Last week was the worst week for U.S. equity markets since October as investors grew skittish about the economy’s future, especially after Fed chair Jerome Powell issued a grim near-term outlook on 27 January. Additionally, the GameStop stock scam suckered hedge funds and other investors into losing billions.
Markets saw sharp drops last Wednesday, when Powell spoke, and again on Friday.
For the week, the NASDAQ and the Dow each shed 2 percent, and the S&P 500 index 1.9 percent.
Perennial favorites Amazon, Facebook, and Tesla lost value; Alphabet and Apple took a hit as a direct result of the GameStop debacle.
For January, the Dow was off 2 percent, the S&P 1.1 percent, and the CBOE’s volatility index – a marker of investors’ trepidations about the future – shot up 45 percent, including a 9.5-percent jump on 29 January alone.
MARKET MANIPULATORS HIKE SILVER PRICES. Cashing out some of their winnings in the GameStop stock game, day traders have moved into silver, closing the most actively traded futures contracts 2.1 percent higher on 28 January after shooting prices up as much as 6.7 percent during the day and pushing prices for the metal close to an eight-year high.
Share prices of First Majestic Silver Corp., a mining company, gained 21 percent on the day.
The unusual moves in the silver market were sparked by a post in a trading forum suggesting a “short squeeze” in silver, in which a trader borrows an asset, sells it, then buys it back at a lower price to repay the “loaned” asset. If other traders swoop in and buy enough of the asset to force prices higher, the trader who borrowed loses money.
Yesterday, silver futures had their biggest one-day jump, spiking 11 percent to nearly $30 an ounce.
Encouraging individual investors to push the silver price up to $1,000, user RocketBoomGo wrote on Reddit over the weekend that, “Silver Bullion Market is one of the most manipulated on earth,” and that “Any short squeeze in silver paper shorts would be EPIC. We know [that a] billion banks are manipulating gold and silver to cover real inflation.”
While the great attack from Wall Street and the media continues that the Reddit group of young people are irresponsible in what they are doing to unjustly and illogically shape the markets, as we noted back in the Trends Journal in April 2014, it’s rigging as usual when the Bankster Gang is in charge:
“The U.S. dollar began to crumble in 2011 when gold hit $1,900 per ounce. But the Federal Reserve discovered that it or its dependent bullion banks (Goldman Sachs, JP Morgan Chase) could sell gold short and drive down the price of gold in the futures market, where the price is set.
The banks found that they could make money doing this. The short selling, sometimes massive, drove down the price of gold so much that stop-loss orders added to the selling and then margin calls on leveraged positions would cause more selling.”
Indeed, RocketBoomGo is 100 percent correct. The markets, beyond silver, are rigged. As we wrote in the Trends Journal back in 2015,
“In May, the Department of Justice announced that five major global banks (Citigroup, JPMorgan Chase, UBS, The Royal Bank of Scotland and Barclays) agreed to cop felony pleas and pay more than $5.6 billion in criminal, regulatory and other fines for rigging the foreign-exchange markets – for years.”
Last year, it was the Bankster bandit, JPMorgan Chase, that was caught rigging the markets. As we wrote in our 29 September Trends Journal:
Here is the latest from CNBC. “JPMorgan Chase is set to pay $920 million to resolve probes from three U.S. government agencies over its role in the alleged manipulation of metal and Treasurys markets.”
The figure was released Tuesday by the Commodity Futures Trading
Commission in a statement from Commissioner Dan Berkovitz. Last week, news reports indicated the New York-based bank was nearing a settlement of almost $1 billion.
For eight years, a group of traders at JPMorgan systematically ‘spoofed’ precious metals and Treasury futures markets by entering hundreds of thousands of orders with the intent to cancel them before execution,” Berkovitz said. “The Commission’s Order finds that JPMorgan manipulated these markets and failed to diligently supervise its traders.”
We went on to note,
The language is a farce. Government B.S. spewed out for the Presstitutes to sell. “Resolve probes,” “alleged manipulation,” “systematically ‘spoofed’ precious metals market.
How about: “Greedy, lowlife criminals were again caught stealing… destroying the lives and life savings of honest people who invested in precious metals.” But don’t call them criminals.
New Week, New Game
Beyond the GameStop and silver frenzy that riled markets last week are the economic fundamentals we have continually detailed and which Gregory Mannarino has reported on and analyzed that defy logic. (See Greg’s new article, “BROKERAGES, MARKETS, GOVERNMENT: A RIGGED GAME OF DECEPTION” in this issue.) Much of the world has entered the “Greatest Depression.”
As evidenced by the numbers, the economic devastation caused by sheltering-in-place entire nations to fight the COVID War, equity markets should be deep in bear territory.
Tourism, trade shows, conventions, entertainment, hospitality, restaurant, airline… dead and dying. Hundreds of millions out of work, 90 million sinking into poverty according to the IMF.
Millions abandoning big cities, working from home as commercial real estate, rental, and condo markets tank in many nations around the world.
Brick-and-mortar retail going bust, malls empty, “For Rent” signs string the streets from Fifth Avenue to Champs-Élysées.
Day after day, week after week, the data pointing to economic decline gets worse, yet stock markets around the keep rising.
Why?
The GameStop Show shows… the game is rigged.
