As we report in this and previous issues of the Trends Journal, nations, states, and cities are imposing new lockdown rules to fight the COVID War. Yet, despite the hard data of the massive economic destruction these measures have wrought on businesses, lives, and livelihoods, U.S. markets are climbing again following the sharp sell-off last week.
Yesterday, the Dow rose 423 points. Today, Election Day USA, it spiked another 555 points.
Why are the markets going higher? Same story, different day. High expectations of much high doses of monetary methadone pumped into the economy should the poll’s favorite, Democrat Joseph Biden, win the race to the White House.
As noted in the article in this issue, “FED BAILS OUT STOCK MARKET – AND TRUMP, TOO?,” again, it illustrates the enormity of the coming money pumping schemes that will keep the markets high as the economy continues to go down.
What to expect next? Gregory Mannarino sums it up in his new article, “MARKETS: ANTICIPATING A BIG MOVE.”
Gold and Silver: As the dollar weakened, gold prices recovered from last week’s selloff, closing today at $1,907 per ounce, while silver rose 20 cents to close at $24.23 per ounce.
We maintain our forecast to steadily rising gold and silver prices. Should Biden win the election, we forecast higher gold prices, since he has promoted injecting in higher doses of monetary methadone into the system. Thus, the bigger the stimulus bills, the lower the dollar will sink and the higher precious metal prices will rise.
Also pushing the dollar down will be rising U.S. debt levels plus our forecast for rising inflation. The further the dollar falls, the more it will cost to purchase goods and services, thus increasing inflation will push safe-haven assets higher.
As we have forecast, as the U.S. debt level continues to historically escalate, the value of the dollar will continue to decline, and China’s yuan will continue to rise over the decades as China overtakes America as the world’s largest economy.
The larger and stronger China grows, it will gain global market share from the dollar and replace it as the world’s top currency in the coming decades.
Oil: After tanking last week, oil prices moved higher yesterday and today. Brent Crude, however, is still below $40 per barrel. Again, this confirms our yearly forecast for oil prices to remain weak and, minus a wild card such as wars expanding in the Middle East and the Caucuses, will trade in the $40-$50 per barrel range for the remainder of this year and for the next several months.
With new lockdowns across Europe and America and air travel plummeting to historical lows, demand for petrol will remain weak.
Grim Results, Job Cuts
ExxonMobil reported a third-quarter loss of $680 million, and its capital and exploration budget for 2020 is down about $6 billion year on year.
In 2017, ExxonMobil initiated a multi-year plan to sharply increase oil and gas production in hopes of reversing its declining fortunes. The ill-timed spending boost has left the company’s finances “severely stressed,” according to the Wall Street Journal, as it weathers continuing global economic uncertainty.
From 2009 into 2019, the company spent $261 billion exploring for oil and gas while its production remained flat, a strategy that brought $45 billion in new debt. Over that time, Exxon’s annual return on capital fell from 16 percent to 4 percent.
Earlier this year, Exxon borrowed several billion dollars to maintain its 37-year record of paying an annual dividend, which usually totals about $15 billion.
Last week, Exxon also announced 14,000 workers around the world, including 1,900 U.S. employees, will lose their jobs. The U.S. jobs will mainly be lost at its Houston offices and include voluntary departures as well as firings.
Previously, British energy giant BP revealed plans to dump 10,000 workers, or about 14 percent of its employees. Shell said in September it will dispense with as many as 9,000 employees. Chevron earlier announced it will cut more than 6,000 jobs.
BP reported a $644-million third-quarter loss on 27 October, compared with $351 million in red ink a year earlier. It was the company’s fifth consecutive quarter of losses.
The news dropped the company’s stock price to a near 25-year low.
BP and Royal Dutch Shell have restructured their operations to emphasis renewable fuels; ExxonMobil has not, betting its future on the oil industry’s recovery.
