ECONOMIC UPDATE: Upside of Equities Much Stronger Than Downside
The Federal Reserve will keep lowering interest rates in the run-up to the November election to keep the party in power...in power
NOTE TO READERS: The following article was published in this week’s Trends Journal. Never miss an issue.
The U.S. equity markets are on a tear, racking up one of the strongest first quarters in 75 years, and The Street is betting that they will keep going higher. Minus some wild cards such as World War III heating up, oil prices spiking, a major terror strike, etc., the upside of equities is much stronger than the downside.
Why?
As the 1992 behind-the-scene Bill Clinton presidential campaign squad noted, “It’s the economy, stupid.” Simply, the bottom line for the voters is to have more money to spend.
As we have long forecasted, the Federal Reserve will keep lowering interest rates in the run-up to the November election to keep the party in power…in power. For all to see, with the former Fed-Head Janet Yellen playing the role of the United States Treasury, the Bankster Bandits are in full control of America’s money.
However, while equities will keep rising, the standard of living will keep declining… and the people will feel it.
Once upon a time, not too long ago, America was “The Land of Opportunity.”
No more.
The private equity groups, venture capitalists, hedge funds, etc., are in full control. Indeed, with the one percent owning some 54 percent of the equity market and the 10 percent owning 90 percent, 63 percent of the plantation workers of Slavelandia are living paycheck-to-paycheck.
Need more proof of the dire state of everyday affairs? America ranks 23rd on the list of the happiest countries.
Why?
“It’s the economy, stupid.”
TOP RUSSIAN SPY BLAMES U.S., UKRAINE, BRITAIN FOR MOSCOW SHOOTING
U.S. TO ISRAEL: WHY SO UPSET? CEASEFIRE VOTE MEANT NOTHING
Therefore, in the run-up to the November elections, Washington will do all it can to keep equities high to artificially inflate the economic scenario.
Thus, as long as the equity markets stay strong, the average person’s economic hardship is covered over by high times on The Street. Only when equity markets crash, will the pain on Main Street be acknowledged.
And the pain is real.
Last year, the plantation workers of Slavelandia in the U.S. paid 50 percent more in credit card expenses than in 2020, according to the Federal Deposit Insurance Corporation, while delinquency rates on credit cards hit their highest level since the depth of the Great Recession in 2011, according to Moody’s Analytics.
And of course, the higher interest rates rose, the more money the credit card junkies make from card holders.
The Financial Times reported that 50 percent of Americans feel they are in worse economic shape under Biden than when Trump was president, while 28 percent cited credit card debt as one of their biggest sources of financial stress. Indeed, back in the day, the mainstream media and politicians condemned the Mafia for charging 10 percent on loans they made.
But with the Bankster Bandits in control of America, the annual credit card rates hit an all-time high of nearly 23 percent at the end of last year.
According to the FT the credit card club made $92 billion in earnings from credit card loans—more than double the $45 billion they made a decade ago.
What is ignored in the polls and the reports is the damage inflicted as a result of the COVID War which destroyed the lives and livelihoods of hundreds of millions of Americans and small businesses.
TREND FORECAST: While equities may rise, as the data proves, the working public is on a downtrend and we maintain our forecast of Dragflation: Declining economic growth and rising inflation. As the Financial Times reported, much worse than the fear of rising credit card debt is the reality of how inflation is hitting consumers hard, as 80 percent said inflation was their main source of worry.
TREND FORECAST: And, as we have long forecast, the lower interest rates fall, the deeper the dollar will fall and the higher gold prices will rise… along with bitcoin.
Indeed, while the mainstream business media was negative on bitcoin after its steep fall last week, we had forecast the opposite, noting that with high spikes there are sharp declines but the trend-line for bitcoin is upward. When will it go down? When central banks go to CBDC and prohibit digital currency competition.
On the gold front, the rising price of bullion has just begun. Besides a weakening dollar that will drive gold prices higher, the escalation of World War III will have more central banks and people across the globe buying gold as the premium safe-haven asset.
Indeed, retail gold purchases in China are up some 25 percent from last year and according to the World Gold Council, since the start of the year, Beijing imported 367 metric tons of gold in the first two months of this year… up more than 51 percent from last year.
On The Home Front
As U.S. interest rates began to rise in March of 2022, from 25 basis points, to the range of 0.25 percent to 0.50 percent—with expectations for much higher interest rates to come—the bet on The Street was that home prices would decline. And dip they did, falling 2.5 percent for the year.
We had forecast the dip was temporary and home prices would keep going up. What differentiated the COVID War housing boom that spiked up home prices some 45 percent from 2020 to now than the one that began after 9/11 until the Panic of ’08 (the dot.com domain we registered in 2007!), was that back then it was an artificially propped up housing market with sub-prime mortgages and other Bankster scams.
When COVID came in 2020 and the masses swallowed the government and mainstream media crap that people on the street and other strangers around them would kill them with COVID, they ran from big cities to hide in a house in the suburbs and x-burbs. But this time, the people that freaked out from the COVID War bought homes they could afford.
And when interest rates kept rising and people didn’t want to sell their homes because a new mortgage would cost too much, we noted that prices would stay high—and keep rising—because it was simply a supply and demand issue: too few homes for sale and high demand, which still exists.
The U.S. Census Bureau and Department of Housing and Urban Development reported on Monday that “Sales of new single‐family houses in February 2024 were at a seasonally adjusted annual rate of 662,000. This is 0.3 percent (±16.2 percent)* below the revised January rate of 664,000, but is 5.9 percent (±14.3 percent)* above the February 2023 estimate of 625,000.The median sales price of new houses sold in February 2024 was $400,500. The average sales price was $485,000.”
TREND FORECAST: So there you have it. The average sales price of a home in the U.S. is $485,000…up some $100,000 since 2019 when America and the world were not fighting the COVID War. While this is a price that the average plantation worker of Slavelandia cannot afford, with a population of 332,000 and the top 25-30 percent able to buy a home, until supply outstrips demand, home prices will stay high.
Indeed, confirming what we have forecast, today Business Insider reported that according to Redfin “Buyers need to earn $114,000 a year to afford a median-priced home, 35 percent above the median household income.”
Also, not all places are created equal. What will be driving up home prices in the suburbs and x-burbs and driving them down in big cities is the Office Building Bust, rising crime rates, homeless and migrants flooding the streets… and the loss of feeling safe and the fear of increasing violence and degradation that did not exist in major cities prior to the COVID War.
TREND FORECAST: As we often note, we are “Trend Forecasters”, not “futurists”. We study the current events forming future trends and no one can actually “predict” the future since there are too many wild cards, may they be played by humans or Nature. And right now the “in-human” wild cards are being played with raging Israel and Ukraine Wars that are escalating World War III.
As we note in this and previous Trends Journals, the lunatics in charge are ramping up the march to war. World War III has begun and it will not become “official” until a major wild card event is played… such as another 9/11 (that “officially” launched The War on Terror), the blowing up of a nuclear power plant, an assassination of a top politician, etc.
When this happens, equities and economies will crash, slashing the price of homes and commercial real estate.