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U.S. MARKET OVERVIEW
In The Bronx, there is a saying: “Bullshit has its own sound.”
While we have long been forecasting that inflation pressures would continue to rise, we kept noting that Federal Reserve chair Jerome Powell and the rest of the Bankster Gang had been spewing out bullshit for most of the year claiming that inflation was “temporary.”
Now, finally, with inflation rising higher across the economic spectrum, Powell told the Senate Banking Committee yesterday that inflation was moving up higher because of longer-than-expected supply chain disruptions and reopening pressures, “These effects have been larger and longer lasting than anticipated, but they will abate, and as they do, inflation is expected to drop back toward our longer-run 2 percent goal.”
And he gets away with this crap.
The Fed Banksters are not stupid. They knew inflation was rising.
They are a brilliant scam artist Gang that knows how to rig markets and get rich from doing it.
Need more proof?
How about the two Bankster Gangsters, Dallas Fed President Robert Kaplan and Boston Fed President Eric Rosengren who both resigned yesterday following reports of their playing the markets in alleged violation of ethics rules.
Indeed, to believe Banksters have “ethics rules” is an oxymoron that only a moron would believe.
As we have reported, the recent ethics outcry over stock trades by Robert Kaplan, who worked with Goldman Sachs for some 20 years which we detailed in “Bankster Bandits Get Rich Playing the Inside Track” (14 Sep 2021), were foretold by information in his financial disclosure forms covering 2020, that Wall Street on Parade reported.
Documents show that he had made “multiple” trades of more than $1 million in S&P futures. Kaplan also had at least $1 million in an S&P exchange-traded fund, which trades during market hours.
So, more than $1 million in an S&P exchange-traded fund can mean a hundred million.
As for Rosengren, he traded in and out of REITs last year in amounts of $1,000 to $50,000.
Again, the point being, the Fed Gang is not stupid.
They understand data and numbers and know how to play the game. Thus, they fully knew that inflation was rising higher.
As we had been forecasting, they kept lying about inflation being “temporary” because the higher inflation rises, the more pressure on them to raise interest rates.
And, as we have forecast, when interest rates rise from near zero to 1.5 percent, the equity markets, housing market and national economy that have been artificially propped up with cheap money… will crash.
Gregory Mannarino has been on top of the Fed fraud pitch on inflation and in this week’s article, “Expect A Second, Larger Wave of Inflation to Hit,” he makes it clear that the worst is yet to come.
Mr. Mannarino says Fed chair Jerome Powell’s claim that “The current spike in inflation is transitory… is being used as a tool to suppress the truth, and the truth is this. Not only is the current pace of inflation NOT transitory—but it is also about to get much worse.”
And in a recent interview with Robert Kiyosaki and Kim Kiyosaki on their Rich Dad Radio Show, Gerald Celente made it clear where inflation is going: “Inflation is REAL: New World Disorder” (Watch the interview here.)
PUBLISHER’S NOTE: The Fed has lost its last shreds of credibility.
From its highest officials trading stocks and futures on inside information, as we disclosed in “Bankster Bandits Get Richer Playing the Inside Track” (14 Sep 2021), to Powell either completely misjudging, or deliberately lying about, inflation’s trajectory, the central bank deserves to lose the confidence of the American public and should be disbanded.
On the Market Front
We had noted last week that fears over the possible collapse of China’s giant Evergrande property developer were being overblown. After a volatile week of trading, the Dow Jones Industrial Average squeezed out a 0.6-percent gain last week, boosting the Standard & Poor’s 500 index by 0.5 percent.
The NASDAQ dipped four points on Friday, less than 0.1 percent, to end the week flat.
Evergrande bondholders had not received an $83.5-million interest payment by Thursday’s deadline. The news blunted Wednesday’s and Thursday’s gains into Friday.
Evergrande’s shares shed 11.6 percent of their value Friday on the Hong Kong exchange and have been stripped of 84 percent of their value so far this year.
