ECONOMIC UPDATE: The Bigs Control Everything

Nearly 5 billion people out of a global population of 8 billion are worse off today than in 2019… the year before politicians launched the COVID War.

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In the real world it’s all about the bottom line. But in the White Shoe Boys Wall Street world it’s about a small gang being in complete control to run and rule the equity markets as they wish.

Need more proof?

Oxfam reported last week that the largest of the money junky gangs, which are called “firms,” control over 33 percent of all corporate profits, while the richest one percent own 43 percent of all global financial assets. 

Need more proof as to who’s running the world?

Here is a headline from CNBC today:

World’s largest hedge funds record bumper year of profits, research shows

• The world’s top hedge funds raked in record profits last year amid a resurgence in stock markets, new analysis showed.

• The 20 leading fund managers made $67 billion in investor profits in 2023, up from the $65 billion recorded during the pandemic-era rally of 2021.

• Overall, the fund management industry recorded gains of $218 billion after fees, according to estimates from LCH Investments.

Meanwhile, for the plantation workers of Slavelandia, according to Oxfam, nearly 5 billion people out of a global population of 8 billion are worse off today than in 2019… the year before politicians launched the COVID War.

As we had long forecast when the COVID War began and politicians imposed draconian lockdown mandates, the lives and livelihoods of billions would be destroyed. Confirming our forecast, Oxfam reports that “with hundreds of millions of people seeing their wages buy less each month, their prospects for a better future disappear.”

Yes, again, as we had forecast: Dragflaton: declining economic growth and higher inflation. Simply stated, it cost a lot more to buy a lot less… and forget about buying a home or retiring. 

And while the plantation workers of Slavelandia lost $1.5 trillion as inflation rose more than their wages, Oxfam notes that since the 2020 COVID War, U.S. billionaires got 46 percent richer and the three richest, Musk, Bezos, and Larry Ellison, saw their wealth increase 84 percent.

TREND FORECAST: We note the above facts to clearly illustrate that where the equity markets are headed is a guessing game since so few own so much and governments, which the rich control, will do what they need to keep the market gamblers gambling. And as we say in The Bronx, “Money talks and bullshit walks.” 

Clearly, by the sheer numbers, “Money” is doing the talking and while there will be, as there always is, volatility in the equity market racket, we maintain our forecast that the lower and faster the Federal Reserve lowers interest rates, the higher and faster equities will rise.

Wild Cards

However, there are the wild cards that will be played. One is our BANKS GO BUST Top Trend for 2024. As defaults escalate in the commercial office building sector and the banks that don’t have funds to cover the unpaid loans go bust, that, as noted with the bank failures last year, will bring down equities. And, the more banks that fail, the deeper equity markets will fall. 

The other major wildcards are the Israel and Ukraine wars. For example, should they continue to escalate and attacks targeting oil refineries increase and/or Iran goes to war with Israel and Brent crude spikes to $130 a barrel, it will crash equity markets and the global economy. 

China Blues

As we have long been reporting, once upon a time, we had forecast that while the 20^th century was the U.S. century, the 21^st century would be the Chinese century because the business of America has been war and the business of China was business. 

But then, China, following America’s war path in a different way, went to war when it launched the COVID War in January 2020 on its Chinese Lunar New Year, “The Year of the Rat.”

Closing down its economy with zero-COVID Policy for three years destroyed the lives and livelihoods of hundreds of millions of its citizens. 

It shows in the numbers. Its real estate sector, which has been grossly overbuilt and accounts for nearly 25 percent of China’s GDP, is in a slump.  

Since the COVID War began, some $6 trillion has been wiped off the value of Chinese and Hong Kong stocks. Hong Kong’s Hang Seng sank some 10 percent this year, China’s Shenzhen Component fell 10 percent and the Shanghai Composite slumped 7 percent.

Rigged Game

Playing the same cards but using a different deck, just as the U.S. and the EU propped up failing equities and their economies to fight the COVID War with trillions of dollars of cheap money, Beijing is playing the same game.

Bloomberg reported today:

China weighs stock market rescue package backed by $278 billion

Chinese authorities are considering a package of measures to stabilize the slumping stock market, according to people familiar with the matter, after earlier attempts to restore investor confidence fell short and prompted Premier Li Qiang to call for “forceful” steps.

Seeing more cheap money ahead, Hong Kong’s Hang Seng index spiked nearly 3 percent today, and after hitting a five-year low, China’s CSI 300 was up 0.4 percent. 

Again, we note what China is doing to make it perfectly clear that a sizable portion, not all, of the world equity markets are nothing more than a money junkie’s game that overrule facts and data.