Worse Than The Tech Bubble? Dow Down 1,100 Points, Top Trend 2022 ‘DRAGFLATION’ Not ‘Stagflation’

Dow Jones Industrial Average sees biggest loss since 2020, worst is yet to come

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Fed Head Jerome Powell wasn’t lying when he said the average American was going to feel pain as he tries to bring down inflation caused by unnecessary COVID-19 lockdowns (that didn’t work) and the Ukraine War (that the U.S. should not be involved in).

The Dow Jones Industrial Average lost 1164.52 points, or 3.6 percent and the benchmark S&P 500 sank 4 percent. The Nasdaq Composite also fell 4.7 percent, or 566.37 points.

And things are going to get worse.

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Retailers are seeing the impact of inflation and soaring oil prices. Target, the main drag on the market, watched its stock fall 25 percent after missing on its quarterly earnings report. And there’s a bumpy road ahead. The company said it could see an additional $1 billion in freight and transportation costs this year tied to near-record-high fuel and diesel prices, Yahoo Finance reported.

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The Associated Press reported:  Purchases of big TVs and appliances that Americans loaded up on during the pandemic have faded, leaving Target with a bloated inventory that must be marked down to sell.

Customers are now avoiding big-ticket items like TVs and refrigerators, economists say.

Target’s numbers come a day after Walmart, the country’s largest retailer, reported a 52 percent drop in profit in the first quarter. The Arkansas-based company also blamed rising costs for fuel, food, and labor for increasing the cost of doing business. Walmart’s net income for the quarter sank to $2.05 billion, or 74 cents per share, “compared with $2.73 billion, or 97 cents per share a year ago.” 

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And guess who’s going to pay for these rising costs? You, the customer.

Brett Biggs, the Walmart CFO, told Yahoo! that the company is “going to try to hold costs with suppliers — but if prices go up in a certain way, then we'll have to take prices [up] on items."

Jeremy Grantham, co-founder and chief investment strategist of Grantham, Mayo, & van Otterloo, told CNBC that the downturn is worse than the tech bubble of 2000 and that stocks could more than double their losses.

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“The other day, we were down about 19.9 percent on the S&P 500 and about 27 percent on the Nasdaq. I would say at a minimum, we are likely to do twice that,” Grantham said. “If we are unlucky, which is quite possible, we would do three legs like that and it might take a couple of years as it did in the 2000s.”

DRAGFLATION: Deutsche Bank, picking up on our forecast of Dragflation, predicted in April “a major recession” for the U.S. in a research note to clients.

The reason: to lasso inflation, the Fed will have to raise interest rates so aggressively that the economy suffers, the bank warned in a report titled, "Why the Coming Recession Will Be Worse Than Expected."

"We regard it...as highly likely that the Fed will have to step on the brakes even more firmly, and a deep recession will be needed to bring inflation to heel," the report stated.

"It is sorely tempting to take a go-slow approach hoping that the US economy can be landed softly on a sustainable path,” the bank said, but “this will not happen.”

The reason: to lasso inflation, the Fed will have to raise interest rates so aggressively that the economy suffers, the bank warned in a report titled, "Why the Coming Recession Will Be Worse Than Expected."

TRENDPOST: We are watching the result of disastrous policy decisions and Powell’s complete failure in identifying the inflation threat for months.

Powell, the Bankster who bullshitted for a year and a half that the spiking inflation was “temporary,” then “transitory,” before admitting just recently it was real and that rising interest rates  will impose “some pain” on the general population.     

And the “pain” is being felt. According to a new Pew Research survey, some 70  percent of Americans say inflation is “a very big problem.” 

Gerald Celente, publisher of the Trends Journal, tweeted, “The Fed knew inflation was real. They are not stupid. With the COVID War raging and businesses, lives, and livelihoods locked down by dictatorial politicians, the Banksters and the Government Gangs flooded the world with cheap money to artificially prop up equities and economies.”

Gregory Mannarino spoke with Celente last month and gave his insights of what to expect next in this New World Order of what he called “Crisis Economics.”

“We have the race to the bottom,” Mannarino said. “We’ve got global currencies issued by Central Banks, they’re not going to stop. This mechanism in place right now – again from crisis, to crisis, to crisis, so they can simply throw cash at them is another mechanism that they can pull cash out of the future to keep hyperinflating the debt bubble…it’s a backdoor way of doing it. They’re going to prolong every single crisis.”

TREND FORECAST: The worst of inflation is yet to come. And, should America and its NATO allies keep putting sanctions on Russia, as we have greatly detailed in Trends Journals since the Ukraine War began 24 February, the inflation rates will continue to rise beyond “expectations.” (Read more in this week’s Trends Journal.)

We maintain our forecast that with each interest rate rise, equity markets and the economy will decline. Therefore, the higher interest rates rise, the deeper they will both fall.

ICYMI