Fueled by that fear, investors sold heavily early in the week, then went bargain-hunting Wednesday, the same day the U.S. Federal Reserve said it was preparing to wind down its $120-billion monthly bond-buying program.
Rather than the markets pulling back on the tapering news, the Dow’s 2.5-percent rally Wednesday and Thursday became its’ largest two-day gain since March.
Why the boost in stocks with the economic outlook uncertain?
As interest rates stay low and money stays cheap, the stock market casino is the gambler’s place to be.
But that climate is now beginning to change.
With uncertainty in the air, it was a mixed day yesterday for U.S. indexes, with the Dow Jones up 71.31 points and the S&P 500 and Nasdaq Composite off 0.3 percent and 0.5 percent respectively.
Today was a different story. The line on The Street is that equities are sharply down because there is a budget stalemate in Washington. Congress needs to approve government funding by Friday or else there will be a shutdown.
In a letter to Congress, U.S. Treasury Secretary Janet Yellen warned today that D.C. lawmakers need to raise the debt limit by 18 October to avoid a government default.
While these factors are adding downward pressure to stocks, the real fear as we forecast, is the Federal Reserve admitting to rising inflation and the fear on the Street that as inflation spikes so too will interest rates rise. And when the cheap flows of monetary methadone begin to dry up, equities will move sharply lower.
Today the Dow fell 569 points, the Nasdaq Composite dove 2.83 percent, marking its biggest fall since March… and the S&P 500 sank 2.04 percent.
TREND FORECAST: The media is once again selling fear and blaming market fluctuations on the possibility of a government shutdown while ignoring the fact that there have been 20 of them in the U.S..
And while it is not mentioned, as though it is ancient history, the 2018-2019 shut down during the Trump Administration, the longest in American history lasted for 35 days and wrecked zero havoc on the economy.
However, considering current market volatility, the fear of rising interest rates and the reality of an overvalued equity bubble ready to burst… a government shutdown as markets are diving will escalate the downward dive.
TREND FORECAST: In “Fed Officials Send Mixed Signals on Policy Shift” (29 Jun 2021), we noted this: “At his December 2020 press conference, Fed chair Jerome Powell pointed to “disinflationary pressures around the globe” and said “It’s not going to be easy to have inflation move up.”
A month later, Powell acknowledged that inflation was on the move but said any rise above the Fed’s 2-percent target rate would be “transient.”
The Fed is finally admitting what we have been saying for months: inflation is not temporary or transitory but an economic reality that will continue surging for at least the next six months as materials shortages and supply-line tangles persist.
Also, while the Fed insisted that it would not raise rates until 2024, we predicted that hikes would begin sooner; now half the members of the Fed’s Open Market Committee are expecting to raise rates in 2022 (see related story).
Over There
And in Europe today, stocks closed sharply lower on concerns of U.S. bond yields moving higher which indicates rising interest rates. And there are concerns that Chinese growth will slow down, which means so too will European exports to China.
Today, both Goldman Sachs and Nomura cut their 2021 China GDP growth forecasts from 8.2 percent to 7.8 percent and 7.7 respectively.
As the saying goes, “When the U.S. sneezes the world catches a cold.” Therefore, minus a U.S. equity market crash, which is still a high probability, we maintain our China GDP forecast of 8 percent. And, even if its GDP dropped to the 7.7 percent range, it is still healthy growth compared to the U.S. and Europe.
GOLD/SILVER: Despite sharply rising inflation which is bullish for safe-haven precious metals, on expectations that the Feds will raise interest rates sooner than expected, today gold slumped more than 1 percent, hitting a seven-week low, closing at $1733.80 per ounce.
While the sentiment of gold and silver is bearish, we maintain that when interest rates go up, despite the dollar getting strong, inflation will still persist. Moreover, when the flow of cheap money dries up, equities will dive and the economy will sink into deep recession. Thus, there will be strong demand for safe-haven gold and silver assets which will spike prices back to the yearly highs… and higher.
