Yesterday, once again, the trend of equity market abnormalcy continued. As nations across the globe impose new lockdown rules, closing down much of their economies, the Dow hit a new high on the hopes a new COVID vaccine will hit the market.
Climbing 1.6 percent, the index was pushed higher by companies that have been hit hard by the lockdown rules, fear, and hysteria. As though a vaccine will instantly pump up their tanking businesses, Boeing and Chevron spiked more than 7 percent, United Airlines and Exxon Mobile shot up over 5 percent, and the sinking cruise line operator Carnival spiked nearly 8 percent.
Unlike last week, when the markets zoomed higher on news of a Pfizer COVID-Killer vaccine but tech stocks sunk on the belief that the old normal would replace the new work-at-home / learn-at-home / stay-at-home new ABnormal that has pumped up the sector… this time tech stocks rose or fell only slightly.
Again, as we continue to note, there is no relationship between the economic hardships devastating John and Jane Doe on Main Street and the Money Junkies getting high on Wall Street.
Indeed, as Gregory Mannarino makes clear in his new article, “MARKET MELT-UP”:
“Despite what the mainstream media outlets and some politicians are trying to sell you, one fact remains: the U.S. and nations around the world are in the midst of an economic collapse.”
Doctor Copper
Commodities also spiked higher with copper prices, the signature metal that projects industrial demand and the economic climate, rose to its highest level since June 2018.
Around the world, markets moved higher with the Stoxx Europe 600 up 1.2 percent. On the Asian front, the Japanese Nikkei spiked 2.1 percent, hitting its highest point since 1991, while the Shanghai Composite rose over 1 percent.
Asian stocks rose on the report of new trade deal signed by 12 Asian nations in a regional block that includes China, Japan, and South Korea, which comprise up to a third of the world’s economic output.
The long-term, bigger news than the vaccine which projects where the future is heading is once again China’s marching forward in its quest to overtake the United States economically (and, in the future, militarily).
As Gerald Celente has long forecast, “The 20th century was the American century. The 21st century will be the Chinese century. The business of America has been war. The business of China is business.”
GOLD. With the Wall Street hype that a COVID-Killer vaccine will instantly inject strong growth back into diving economies – thus ending the unprecedented central bank and government money pumping schemes – gold and silver, the safe-haven precious metals, continue to trade in the high $1,880 and $24 per ounce range, respectively.
We maintain our forecast, however, that a COVID vaccination will, at best, only temporarily boost economic growth. Therefore, as the “Greatest Depression” worsens, massive injections of fiscal and monetary methadone will be pumped into failing economies across the globe… thus pushing precious metal prices higher.
BITCOIN. Today, Bitcoin spiked some 5.5 percent, hitting $17,696 as we go to press. We maintain our Bitcoin forecasts:
The amount of monetary methadone injections into failing economies to prop them up is unprecedented in world history. Thus, the rise in gold, silver, and Bitcoin as those who want to protect what savings they have in cash, are fearful of their nation’s currencies collapsing… or as we had written, they go from “DIRTY CASH TO DIGITAL TRASH.”
For younger and more speculative investors, Bitcoin will remain their alternative to precious metals, thus pushing that price higher as well when it solidly breaks above the 10,000 mark. – Trends Journal, 27 June 2020
As forecast, Bitcoin prices continue to rise as governments, particularly China, go digital. And, unlike older generations who view gold and silver as safe-haven assets, the going-digital trend will prove bullish for cryptocurrencies, particularly for younger generations who live in a digital world and are fearful of an economic future of worthless money.
We forecast Bitcoin will continue to rise, surpassing its all-time high. As the “Greatest Depression” worsens, more cheap money will be pumped into failing economies, thus pushing the value of currencies down… and inflation higher. The lower currencies fall and the higher inflation rises, the greater the demand for safer-haven assets such as precious metals and Bitcoin. – Trends Journal, 27 October 2020
OIL. On the vaccine news, Brent Crude, which was selling in the $39 per barrel range two weeks ago, rose to nearly $44 a barrel. Today, prices were basically flat with Crude closing at 43.86.
Renewed economic shutdowns in Europe and lingering weak demand across the Americas has led OPEC to lower its 2020 forecast for oil demand by another 300,000 barrels a day to 9.8 million.
The cartel of oil producers also reduced its 2021 forecast by 300,000 daily barrels, now saying that demand next will grow by 4.4 percent, not the 4.5 percent predicted earlier.
The global distribution of an effective COVID vaccine “as soon as the first half of 2021” could raise those numbers, OPEC said in a statement announcing the adjusted forecasts.
China is an exception. With its economy recovering faster than expected, OPEC has raised its 2020 demand forecast there by 200,000 barrels a day.
China’s September imports of crude oil were the third highest ever recorded, following June and July of this year as factories reopened with government support, according to OPEC.
The International Energy Agency (IEA) sees a darker picture.
In its November monthly report, it cut 400,000 barrels a day from its previous forecast, placing 2020 demand at 8.8 million barrels a day. It also noted a daily supply increase this month of one million barrels.
The price of oil available now for physical delivery is lower than prices on the futures market, emphasizing the current oversupply.
The agency also reduced it demand forecast for the first quarter of 2021.
Almost all of the demand reductions are seen in Western countries, the report said, with demand picking up in China and India.
The economic shutdown has permanently closed refineries that used to process 1.7 million barrels a day and has temporarily shut off another 20 million barrels of refining capacity, the IEA said.
A COVID vaccine is “unlikely to ride to the rescue of the global oil market for some time,” the report noted, fueling OPEC’s deliberations about production caps when it meets later this month.
TREND FORECAST: We maintain our forecasts that oil prices will average below $50 a barrel until at least next spring.
When OPEC members meet with their allies early next year, the majority will push for an extension of current production caps until inventories stop rising faster than demand. The cartel and its partners are likely to keep the current 7.7-barrel daily production cuts in place until at least next spring, although political wrangling and dissention could alter that number or drive some in the group to break ranks.