SVET Markets Review (July 29, 2022)
US Bureau of Economic Analysis (BEA) made quite a noise yesterday by releasing at 7:30 AM its advanced estimate of Q2 real (adjusted for inflation) Gross Domestic Product growth (a complete report is due at August 25, 2022). It says that in Apr-June GDP shrunk another 0.9 percentage adding to 1.6 percent decrease registered in Q1 2022.
It means, of course, that US economy enters into the recession (defined as two consecutive quarters of negative economic growth measured by real GDP). It also means that those of us who thought, that dear-leader-Powell’s ‘quantitative un-easing’ is more damaging for the over-leveraged US economy than even a double digits inflation, were absolutely right.
So, now, thanks to one unelected, megalomaniac bureaucrat, vigorously supported by a handful of short-sighted politicians, we have a double whammy: the absence of an economic growth accompanied by the high inflation (~>10%).
We, quite officially, enter into the ‘stagflation’ period unseen in US since the depression of 1973–75, which was accompanied by the Dow’s fall from 1050 to 600, oil prices spike from 27 to 60 USD per barrel (caused by OPEC imposing in October 1973 the embargo on supporters of Israel during the Yom Kippur War), and the spectacular collapse of Nixon’s second administration (Watergate).
According to BEA:
Q: The decrease in real GDP reflected decreases in private inventory investment, residential fixed investment, federal government spending, state and local government spending, and nonresidential fixed investment that were partly offset by increases in exports and personal consumption expenditures (PCE). Imports, which are a subtraction in the calculation of GDP, increased. EQ:
Despite most main-stream analysts mistakenly anticipating ~1% GDP growth in 2Q, we in crypto, stressed by wall street gangsters dumping coins on us as it was 2018 again, had been acting as proverbial canaries in a coal mine for almost five months.
As a result, past couple of days we have seen the Bitcoin micro relief-tally brining BTC from 2100 to 2400. It, actually, preceded NASDAQ jumping from 12100 to 12400, which have made some to wonder whether BTC start to trade places with USD, at last.
Notwithstanding technically entering into the stagflationary zone, the US economy is far too big today (compare to 1970th) for most businesses to be brought dramatically down in a less than a year.
However, thanks to Charmain’s legendary inconsistency as well as to his uncanny ability to destroy the entrepreneurship climate not only on the North American continent but all across the world, we will have to brace ourselves, one more time, in September, when this hellish committees of unelected bureaucrats will be deciding the future of our money again.