On the silver front, today it fell nearly one percent to close at $22.44 per ounce.
OIL: Today Brent Crude briefly hit $80 per barrel, its highest level since October 2018, before falling 0.93 percent to close at 78.79 per barrel… which is up some $4 per barrel from last week’s close.
West Texas Intermediate fell 0.21 percent, closing at $75.29 per barrel.
With Brent and WTI up some 50 percent this year and natural gas prices spiking, as we have been reporting, inflation will continue to rise and the higher prices will hit the working class citizens of Slavelandia the hardest.
BITCOIN: As we had forecast when the crypto craze accelerated, bitcoin prices will continue to rise but the greatest threat that will bring them down is when governments do what they can to ban them.
Last week, the People’s Bank of China banned all transactions involving cryptocurrencies and the government has renewed its pledge to end crypto mining in the country.
Any crypto transactions will now be considered illegal financial activity, even when handled by exchanges abroad, the bank said.
China has long complained about digital currencies because of their possible ties to money-laundering and other crimes, as well as their ability to siphon money out of the country unnoticed.
The government also has said that mining uses too much fossil fuel energy and is a factor causing China to fail to meet self-imposed targets for reducing greenhouse gas emissions.
In addition, China plans to debut its own stablecoin digital yuan next year and is nervous about competing cryptocurrencies.
Beijing banned crypto exchanges from China in 2017 and outlawed crypto mining in June.
China announced the ban on 24 September, dropping Bitcoin’s price from above $45,000 to about $42,000 in a few minutes.
The price did not crater because much of China’s crypto activity already had been moved elsewhere as earlier strictures on digital currencies were put in place, analysts told Bloomberg.
“News out of China definitely impacts markets because it can shake market sentiment,” Clara Medalie, research chief at data firm Kaiko, said, “but the actual effect of another Chinese ban has minimal impact on underlying market structure at this point.”
As we go to press, Bitcoin is trading at $41,600 per coin.
TREND FORECAST: We maintain our forecast for Bitcoin to dive deeply if it goes below $25,500 per coin and rise sharply if it breaks strongly above $50K per coin and steadily maintains the above mid-$50K range.
We also maintain our forecast that a major factor in forecasting the future price of bitcoin and other crypto currencies is dependent on government regulations. 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.
(For more on bitcoin and other cryptocurrencies, please see our “TRENDS IN CRYPTOS” section.)
TRENDPOST: China has complained that cryptocurrency is not real money, should not be used in commerce, and is a haven for criminals’ ill-gotten gains, as our articles highlighted.
We have documented China’s dislike of digital money in our “Cryptocurrency Special Report” (25 May 2021), “Crypto Prices Fall as China Shuts Down Most Bitcoin Mining” (22 Jun 2021) and “China Goes Full Digital Yuan in Beijing” (29 Jun 2021).
TREND FORECAST: China will debut its digital yuan stablecoin next year and will continue to suppress and harass all other forms of cryptocurrency in order to ensure that all Chinese domestic residents can only use the official form of digital money, allowing government minions to track each person’s purchases.
When the digital yuan becomes available to China’s general public, the event will spur other central banks to speed creation of their own stablecoins.
Over time, stablecoins’ widening availability will part the crypto universe in two: investors will hew to digital currencies that tie their value to a stable asset, such as the U.S. dollar; speculators will continue to jump into the crypto sectors the governments can’t control. Free-floating cryptocurrencies also will remain the domain of innovators, whose creations then will be adopted by market sectors.
WILL FED TAPER BOND PURCHASES?
The U.S. Federal Reserve could begin paring back its $120-billion monthly purchase of government and mortgage bonds within six weeks and be ready to raise interest rates next year, the Fed announced after its policy meeting last week.
The Fed has been buying $80 billion in government bonds and $40 billion in mortgage bonds every month since June 2020.
