Again, I implore everyone to watch this video, as it describes the persistent downtrend in MQNZ22 on a monthly and weekly chart basis, but shows the emerging new potential uptrend (and for now, the REAL uptrend) that can now be seen on the daily chart.
The video will show why I still think any rally may be contained between 12,500+ to 13,000, but with an insane call by the Federal Reserve to pivot could still go higher.
Here are the reasons why I think that upper limit will be the case:
I Think That Larry Summers Is Right
Even leftist economists who like Larry Summers have a real grasp on monetary and fiscal policy know that rates cannot be contained with tiny rate hikes, as poorly managed as our energy infrastructure is being managed and with relentless urges by Congress, The U.S. Treasury, and the Federal Reserve to print money.
The consumer will continue to see higher food prices in 2023, particularly if the EPA Gestapo decides to implement nitrogen fertilizer restrictions that will cut crop yields and food production, leading to food shortages. Even without them, the costs to produce them remain prohibitive high in some cases, which may force farmers to quit farming.
Gasoline and diesel costs will rise as the restrictions on Russian oil purchases and the destruction of the United States’ oil production capacity will continue as 2023 begins. That is in no way a good thing for manufacturers or the U.S. consumer.
Manufacturing Jobs Declined Dramatically Last Month
In total, America’s highest-paying jobs, manufacturing jobs, dropped by 100,000 last month. Even though employment rose, the jobs filled were lower-paying service jobs, and as I mentioned a few weeks back, some of those jobs are held by the same person, who is now working two jobs to make ends meet.
Unless Fiscal And Monetary Policies Are Seriously Addressed, We Can See Another Decade Of Inflation
As one portfolio manager sees it ( as I see it ) we will have elevated levels of inflation for the next decade. Even though inflationary conditions are often bullish for stocks, the condition of the real value of the dollar given the collapse of the petrodollar will create pressure for it to remain the world’s strategic reserve currency. If that ends, America’s standard of living will decline dramatically as commodity prices will begin to swing like pendulums, and the ability to manage costs will become incredibly more difficult than before the era of the U.S. Dollar being “King Dollar.”
International Turmoil Will Negatively Affect Technology Manufacturing And Sales
Apple may have to move iPhone and computer component manufacturing from China because of the chaos created by the insane Covid lockdowns in the People’s Republic of China. As world tensions increase, (and the Chinese people get sick of Chairman Xi’s bull@#$%), there will be disruptions in manufacturing and an increase in costs as time moves forward.
For some reason, Defense Now has an article about the topic of increased military action by the PRC against Taiwan, but this New Yorker article gives you the gist of it. At some point, perhaps to quell the domestic anger over Chairman Xi Jinping’s human rights abuses and murderous Covid policies ( something I was thrown into Facebook jail this weekend for criticizing ), the PRC might wage a “patriotic war” to reunite Taiwan with China’s mainland. That would utterly devastate America’s manufacturing base, and many run on robotics, and it would affect even those that do not use semiconductor technology for consumer products. All of that business would come to a screeching halt. That would include ALL automotive manufacturing from internal combustion engines to electric vehicles.
Conclusion
We could easily see a year-end rally to that 12500+ to 13,000 range, but beyond that, we will have to see what level of craziness the U.S. and world economies operate in 2023. I didn’t even mention central bank digital currencies this time, but even that could add to the level of wackiness we are experiencing currently.
Let’s make sure our trading and investing plans are consistent with the time frames they’re intended to operate within.
More will be coming soon. THANK YOU AS ALWAYS FOR SUPPORTING THIS BLOG!
