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STOCKS BOOM BOOMING
Despite U.S. Fed fears that a slowdown of economic growth in China—which is facing a high-stakes real estate risk—could rattle the global economy, to fears that Germany, Europe’s economic engine is stalling… equities across the globe keep rising higher.
“Global Economic Recovery is Facing Big Test,” headlined yesterday’s The Wall Street Journal. With the U.S. Federal Reserve tapering its bond buying scheme, plus a number of nations raising interest rates as inflation continues to spike (as we have both forecast it would and have detailed inflation’s acceleration in the Trends Journal), there is concern that with supply chain disruptions worsening, inflation will spike higher and so too will interest rates.
But will it really make a difference? Will interest rates spike higher? Will the money pumping schemes end?
What will the Fed do next, and how will it affect the markets? According to Gregory Mannarino, it’s a “MELTUP.” Mr. Mannarino notes that the tapering is just talk, it means nothing and the equity markets know it.
Last Week
Fresh from stellar earnings reports in recent weeks, U.S. equity markets set new record highs last week on news that Pfizer has formulated an effective anti-COVID pill and that the economy added 531,000 jobs last month, far more than the 450,000 predicted by economists the Wall Street Journal surveyed. (See related stories in this issue.)
The unemployment rate edged down to 4.6 percent last month from September’s 4.8.
In the week ending 5 November, the Dow Jones Industrial Average added 0.6 percent, the NASDAQ 0.2 percent, its best weekly showing since April, and the Standard & Poor’s Index climbed 2 percent.
The pan-continental Stoxx Europe 600 ticked up 0.1 percent, with retail and telecom shares leading gainers.
Japan’s Nikkei gave up 0.6 percent, due in part to the weakening economy of China, its largest trading partner.
Hong Kong’s Hang Seng index lost 1.4 percent on the week; the Shanghai Index dropped 1 percent. China’s economy has sagged, with its debt-laden property sector weighing down investors’ confidence and economic performance. (See related story in this issue.)
Pill Push U.S.A
News that Pfizer has concocted an anti-COVID pill that cuts rates of hospitalization and death from the virus by 89 percent energized Friday’s equity markets.
Pfizer’s news gave investors hope that the global COVID infestation may soon be under control and that economies will normalize sooner than previously hoped, according to the Financial Times.
“We have an overwhelming therapeutic toolbox to eliminate death and suffering from COVID,” Scott Gottlieb, Pfizer board member and former head of the U.S. Food and Drug Administration, said in comments quoted by the FT.
“For the U.S., the end of the COVID [crisis] is now in clear view and secure,” he said.
Gottlieb also said in a CNBC interview that the COVID virus could be curbed by the end of this year.
After the news, stocks of companies that depend on travel and public gatherings jumped. (See related story in this issue.)
Pfizer’s own stock price went up 7 percent, while rivals Merck and Moderna saw their market values drop 8 and 25 percent, respectively.
TRENDPOST: Will the Pfizer pill live up to its expectations? Will Pfizer stocks keep booming as they rake in tens of billions in profit? Read all about it in this week’s Trends Journal (See, “FIRST” PILLS FOR COVID-19: MORE $$ for PFIZER, MORE BS?)
COVID War Over? Travel Stock Rally
Last week, on anticipation that starting yesterday, the U.S. would lighten up on its international travel restrictions from Mexico, Canada and most of Europe, travel industry stocks strengthened as earnings reports showed a steadily improving market for airline tickets, room bookings, and ride-hailing services.
Royal Caribbean’s share price gained 10 percent Friday; Delta and Southwest Airlines stocks added 7 percent, concert promoter Live Nation Entertainment shot up 15 percent, and rival Eventbrite more than 5 percent.
Third-quarter ticket sales were up 10 percent compared to 2019, according to Live Nation CEO Michael Rapino and “many of our festivals are selling out in record time,” he told CNBC.
Among other winners:
- Expedia’s third-quarter revenues zoomed 97 percent, year on year, sending its share price up 16 percent on 5 November;
- Booking Holdings’ stock gained 7 percent;
- American Airlines’ stock price rose 14 percent last week, Southwest Airlines’ 10 percent, and Delta Airlines’ share price rose 13 percent last week, its best week in almost a year.
The idea that consumers are venturing into public spaces again strengthened share prices for Lyft by 17 percent last week and Uber’s by 8 percent.
After its near-collapse during the COVID War (“Airbnb Reports 2020 Losses,” 2 Mar 2021), lodging booker Airbnb posted a record $2.24 billion in revenue in this year’s third quarter, 67 percent better than the same period in 2020.
The sum far surpassed the company’s previous record of $1.65 billion in 2019’s third quarter and netted $833.9 million in profits, almost four times that of a year earlier.
The year’s third quarter included much of the summer vacation season, typically Airbnb’s busiest time, especially because people penned at home for much of the past 18 months were finally able to get back on the road.
In addition, the pervasive shift to remote work has led to longer stays at Airbnb properties, the company reported.
Bookings at the end of September were 67 percent more numerous than a year previous, signaling a strong Thanksgiving holiday travel spurt.
International travel also has gained strength, reaching 80 percent of its pre-COVID level and making up a third of Airbnb bookings, the company noted.
Airbnb slashed costs over the past 18 months, freezing new projects, cutting its marketing budget, and shedding 25 percent of its workers.