“The purpose [of the announcement] is to put notice that” a decision to begin trimming bond purchases “could come as soon as the next meeting” on 2 November, Fed chair Jerome Powell said in a post-meeting news conference.
Most policy committee members agreed that the bond purchases ending “around the middle of next year is likely to be appropriate,” Powell said.
Following the announcement, the Dow Jones Industrial Average bounded up more than 500 points on the news; the NASDAQ and Standard and Poor’s 500 each added 1 percent.
Nine of the 18 committee members now expect to raise interest rates next year, compared with 13 at the June meeting who thought a rate hike could be put off until 2023, which we reported in our “U.S. Markets Overview” on 22 June, 2021.
Half those present in the meeting think rates will need to increase by a full point by the end of 2023, from their current 0.25 percent, and add another three-quarters of a percentage point in 2024.
Again, as though they didn’t know it before, now more Fed officials than previously, expect inflation to run hotter next year than they had forecast at the June meeting. With inflation running higher, they are now selling the line that not only will rates rise next year, but they will jack them up more than once in 2023.
To make such a long term forecast has nothing to do with reality. It is purely a guessing game that is engineered to keep markets flying high now with the reality on The Street that what the Fed will do in 2022 and 2023 will depend on the state of interest rates and the economy at that time.
“I came away thinking Federal Reserve officials are somewhat more concerned about elevated risks of inflation and they see the possibility that inflation could be more persistent,” economist Tiffany Wilding at Pacific Investment Management told The Wall Street Journal.
Powell is prepared to admit as much in Congressional testimony this week (see related story).
An increasingly successful vaccination campaign and $2.8 trillion in federal stimulus spending has created a swift recovery, but that has sent inflation galloping at more than twice the Fed’s 2-percent target rate.
A high inflation rate could be sustained by the impacts of the COVID virus’s Delta variant, coupled with commodity shortages and snarls in global logistics, and could slow growth.
Powell, as the Fed’s public voice, has previously downplayed speculation about rate increases, saying the criteria for raising rates was more stringent than those needed to start tapering bond purchases.
However, the Fed’s internal calculations now are persuading more central bank officials that they likely need to raise rates sooner than they have been planning.
Yields on 10-year treasury notes rose from 1.306 percent before Powell’s comments to 1.332 at the end of the trading day, the WSJ noted; the two-year yield moved from 0.214 percent to 0.24.
Because yields rise as bond prices fall, the movement indicated investors’ cautious optimism about the economy’s future in the wake of Powell’s statements.
TREND FORECAST: As we have long forecast, when interest rates go up, the equity and housing markets will significantly weaken. When interest rates increase to the 1.5 percent range, both sectors will crash.
The Fed is fully aware of this, thus, despite the talk of rates rising, even if they go marginally, it will put immediate downward pressure on housing and equities which are bubbles that are ready to burst.
DEFAULT COULD ERASE SIX MILLION U.S. JOBS, MOODY’S SAYS
If Congress does not raise the debt limit and the U.S. defaults on its debts, the country would vaporize six million jobs, bounce the unemployment rate to 9 percent, and the economy could hurtle into a tailspin that would rival the Great Depression, Moody’s Analytics declared in a 21 September report, “Playing a Dangerous Game With the Debt Limit.”
The government will run out of money next month if Congress fails to act. This Thursday has been set as the deadline to do so.
A decision to not pay its bills would cost the U.S. about six million jobs and slash stock market values by a third, Moody’s report said.
“This economic scenario is cataclysmic,” Mark Zandi, Moody’s chief economist, wrote.
The law limiting the amount of money the U.S. can borrow is an anachronism left over from World War One. It requires Congress to authorize additional borrowing by the federal government.
Congress has raised the debt limit 78 times since 1960, most recently in 2017 when Republicans controlled Congress and the White House.
