U.S. INDEXES KEEP SETTING NEW RECORD
The Dow Jones Industrial Average closed last week at 35,677, another record high, with the NASDAQ adding 1.3 percent and the Standard & Poor’s 500 index up 1.6 percent for the week.
Price gains were driven by strong earnings reports by banks, manufactures, consumer sectors and a variety of major companies reporting better than expected earnings.
Also, market watchers foresee profits to climb 35 percent this quarter compared to a year ago, according to The Wall Street Journal.
Ignoring the real facts on Main Street, where, as we detail in this and previous Trends Journals… as the Bigs get bigger and the rich get richer, The Street applauds the socioeconomic disparities and on-the-ground realities that keep pushing overvalued equities higher.
The WSJ notes that earnings reports indicate that many large companies “have been able to insulate themselves from the global supply chain crisis,” with some companies “passing down higher prices to customers.”
Yes, higher prices to consumers who, when accounting for inflation, are paying more and earning less.
Another New High
Today, strong earnings by the Bigs pushed U.S. stocks to new record levels. The Dow was up 15.73 points, and both the S&P 500 and Nasdaq climbed just 0.2 percent and 0.1 percent respectively.
Thus, as Gregory Mannarino notes in his article, “THE GAME CONTINUES”… “Price action distortions across the entire spectrum of asset classes continue to worsen at an epic pace, inflationary pressure continues to build rapidly, and the US economy as a percentage of GDP continues to shrink at its fastest rate on record.” Yet, equities keep moving higher.
TREND FORECAST: What trends will sink the equity markets back to reality?: Above-trend inflation spikes, trend slumping economic growth and interest rates trending higher.
As we say over and over, when interest rates rise and the cheap money flow dries up, equities and economies will rapidly decline.
While The Street calls it stagflation, i.e., stagnant economic growth and rising inflation, we forecast Dragflation… declining economic growth and rising inflation.
That equities are rising despite draconian vaccine passports which will restrict freedom to travel, dine out, attend events, go to school etc., is anathema to economic reality. With sizable sectors of the unvaxxed society being banned from the consumer revenue stream that businesses depend on for profit and growth, the downtrend for economic growth persists despite equity price increases.
Indeed, even during the best of times, profit margins in many sectors are thin, and now with No Vax, No Job; No Vax, No Travel; No Vax, No Freedom mandates being imposed and enforced across the globe, it will drag down not only economies, but the human spirit as well… a factor negated in the bottom-line world of economic worship.
TREND FORECAST: In our 41 years of trend forecasting, there has never been a more advantageous time for OnTrendpreneurs® to provide products and services to uplift the down-and-out human spirit. For those interested in the trendlines of opportunity in a variety of consumer sectors, the Trends Research Institute provides Corporate & Private Consulting Services.
GOLD/SILVER: With inflation fears rising, gold rallied some 2.5 percent over the past five sessions. But prices fell 0.83 percent today, closing at $1793.01 per ounce as the dollar firmed and corporate earnings rose… which in turn decreased the demand for gold.
Silver also took a hit, declining 1.6 percent and closing at $24.16 per ounce.
TREND FORECAST: While the talk on The Street is that investor confidence in the general growth of the economy is driving equites higher and precious metals lower, as evidenced by the spike in cryptocurrencies, there is a sizable investor sector that sees inflation rising and central bank’s currencies value declining.
But in the New Hi-Tech Age of dominance, the trillions going into the crypto sector for safe-haven investment instead of the traditional precious metals, have restrained gold and silver prices from rising.
However, we maintain our forecast that gold and silver prices will decline when interest rates rise, then sharply spike as the world sinks into Dragflation… while reclaiming their value as the world’s #1 safe-haven assets.
OIL: Oil prices hit a multi-year high today as fears that a global supply shortage will persist and strong demand in the United States will continue. Trading at $86.42 per barrel as we go to press, Brent Crude is up 32 cents today… its highest close in three years. Hitting a near seven year high, West Texas Intermediate is up nearly $1 per barrel, trading at $84.69 per barrel as we go to press.
TREND FORECAST: Propane prices in the U.S. are about triple those of last October. In Europe, the price of natural gas cost six times more than it did a year ago. Across the spectrum, from heating a home to fertilizer production, the price spikes are ramping up inflation, yet, the U.S. and European central banksters still sell the line that they are hesitant in raising interest rates and will persist in buying government and corporate bonds.
We disagree… get ready for higher EU and U.S. interest rates as inflation keeps rising.
TREND FORECAST: U.S. oil and gas prices are climbing, but production companies have slashed their exploration budgets under pressure from investors.
Foreign oil producers, many of which are owned wholly or partly by national governments, have fewer such restraints.
U.S. oil and gas production will not regain past output levels of production for many months to come, thus tightening global supplies, driving up prices, and pushing the U.S. closer to shortfalls in supplies.
As prices rise, more consumers will turn to alternative energy sources, prices for which have plunged in recent years. Lazard’s Levelized Cost of Energy (LCOE) analysis reports that cover the last decade, wind energy prices have fallen 70 percent and solar photovoltaics have fallen 89 percent on average.
BITCOIN: The bitcoin/crypto markets remain strong. As we go to press, bitcoin is $62,428 per coin, which is still in the trading range from last week when it was trading around $63,000 per coin.
After Proshares’ Bitcoin ETF began trading last Tuesday, it collected $1.2 billion from investors, the fastest rise to billion-dollar capitalization on record, sending the coin’s value above $66,870 on 20 October.
Bitcoin’s renewed strength has persuaded a growing number of analysts to adopt our long-standing forecast that after breaking through $50,000, Bitcoin will rise to $100,000.
Analysts who are following our lead in predicting Bitcoin at $100,000 now include Alexander Hoptner, CEO of BitMEX, who named the figure in a 22 October Bloomberg interview; Michael McGlone of Stansberry Research; and David Keller, chief strategist at Stockcharts.com.
TREND FORECAST: As we have long forecast, if bitcoin broke strongly above $50K per coin and steadily maintains the above mid-$50K range, it would move higher. We hold to our long-standing forecast that bitcoin’s current run will take it to $100,000, possibly before the end of this year.
We also maintain that a major factor in forecasting the future price of bitcoin and other crypto currencies is dependent upon government regulations. However, that threat in the U.S. and Europe is lessening as more banks, businesses and investment funds are going crypto.
Of course that trend can instantly change and it will, we forecast, when central banks go digital and do all they can to eliminate the competition.
Thus, the more regulation, the lower the value of the coins, the less regulation, the higher the prices rise… especially as more small-time traders keep jumping into the crypto market and cryptocurrencies replace gold and silver as safe-haven assets… particularly among the younger hi-tech generations.
(For more on bitcoin and other cryptocurrencies, please see our “TRENDS IN CRYPTOS” section.)