap money pumping scheme going to artificially boost the equities market and the economy. And it worked as planned.
And on the statistics front, for over a decade the Fed, as with the European Central Banksters, kept selling the bullshit that when inflation hit above 2 percent, they would raise interest rates. In fact, the last time the Fed lifted rates from where they are now, at near zero, was in 2015, when inflation was running below its 2 percent target range.
Despite the consumer price index spiking 7 percent in 2021, the highest in 39 years, not one rate hike by the Fed Banksters!
Today it was reported that U.S. wholesale prices rose 1 percent in January hitting 9.7 percent over the past year… the biggest jump-up to a near-record that it hit in 2010 at the height of the Panic of ’08.
Where is it all heading, what’s next? Read Gregory Mannarino’s article: “A Rapidly Developing SUPER-Crisis: YOU’RE IN ONE.”
As he notes,
“The global economy is in FREEFALL, inflation is surging, and debts/deficits are skyrocketing. Real wages, personal income weighed against inflation, is CRATERING. Meanwhile, the US stock market after its rebound off the recent low, is only single digit percentage points away from all time highs. Does this make sense to you? In short, it’s a freak show.”
TREND FORECAST: Go back to last year. Up until recently, the word on the Street was that the Fed would not raise interest rates until 2023… or late 22 at best. Now, as reported by the mainstream business media CNBC shill, “The Fed is prepared to tighten monetary policy after two years of unprecedented accommodation. Nearly all central bank policymakers say they expect a rate increase next month, and the market is pricing in a strong possibility of a 1.75 percentage point increase by the end of 2022.”
Shill?
Yes, only a shill would call what the Fed did “unprecedented accommodation.” It was a total sellout to enrich the Bigs by giving them all the cheap money they needed for record levels of merger and acquisitions, to artificially inflate equity markets with monetary methadone so the Wall Street money junkies could stay on their over-injected high, make the billionaires trillions of dollars richer… while median household income hit record lows and inflation spiked well above wage gains.
Should the Fed raise rates to 1.75 percent as the market now perceives, we maintain our forecast that equities will dive deep into bear territory and the nation will fall into severe recession/Depression.
War Time or War Time Out?
On the Ukraine War front of lies, damn lies and statistics, equities across the word declined dramatically last week on Washington’s claims that their intelligence showed Russia would invade Ukraine before the Olympics ended.
Will they? Not if the “damn lies” trend continues.
As we have detailed, since 2014, the United States has been claiming that a Russian invasion of Ukraine was evident. In fact, today, Dr. Paul Craig Roberts, who wrote in detail for the Trends Journal about the U.S. inspired Ukraine civil war and the false claim Russia was ready to invade Ukraine, posted that Trends Journal article on his website for all to see: https://www.paulcraigroberts.org/2022/02/15/washington-has-been-predicting-a-russian-invasion-of-ukraine-for-8-years/.
And now today the word is that Russia is backing off the Ukraine invasion… which Russian had been saying since 2014, that they would not invade.
At a joint press conference in Moscow today with Russian President Vladimir Putin and German Chancellor Olaf Scholz, Putin was asked if he would rule out a war with Europe. He said, “Do we want it or not? Of course not. That’s exactly why we put forward proposals on a negotiating process that should result in an agreement ensuring equal security for all, including our country.”
As we have been reporting, Russia has claimed their military build-up posed no threat to Ukraine and that Moscow’s security concerns of NATO’s decades long eastward expansion to the Russian border were being ignored. Furthermore, as we have detailed in this and past Trends Journals, NATO’s expansion was in violation of past U.S./Russian agreements. See, in this issue, “RUSSIA: US SPREADING ‘LARGE-SCALE DISINFORMATION CAMPAIGN’ TO DIVERT ATTENTION FROM THEIR ‘OWN AGGRESSIVE ACTIONS’.”
The Market Front
Last week, U.S. stocks closed lower on Friday for the second consecutive day as the labor department reported January’s inflation to be a worse-than-expected 7.5 percent.
