Hope you had a great start to 2021, this in-depth analysis was written over a 2 week period so includes brief updates to the first 2 sections.
- UK Coronavirus Catastrophe at Start of 2021
- US Coronavirus Catastrophe at Start of 2021
- US House Prices Trend Forecast Review
- The Inflation Mega-trend QE4EVER
- US House Prices Trend Forecast 2021
- General Artificial Intelligence Was BORN in 2020!
- How AI will come to rule the world
- Intel Fights Back!
- AI Stocks at Start of 2021
2020, the year of the Pandemic has finally coming to an end. However the chinese virus is not done with reeking havoc on the worlds population, at least in western nations with their ageing populations that for the likes of Italy stand at an average age of 45 against developing nations such as Pakistan with an average age of just 22 years which at least goes some way to explain why the covid crisis is just not as bad as it is in the West. Though India with an average age of 26 seems to be suffering that bit more than Pakistan is so this anomaly could be down to -
a. A weaker strain of the virus.
b. Less testing so most patients with covid are unrecorded much as was the case in the West during the March / April first wave of the chinese virus.
Nevertheless the virus is not quite done yet with the West as my warnings of to expect worse 2nd and third waves starting in August and right into early October are materialising with a vengeance. And where the primary reasoning behind this outcome boils down to GROSS NEGLIENCE AND INCOMPETENCE! On the one hand we have literally MAD SCIENTISTS encouraging the likes of herd immunity, EVEN as late as September 2020, as what's her name the so called Cambridge University Professor could be seen babbling on the likes of Channel 4 news encouraging non action, IGNORANT of the facts that the virus was starting to pick up speed as millions of Brit's returned from their summer holidays soaking up the virus on Portuguese and Spanish beeches that seeded the virus across the UK the price for which would be paid in terms of 2nd and then third worse winter waves. Clearly the scientists advising the government had been WAITING for the Pandemic for decades so that they could now bask the light of media attention, many of whom of gone on to become media whores, household names! These mad baskets have literally had their wish come true!
Then we have the negligent stick their heads in the sand governments, who would rather not read the writing on the wall until it was too late! With hospitals filling up in their brim and the number of deaths doubling every couple of weeks. So the warned of WORSE Second AND Third waves were INEVITABLE. Even if this is not how the Pandemic should have played out if the government and healthcare sectors response had been competent as my graph from Mid March illustrates that each successive peak was supposed to diminish in severity with each subsequent wave of the virus.
The logic being that increased intelligence on the virus should result in a more efficient healthcare response, that and gradually the more people that became infected and immune or died from the virus then there would be less scope for the virus to spread with each successive wave. However, I clearly gave too much competency to the government and it's self serving mad scientists hence where we stand today at the start of 2021 with the virus literally going on an out of control rampage.
UK Coronavirus Pandemic Catastrophe Current State
The number of people testing positive has rocketed higher since September when it was eyeing a break of the April official tally of 6,000 a day. Though as the graph illustrates the actual number at the peak was more like 100,000 a day given the government incompetent response to the pandemics first wave.
This is what the graph currently looks like as Novembers second wave soon morphed into a far more severe December third wave that currently stands at about 80% of the April peak when allowing for asymptotic people who are not getting tested, so approximately right now about 80,000 per day are contracting the virus.
So the UK is pretty close to having infections rivaling that of the worst of the Pandemic peak, perhaps no more than 7 days away as the lockdown that proved successful earlier in the year failed to work that is largely due to a new strain emanating out of London that probably has its origins in Dutch mink farms which is proving it be about 50% more virulent than that of the first wave.
So on this measure alone January for the UK looks set to be catastrophic!
Covid Hospital Admissions
This was the picture in late September with few covid patients occupying NHS beds, that played a large part in the government and it's mad scientist advisors making a series of critical errors in assuming that the worst of the Pandemic was behind the nation and thus introduced a tiered approach to controlling the pandemic instead of a series of rolling lockdown's to clamp down hard on the pandemic.
Unfortunately my worst fears of worse second peak on terms of hospitalisations is now coming to pass. As clearly adopting a tiered approach was flat out WRONG and has FAILED miserably to halt the pandemic.
So the UK stands at the start of 2021 with its hospital beds full, with reports that ill patients are being treated in lines of ambulances parked outside hospitals, a disastrous start to the year.
Covid Deaths 28 Days Since Testing Positive
The only reliable way to measure the extent of the pandemic during the first wave was in the number of deaths, which illustrated the extent to which the government had lost control as the number of daily deaths soared to a peak of 1,224 by the 22nd of April.
Back in September I had estimated that given the governments lack of competence the then daily death rate of 37 could reach as high as 600 per day by early November 2020, by which which time I had hoped that the government would have gotten their act together with a series of rolling national lockdown's, instead of which the government adopted it's disastrous tiered approach.
Unfortunately here we stand with the number of daily deaths accelerating to just below 1000 per day, that now given that the hospitals are full and with Christmas relaxation coupled with new year festivities all topped off with a 50% more virulent virus though thankfully the vaccine still works with, then the number of UK deaths per day looks set to pass the peak daily tally of 1224 within the 10 days of the new year, and likely could set a new high at over 1500 deaths per day.
