Today Gerald Celente issued 3 major forecasts ahead of the Fed decision.
November 1 (King World News) – Gerald Celente: There was no October surprise on the equity market front, in fact, quite the opposite.
Despite soaring inflation, rising recession fears, intensifying Ukraine War, job layoffs, home sales slumping, mortgage and interest rates rising, a mixed third-quarter earnings season and slow growth warnings from companies such as the Amazon giant—which accounts for nearly 40 percent of the U.S. e-commerce sales—it was a great month for The Street.
And no need to worry about falling government bond prices and rising yields which usually slams the stock market. On Monday, the 10-year Treasury Yield hit 4.074 percent compared to 3.802 percent at the end of September.
Making absolutely no sense considering the hard data and failing economic fundamentals, snapping a two month losing streak, the major averages racked up their best month since 1976. Scoring its best October ever, the Dow spiked up 14 percent, the S&P rose nearly 8 percent and the tech-heavy Nasdaq climbed almost 4 percent.
Now of course, all eyes are on Wednesday when the Federal Reserve will announce how much they will raise interest rates following their meeting and how low they will go when they meet again in December.
With annual inflation at 8.2 percent in America, the guess on The Street is that the Feds will raise interest rates to 4.75 percent—5 percent range next year.
TREND FORECAST:
We maintain our forecast that when interest rates move above 4 percent the U.S. economy will sink in deep recession. And the higher U.S. interest rates rise, the deeper dollar indebted emerging markets will dive… and so will all those businesses, hedge funds, private equity groups and individuals whose loans are not fixed and unsecured.
Among the hardest hit sectors, which never a word is heard in the mainstream media, will be commercial office buildings and commercial real estate sectors that depend on commuters. The work-at-home trend that was born with the outbreak of the COVID War when politicians forced businesses to close down and people to stay locked up in their homes has become the new reality.
After spending months at home working remotely, the reality of disgusting multi-hour commutes to-and-from work hit the hearts and souls of employees who will no longer endure the mental degradation of commuting. Therefore, office occupancy rates will continue to stay well below pre-COVID War levels as people commute to work a few days a week… or not at all. And for employers who need less rental space because of fewer employees coming to work, cutting back on office space is a money saver.
TREND FORECAST:
As the old saying goes, “It’s the economy stupid.” And with the U.S. midterm elections next Tuesday and polls showing that the major issue facing the public is the economy. Indeed, a headline in yesterday’s Wall Street Journal read: “Economy Tops Other Issues In Campaign’s Final Stretch.”
Therefore, we forecast that although they may raise interest rates 75 basis points, the Fed’s message will be for lower hikes in the future which will prove bullish for equities. Therefore, the higher equities rise between now and next week, the better the prospects that people will vote for the ruling party…
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Money Bonanza Has Come To An End
Since the COVID War began and the central Banksters brought interest rates to record lows and governments pumped in countless trillions to artificially pump up equities and economies, besides the Bigs getting bigger with record merger and acquisition activity hitting an all-time high in 2021, Main Street also cashed in on the cheap and free money bonanza with their home buying spree.
When the phony subprime real estate market exploded during the Panic of ’08, home prices in the U.S. fell 27 percent between 2006 and 2012. While we do not forecast such a sharp decline as interest rates rise and the housing market slumps, the signals are flashing “Danger Ahead.” For example, already the Case-Shiller Index shows that home prices are down 8.2 percent in San Francisco. Yes, the city that was among the first to lockdown and imposed draconian mandates that destroyed lives and livelihoods while boosting the homeless and crime rates.
With still a long way to go down since home prices shot up 43 percent during the COVID War housing boom, marking the first national home price decline since 2012, U.S. home prices have fallen 1.6 percent between June and August.
And the facts of decline are in the numbers. Quarter-to-quarter real growth in construction spending has been negative for four of the last five calendar quarters and is down at an annualized quarter-to-quarter pace of 16.7 percent according to Shadow Stats.
They also note that on the inflation side of life, headline year-to-year September 2022 PPI Construction Inflation of 23.09 percent notched higher from 22.95 percent in August.
