After losing 622 points on Friday, the Dow Jones Industrial Average regained 26 of them Monday and bounced up another 133 points today on the hopes the lockdown economy will be opening up.
The NASDAQ fared better, reversing its 284-point Friday loss by 105 points yesterday and was up 1.13 percent today.
The S&P budged up 12 points to 2,842 after losing 82 points Friday.
Yields on ten-year treasuries rose to 0.64 from Friday’s close of 0.62.
Staying in its tight high $1,600 to low $1,700 range, gold closed up at $1,708.
Bitcoin’s value retreated about 2 percent to 8,719, but it is still trading in the neighborhood of recent highs.
With hopes of demand recovering and demand increasing, oil prices registered their fifth day of gains with Brent crude closing at $31.15 and West Texas Intermediate at $24.50.
TRENDPOST: Equity markets, as evidenced by facts documented in the Trends Journal, are being artificially propped up with trillions of dollars from the Federal Reserve banks, particularly the New Federal Reserve Bank.
There is no connection between the gambling casino on Wall Street and the economic hardship realities pummeling Main Street. There will be no V-shape or U-shape economic recovery. Having entered the first phases of the “Greatest Depression,” equity markets rising on the hopes of an economic rebound is a false flag event.
TREND FORECAST: In the “New ABnormal,” where politicians make up laws and rules of who can go where and when, for how long, how far apart, wearing masks, etc., retail, hospitality, travel, cinema, theme parks, and live entertainment will fight for survival.
Indeed, with the mainstream media constantly streaming COVID fear and hysteria, and nations closing borders, people will be afraid to fly, take a cruise, eat in restaurants, stay in hotel rooms, go to concerts, etc.
Just today, President Emmanuel the “King of France” Macron declared his people would be banned from taking foreign trips this summer… even within Europe: “It is too soon to say whether we can take holidays. What I can say is that we will limit major international travel, even during the summer holidays. We will stay among Europeans and, depending on how the epidemic evolves, we might have to reduce that a little more. We will know early June.”
TRENDPOST: Last week, the Dow turned in its best monthly performance in 33 years, gaining 11.1 percent, and the NASDAQ’s rise was unequaled since June 2000, up 15.5 percent.
Amazon’s stock price fell because the company announced major costs in its warehouses related to keeping workers safe from the COVID-19 virus. Apple’s quarterly earnings topped analysts’ expectations, but the company showed no revenue growth. Apple also failed to offer second-quarter guidance, making investors nervous.
Also on Friday, gold rose 1 percent as prudent investors still want to preserve value away from stock markets artificially inflated by cheap money from the Federal Reserve.
Bitcoin did well, approaching 9,000 at the end of the week.
TREND FORECAST: With nations announcing more unprecedented “stimulus” measures, gold prices will remain strong despite equity markets being artificially propped up by central banksters. We maintain our forecast that when gold stabilizes above the $1,740 per ounce range, it will spike to $2,000 per ounce.
Small Oil Companies Shutting Off Wells En Masse
Oil rose between 15 and 20 percent on the agreement between Russia and Saudi Arabia to cut production. U.S. oil producers also began shutting down wells, which will help shrink the global oversupply. Renewed threats of conflict in the Middle East between Iran and the U.S. nudged prices higher.
But small, independent oil producers that make up about 25 percent of U.S. oil production are shutting down their wells in the country’s high-cost shale oil basins.
Valendera Energy Partners has turned off 75 percent of its Louisiana production; Iron Oil Operating has cut back its 4,000 daily barrels of North Dakota’s Bakken shale oil to a trickle.
Anschutz Exploration has closed down wells pumping 18,000 barrels of oil every day and laid off the work crews that kept them operating.
“We’re prepared to leave these wells shut in for an extended period,” said Joe DeDominic, president of the Denver-based company. He expects prices will not recover to sustainable levels for several months.
Mewbourne Oil, one of the largest producers in New Mexico and west Texas, has halved its daily production.