Current total deaths on the 28 day test measure are 73,512, a number which could double towards an end 2022 death toll tally of 150,000!
Schools Not Likely to Reopen Anytime Soon, Expect GCSE Exams to be Cancelled
Meanwhile Britain's schools despite the Governments mantra of business as usual during January of a one week delay for Year 11's and home schooling for the rest for a couple of weeks. I just cannot see how schools can open in any significant manner until perhaps Mid March. Furthermore my consistent view has been GCSE exams will be cancelled for 2021 for which so far there is diddly squat reporting of in the mainstream press despite this being the most probable outcome.
Of course the primary reason why there has been no announcement for the canceling of GCSE Exams for 2021 is because then Year 11 children would have little incentive to study. Nevertheless, I reiterate my message to all Year 11 students in that YOU MUST STUDY HARD for the Mock exams, As many pupils are scheduled to sit their mocks during January which is why the focus is on getting Year 11's into school now for at least a few week so that they can sit their mock exams.
Also Year 11 students should note that their mock exam results will be their FINALE GCSE grades with perhaps most of mock grades being increased by 1 level, i.e. a Maths mock exam grade 7 would be increased to a GCSE final grade 8.
To date 1 million Pfizer first dose vaccines gave been administered in the UK. However the government is now delaying the second dose so that more people can be vaccinated in a race against time against the new strain of the virus. With the Oxford / Astrazenica vaccine to start being administered from the 4th of January. Whilst the vaccines will make a significant difference, unfortunately that difference will likely only start to impact on the pandemic from March onwards after some 10 million+ people have been vaccinated and had time for an immune response to develop.
So the vaccines are not going to save Britain from the catastrophe that is likely to take place during January and much of February.
All of this does not bode well for UK economic activity for at least Q1 2020 that could see GDP contract by as much as another 6% on top of the 10% drop for 2020 which will likely have a negative impact on the FTSE during Q1, that I will include a look at in my forthcoming stock market trend forecast for 2021.
UPDATE - On the 4th Jan 2020 at 8pm Boris Johnson announced a FULL UK Lockdown that looks set to run to at least Mid February that in my opinion could continue into Mid March. Also announced was an ambitious plan to vaccinate 15 million people, i.e. all those in the 4 highest risk groups and key workers by Mid February. Unfortunately to date the government has barely managed to vaccinate 2 million people so I don't see how the 15 million target can be achieved by Mid Feb, in fact even half the target (7.5 million) will be tough to achieve which means to expect the vaccination mission to be accomplished by Mid March by which time the number of daily deaths should have sharply fallen from the current 1200+ per day to perhaps less than 50 per day, given that most of those likely to die from the virus will have been vaccinated by then and gained some level of immunity.
In the meantime the UK is fast galloping into the covid storm with covid hospital beds now exceeding 30,000, against 25,000 at the height of the first wave peak, and the continuing news of about 50,000 covid cases per day which means many more patients will need hospitalisation over the coming weeks. So things are definitely going to get a lot worse in the UK before they get any better, and thus the next 3-4 weeks is definitely not a time to be falling ill with anything, as ones chances of receiving effective treatment in UK hospitals will be near zero! Especially if ones skin tone is brown given the institutionally racist nature of the NHS that has been born out in the deaths disparity both for BAME NHS workers and patients.
Meanwhile ONS data confirms the magnitude of the pandemic's impact as the number of excess deaths for 2020 is the greatest since World War 2.
So imagine if the government had more closely followed the advice of the mad scientists such as Valance and the Cambridge so called professor who had fully embraced herd immunity, UK deaths spike would likely now be 2 to 3 times higher.
US CoronaVirus Pandemic 2021
As per my warnings every US pandemic Wave has turned out to be higher than the one before. US death toll now stands at over 350,000, well above the worse case scenario of 250,000 that was being touted during the height of the first wave.
Even worse for the US is that there does not appear to have been much of a dip before the US heads into it's fourth wave that could see the US hit testing capacity constraints with actual positive tests far exceeding testing capacity as was the case during the first wave.
To illustrate the loss of control of the pandemic the number of daily deaths has far exceeded the first wave, this despite increased intelligence and treatments.
With far worse to come for the US as the 'London' strain spreads and becomes dominant. Therefore the US death toll is likely to double once more to pass 700,000 before the end of 2021.
Warp Speed Vaccine Development fails to Delivery shots into peoples arms.
The US vaccination program was supposed to have delivered 20 million vaccinations into peoples arms by the end of 2020. Unfortunately the actual rate of vaccination is running at about 15% of that expected and needed to cope with the pandemic, especially as the London strain of the virus has started to make an appearance across US states which the US is not prepared for the consequences of as was the case for the UK. The US is perhaps 4 weeks behind in terms of the catastrophic consequences of the second more virulent strain starting to become the dominant strain. Valuable time that an inept and incompetent US government response looks set to waste due to failure to contain the virus outbreaks and in terms of ramping up vaccinations.
