As we have been noting since the COVID War began one year ago and most of the planet was locked down, it made absolutely no sense for the wide range of equities to keep hitting new highs.
In the real world, the socio-economic devastation of draconian shelter-in-place orders is in front of everyone’s eyes. “For Rent” signs are splashed across cities far and wide. Once-bustling roads are nearly empty… especially at night. People walk around masked up, looking down, and mumbling to each other.
As we have detailed extensively in the Trends Journal and will continue to do so, the facts don’t matter. The fear and hysteria that has been sold to the people by the Presstitutes, such as CNN, which has admitted that promoting the COVID War boosts their rating and makes them money, keep selling a steady stream of lies… and the people are buying it. (See our article in this issue, “CNN DOUBLES DOWN ON FEAR PORN AFTER TEXAS RE-OPENS.”)
Yes, some states have opened up in America, but many are still on COVID War Alert. And the economic devastation continues to take its toll. The hospitality sectors, tourism, restaurants, conventions, trade shows, theaters, cinema, entertainment venues… empty, dead, dying.
That’s the reality on Main Street, which has absolutely no connection to Wall Street.
Yesterday, technology stocks continued their decline, with the NASDAQ falling 2.4 percent, pushing the index into correction territory… down 10 percent from its 12 February record high.
With the $2 trillion stimulus ready to be injected into the U.S. economy, and a supposed return to a pre-COVID-War world, the prospects for less hi-tech life plus rising bond yields have erased the shine from the highly-traded sector.
Yields on 10-year U.S. Treasury bonds were up for the fourth straight session, hitting 1.594 percent… their highest since 19 February 2020, just before World War COVID was launched.
That was yesterday. Today, bond yields weakened, and in a blink of a market eye – buy-the-dips – gamblers pushed the NASDAQ up 3.69 percent. The recent, big-hit tech losers such as Tesla, which was sharply down over the past five trading days, spiked 20 percent. The other previously shrinking big techs such as Amazon, Netflix, Apple, and Microsoft closed up some 3 percent.
Meanwhile, the Dow, up 1 percent earlier in the day, erased most of its gains in the last hour, closing up continues to move higher, closing up 30 points.
How can this be? What and who are driving up equities for an entire year since the COVID War devastated most economies across the globe?
In the U.S., for example, tens of millions of lives and livelihoods were destroyed; businesses gone bust will never return; commercial real estate is tanking in once-thriving metropolitan cities; corporate debt loads are climbing; ten million are unemployed.
Without a doubt, Washington’s $2 trillion monetary injection into the U.S. economy will inflate economic growth for the next several months, but there is a much larger inflation injection that is artificially propping up equities. It’s courtesy of “THE FED: INFLATE BY ALL MEANS NECESSARY”… The Federal Reserve scheme Gregory Mannarino details in this issue of the Trends Journal.
GOLD. With the dollar index weakening and bond yields falling, gold and silver prices moved sharply higher. Gold closed up $36.10, closing at $1,714, and silver was up 75 cents, closing at $26.02, both sharply rebounding from yesterday’s lows.
Since gold’s recent decline, we have now identified its low breakout point at $1,650 per ounce. Should it hit that level, the downside risk is around $1,550 per ounce. As for sliver, should it break below $22 per ounce, the downside risk is in the $17 per ounce range. Considering silver is the most efficient conductor of electricity and its strategic demand in both hi-tech and heavy industry, we do not forecast it will break below that range.
We maintain our forecast for gold to break above $2,100 per ounce this year and silver to move above $50 per ounce. And, we also note, among the factors holding back price hikes in gold is that money that would have been flowing into the precious metal has found its way into cryptocurrencies… “gold” for the younger generations.
OIL. While Brent Crude and West Texas Intermediate fell some 65 cents and 88 cents a barrel, respectively, today, they are still trading near their yearly highs. With more stimulus money being pumped into economies, there will be an increase in oil demand, thus keeping prices in their current range.
This, in turn, will hit consumers and businesses, further pushing up the inflation index.
As we have noted, should military tensions break out in the Middle East and oil prices spike toward the $100 per barrel range, it will be a spark that could crash equity markets and drive the global economy deeper into the “Greatest Depression.”
Rigged Game
Worried that COVID War might still cripple a global economic recovery, the OPEC+ cartel agreed at their 4 March meeting to not raise production levels.
Under the current plan, Saudi Arabia will continue to restrict production by one million barrels a day at least through April. The country then will raise production “eventually and gradually” in future months, depending on market conditions.
As part of the agreement, Russia and Kazakhstan are allowed small production increases.
OPEC and its partners plan to meet monthly to review market conditions and production levels.
BITCOIN: The Bitcoin boom continues. After hitting a high of $58,341 two weeks ago, Bitcoin was trading in the $47,000 per coin range. Today, it’s back above $54,000.
We maintain our 5 January forecast: “The downward breakout point will be hit should the price fall below $25,000 per coin.”
