On the market front, the Dow, after being up 237 points, closed basically flat today, while the S&P 500 closed up 0.5 percent and the NASDAQ gained 1.2 percent on the news that big dealmakers are making more deals and hopes of a corona virus vaccine hitting the market soon.
Today’s headline story from CNBC sums up why equities keep climbing: “Wall Street expects trillions more in stimulus from the Fed, Congress: CNBC Fed Survey.”
Confident the money pumping schemes will continue by the Bankster cartel called the Federal Reserve, the gambler gang is betting the Fed won’t raise interest rates until 2023.
We disagree with the majority of those surveyed by CNBC and the Bank of America who believe the recession is over and the nation is in an early cycle phase. The “Greatest Depression” has just begun. To keep the markets rising and in attempt to keep the economy from crashing, the Fed will lower interest rates into negative territory.
And, with the Fed abandoning its 2 percent inflation target range, its cheap money policies will also push inflation higher, which will, in turn, push the dollar down and the price for gold and silver up.
Indeed, as currencies decline around the world, the demand for gold will accelerate. As reported in today’s Wall Street Journal, in Turkey, where its lira fell more than 20 percent this year against the dollar, the gold rush is on.
The average daily volume at the Grand Bazaar in Istanbul, a major gold-trading hub, has spiked from 450 pounds to almost 4,500 pounds. The WSJ also reported that from January to August, Turkey’s imports of gold increased 153 percent from a year earlier.
This same scenario – which is being played out in scores of nations across the globe as central banks and governments artificially inflate economies with digital money backed by nothing and printed on nothing – will keep pushing precious metals higher in the foreseeable future.
Again, as for the U.S. dollar, the more cheap money the Federal Reserve and Washington pump into equity markets and the economy, inflation will rise and the dollar will fall, thus increasing gold demand.
TREND FORECAST: During the week of 30 August, the NASDAQ hit a record high – its 43rd this year – and then plummeted six percent as Apple’s share price set a record for its one-day price drop.
Shares of Amazon, Apple, and Facebook rose at least 85 percent since the markets’ 23 March bottom. On 31 August, Alphabet, Amazon, Apple, Facebook, and Microsoft made up 26 percent of the S&P’s value, compared with a year earlier, when the index’s five biggest stocks comprised only 14 percent.
As evidenced by the speedy stock market bounce back, the word on The Street is that the markets can only go up, driven by the Fed’s cheap money.
But faltering tech stocks are signaling a possible market peak, if not an enlarging leak in the bubble.
The bubble fear was evidenced on 3 September when shares of those five stocks plus Netflix crashed, erasing $500 billion in value from the market.
On 31 August, Tesla passed Visa to become seventh largest publicly traded company and, within a few days, had lost 16 percent of its market value.
Despite President Trump wanting to do all he can to keep Wall Street riding high before Election Day in November, we forecast increasing stock market volatility, corrections, and a bear market probability.
On the Oil Front
Brent Crude oil sunk below $40 a barrel last week but rebounded a bit today, closing at $40.70
With the summer driving season and many economies not rebounding, today, the International Energy Agency (IEA) lowered 2020 oil demand by 200,000 barrels per day (bpd) because they “expect the recovery in oil demand to decelerate markedly in the second half of 2020, with most of the easy gains already achieved.”
TRENDPOST: The oil demand reality on Main Street is measured by hard facts and dollars spent compared to Wall Street’s markets rising to new highs based on overvalued stocks expected to keep making new highs.
As Gregory Mannarino writes in his article this week, “ERADICATION OF THE MIDDLE CLASS,” the Fed’s suppression of rates has created monster bubbles in the markets that are due to burst at some point soon.