Despite achieving delivery of over 20 million doses to date, the US only vaccinating 3 million people represents an abysmal failure on a criminal scale that WILL cost many thousands of lives! Valuable time has been wasted. At the current pace of vaccination the US is only likely to have vaccinated about 10 million people by the end of January, instead of a target of 50 million which will be just at a time when the 2nd strain becomes dominant.
All of which continues to confirm that the US as is the case with the UK could see the current horrific death toll of 350,000 DOUBLE to over 700,000 during 2021!
So the coming worse covid storm is likely go have economic consequences where the question remains to be seen if the stock market reacts to immediate term economic pain or continues to discount the end of the pandemic which will be the focus of my forthcoming stock market trend forecast for 2021.
UPDATE - The number of US daily covid deaths now exceeds 4000 as the US explodes into it's fourth higher covid peak prompting vaccine centres to now vaccinate anyone who walks through their doors given the slow roll out of the vaccines that currently numbers just 6.2 million doses administered against a target of about 30 million.
The US needs to vaccinate some 50 million people for respite from the pandemic to take effect. At the current pace of vaccinations then the US could achieved this target by the end of February 2021 which would be accompanied with a sharp drop in hospitalisations and deaths during March and thus an easing to the pandemic restrictions during March. So the US could be as little as 2 months away from returning to some semblance of normality.
Meanwhile Trump supporters egged on by the President stormed the Reichstag! Democrats started their Impeachment process in attempts at preventing Trump from being able to stand for office again. Twitter permanently suspends Trump as we count down to the end of Trump the politician as the establishment effectively seeks to exclude 50% of the US electorate i.e. all those who voted for Trump which does not bode well for social cohesion.
At the end of the day silencing Trump and hundreds of thousands of others amounts to ending freedom of speech in the US. So it's not Trump but the Democrats who are behaving in a totalitarian manner! Trump was an amateur compared to the likes of Nancy Pelosi and Chuck Schumer, democracy is dieing in the US if this is the response to those one does not agree with.
Another sign of the drift towards totalitarianism in the US and UK is the silencing of all those who criticise the vaccines i.e. the anti-vaxers. Whilst I don't agree with their point of view nevertheless they should be heard and NOT silenced, for instance I recall some of my Vitamin D videos being deleted by youtube in March because they went against that which the medical establishment was spouting at the time, only for them to turn on a dime some 6 months later which illustrates the consequences of internet censorship underway as who knows, there could be some truth in what the anti-vaxers are saying which is busy being deleted by the tech giants as it goes against the wishes of Big Pharma and the politicians in their pockets.
At the end of the day the Covid crisis is just the current phase of the ongoing FINANCIAL CRISIS that has NOT ENDED! The evidence for which is staring you in the face when you look at the balance sheets of the Federal Reserve Bank and Bank of England etc, and the exponentially expanding public debt mountains. Where my response to which has remained consistent which is to leverage oneself to MONEY PRINTING INFLATION by holding assets that cannot be easily printed. I had my wake up call following the 1987 Crash that saw the Fed soon inflate stock prices back to their pre crash highs, all whilst the perma fools continued with their mantra of the Dow heading to the 1930's low of 40. I hope all of you reading this are also fully awake to the consequences of the money printing inflation mega-trend!
South African Strain
And then there is the nightmare scenario of the South African strain that has 3 significant mutations compared to the London strains. Which means that the vaccines are going to prove less potent against the SA strain, which I am sure much testing is underway to quantify but at this time my best guess is for a 50% response of the vaccines instead of 90%. However on the plus side it appears that the vaccines can be adjusted to counter the SA variant as well as other strains that definitely will materialise over the coming months.
US Housing Market Trend Forecast
Given the US governments continuing catastrophic response to the chinese virus resulting in severe economic contraction then one would assume that the crowing from the rooftops perma bear deflationistas would finally be proven right with their decade long perma bear messages of a US housing market crash finally being fulfilled. So is that what happened? Were the perma bears finally proven right by chance, a black swan event courtesy of a leak from a wuhan bio lab?
We'll in economic terms the US as is the case for all western nations has come under severe economic pressures following the panic lockdown responses to an out of control pandemic with further economic pain expected during Q1 2021 in a race against time to deliver vaccines into american arms.
The recovery in US employment has started to flat line as the US heads into new lockdown's as the pandemic Wave 4 starts to materialise, thus expect US unemployment to increase though to nowhere near the extent of the first wave.
Whilst GDP recovery has proven more robust which after Q2 contraction of 31.4% with overall expectations for US GDP to end 2020 down between 2% to 3%. Whilst GDP is expected to take a further hit in Q1 that could shave off 1% of GDP expectorations for 2021.
So the US economy in GDP terms is proving far more resilient than most western nations due to stimulus bailouts and weaker lockdown measures than elsewhere.
US House Prices 2020
Did the perma bears finally get their US house prices crash that they have been crowing so loudly for a decade now?
Firstly a recap of my existing US house prices trend forecast.