However, Republicans in the Senate now have promised to filibuster the bill to raise the ceiling in protest of president Joe Biden’s proposed $3.5-trillion infrastructure plan, although raising the debt ceiling would address only expenses Congress has authorized previously.
Equity markets have not reacted to the imminent threat, probably because they have become inured to this repeating drama and are confident that Congress will act in time, Zandi said.
In 2013, fears of a default boosted yields on treasury securities, socking taxpayers for an estimated extra $500 billion in interest costs, Moody’s report said.
In the report’s worst-case scenario, the government will default and Congressional gridlock will linger on, delaying $80 billion in payments due 1 November. If the impasse continued, spending would be slashed deeply or delayed indefinitely in every program except national security.
If the worst comes to pass, “Americans would pay for this default for generations as global investors would rightly believe that the federal government’s finances have been politicized and that a time may come when they would not be paid what they are owed when owed it,” Zandi warned.
TREND FORECAST: Considering the rapidly building U.S. debt level of near $30 trillion, and when interest rates rise the cost of servicing it will also escalate, a debt default will sharply rattle the already weakening equity markets while adding downward pressure on the dollar.
This will in turn push gold and silver prices higher as investors seek safe-haven assets.
UNEMPLOYMENT CLAIMS CLIMB AGAIN
New claims for state jobless benefits bumped up to 351,000 in the most recent week, compared to 335,000 the week before and disappointing analysts’ expectations for just 320,000 new filings, labor department figures show.
Continuing claims rose to 2.85 million, passing economists’ expectation of 2.6 million.
The figures show the largest increases since July and signal a slowdown in the U.S. job market and, more broadly, in the nation’s economic recovery.
On 6 September, the weekly federal $300 unemployment insurance benefit ended, as did support programs for unemployed persons who had used up their state benefits.
TREND FORECAST: A crashing equity market will greatly increase the unemployment numbers. And what we said in “Unemployment Claims Ticking Up” (27 Jul 2021), has proven yet more accurate now.
Tens of thousands of businesses have permanently closed, vaporizing millions of jobs. Even under perfect economic conditions where there is steady growth, it would take many years to form and capitalize enough businesses to absorb all of those workers displaced by the COVID War.
In addition, the growth area for new jobs is in skilled work. Many of the millions who lost jobs in hospitality and leisure businesses lack the skills needed to change careers.
Although unemployment is decreasing, it will take much longer to settle down to the rate that marked the pre-2020 economy. Also, now that federal unemployment benefits and eviction bans have ended, and millions of people fear catching the Delta virus, the Biden Bounce has flattened out.
Unemployment is unlikely to reach the Fed’s dream of “full employment” (see related story) as long as unskilled workers lack work and skilled jobs lack qualified workers.
HALF OF COVID’S JOBLESS GONE FOR GOOD?
Of the 5.5 million U.S. workers still jobless from the COVID War, more than half are not seeking work and no longer plan to, according to a report published last week by JP Morgan.
“About half of the people who lost jobs during COVID are still actively looking for work, while the other half are not,” Morgan senior economist Jesse Edgerton wrote in the study.
A little more than 22 American million jobs were lost when lockdowns were first imposed; now, about 17 million have been added back, leaving roughly 5.5 million off of payrolls.
Of those 5.5 million, 2.9 million are not seeking work, Morgan’s study calculated.
About 900,000 of those are age 55 or older and could have simply retired early, the report acknowledges.
From February 2020 to June 2021, 1.3 percent of the U.S. workforce retired, compared to the 0.3 percent that would be typical during that length of time, according to figures from the Federal Reserve Bank of Kansas City.
The remaining two million ex-workers could be remaining jobless for several reasons, the report said.
Some might be waiting for the Delta virus to come under control; others, almost all women, may be handling child care responsibilities, with the future of in-person schooling in doubt and daycare centers now left with 126,700 fewer workers than before the COVID War, according to The Washington Post.
Others have reevaluated their work lives and have left low-wage jobs in hospitality or health care to search for something more fulfilling or lucrative, the report suggested.
