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EQUITY MARKETS RECORD-SETTING RALLY
On 25 June, U.S. stock markets closed their best week since February, reversing the previous week’s plunge that marked their worst five-day span in eight months and giving the S&P 500 index new record closes on Thursday and Friday.
The S&P ended the week at 4,280.70, gaining 2.7 percent over the five trading days.
Optimism about the economic recovery and of a $1 trillion infrastructure deal between Congress and President Joe Biden helped ignite the broad rally.
The Dow Jones Industrial Average added 3.4 percent for the week, the NASDAQ 2.4 percent despite slipping 9 points on Friday.
Markets also were buoyed by data showing U.S. consumer spending in May exceeded pre-shutdown levels (see related story) and Eurozone business activity expanding faster than at any time since 2006,
Yesterday, U.S. markets hit new highs and today stocks were up a bit with the broad market index inching up less than 0.1 percent.
However, as we detail in this and last week’s Trends Journal, get ready for COVID War 2.0 and politicians, “health experts” and the media selling more fear and hysteria of the Delta variant. Indeed, The Street worries the “variant” could slow the global economic recovery, further disrupt the disrupted supply chains and push inflation higher.
In fact, this is the Washington Post’s headline today: “Spread of delta variant prompts new restrictions worldwide.”
They go on to say that, “The rapid spread of the delta coronavirus variant has forced a growing number of countries to reimpose lockdowns and other public health restrictions, raising fears that the more contagious variant was hampering global efforts to contain the pandemic.”
However, despite the new round of fears, we forecast the gambler gang is betting on the Fed to keep the $120 billion a month bond-buying scheme going and keep interest rates in the zero range as long as they can despite rising inflation… which the Fed says is temporary.
What’s the Fed’s next move? Read all about it in Gregory Mannarino’s trend forecast, “EXPECT THE FED TO INCREASE! NOT DECREASE, ASSET PURCHASES.”
TREND FORECAST: The markets’ two-week rollercoaster signals that investors are unsure of the economic recovery’s strength, especially after the most recent weekly unemployment report showed new claims for benefits stuck above 400,000. More importantly, however, since hard data rarely counts among money-junkie addicted gamblers, their prime concern is interest rates.
As we have long forecast in scores of Trends Journal issues, inflation is not temporary as the Feds claim. And nations across the globe are raising interest rates to combat rising inflation.
Thus, when the Fed brings rates up to the 1.5 percent range from the current near zero range, equities and the economy will crash.
And now, after denying it for months, the CNBC Global CFO Council survey for the second quarter, released yesterday, confirmed what we had long been warning. They report that U.S. based chief financial officers see inflation as the biggest external risk factor that their businesses face. And proof of their inflation denial is that virtually no CFO had cited inflation concerns in the Q1 2021 survey.
TREND FORECAST: We maintain our forecast that Inflation is, and will continue to rise for at least several months. Today S&P Case-Shiller reported that U.S. home prices surged in April at a ‘truly extraordinary’ rate, spiking up 14.6 percent in April, up from a 13.3 percent spike in March. However, regardless that this was the sharpest rise in 30 years, in the rigged consumer price index scam, the Bangster Bandits do not include home prices.
But in the real world, it counts. For people wanting to buy homes in Charlotte, North Carolina, Cleveland, Dallas, Denver and Seattle, the price surge was the largest annual increase ever.
And while there are expectations that this is an artificially inflated housing bubble, as we have detailed in numerous Trends Journals over the past year, we disagree. This is very different from the subprime mortgage crisis when the Banksters gave home-loans to people with miserable credit ratings. In fact, homes that are now being sold are on the higher end of the market, while lower wage earners are being priced out.
TREND FORECAST: On the commercial real estate front, the trend line is down and out. As we have forecast, commercial real estate in major cities will take a downward dive as more people choose to work from home… a trend that did not exist before the COVID War was launched in the winter of 2020.
And as we reported, the Banksters are holding trillions of dollars of commercial real estate debt, and they are fully aware of the disastrous financial implications that will result if a significant percentage of employees do not return to work. Thus, they are among the first and most vocal for workers to end their zoom calls, get vaccinated and commute back to office buildings. It should also be noted that as interest rates rise, so too will debt levels.
GOLD/SILVER: Both precious metals remain weak, with gold prices falling 1 percent to its lowest level since mid-April as the dollar and U.S. Treasury Yields rose. Down 7.6 percent in June, gold is racking up its worst month since November 2016 when the price dove some 8 percent.
Despite the downturn and negative sentiment on the Street, we maintain our forecast for both gold and silver to sharply rise as the real inflation index continues to spike higher and subsequently the dollar will move lower. Indeed, absent in The Street’s analysis is the unprecedented money pumping schemes by governments and central banks that have flooded the markets with cheap money backed by nothing and printed on nothing.
OIL: Inflation temporary? Been to the gas pump lately? Brent has advanced over 44 percent this year.
Last week is this week. No real movement on the Brent Crude and West Texas Intermediate levels. Last Tuesday Brent closed at $74.81 per barrel, today it closed at $75.05, while WTI finished the day at $73.31 per barrel, up 25 cents from last week.
As we have noted, we are forecasting strong economic growth this summer in much of the world which will be bullish for oil prices. And CNBC reported last week that Global Research raised its Brent Crude price forecasts for this year and next, saying that tighter oil supply and recovering demand could push oil briefly to $100 per barrel in 2022.
Indeed, with demand increasing, natural gas futures are up almost 100 percent from a year ago. Thus, the higher prices of oil and gas, the higher inflation rises… and the higher inflation rises, so too will interest rates.
BITCOIN: Where are crypto’s heading, what to expect? Read all about it in the special section of this week’s Trends Journal: “TRENDS IN CRYPTOS.”
Last week the crypto crash wiped out $1.3 trillion according to MarketWatch.
To illustrate the volatility of the digital coin, as we noted last week, after plunging some 50 percent from its $64K high, Bitcoin climbed above $40,000 after Elon Musk tweeted that Tesla would allow bitcoin transactions “when there’s confirmation of reasonable (50%) clean energy usage by miners with a positive future trend.”
After slumping down to the $30K range later in the week, today bitcoin is trading around $36K.
As we have been detailing for over a year, the harder governments call for crackdowns on cryptocurrencies – for whatever reasons – the lower the prices will fall. Thus we maintain our forecast that should Bitcoin, which is now down some 50 percent from its recent high and up 9 percent this year, fall to around $25,000 per coin, it will continue to rapidly decelerate.
For further analysis and crypto forecasts in the Trends Journal, note these articles in our special “TRENDS IN CRYPTOS” section: “CHINA MADE A TRILLION DOLLAR MISTAKE, SAYS MICROSTRATEGY CEO”; “CHINA GOES FULL DIGITAL YUAN IN BEIJING”; “BINANCE SHAKES OFF U.K. BAN”; “BLOCKCHAIN BATTLES; GLOBAL BANKSTERS GOING DIGITAL”; and “ISRAEL HAS TESTED DIGITAL SHEKEL, OFFICIAL ADMITS.”