U.S. equity markets continue to rise. The Dow rose 477 points on Friday, and after plunging over 700 yesterday, rebounded to close up 157 points. Today, the Dow closed up 526 points.
As we noted last week, The Dow’s six-day winning streak, which brought the S&P 500 back above where it began the year, and the NASDAQ hit a record high on what The Street calls optimistic news of businesses reopening, absent in their hype is the reality that the three-month shutdowns, lawlessly imposed on the people, have devastated the economy and millions of people’s lives.
Also absent the Wall Street hype is the harsh reality that considering the broad array of newly invented, restrictive bureaucratic regulations imposed on business, i.e., capacity, mask wearing, social distancing, hygiene, plastic shields, etc., growth and profits will sink deeply in the coming months and years.
Ignored by The Street, for example, is the report by the Independent Restaurant Coalition that as many as 85 percent of independent restaurants will be out of business by the end of the year due to the shutdowns and costly, dictated reopening rules and regulations that not only lack scientific evidence, as detailed in the Trends Journal, but also make no sense and are contradictory.
As evidenced by yesterday’s market swing of more than 1,000 points before closing, instead of focusing on the economic facts, the markets have been flying higher as the Federal Reserve, in full view, keeps pumping in trillions of dollars to artificially inflate an overvalued stock market.
Capitalism is dead in the U.S.S.A: The United Soviet States of Amerika
By the deeds of the government and the Federal Reserve, capitalism is dead. It is socialism for the rich. What artificially pumped up U.S.S.A. markets yesterday was another massive dose of central Banksters monetary methadone to keep the money junkies gambling on Wall Street.
To stop the tanking stocks, the Fed announced it would greatly expand its purchases of corporate bonds from U.S.S.A. companies. Indeed, this money-pumping scheme was welcomed by The Street and politicians, and propagandized by Presstitutes as the “new normal.”
TREND FORECAST: When will the markets crash? As we’ve noted, it’s pure guesswork. Who could imagine what new schemes undreamed of – from bailing out banks, quantitative easing, zero interest rates, negative bond yields, buying corporate junk bonds, etc., the Fed will invent to keep the overvalued equity market riding high. It is pure guesswork.
It is essential to keep the markets high as an illusion to divert the real facts of the economic disaster politicians have created by locking down the economy.
Although some 84 percent of stocks are owned by 10 percent and there is no connection between Wall Street and Main Street, when the stock markets collapse, it will be event that signals to the uninformed and out of touch everyday people that the worst is yet to come.
TREND FORECAST: What will temporarily boost equities and the economy is a COVID vaccination and/or other drug, such as dexamethasone, which an Oxford university trial found to significantly reduced the risk of dying from coronavirus.
They estimate the drug, which is plentiful and inexpensive, cut the death rate in the U.K. of the most seriously ill patients on ventilators by one-third and by one-fifth in patients receiving oxygen.
Oil Flowing Higher, Gold on Hold, Silver to Shine
Today, the International Energy Agency (IEA) forecast oil demand would increase 500,000 barrels per day higher than its previous report as a result of higher than expected consumption during the lockdowns.
Brent crude closed today at $40.67. West Texas Intermediate closed at $37.93 on “improving demand.”
On the gold front, the precious safe-haven metal closed at $1,728.
Again, as we have noted for several months, we maintain our forecast that when gold prices solidify above $1,740 an ounce for some three weeks, prices will spike to above $2,000 per ounce.
As for silver, when gold breaks out, we forecast silver will follow.
On the bitcoin front, at $9,500, it has remained stable in its $8,000 to $9,000 range, as speculators seek alternatives to fiat currencies during a period of unprecedented cheap money injections by central banks.
TRENDPOST: U.S. stock markets are proving day by day that they are havens for gamblers and speculators as stock speculators are bidding up bankrupt companies.
Case in point: high-profile companies that recently filed bankruptcy are seeing their stock prices skyrocket.
Hertz and J.C. Penney went bust last month. Since then, Hertz’s share price has shot up about 800 percent and Penney’s has gained almost 500 percent, even though it is not yet clear that either will survive bankruptcy.
On 15 June, Hertz filed a request with the Securities and Exchange Commission to issue $500 million in new stock that, it stated, is more than likely to become worthless.
Stockholders will only recover their investment, Hertz said, if current debtholders are paid in full, the travel market sharply rebounds, and there is stunning progress in stemming the COVID virus’s spread.
The oil industry mirrors the trend.
Whiting Petroleum, a leading shale oil producer, went bankrupt in April when oil prices collapsed. Its stock value has risen more than tenfold since then, spiking 150 percent on 8 June alone. Chesapeake Energy, another bankrupt shale company, saw its share price shoot up 180 percent the same day.
West Texas Intermediate prices climbed 1.7 percent to almost $40 a barrel on 10 June, double its price from mid-April, at the same time, the U.S. Energy Administration reported U.S. oil inventories are at an all-time high. In a rational market, an oversupply would drive prices down. But U.S. stock markets are no longer rational.
Obviously, oil prices are not rising based on changes in supply or demand; they have been rising, as Goldman Sachs noted, “entirely on expectations” as gamblers hop aboard rising asset prices in general, hoping for a short-term profit as the U.S. economy begins to reopen.
Gamblers are betting the U.S. government will step in and rescue companies it sees as cornerstones of their industries, as we have seen with the tens of trillions of dollars they and the Federal Reserve have pumped into the markets.