30th April 2019 - US House Prices Trend Forecast 2019 to 2021
Therefore my forecast conclusion is for a relatively weak continuation of the US housing bull market into late 2020 at a much shallower pace than experienced in recent years for a likely gain of just 3% over the next 2 years (Jan 2019 to Jan 2021) before entering into a downtrend going into 2021 i.e. Case Shiller 10 city Index (SPCS10RNSA ) rising from 225.9 (Jan 2019 data) to just 232.4 (Jan 2021 data) as illustrated by my trend forecast graph.
Here is the updated chart for what has transpired since my forecast of April 2019.
Whilst the US stock market had a panic attack crash into Mid March. The crash where US house prices are concerned was UPWARDS! Which should not come as much of a surprise to those who have been following my analysis for the past 10 years! Money printing, MONEY PRINTING! When you know the Fed is about to print a shit load of money whatever they call it, will mean that assets that cannot be easily printed will surge higher, this IS the INFLATION MEGA-TREND IN ACTION!
The primary mega-trend IS THE INFLATION MEGA-TREND! Those who bet against it on hopes of a repeat of the 1930's depression will keep going BROKE!
THE INFLATION MEGA-TREND QE4EVER!
A reminder folks that regardless of Fed propaganda and what you read in the mainstream press QE is 4 EVER! Once it starts it will not stop. As I have been iterating for a decade now as the following excerpt from 2 years ago illustrates (Stock Market Trend Forecast March to September 2019) that CRISIS ARE MONEY PRINTING EVENTS TO CAPITALISE UPON BY INVESTING IN ASSETS THAT ARE LEVERAGED TO INFLATION!
So why has the the stock market soared, what is that the stock market knows that most commentators and economists fail to comprehend? We'll for one thing there are the dovish signals out of the Fed which go beyond a pause in their interest rate hiking cycle in response to a subdued inflation outlook. Similarly the worlds other major central banks have their own reasons to avoid rate hikes, most notable of which is the Bank of England that has been busy propagandising the prospects of a NO Deal Brexit Armageddon in attempts to scare Westminister into avoiding EXITING the European Union in anything other than an ultra soft BrExit.
So on face value the stock market is clearly discounting not just a more accommodative interest rate environment but that QE REALLY IS FOREVER! Once it starts it DOES NOT STOP! As evidenced by the Fed's balance sheet first having exploded from about $800 billion to over $4.5 trillion, all to bailout the banking crime syndicate by inflating asset prices such as housing and stocks so as to generate artificial profits for the central bankers banking brethren. But none of this news, for I have written of it for a good 10 years now that QE will never stop as the worlds central banks will repeatedly expand QE to monetize government debt.
So I would not be surprised that WHEN the next crisis or recession materialises, QE will resume, by the end of which the Fed balance sheet will likely have DOUBLED to at least $8 trillion. And it is this which the stock market is DISCOUNTING! Just as has been the case for the duration of this QE driven stocks bull market that clearly paused during 2018 in the wake of mild Fed unwinding of its balance sheet. So forget any lingering Fed propaganda for the continuing unwinding it's balance sheet, the actual rate of of which has slowed to a trickle and thus we are probably near the point when the Fed ceases unwinding it's balance sheet because as I have often voiced that once QE starts it does NOT STOP!
So whatever form the NEXT crisis takes, the Fed will be at hand to print money and double its balance sheet, as it will periodically continue to supports asset prices such as housing which cannot be printed. We'll not until we see start seeing house building 3D printing drones emerge from the machine intelligence mega-trend that will fly around in swarms and erect designer houses anywhere on the planet.
All whilst clueless fools that populate the mainstream press and blogosfear who probably never put their money where their mouths are continue to bang the drums of NON EXISTANT DEFLATION! As I stated in opening line in my January 2010 Inflation Mega-trend ebook (download).
The worlds economies swim in an ocean of inflation that is punctuated by occasional ripples of deflation which is illustrated by the perpetual upward curve of general prices as measured by the Consumer Price Index (CPI). Inflation in the long-run impacts on virtually all commodities and asset prices.
Here's the current state of the Fed Balance Sheet that's looking pretty parabolic, pouring rocket fuel onto the inflation fire.
At the end of the day the money printing induced Inflation Mega-trend is the primary mega-trend that people really need to beware of and focused on so as to leverage themselves to this mega-trends consequences which is the loss of purchasing power of currencies which is why savings should not be viewed as long-term holdings and why the likes of housing should. To further illustrate this point since the Federal Reserve bank came into being in 1913 the US dollar has lost over 96% of it's value! PRICE INFLATION! Which is why you need to hedge or leverage yourselves to MONEY PRINTING INFLATION! This is what the world's central banks do at every crisis, PRINT MORE MONEY that causes REAL INFLATION.
U.S. House Prices Analysis 2021
Work From Home Inflationary BOOM?
The pandemic has resulted in many tens of millions more americans working from home. As someone who has been working form home for a good 15 years I can well understand why house prices have rocketed higher as prospective home buyers both seek out properties that are better suited to working from home, more suburban, quiet office spaces, plenty of storage, or view properties with scope to being upgraded into work from home environments.