Also, there is a continuing mismatch between skilled jobs that are open—in manufacturing, for example—and people seeking work but lacking those specialized abilities.
TRENDPOST: We have said many times that what has been lost is lost forever. The COVID WAR has destroyed the lives and livelihoods of millions.
The COVID War has reshaped the world job market, wiping out millions of low-wage, low-skill jobs, spurring automation in the workplace, as we detailed in “Virus Speeds Automation: Bye Bye Workers” (21 Sep 2021), and creating a future that has far less use for people who lack specialized training and skills.
END OF FEDERAL JOBLESS BENEFIT WON’T BRING MANY BACK TO WORK
The end of the emergency federal $300 weekly unemployment benefit is unlikely to drive large numbers of workers back into the labor market, several studies by economists and the Financial Times have found.
About 7.5 million potential workers were impacted when the COVID-era weekly subsidy ended on the 6 September federal cutoff date, the FT said.
Twenty-six states already had ended the program in June, July, or August for their residents, hoping to push them back to work.
From May, when most of those states announced they would end the program early, through August, states that curtailed the benefit and those that kept it both saw jobs added at a rate of about 1.3 percent, according to U.S. labor department figures.
The view that federal unemployment benefits was the only major barrier to bringing people back to work is “misguided,” Gregory Daco, chief U.S. economist at Oxford Economics, said to the FT.
“It was one factor but not the only one,” he said.
From May through August, unemployment did fall slightly faster in states that ended federal benefits early, Indeed’s chief economist Jed Kolko told the FT, but that was matched by the additional jobs created in states that kept the federal checks coming.
A study by Columbia University researchers of 18,000 low-wage workers receiving unemployment payments found that 26 percent of those in the study took jobs in states where the federal benefit was cut off early, compared to 22 percent in states that kept it.
For most of 2020, the federal bonus was set at $600 a week for unemployed workers and self-employed people who lost gigs. The money was in addition to state unemployment checks.
The federal top-up channeled $850 billion into the U.S. economy from March 2020 through August 2021, according to investment firm Evercore.
The U.S. economy welcomed back about one million workers in each of June and July, still leaving about 5.5 million out of work.
Because the early end to federal jobless support in half the states failed to drive workers back into the labor force, the problem of persistent unemployment is rooted more deeply, economists told the FT.
Nearly three million women left the labor force during the COVID War and 1.8 million are still jobless, labor department figures show.
Many are staying home to supervise children learning remotely or out of fear of the Delta virus.
Others, including many men, have reevaluated their low-wage, dead-end jobs and have returned to school or are seeking more meaningful work.
The impact of almost 5.5 million jobless workers suddenly losing $300 a week lays the foundation of a different kind of study, the FT noted.
“The expiry of these benefits could end up doing more damage for families’ finances than good for their employment situation,” Daco said.
TREND FORECAST: What the COVID War has done—with much of society locked down and out of work—it gave people lots of time to assess who they are and what they are doing with their lives. And what millions saw was a bleak picture.
Now, with the Big’s in control of the economy and no room to move up the corporate or small business ladder, many would rather not work at all than work at a job that pays $15 an hour or less, that will take them nowhere.
Thus, we forecast that unemployment numbers will remain high and hiring difficulties will persist. And, with more companies mandating and/or requiring employees to be vaccinated, this too will add to the job gap.
RISKY LOAN BACKERS BEWARE
The next default crisis is taking root in the junk-bond and leveraged-loan markets, according to analysts at the S&P Global credit ratings service.
As risk rises, interest rates typically do also to compensate investors for the greater chance of losing their money, the analysts note, but “just the opposite is now true,” they wrote in a research report.
As an example, Coinbase, rated as a high-risk loan prospect, has just secured a 10-year bond carrying an interest rate of 3.625 percent, within half a percentage point of what the U.S. government paid to borrow in 2018, the analysts noted.
