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Crude Oil Prices Will Likely Remain High

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In his Daily Market Notes report to investors, while commenting on crude oil prices, Louis Navellier wrote:

Pricey Oil Will Persist

The European Union (EU) proposed its sixth package of penalties against Russia this week, but the biggest news is that the EU is proposing a ban on all Russian oil that will be phased in over the next six months. There is also a proposed ban on all refined Russian crude oil products by the end of the year. Hungary and Slovakia are particularly reliant on Russian crude oil and will have until 2023 to comply with the import ban. In fact, Slovakia is asking for a three-year exception to change its refineries and pipelines.

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Q1 2022 hedge fund letters, conferences and more

If the EU succeeds in implanting this crude oil ban for its 27 member nations, it will help ensure that crude oil prices will likely remain high in the fall and winter months when global crude oil demand normally drops.  This is obviously great news for all the crude oil and oil service companies that I recommend.

Today’s Federal Open Market Committee (FOMC) statement after the Fed increases its key interest rate will be scrutinized as well as Fed Chairman Jerome Powell’s press conference.  Although the Fed is raising key interest rates, Japan has refused to change its interest rate policy due to inflation, and the European Central Bank (ECB) President, Christine Lagarde, recently rejected increasing interest rates and on an IMF panel said “For goodness sake, let’s wait until we have by the data and then we move on to decide.”

Domestic Companies Have A Big Advantage Compared To Multi-Internationals

Due to the fact that both Japan and the ECB have refused to increase interest rates, the U.S. dollar remains very strong, which means that domestic companies have a big advantage compared to multi-international companies suffering from getting paid in weak currencies and lackluster international economic activity.

The Atlanta Fed recently revised its second-quarter GDP estimate to a 1.6% annual pace, down from its previous estimate of a 1.9% annual pace.  The consensus of most economists ranges from a 1.6% to a 4% annual pace, so the Atlanta Fed is currently at the low end of GDP estimates.  If the supply chain bottlenecks diminish in the second quarter, I expect GDP growth to resurge.

Payroll Distortions

ADP reported on Wednesday that 247,000 private payroll jobs were created in April.  Interestingly, small businesses (less than 49 employees) shed 120,000 private payroll jobs in April, while medium businesses (50 to 499 employees) added 46,000 jobs.  Large businesses created 321,000 private payroll jobs in April.  Small businesses appear to be incurring a higher “quit” rate as employees move and try to find higher-paying jobs.  The ADP private payroll report has declined for three straight months, so there may be some changes underway, but right now the payroll numbers seem to be distorted by the movement of workers seeking higher pay.

Coffee Beans

Global trade turmoil in the latter half of 2021 and into 2022 saw Chinese manufacturing PMIs hover around the 50-point mark. Readings above 50 indicate that the sector is growing while readings below 50 signal a contraction. The coronavirus outbreaks with draconian lockdowns finally saw the indices tumble, from 48.1 and 49.5 in March to only 46.0 and 47.4 in April, with potential ripple effects for global trade. Source: Statista. See the full story here.