Blaming Higher Energy Prices For The August CPI

Published on

In his podcast addressing the markets today, Louis Navellier offered the following commentary.

If you wish to listen to this commentary, please click here.

Blaming Energy Prices

Higher energy prices will be blamed for the August CPI, so I do not expect the Fed to increase key interest rates at its September Federal Open Market Committee (FOMC) next week.

The Labor Department on Wednesday announced that the Consumer Price Index (CPI) rose 0.6% in August and 3.7% in the past 12 months. The core CPI, excluding food and energy, rose 0.3% and 4.3% in the past 12 months. Food prices rose 0.6% in August, while energy prices surged 5.6%. Gasoline prices surged 10.5% in August. The good news is that owners’ equivalent rent rose only 0.3% and 7.3% in the past 12 months, so it appears that shelter costs are finally moderating somewhat.

Eyes on Wholesale Service Costs

Then on Thursday, Retail Sales and the Producer Price Index (PPI) will be announced. I am expecting another good retail sales report. As far as the PPI is concerned, we want to see wholesale service costs coming down.

Fragile Demand For Crude Oil

Natural gas prices are up due to an LNG strike in Australia. There is also a lot of talk in the wake of the G20 meeting in Italy that Saudi Arabia wants to get crude oil prices up to $100 per barrel. Right now, global supply and demand for crude oil is very fragile and any disruption, such as a Russian pipeline break or a hurricane in the Gulf of Mexico, could disrupt crude oil production and send crude oil prices to $100 per barrel.

After Germany’s August wind auction only offered to develop 1.4 gigawatts of electricity, down from 1.6 gigawatts at its July auction, Britain failed to attract any bids on its latest offshore wind auction. Naturally, this is a massive setback for countries like Britain and Germany, which are striving to achieve net zero by 2050. Britain’s Ed Miliband, who is commonly referred to as Labor’s “shadow climate secretary,” said failing to secure and new offshore wind generating capacity is an “energy security disaster.” The fact of the matter is that bidding on offshore wind projects remains especially weak, since the economics of wind energy is erratic, especially if there is a cold snap in winter that can damage wind turbines.

I can tell you the green police were not happy with the G20 meeting in India, since the Financial Times said that G20 leaders were “missing in action” on a timeline for ending fossil fuel use. The G20 accounts for about 80% of the world’s greenhouse gas emissions and did agree on a goal to triple renewal energy by 2030. However, as Britain and Germany’s wind auctions demonstrated, there is not a reliable economic incentive currently to boost wind production.

Coffee Beans: Extraterrestrial

Two 1,000-year-old ‘alien corpses’ were displayed in glass cases as part of an official unveiling at Mexico’s Congress in a hearing. It was reported that scientists used radiocarbon dating to gather DNA evidence and X-rays had shown one to have “eggs” inside. Source: Sky News. See the full story here.