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Former U.S. president Donald Trump was shot Sunday while delivering a campaign speech. Trump economic policies are protectionist driven, as the U.S. economy is already within stagflation 'lite', note PPI release for June showing that prices are accelerating. A trump victory in November would add to already embedded inflation. Short end yields and the USD rise on the uncertainty of Trump's reaction after the shooting.
Oil futures are trading above $83 per barrel on Israel's looming invasion of Lebanon. If the oil price sits above $90 for an extended period of time, more than a month. Stagflation will be locked into the global economy. A wider conflict in the middle east would be Iran and the U.S. directly in combat
Self explanatory chart: Oil remains bid despite the Chinese economy facing a recession or in a 'recession', due to geopolitical issues from 2022. Please refer to 'call out' notes and the season (% of change) chart from 2022, 2023 and 2024. 2024 was probably a year of stagflation - lite, Iran/Russian sanctions and possibility of Iran military action in 2025, will lead to full stagflation if China cannot come back on line.
The oil price remains bid over $75, OPEC cuts and broader Middle Eastern war may push the price to $80. MArkets are overstretching expectations that rates will be cut in 2024 on a China/U.S. slowdown. Not with unemployment rates at all time lows and higher energy prices. Coffee futures are bid, Brazil is suffering from the worst drought in history. Climate Change should be priced into markets.
Self explanatory chart: NASDAQ is close to falling into a bear market, as Trump Fascist/isolationist economic policies of Trade war on everyone, are reginting inflation/stagflation fears. With the U.S. probably already experiencing stagflation lite. USD sells off, swiss franc and yen are bid, oil remains collapsed on Trump handing Putin a pyrrhic victory over Europe.
OPEC tightens supply and offers "voluntary" oil cuts of its members, prior to U.s elections/Central Banks beginning to cut rates in 2024, then they'll add barrels back into the market. The market has over read this as bearish. Oil slump's over 3%, while geopolitical issues remain, as Ukraine can target Russia with U.S. made missiles. Russian Oil refineries maybe targets.
The oil price find bids over $74, as short positions drawdown the price into oversold territory. Market is reading deflation incorrectly, via Central Banks confusion. The global economy is already in stagflation lite. Oil Price is supported by two proxy wars, more so Israel about to go on the offensive against Lebanon, may draw in Iran. (update 1)
Self explanatory chart: Japanese yen falls to 37 year lows, on the back of U.S. Dollar strength and rising (short end) U.S. yields. Fed chairman fails to lift the YEN with dovish comments. MArkets are not buying the inflation fight is nearly over rhetoric. Remember, Japan is a net importer of oil. China 'slowdown' maybe stagflation lite.