And then we have the demand for home working tech where demand has soared through the roof during 2020 and looks set to continue into the END OF 2021. Which is why I went on a personal spending spree upgrading virtually whole of my home tech whenever the opportunity presented itself i.e. Prime Day, Black Friday and Cyber Monday of which Black Friday turned out to present the best value for money discounts.
Where upgrading your homes and tech for home working is concerned then the key thing is to act sooner rather than later as there is a GREAT DEAL OF inflation in the pipeline for home working technology i.e. computers, DELAYING purchases in the hopes of price drops IS NOT GOING TO WORK. If you need a new computer then bite the bullet and buy it now because prices look set to increase during 2021! Which is something that the tech reporters don't realise as they scratch their heads and keep suggesting that stock and prices will soon start to normalise which is usually what one expects tech to do i.e. get cheaper over time. Instead the likes of the Ryzen 5000 processors and and RTX 3000 series GPU's rather than falling in price will INCREASE in price because we are in an inflationary working from home BOOM!
So make lists of what you need to efficiently work from home and then go and buy it ASAP because prices are going to go much higher during 2021!
Where the housing markets are concerned then it should not be so surprising that house prices have gone up when the consensus expectations were that they would fall, and will go up further for many homes are now also part commercial office space and thus price rises are reflecting that added value, and at some point we will probably see governments attempt to levy extra taxes onto home workers, perhaps during 2022. Conversely commercial real estate especially office space is going to experience more pain during 2021 which perhaps could present opportunities to pick up some cheap commercial office space for those seeking to expand out of their home offices.
Houston we have Lift OFF! If it were not clear from the house prices graph then it should be clear form the momentum graph that US house prices have taken off! Rising at their fastest pace since 2012! Likely to end 2020 up about 8% on the year. Furthermore the breakout above the 2018 peak suggests further strong house prices gains to come during 2021 i.e. this sort of powerful up thrust in trend usually does not turn on a dime.
By Mid 2021 we could see average US house prices rising by over 10% per annum! IMAGINE THAT! 10 PERCENT PER ANNUM! Though after the summer mania I would expect momentum to slow during the second half of 2021 so likely fall back sharply towards 6% per annum.
So momentum suggests to expect another strong year for the US housing bull market, probably end the year up between 5 to 9% after about an 8% gain for 2020.
The Vaccine Indicator
In my opinion one of the primary indicators for economic recovery for the US and the rest of the world is the percentage of the the adult population that has been vaccinated, and especially the segment of the population at highest risk of hospitalisation and death from covid-19 i.e. the over 50's. In which respect US vaccinations currently stand at 6.2 million with approx 1 million americans being vaccinated per day (1st dose) or about 0.3% of the population. Which frankly is just not good enough. So unless things step up a gear perhaps after Biden takes office then under the current pace the US is not going to have vaccinated 50% of the population until late May and that is just with the first dose!
So currently in vaccine indicator terms the Covid crisis looks set to continue and likely worsen for most of Q1 2021 and likely only really start to diminish in severity as US enters April when enough people have been vaccinated so as to induce herd immunity and thus result in a sharp drop off in the number of cases during the summer months and especially ahead of Winter 2021.
So more economic Covid pain for the duration of Q1. With strong recovery starting early April as the rate of vaccinations jumps to perhaps 1.6 million per day that should see the covid crisis evaporate as we enter May by the end of which perhaps 50% of the US population will have gained immunity of sorts with perhaps 25% having received their second doses by then. Therefore the covid vaccine indicator implies to expect a Summer economic boom of sorts following the end of the Pandemic as all those who survive go on a spending binge! Which implies to expect HIGH REAL INFLATION! Your dollars are going to buy you far less than they do even now after the great Covidflation of 2020 which is the price paid for handing the population free money.
Though the US also has a healthy dose of the anti-vaxers to contend with that could derail the US vaccinations programme from achieving anywhere near herd immunity by early Summer, something to definitely keep a close eye on.
Whilst the UK appears about 2 weeks ahead of the US in terms of vaccinations with 3% of the population vaccinated. Though that advantage is more than offset by having to contend with the London / Dutch strain that is 50% more virulent, rather than more deadly. Though when one crunches the numbers, a strain that is 50% more virulent than if it were 50% more deadly is actually worse! As far more people become infected soon resulting in hospitals becoming overwhelmed with ill patients. So the MSM broadcasters have got things WRONG again as they confidently report that the new strain is not any more deadly than the strain let out of the wuhan bio lab some 14 months ago. Which implies to expect deeper covid economic pain during Q1. Though this more virulent strain has already appeared in the US. So now is definitely time for both the US and UK to up their game in the delivery of jabs into peoples arms where every single day counts! and where the likes of the Pharmacies in Supermarkets and High Street chemists should be co-opted to hasten the pace of at least the delivery of first jabs into peoples arms in a race against time to prevent collapse of health care systems that in the UK at least is less than 2 weeks away.