The company’s stock price jumped 3.23 percent on news of its record quarter.
In contrast, stocks of many companies catering to consumers bunkered at home for months slid sharply.
Home workout company Peloton had its worst day Friday since its’ 2019 IPO, off 35 percent as gyms reopen and people are eager to congregate again.
The company has imposed a hiring freeze, CNBC reported.
Netflix stock shed 6.5 percent of its value last week, its sharpest drop since April; Zoom’s shares surrendered 6 percent and Doordash lost 4 percent.
This Week
Yesterday, on the news that the U.S. House of Representatives passed a $1.2 trillion infrastructure bill on Friday—i.e., pumping more cheap money into the system and bloating the nation’s debt load to nearly $30 trillion— equites in the U.S. again hit new records. And, with the ability to easily create more debt, segments of Congress are ready to push through President Biden’s $1.75 trillion “Build Back Better” (BBB) monetary injection to combat climate change, extend health care coverage, alleviate child poverty, etc.
Thus, while the mainstream business media keeps blaming rising inflation on supply chain disruptions, barely a peep and never a tweet that what is driving prices higher is the massive amounts of cheap money being pumped into the system by Washington, the Federal Reserve’s multi-trillion dollar bond buying schemes and its near zero interest rates that have flooded into Wall Street and Main Street.
But today, The Street was hit with Main Street reality.
Spewing out Fed Bullshit last week, Jerome Powell, the head Bankster bandit who for nearly a year said inflation was “temporary,” then “transitory,” declared that “It’s very, very difficult to forecast and not easy to set policy,” and that “Inflation has come in higher than expected and bottlenecks have been more persistent and more prevalent.”
He went on to say that “Inflation has come in higher than expected,” the bottlenecks are worse than they thought and that “This was not expected by other macro forecasters.”
TRENDPOST: As we said, we are fed up with Fed bullshit. As Trends Journal subscribers well know, we have long forecast rising inflation, so the “macro forecasters” Powell referred to are micro-minded. And taking our past inflation forecasts forward, back in September, Trends Journal publisher, Gerald Celente well detailed where inflation was heading and why on Robert Kiyosaki’s Rich Dad channel. (See, Inflation is REAL: New World Disorder.)
Today, on news that wholesale prices recorded their sharpest annual rise in 11 years … spiking 8.6 percent in October from a year ago, U.S. equities took a hit.
Snapping an eight day winning streak, the S&P 500, closed down 0.35 percent, while the Dow and Nasdaq declined 112.24 points and 95.81 points respectively.
GOLD/SILVER: Following expectations last week that the Federal Reserve will not quickly raise interest rates and announced a minimal tapering scheme, gold and silver prices began moving higher. Today, they hit a two month high following the new 8.6 year-over-year wholesale inflation number… with gold moving up $6.34 to close at $1,834 per ounce.
However, despite expectations that climate change initiatives will be accelerated and there will be growing demand for solar power and renewable energy for which silver is used, silver prices fell 0.64 percent, closing down at $24.38 per ounce.
As to where the future of gold is heading—and with some 230 million people buying cryptocurrencies at a tune of $3 trillion which is sapping energy from precious metals—according to a the World Gold Council, global sales of gold bars and coins increased for the fifth consecutive quarter compared with the same period in the year prior. What has pushed up prices, in part, is the demand for gold jewelry which has spiked 33 percent year-on-year, mainly driven by markets in China, India and the Middle East.
TREND FORECAST: Both precious metals prices will continue to rise as inflation moves higher. They will decline when interest rates rise and investors put their money in products that yield interest. However, we maintain our forecast that this decline will be temporary, since the higher interest rates rise, the deeper equities and the economy will sink and investors will seek safe haven precious metals assets.
OIL: Back in late October, Brent Crude has risen over 60 percent this year, hitting $86.70, a three-year high, while West Texas Intermediate spiked to a seven year high, reaching $84.65 per barrel. After slumping a bit last week, today Brent was up 1.73 percent at $84.85 per barrel while WTI, closing the gap with Brent, spiked 2.88 percent, closing at $84.27.
Prices were driven higher on the expectations that with the U.S. easing international travel restrictions, there will be higher fuel demand.
While there was glory on The Street that prices were rising higher, absent in the reporting is that the higher oil prices rise, the higher inflation rises.
And as we note in this Trends Journal, with tensions again heating up in the Middle East, should military conflict intensify, oil prices will spike to the $100 per barrel range, which in turn will have a devastating impact on equities and economies globally. (See, “ISRAEL KEEPS BOMBING SYRIA.”)
BITCOIN: Bitcoin hit a record high $68,106.91 early this morning. As we go to press, it’s still trading in that range, trading at $67,176 per coin. Today it was announced that Apple CEO Tim Cook told The New York Times that he has been interested in cryptocurrency “for a while,” and said, “I think it’s reasonable to own it as part of a diversified portfolio.”
We note this statement, because as we have extensively detailed, The Street is going crypto. Also, as we had precisely forecast, when bitcoin settled in the trading range of $55,500 per coin it would continue to spike.
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, thus, the upward crypto trends, especially bitcoin, will continue to gain momentum.
(For more on bitcoin and other cryptocurrencies, please see our “TRENDS IN CRYPTOS” section.)