As Joe Doran details in this Trends Journal, “SPECIAL REPORT: GAME STOP,” just as the “smalls” brought down the “Bigs” last week by joining to together to direct the stocks, that is virtually an everyday game played BY the Wall Street Money Junkies the mainstream media sanitizes as hedge funds, private equity groups, and “investors.”
GameStop dropped more than 60 percent today, bringing its two-day loss to 72 percent.
Markets
After a down January, February has started with a bang with the Dow closing up 229.29 points yesterday, the tech-heavy NASDAQ up 1.4 percent… and the S&P gaining 1.7 percent, pushing it back into positive territory for the year.
Today was another happy market day with the Dow Jones Industrial Average up 475 points, the NASDAQ spiking 1.56 percent, and the S&P rising 1.39 percent.
GOLD/SILVER. Gold slumped $26.60 per ounce, dragged down by the silver crash. Following the Chicago Mercantile Exchange (CME) increasing maintenance margins on Comex 5000 Silver Futures by 17.9 percent, silver fell 9.46 percent, closed down at $26.63 per ounce.
Despite the volatility in the precious metals sector, we maintain our forecast for gold to rise above $2,100 per ounce and silver above $50 per ounce.
BITCOIN. As we go to press, bitcoin, at $35,781, is up some $3,781 from last week. Thus, it is still finding strength despite its pullback from its recent $41,000 high.
And, as we have reported, there is increasing pressure from central Banksters to reign in bitcoin. Most notably, the chief of the European Central Bank, Christine Lagarde, called for international bitcoin regulation last month claiming bitcoin is “a highly speculative asset, which has conducted some funny business and some interesting and totally reprehensible money laundering activity.”
We maintain our 5 January forecast for bitcoin: “The downward breakout point will be hit should the price fall below $25,000 per coin.” On the upside, should bitcoin again break past $41,000 into the $42,000 per coin range, we forecast it will spike above $50,000 per coin.
OIL. On the oil front, oil prices rose higher on reports that OPEC+ pact will extend oil production curbs and Saudi Arabia would cut production in the first quarter by an additional one million barrels per day.
As reported by oilprice.com, OPEC Secretary-General Mohammad Barkindo was delighted because of “the backwardation” at the opening of the OPEC+ panel meeting today. He said, “With the crude oil market currently switching into backwardation, we are hopeful that 2021 will be a good year for overall demand.”
They noted, “The futures curve continues to firm into backwardation, the state of the market that points to tighter supplies with the prices of the nearer futures contracts higher than those further out in time.”
Thus, as is clear by the deals made by OPEC+ Gang, in full focus for all to see and hear – as with the equity, other financial and commodity markets – the game is rigged.
2020: WORST ECONOMIC PERFORMANCE IN 75 YEARS
The COVID lockdowns pushed the U.S. economy down by 3.5 percent last year, the U.S. Commerce Department reported, the worst contraction since 1946 when World War II ended.
In comparison, the economy shrank 2.5 percent in 2009 at the depth of the Great Recession and expanded by 2.2 percent in 2019.
More than 18 million Americans are receiving some form of unemployment benefits; face-to-face jobs are unlikely to return in volume until the COVID virus is controlled, possibly during the third quarter, optimistic analysts say.
The greatest loss of jobs has been among women, people of color, and those without a college degree, studies show.
Consumer spending slowed for the year in all 15 categories monitored by the Commerce Department’s Bureau of Economic Analysis.
Funny Money
Plunging further in debt, the U.S. government pumped more cheap money into the pocketbooks of the peasants of Slavelandia.
Thus, personal income grew in 2020 from 2019, thanks to federal $1,200 stimulus checks, federal $600 weekly unemployment benefits, and the Paycheck Protection Program, which allowed some workers to hang onto their jobs.
Disposable personal income grew faster last year for lower-income households than for the average household, according to a joint study by the Peterson Institute for International Economics and Harvard University’s Kennedy School.
Those federal dollars helped ignite an economic recovery as people spent on vehicles, household items such as furniture to make being locked down at home less unpleasant, and supplies for home offices, the Washington Post reported.
But those boosts faded in 2020’s second half as stimulus funds were spent or banked and federal unemployment benefits disappeared.
Congress’s $900-billion rescue package passed in December gave every American another $600 stimulus payment and extended a $300 weekly federal unemployment payments through March.
To spark a long-lasting recovery, Democrats in Congress emphasize a need to “go big and go bold,” in the words of Senate majority leader Chuck Schumer, and quickly pass President Biden’s $1.9-trillion stimulus plan; Republicans are balking at the cost.
Biden has met with a group of Republican senators to discuss prospects for a compromise plan.
TREND FORECAST: A deal will be reached with Congress, more money will be pumped into the system, and it will artificially inflate the GDP in the second quarter, third quarter, and possibly the fourth depending on unforeseen wild cards. But long term, we forecast it will decline as the “Greatest Depression” worsens.
There will be a “Biden Bounce” – some lost jobs will recover, but new ones won’t be created. Yesterday, the Congressional Budget Office forecast that the number of employed Americans won’t return to its COVID War lockdown level until 2024.
Therefore, some of what is lost will come back, but true economic growth – the creation of new jobs and businesses – will not expand.
