The patterns of crude oil, stock, and bond prices are coming together for a more reliable prediction so here goes.
As predicted Team Biden’s release of one million barrels of oil per day has done nothing to bring prices down. And it endangers the chance that the Saudis might use that as an opportunity to embargo some oil supplies. Crude prices are hanging around the hundred dollar level. And the CEO of Chevron suggests those prices are now necessary to create supply. Prices might regain the $115 level but probably not all the way to $130.
Jason de Senna Trennert, CEO of Strategas had some interesting observations on carbon fuels this week. As world-wide politicians go all in for electric cars, some 3.5 billion people have no way to obtain reliable electricity. The rejection of coal, natural gas, and atomic energy by the EU has put that area back in the hands of Russia and Saudi Arabia. Worse our government is begging Venezuela to provide us with energy rather than our own U.S. producers.
An electric car requires four times the amount of copper versus an internal combustion automobile. Is there that much copper available? Worse, if all of us had an electric car, how would we have charged them in the last February blackout? And ships, trains, and planes all use fossil fuels. So I let energy producers do just that, produce reliable energy which can be stored, unlike solar and wind.
Stock prices have retreated the last few weeks. A low is likely later this month with another high this fall. The Transports have been hard hit, more so than the Dow Industrials. ETFs in that area include IYT, XTN, and HAIL.
Interest rates have soared. It is hard to imagine a thirty year bond yield of less than 3% while inflation is reported at 8%. The FED, as we said last week, is way behind the yield curve in failing to raise rates. But the market is doing that for them. Our latest research suggests a peak in rates later this month. That too seems hard to imagine but the indicators are there.
The situation in Ukraine reminds that there are still authoritarian leaders with plenty of Stalin-like stomach for death. I suggest one give to Franklin/Graham’s Samaritan’s Purse. He is the son of well-known Billie Graham. Franklin runs a world-wide relief campaign and follows his dad in a low cost, well run organization.