Reacting to the news, James Bullard, president of the Federal Reserve Bank of St. Louis, said the Fed could consider raising interest rates by a full percentage point by July, heightening investors’ fears that the U.S. Federal Reserve will raise rates higher and faster than previously thought.
Concerns about interest rates are most clearly expressed in the bond market, where the yield on 10-year treasury notes rose past 2 percent last week, a 33-percent gain since the year began.
The Dow Jones Industrial Average sank 1.43 percent, about 503 points, on Friday. The NASDAQ surrendered 2.8 percent and the Standard & Poor’s 500 index dropped 1.9 percent.
The S&P has fallen in four of the last six weeks and has tumbled 7.9 percent from its 3 January high this year. The NASDAQ has slid 14.1 percent from its peak last November, putting it firmly into a correction, defined as a decline of 10 percent or more from a recent high.
The Russians are Coming, The Russians are Coming!
The line from Washington of “imminent” war on the near horizon in Ukraine also drained investors’ enthusiasm after “intelligence” reports that the government refused to show, indicated Russia was ready to invade the country at any moment.
Russia produces about 10 million barrels of oil a day that likely will be sanctioned if it invades its neighbor as the U.S. says it will. Concerns over global oil supplies pushed the benchmark Brent crude price above $95 a barrel Friday. Thus, if the Russians invaded Ukraine as the U.S. claims they will do within a week’s time, we maintain our forecast that Brent Crude will spike well above $100 per barrel to the $125 per barrel range.
With the Russian invasion of Ukraine fear rising, equity market players started taking money off the stock market table.
Also on Friday, the University of Michigan released its monthly survey of consumer sentiment, which found consumers were more pessimistic about the U.S. economy than they have been since 2011 during the Great Recession.
Abroad, the Euro Stoxx 600 and Shanghai Composite indexes closed last week up 0.01 percent. Japan’s Nikkei 225 rose 0.14 percent and Hong Kong’s Hang Seng index gained 1.2 percent.
The Dow Jones Industrial Average dove 300 points, or about 1 percent, on Monday morning on news that the U.S. was moving its remaining skeleton diplomatic staff in Ukraine from Kiev west to the city of Lviv, closer to Europe. Investors feared the news presaged Russia’s imminent attack.
The market climbed back to its opening level mid-day after Russian president Vladimir Putin and foreign minister Sergey Lavrov appeared together and indicated a diplomatic solution to the Ukraine crisis might still be negotiable.
In the afternoon, with Washington ramping up Russia will soon invade Ukraine war-talk, the market tumbled again, at one point losing 400 points before recovering to close the day down only 172 points, a fraction of 1 percent.
The Standard & Poor’s 500 index was down 0.4 percent for the day. The NASDAQ closed flat.
Abroad, other markets followed a similar rollercoaster.
The pan-European Stoxx 600 index dropped about 2 percent early, then recovered to end with a loss of 1.3 percent. Japan’s Nikkei 225 gave up a fraction of a percent and closed the day essentially unchanged.
The Shanghai Composite index trended gently down through the day, closing off 0.007 percent. Hong Kong’s Hang Seng quickly shed 1 percent at the open, then bumped through Monday to finish down 0.007 percent.
Oil won the day. March Brent crude futures moved up to $96.48, their highest price since 2014. West Texas Intermediate, the U.S. benchmark, closed at $94.77.
Today
On news today Russian Defense Ministry spokesman Igor Konashenkov said troop drills on the Ukraine/Russian border were winding down and the troops “have already begun loading onto rail and road transport and will begin moving to their military garrisons today,” the Dow sprang up 422 points, while the S&P 500 and tech-heavy Nasdaq rose 1.58 percent and 2.53 percent respectively.
GOLD/SILVER: After hitting a several month high over fear that a Russian invasion of Ukraine was “imminent,” safe-haven asset gold went down $15.70 per ounce today, closing at $1,853 per ounce and silver dropped 1.92 percent to close at $23.39 per ounce.
TREND FORECAST: The spike in gold as a safe-haven asset was exemplified as war-talk fear intensified. It should be noted that while gold and silver prices rose, bitcoin prices slightly decreased.