The US economy is recovering fast from the corona crash with annualised GDP down just 2.8% for Q3, a remarkable performance and far better than most western nations.
Whilst it is a bit early to suggest an economic boom for 2021, still everything is pointing towards at least a 2.5% gain for the year, where the US housing market is LEADING the recovery, which given potential momentum of 10% implies US GDP for 2021 should easily exceed 3% and could nudge above 4% by the end of 2021. Which means that the US will have more than recovered from the pandemic crash by the end of 2021.
Official US Unemployment should continue to recover from the pandemic collapse, though as my earlier graph illustrates momentum has greatly slowed which means it's going to be tough going to get to pre-corona levels. At best US unemployment could reach 5% by the end of 2021, so still supportive of rising house prices.
CPI, the highly doctored official measure of US inflation stands at just 1.2% for November 2020. Real inflation is far higher, probably quadruple the official rate i.e. at above 4% hence why the likes of US house prices are rocketing higher as the real value of money falls as a consequences of rampant money printing. Still official US inflation of just 1.2% gives the Fed cover to continue printing money and for the Biden administration to go on a socialist spending spree which is supportive of rising house prices. Whilst the expected post Pandemic spending boom will push CPI inflation higher during the second half of 2021. However, this time round one key element is lacking in sustaining any rise in prices which is a tight labour market. And 2021 will be yet another year that the deflationistas' will get very badly wrong.
Therefore high real inflation with rising GDP are BULLISH for US house prices for the duration of 2021.
Yield Curve (spread between 2 year and 10 year US bonds)
One of the reasons why my analysis of April 2019 was more subdued in terms of the prospects for US house prices than it would otherwise have been is because the yield curve was flirting with inversion, that I concluded that the Fed would not allow to take place and thus adopt whatever measures were necessary to PREVENT inversion that tends to foreshadow lower inflation and recessions.
The Fed succeeded in preventing a sustained inversion during 2019, with the yield curve massaged to hover around 0.2% that is until the pandemic broke and the Fed panicked and opened the monetary flood gates sending the yield curve soaring to currently stand at 1% as the bond market is discounting higher future inflation as the consequence of rampant money printing.
A steep yield curve is signaling FUTURE INFLATION, more money printing stimulus which is good for house prices because basically investors are selling long dated bonds to buy inflation proof assets such as housing. So the yield curve trend is strongly bullish for US house prices.
Of all the noise the politicians make the reality is that Democrat or Republicans both are socialists in the practice of deficit spending as the following graph illustrates that if one ignored the Pandemic crash then one would be hard pressed to see the difference between Obama and Trump years.
The US debt mountain has now passed £27 trillion, 100% of GDP after adding nearly $4 trillion for 2020!
What are the consequences of the US government printing and spending $4 trillion dollars during 2020 and at least another $1.5 trillion during 2021? HIGH REAL INFLATION! So what should you do? Invest in assets such as real estate that cannot be easily printed. Thus in this one graph you have your housing bull market smoking gun. All whilst the perma fools continue to bang the decades long drums of the always imminent debt bubble bursting deflation. All whilst the money printing induced inflation mega-trend continues on it's exponential trend trajectory.
US Housing Market Real Terms BUY / SELL Indicator
What does my primary indicator on the health of the US housing market say that has proven accurate for literally decades! Catching every major bull and bear market of the past 30 years! From it's first SELL signal in 1990 to it's last BUY in 2012. What do real terms US prices say for the prospects for 2021?
a. There has been a sharp increase in real terms house prices during 2020, the reversal of which looks highly improbable for 2021. Therefore US house prices look set for at least another bullish year.
b. Real terms US house prices are nowhere near the their early 2007 highs, therefore there is plenty of scope for US house prices to continue to trend higher for a number of years.
c. real terms momentum is nowhere near reaching an overbought state, which suggests the 2020 bull run is more than sustainable for 2021 and into 2022.
Therefore the real terms indicator confirms a strongly bullish outlook for US house prices for 2021.
Formulating a US House Prices Forecast
Pandemics end, momentum, economic, trend and real terms prices analysis ALL point towards a US house prices boom of sorts for 2021. Targeting a bull run into the end of 2021 of about +10% on the most recent Case Shiller 10 city Index (SPCS10RNSA ) rising from 248.5 (Oct 2020 data) to about 273 for Dec 2021 data.
US House Prices 2019 to 2021 Trend Forecast Conclusion
Therefore my forecast conclusion is for the US housing market bull market to further accelerate to an annualised momentum of just over 10% per annum during Mid 2021 before momentum slows to end 2021 with a gain of about 7.7% for the year, on top of again of 1% for November and December 2020. For a total house prices gain of about 9% by the end of 2021. i.e. Case Shiller 10 city Index (SPCS10RNSA ) rising from 248.5 (Oct 2020 data) to 271 (Dec 2021 data) as illustrated by my trend forecast graph.
General Artificial Intelligence Was BORN in 2020!
During 2020 the fictional general artificial intelligence of the movies to some degree become reality in the form of GPT-3 that performs exponentially better than AI that preceded it as the following graph illustrates,
What is GPT3?
