The Dow Jones Industrial Average and S&P 500 index closed last week hitting new highs with the Dow setting its 21st record close this year. And the S&P, which has surged 87 percent from its low last March, hit its 23rd record close and is up 5.8 percent in this year’s first quarter.
With some 50 percent of Americans having gotten at least one COVID jab, sharp boosts in retail sales, massive government stimulus injections, and record low interest rates… there are expectations for strong economic growth in the coming months.
Indeed, according to an American Association of Individual Investors, almost 57 percent of investors are bullish for the stock market to stay strong over the next six months.
A Bank of America analysis of EPFR data reported by the Wall Street Journal showed investors, (i.e. gamblers) pumped in more money into global stocks funds on a net basis in the past five months than they did during the prior 12 years combined!
Today, on the news that COVID cases are rising, which in turn lowers expectation for a sharp economic rebound, U.S. stocks retreated for their second day in a row, with the Dow down some 250 points, Nasdaq was off nearly 1 percent and the S&P 500 fell 28 points.
TREND FORECAST: We maintain our forecast that as long as interest rates remain low and the federal government and central bank keep injecting fiscal and monetary methadone into the system – minus a wild card, be it man-made or by Mother Nature – the artificially injected equity markets will stay on their high for the near term… as long as inflation does not rapidly spike.
However, as we have forecast, inflation rates will rise as will interest rates, and the higher the interest rates go the faster and lower equities will fall. Indeed, interest rates cannot be maintained at these low rates forever. And the higher interest rates rise the more it will cost the government to service its record high 28 trillion debt.
Gold/Silver: With the dollar not rebounding from its seven-week low and fears of inflation rising, gold prices moved up $8 per ounce, while silver prices stayed flat.
As history proves, the deeper the dollar dives, the higher precious metals prices will rise. Backing up our forecast for a weak dollar – which will push gold above $2,100 per ounce this year and silver to double in value – is Gregory Mannarino’s new article, “VALUE OF THE USD IS CRATERING.”
Bitcoin: As we go to press, Bitcoin spiked 2 percent. Despite it being down some $6,000 from its record high – minus a collective government/central bank movement to ban cryptos – we maintain our forecast for rising prices as top cryptocurrencies become more of a mainstream safe-haven asset.
Indeed, if there were no crypto market, precious metal prices would be plowing toward double digits. Should Bitcoin fall below $30,000, the downside risk will push it into its teens. Should it break over $72,000 per coin, we forecast it will quickly close into toward $100K per coin.
TRENDPOST: Nearly four years ago Beijing began to crackdown on cryptocurrencies when they shut down local cryptocurrency exchanges. Indeed, as we wrote back then, it was the Chinese, that were driving up bitcoin, purchasing more of it than any other nation.
Now they are singing a different tune. Last Sunday, during a panel hosted by CNBC at the Boao Forum for Asia, Li Bo, deputy governor of the People’s Bank of China said, “We regard Bitcoin and stable coin as crypto assets … These are investment alternatives.” said on Sunday.
He went on to say, “They are not a currency per se. And so the main role we see for crypto assets going forward, the main role is investment alternative.”
Following his announcement, bitcoin spiked over 2 percent.
TRENDPOST: While China is opening up to cryptocurrencies, Turkey will forbid digital currencies to be used as payment for goods or services.
Cryptocurrencies are volatile in value, can be used for illegal transactions, and are “neither subject to any regulation or supervision mechanisms, nor a central regulatory authority,” Turkey’s central bank said in announcing the ban on 16 April.
Users will still be able to exchange digital currencies through banks, which will give the Turkish government greater ability to monitor transactions and identify people involved.
However, cryptocurrencies can be traded between people without using a bank, limiting outsiders’ power to see transactions’ details, Chris Bendiksen, research chief at CoinDesk, said in comments quoted by the Wall Street Journal.
“Users can continue to buy, sell, or hold cryptocurrencies through cryptocurrency platforms,” Ozgur Guneri, CEO of the TurkBtc crypto exchange, told the WSJ. “I don’t see [the ban] as a long-term problem.”
Most Turkish crypto users buy and hold digital coins to store value, not to buy things, he added.
Digital cash soared in popularity in Turkey over the past year as the lira, the country’s national currency, crashed.
Bitcoin prices in Turkey have more than doubled just this year in dollar value; one bitcoin was worth almost $500,000 on 16 April, compared to $215,000 on 1 January.
The global rally in cryptocurrencies also helped eroded the lira. At the beginning of 2020, one Bitcoin was worth less than 50,000 lira; it ended March valued at more than 500,000.
About 2.4 million Turks were using cryptocurrencies in 2020, according to the country’s Information and Communications Technologies Authority, as well as turning to gold and other alternative forms of storing value while the lira tumbled.
Oil: Earlier today, oil prices ticked up a bit on the news of an outage in Libya, but Brent Crude fell 56 cents to close at $66.49 a barrel. West Texas Intermediate fell 77 cents, closing at $62.61 a barrel on news of rising COVID cases and expectations for more lockdowns which will, in turn, lower demand.