Before the COVID War and before the record low interest rates and the estimated $8 trillion of dollars of fake money Washington pumped into the economy, Shadow Stats also notes that the highest annual pace of Construction Inflation increase in the modern PPI had been shy of 6 percent, back in 2018.
Sales Slowdown
Sales of existing homes have been sliding for eight months running while sales of new homes dropped 10.9 percent in September from August and 17.6 percent from a year earlier, the U.S. Commerce Department reported last week.
Rising interest rates caused the decline, according to The Wall Street Journal.
Meanwhile, the median selling price of a newly built home climbed to $470,600 during the month, a gain of 13.9 percent over that in September 2021, the department said.
September is the fourth month this year that sales of new homes dropped 10 percent or more, month over month and April marked the biggest drop at 12.4 percent.
In the week ending 21 October, applications for mortgages to buy homes plunged 42 percent from a year previous, the Mortgage Bankers Association said…
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Over There
And the bad data keeps getting worse. Hitting 9.9 percent in September—the highest inflation rate since the euro was invented 23 years ago—for October, consumer prices in Europe surged to a record high of 10.7 percent.
The latest high, reported by the European Commission’s statistics arm Euro-stat, also outstripped the 10.2 percent expected by economists polled by Reuters. It was the 12th consecutive month that inflation had set a record high in the Eurozone, taking it to more than five times the ECB’s 2 percent target.
In September, thanks to rising food and energy costs, the bloc’s overall inflation rate hit almost 11 percent.
While the data shows where it came from, Christine Lagarde, the head of the European Central Bank said last Friday that they raised interest rates “because we are fighting inflation,” that “pretty much came about from nowhere.”
And rather than blaming the United States and NATO for imposing strict sanctions on Russia and their cutting off Russian oil and gas supply into Europe, Lagarde bullshitted that “the energy crisis caused by Mr. Putin who has decided in an unjustifiable way to invade another country”… unlike American and NATO’s “unjustifiable” invasions of Yugoslavia, Iraq, Libya, Afghanistan, etc.
And as we have noted, even with the two 0.75 rate hikes which bring the rate to 1.5 percent, real EU interest rates remain deep in negative territory. And, with the economy long weakening despite some eight years of negative interest rate policy, now, the tiny hikes will cause the euro area to dive into recession.
Gross domestic product in the Eurozone slowed in the third quarter, rising 0.2 percent from the previous quarter according to Eurostat… a slowdown from 0.8 percent growth in the previous quarter.
And with GDP increased slightly in Germany, France, Italy and Spain reported sharp declines.
However, while Germany racked up GDP growth, inflation spiked 10.4 percent in October according to preliminary figures.
Not So Good News
Still showing a slowdown in growth, but better than expected, the purchasing managers’ index (PMI) for China’s manufacturing sector came in at 49.2 in October, down from 50.1 in September, the National Bureau of Statistics reported.
A reading above 50 indicates expansion, while a reading below reflects contraction.
And over in India, The Indian rupee continued its ten month slide against the dollar. Notching up its worst losing streak in almost four decades, the rupee hit new lows against the dollar in October and is down nearly 11 percent for the year.
TREND FORECAST:
The equation is simple, the higher the U.S. Federal Reserve raises rates, the steeper most currencies will fall.
Emerging market nations are leaking investment capital as fast as they continue to pile up debt. A number of the countries have extraction economies—selling minerals, timber, and other raw materials. But inflated prices for imports and the declining value of their currencies—which has them buying less but costing more – will exceed their export revenues. As a result, emerging nations will be pushed into Dragflation, our Top 2022 Trend in which economies shrink under high prices.
With Dragflation setting in, many countries will find it harder and harder to service their massive debts, pushing many of these nations into default. And again, the more dire the economic realities, the greater the escalation of people taking to the streets to protest lack of basic living standards, government corruption, crime and violence.
And the more intense the social uprising, the greater the risk for civil wars that will expand to regional wars.
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***To listen to Gerald Celente discuss gold, real estate, major markets and much more CLICK HERE OR ON THE IMAGE BELOW.
***To listen to when the Fed will pivot and how it will impact major markets, including gold CLICK HERE OR ON THE IMAGE BELOW.
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