GPT-3 generates texts using pre-trained algorithms created by Open AI which was co-founded by Elon Musk. GPT-3 has basically hoovered up most of the text published online much as Google's search engine has indexed web pages throw regular crawls. The result is that GPT-3 can answer questions, write essays, summarise texts, translate languages, take memos, virtually anything a human can do involving text GPT-3 can do!
In my opinion this means THE AI has now been born, where the only question mark is how quickly will it grow? Where if you follow my analysis and conclusions you should understand I expect it to develop exponentially in capability, and perhaps on the cusps or leaving human level intelligence behind.
So how to profit from GPT-3. Well ensure you own stock in the No 3 company on my AI stocks list, because Microsoft has effectively BOUGHT GPT-3! Yes, it was supposed to be open source, but Microsoft UNDERSTOOD what it was looking at when it saw what GPT-3 could do and BOUGHT IT! Has an EXCLUSIVE right to the SOURCE CODE!
Anyway, there will be plenty more competing GPT-3's out there as each tech giant will have their own AI.
AI has now been born so it is no longer a future we are trending towards, it has now HAPPENED, Pandora's box has been OPENED!
And once more all we can do is to -
a. Own a piece of the AI
b. Ensure we understand the technology so we can deploy AI to improve productivity for which we are witnessing signs of everywhere, i.e. from neural engines incorporated into CPU's and GPU's such as Apples new M1 processor and Nvidia RTX GPU's.
c. To stay one step ahead as individuals we need to start offloading processing power onto AI, because we cannot compete against AI so HAVE to USE IT to our advantage i.e. in our decision making processes, an example of which is Google, where we let Google answer our queries and guide our actions in every day life from the routes we take following Google Maps, to answering a myriad of how to queries we pump into Google search every day.
How AI will come to rule the world
Ai's foot print in controlling and ruling over mankind is not going to happen with terminator style robots roaming the world, though that may be our fate several decades down the road. Instead to see how AI will rule mankind one needs to take a look at exactly what is fostering and nurturing the AI mega-trend which are the intelligence agencies as a means of controlling populations and expressing power over other nations. So whilst the likes of Google may be seen by most to be trading as a profit driven corporation focused on corporate earnings, in reality whether the heads at Google like it or not IS part of the CIA's intelligence umbrella as are all of the other tech giants, just as once upon a time the primary expression of power was through the print media, which is why a large number of journalists were on the payroll of the intelligence agencies. Which means there won't be any respite or pause for thought for the consequences of what is being unleashed onto the planet, artificial intelligence and the intelligence agencies go hand in hand, are flips side of the same coin.
Thus artificial intelligence is already being used by state intelligence agencies to for instance interfere in elections right across the globe, where AI over time will increasingly act on their own accord, far beyond the comprehension of those with just 1350cc of grey matter to comprehend the direction of travel as all they will beware of are disparate events just as human Intelligence agencies do today, will have a hand in towards a particular outcome of control.
The consequences of which is that we are all going to be living in a less free world, less freedom of thought and expression as the AI will increasingly be successful in silencing competing narratives through either brain washing, mind control and silencing of opposition, much as the Democrats in congress are doing this very day. The successors to CIA's experiments of the 1970s that we know of namely "MK Ultra" and outright assassinations just as the CIA has been engaged in so will the Central Intelligence Entity continue to unchecked.
The bottom line is to remain invested in AI stocks, don't make the mistake of exiting early because we are NOT on an Linear curve but EXPONENTIAL! i.e. the market will likely not give you an opportunity to buy back in cheaper later so we basically got lucky with the pandemic that resulted in severe Mis-pricing of AI stocks during March 2020 that I hope my Patrons took full advantage of to stock up on to the hilt.
Intel Empire Fights Back!
Leaked benchmarks on the performance of Intel's 11th Gen rocket lake processors due to make an appears as early as March 2020 suggest that the Intel's slide into CPU market oblivion could soon be halted on at least core basis (especially important for gaming) that deliver a 30% leap over their 10th Gen processors. And even more importantly Intel BEATS AMD's BEST processor even when overclocked, the 5950x running at 4.9ghz by about 3%! Which IS what Intel should have done with it's 10th Gen processors! Still it looks like the Intel has finally read the writing on the wall and plowed a large chunk of it's cash mountain into trying to compete against AMD, though STILL stuck on the 14nm node!
However now Intel can compete against AMD Zen 3 processors on single core performance and against AMD mid-range CPUs on multi-core i.e. the 5800x. Which means Intel has given up on trying to compete against AMD at the higher end of the market i.e. against the 5900x and 5950x, where Intel hopes to offer some competition early 2022 when 10nm 16 core Alder lake processors are expected to make an appearance, though given Intel's track record they could be delayed AGAIN, after all Intel 10nm processors were first supposed to have made an appearance during 2019!
Anyway there is a glimmer of hope that Intel is starting to turn the corner and likewise the In tel stock price should rise in advance of expected Q1 good news. IF the leaked benchmarks turn out t be true.