The worldwide oil glut that has driven prices down to 1990s levels – and, in a few cases, even lower – is likely to force those wells to stay shut at least through June. Many producers have said they will not turn wells back on until prices rise beyond $30 and remain there for a period of time.
The closures are leading analysts to drastically reduce their forecasts for U.S. oil production this year.
U.S. output, which was 12.8 million barrels a day in January, will likely be 10.8 million in June and as low as 10.3 million by September, according to calculations by consulting firm Rystad Energy.
The oil market’s collapse also has affected major producers.
For the first time since 1945, Shell Oil has cut its stock dividend. After first-quarter profits declined by about half, the company slashed its dividend by two-thirds to 16 cents a share.
TREND FORECAST: The massive shut-in of U.S. production may well rob the country of its status as the world’s leading oil producer. The steady rise of renewable energy sources, and drop in prices, will take more market share from fossil fuels during the long recovery from the global economic lockdown.
For years to come, there will be more oil supply than demand, keeping prices low while tensions rise in oil-rich companies… both rich and poor.
In addition, cities and states that rely on oil as a prime revenue source will suffer rust-belt downturns, pushing real estate prices lower and public and private debt levels and bankruptcies higher.
BP Posts First Quarter Results
BP, the British oil giant, reported net income of $628 million for this year’s first quarter, a period during which crude prices fell by more than 60 percent.
This figure is less than a third of the $2.1 billion the company reported a year previous.
BP also noted $6 billion in new debt, bringing its total to $51.4 billion. After the quarter closed, the company issued another $7 billion in bonds.
In response to collapsing prices, BP has cut its spending by $3 billion, or 25 percent, and trimmed $2.5 billion from its operating costs.
Businesses may become accustomed to more people working from home and consumers may be learning a “new normal” of less travel, noted Bernard Looney, BP’s CEO. “There’s a real possibility of that,” he added, saying the oil industry must plan for that contingency.
First Quarter’s Economic Slump Worst in 12 Years
The U.S. economy contracted by 4.8 percent in the first three months of this year, ending a 12-year expansion with the worst performance since the Great Recession in 2008.
Economists had forecast a slightly less severe 4-percent pullback.
Personal consumption fell 7.6 percent, the sharpest drop since the 1980s, and personal income fell 2 percent in March, the most since 2013.
Consumers spent 40 percent less on health care, as hospitals canceled elective surgeries and clinics and dentists’ offices closed. Medical procedures are costly; less spending in that sector has a disproportionate effect on the overall economy’s statistical outcomes.
Business investment declined for the fourth quarter in a row, the steepest slide since 2009.
The Federal Bureau of Economic Analysis attributed the decline to government-imposed lockdowns that closed businesses, turned 30 million people out of their jobs, and halted economic activity.
The second quarter’s GDP will be a “big negative number” according to White House economic advisor Kevin Hassett, who also predicted that unemployment could reach 20 percent by the end of June.
Data for the U.S.’s second-quarter economic performance will be “worse than any data we’ve seen for the economy,” said Jerome Powell, Chair of the U.S. Federal Reserve, during a 29 April news conference.
Agreeing to what we have been forecasting since the government imposed economic disaster, Powell said that lifting economic lockdowns across the country could deliver a spurt of economic activity but “it’s unlikely that it would bring us quickly all the way back to pre-crisis levels.”
Adding insult to the enormous injury Washington has long imposed on the general economy with its “Socialism for the Rich” cheap money/bailouts/tax breaks for the Bigs and “Capitalism for the Prols” policy of grabbing every penny they can from the workers of Slavelandia… the Fed Chair dementedly anointed a corrupt and incompetent Congress and the Trump administration to collaborate to create policies and conditions that will foster a “robust” recovery.
Trump administration officials and some economists are forecasting a V-shaped recovery, with steep gains in GDP during the second half of the year.
TREND FORECAST: Again, there will be no V-shaped or U-shaped recovery. The global economy was sinking before politicians brought us the “New ABnormal” as their response to the coronavirus.
The economy has been knocked down and will stay down for the foreseeable future, bumping along with peaks and troughs… steadily heading downward for years.