And today, despite wholesale prices hitting a 14 year high, both precious metals declined.
We maintain our forecast that should interest rates radically rise as is now the belief on The Street, it will crash the greatly overvalued equity markets which have been artificially propped up with cheap money. However, as interest rates rise before the crash, it will put downward pressure on precious metals since interest rate hikes raise the opportunity cost of holding non-yielding bullion.
However, when higher interest rates crash Wall Street, Main Street will crash with it, bringing down the residential real estate sector as well… which we forecast will not be a crash.
On the commercial real estate side, with a portion of society still working remotely, there will be strong downward pressure in that sector. Thus, we maintain our forecast that even when the COVID War officially ends, remote work will become a part of the future. Thus, the fewer commuters, the lower office occupancy rates and the more it will hurt small businesses that rely on commuter traffic.
Indeed, according to Kastle Systems, in the first week of this month, the office occupancy rate was down 77 percent from its pre-COVID War levels in 10 major U.S. cities. They also report that movie theater attendance is down 42 percent from pre-COVID War days.
And today, The Wall Street Journal noted that in Massachusetts the majority of 3,400 businesses that closed since March 2020 when the COVID War was forcibly launched, have yet to reopen.
It should also be noted, the higher interest rates rise, the more it will cost the U.S. government in interest on its $30 trillion debt.
And on the equity market front, we truly suspect the plunge protection team will purchase equities as they plummet.
OIL: The price of benchmark Brent crude oil passed $95 a barrel last week, their highest price since September 2014, after U.S. national security advisor Jake Sullivan hit the airwaves… warning the world that Russia could invade Ukraine “at any moment,” and urged Americans in Ukraine to leave at once.
West Texas Intermediate oil closed above $93 a barrel on Friday.
Russia delivers about 10 million barrels of oil a day into the world market.
If it invades Ukraine, the West would almost certainly slap sanctions on Russia’s oil exports, disrupting and shrinking global supplies.
The prospect comes as several OPEC members are failing to reach their assigned production levels, already tightening the world’s oil supply.
OPEC members and allied countries agreed last summer to add monthly increments of 400,000 daily barrels to the world’s oil market as the global economic recovery progressed.
However, Angola, Malaysia, and Nigeria consistently have failed to meet their production targets, leaving the cartel group 900,000 barrels a day short of their target output in January after falling 790,000 daily barrels behind in December.
Since the start of 2021, OPEC+ has failed to deliver 300 million barrels of oil that it had pledged, according to figures from the International Energy Agency.
Today, following news that Russia is winding down its military drill at the Ukraine border Brent crude fell 3.33 percent to $93.15 per barrel while West Texas Intermediate fell 3.80 percent to close at $91.83 per barrel… basically at the same range as a week ago.
TREND FORECAST: Despite oil prices falling from the recent highs, they are still up some 17 percent since the start of the year. If oil passes the psychological $100-a-barrel milestone and continues to climb, it will spike inflation, thus forcing central banks to radically raise interest rates to fight it… which will sharply drive down equity markets and economies as money becomes too expensive to borrow and the cost of servicing debt increases.
And according to CNN data exclusively shared to them, RMS indicates that if Brent Crude hits $110 a barrel, inflation in the United States would exceed 10% on a year-over-year basis.
BITCOIN: Shortly following the massive Super Bowl cryptocurrency advertising campaign, Bitcoin climbed more than 4 percent to $44,115 per coin as we go to press.
TREND FORECAST: We maintain our forecast that bitcoin will find strength to hit new highs when it breaks above $55,500 per coin. We had also forecast, the downward breakout point would be hit should prices fall below $25,000 per coin. If they go that low, bitcoin could well fall back to the $10,000 range.
We also note this because the mainstream business media had forecast that when bitcoin slid to the $33,000 range a few weeks ago, it was signaling an end to cryptocurrency mania.
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.
(For more crypto trends and forecasts, please see our TRENDS IN CRYPTOS section.)