And of course no matter how good the single core performance is, 8 core CPUs are no match for AMD's 12 core and 16 core processors in multi-core performance. So rocket lake buys Intel only a few months, with a lot of work remaining to be done in terms of Intel moving to the 10nm and then 7nm node process so as to allow for more cores. Unfortunately for Intel, AMD is working on it's Zen 4 5nm architecture that will likely make it's appearance Mid 2022 that once more looks set to obliterate the competition, which means Intel really needs to use 2021 to innovate else face the return to fast trending towards CPU market oblivion.
As I sign of who is winning the CPU wars, what would I buy today ? Rocket lake or Ryzen 5000?
It would still have be AMD given the 5950x multi-core performance, as Intel's single core advantage of about 8% is nowhere near enough to counter the 35% advantage in multi-core performance of the 5950x . Still Intel is showing that it is not quite dead yet. Now lets see Intel soon move to 10nm and then 7nm by Mid 2022 with Alder Lake, else Zen 4 will crush Intel like a bug AGAIN.
Meanwhile Nvidia is launching many more variants of it;s market conquering RTX 3000 series of GPU's including at least 3 mobile variants in attempts at seeing off the competition from AMD's 6000 series GPU's. Though given continuing extremely high demand then both Nvidia and AMD still continue to sell as many GPU's as they can physically produce. That and prices they tend to sell for continue to be well above MSRP. For instance in the UK a regular RTX 3080 will cost over £700! That's OVER $930! Whilst the more premium 3080's ship for over £900 / $1200!
So all those who failed to hit the buy button on Nvidia or AMD or just failed to heed my warnings of not selling out of with a view to buying back later will have to bite the bullet and buy at a high price because as things stand the prices look set get yet higher!
Microsoft has seen what Apple has done with it's M1 processors and so is now also set to embark down the road of producing it's own Arm based SOC's, which does not bode well for Intel or AMD, but the consequences of which are several years down the road and even then likely to be focused on Microsoft surface books as unlike Apple, Microsoft does not have any presence in the desktop hardware market. Nevertheless the market can expect Microsoft to try and replicate what Apple has done to some degree over the coming years which will be good news in the long-run for Microsoft investors.
Bottom line is the the AI tech mega-trend continues to rage and there are signs of life in Intel, so what you waiting for ? BUY INTEL! IT's CHEAP!
AI Stocks at End of 2020
Someone lit the fuse wire under Samsung, up 25% in just over a month! Gains down to surging demand for Memory and Nvidia GPU's. With similar performance from TSMC as they ceased discounting chip orders from Nvidia and AMD due to unprecedented demand for their services. In fact virtually all of the AI tech giants soared higher into the end of 2020.
I will update the buying levels for 2021 Q1 following a stock market trend forecast. But as things stand I am locked and loaded to buy more AI stocks on any Q1 sell off.
Analysis Schedule :
My analysis schedule for the rest of January and into Mid February to include:
- UK house prices trend forecast
- Stock market trend forecast for 2021
- AI stocks buying levels update
- Bitcoin price trend forecast
- US Dollar and British Pound analysis
* UK Housing Market Trend Forecast 2021
Will the UK follow the US inflationary lead or has Brexit and Covid combined to press the pause button on the UK housing bull market for 2021?
* Stock Market Trend Forecast 2021
In respect of which how did my forecast at the start of the year for 2020 fair?
31st Dec 2019 - Stock Market Trend Forecast Outlook for 2020
Dow Stock Market 2020 Outlook Forecast Conclusion
Therefore my forecast conclusion is for the Dow to target a trend to between 30,750 and 31,000 by the end of 2020. For a likely gain of 8% to 9% for the year (on the last close of 28,642).
My series of 2020 stock market analysis will seek to map out multi-month detailed trend forecasts as was the case for 2019. With the first to be completed during January, going into which my expectations are for a correction early 2020. Which given my bullish outlook implies should prove to be a buying opportunity.
Here is how the Dow trended during 2020 and where it ended the year.
* AI Stocks Buying Levels for Q1 2021
If possible before the end of January 2021, if not early February.
* Bitcoin trend forecast 2021
Last two updates forecast conclusions -
17th Sept 2019 Bitcoin Price Analysis and Trend Forecast
Therefore my forecast conclusion is for the Bitcoin price to hold support at $9,400 in preparations for an assault on $12k, a break of which would target a break of $14k. However if support at $9.4k fails than Bitcoin could trade down as low as $6k BEFORE heading higher.
31st March 2020 - Coronavirus Parabolic Pandemic, Bitcoin Price Trend Forecast
My forecast conclusion is for the Bitcoin price to mark time by trading down to as low as $7,500 before basing for a run higher to resistance of $10,500 that 'should' break to propel the Bitcoin price towards the next resistance level of $12,000. Thus the bitcoin price could drift lower for the next couple of months or so before resuming a bullish trend as illustrated by this chart.
Your analyst wishing all my Patrons a happy and prosperous covid free 2021
By Nadeem Walayat
Copyright © 2005-2021 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.