From 1 January through August this year, the combined value of planned and completed mergers and acquisitions worldwide totaled a record $3.6 trillion, with half in the U.S., as we reported in “M&A Spree Continues as the Bigs Get Bigger, Rich Get Richer” (14 Sep 2021).
Avenue Capital Management, a private equity firm, has turned down “hundreds of deals” recently, CEO Marc Lasry told a conference last week, because of concerns that borrowers would have trouble making payments in years to come, according to the Financial Times.
“There are a lot of knuckleheads out there and a lot of people making huge mistakes,” he said, making risky bets for fear of losing out on deals that others seem eager to fund.
U.S. financial conditions are as loose, and loans are as easy to get, than at any time since at least 1982, according to a Goldman Sachs analysis cited by the FT.
The current lack of broader investor safeguards likely will persuade private equity companies to pay themselves lavish dividends when they take over companies of questionable worth or by using high leverage, analysts at Moody’s warned.
This year has already seen a record number of leveraged buyouts, surpassing the previous record set when the economy collapsed in 2007, data firm Refinitiv noted.
In 2020 and 2021, 8.4 percent of high-leverage private equity deals defaulted on loans, compared to just 5.2 percent of heavily indebted companies that lacked private equity involvement, Moody’s found.
Lenders are lured into these outlandishly risky deals because they are “aggressive and highly optimistic,” according to a research paper by economists at New York and Stanford universities.
“Investors appear to be making a bet that is highly asymmetric to the downside,” the paper noted.
During the Great Recession, Wall Street banks were left holding a bag of failing loans. During the current crisis, asset managers have made the loans on behalf of pension funds, endowments, and individuals, the FT pointed out.
“We’ve learned…not all bets pay off,” the FT said.
TREND FORECAST: We repeat what we said in “Risky Companies Snapping Up Cheap Loans” (23 Feb 2021): the junk bond and leveraged loan markets are gamblers’ games and many of their bets will come up craps when interest rates rise, as they will next year (see related story).
We said in “Bond Market Tightens, Junk Bonds in Crisis” (24 Mar 2020) that the “Greatest Depression” will trigger a wave of defaults larger than that of the Great Recession. Bottom-of-the-barrel junk bonds, those rated B3 or lower, made up 38 percent of the junk bond market in July 2019, compared with 22 percent in 2008, according to Moody’s Analytics.
After another year of cheap money, market euphoria, and $250 billion in SPAC speculation, the problem has become enormously worse.
“Investors probably will be surprised at the extent of their losses,” said Oleg Melentyev, a Bank of America investment strategist, in spring 2020. He estimated 29 percent of junk loans will fail when credit tightens again, as the Fed is preparing to do next year, compared to about 20 percent during the Great Recession; and that investors will recover only about 50 cents on the dollar against 58 cents in 2007 through 2009.
They will be lucky to collect even their 50 cents now.
BACKLOGGED SHIPS: NEW ABNORMAL
As of 19 September, the number of ships anchored off the ports of Long Beach and Los Angeles waiting to load or unload cargo totaled 73, up from the 44 on 28 August that we reported in “Ships Clog = Inflation” (14 Sep 2021), according to the Marine Exchange of Southern California.
Before the COVID War, ships virtually never had to wait for a berth at a terminal, The Wall Street Journal noted.
Ships continue to add to the clog because there are so few other places to go, given the physical supply lines that have been built up over decades, the WSJ reported.
They are the closest U.S. landing point to China and Asia’s factories.
The two ports have dozens of cranes to handle a constant flow of containers and vast warehouses to store goods.
In 2020, the two southern California ports handled 8.8 million loaded cargo containers, more than twice as many as the ports of New York and New Jersey, the nation’s second-busiest shipping docks.
TREND FORECAST: Should politicians and Presstitutes start selling a winter of COVID Fear and Hysteria, there will be more backlogs and delays in shipping deliveries which will further drive up prices and increase inflation rates.