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NATO Allies Angry Over Withdrawal From Afghanistan

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In his Daily Market Notes report to investors, while commenting on the angry NATO allies, Louis Navellier wrote:

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Angry NATO Allies

Our NATO allies are not very happy with the impending August 31st withdrawal from Afghanistan.  In fact, in a stunning rebuke of U.S. foreign policy, the British Parliament last week held an emergency session that condemned both Prime Minister Boris Johnson and President Joe Biden.  Specifically, Parliament cited that the failure to intervene and protect the Afghanistan government from imminent collapse as an intelligence failure and neglect of moral duty.  Adding insult to injury, Prime Minister Boris Johnson was repeatedly heckled from skeptical members of Parliament.  The anger of our NATO allies against the Biden Administration is expected to persist, and this lack of respect for the U.S. may eventually undermine the strength of the U.S. dollar in the upcoming months.

The largest impact by the federal government on the markets has been an increase in the money supply by 40% over the past year, which is why residential real estate, the stock market and some collectibles have prospered.  The velocity of money, which is how fast money is changing hands remains high as consumers get out and about, despite the Covid-19 Delta variant, so 6% annual GDP growth persists.

I am also keenly aware that 61% of Americans pay no federal income taxes and that two-thirds receive more benefits from the federal government than they contribute.  However, for those of us that pay our taxes, our side is more energized, and we will be asserting ourselves via our economic activity as well as via the voting box.  In California, one of the reasons that some experts expect Governor Gavin Newson to be recalled in September, is the state unemployment office has had repeated delays processing claims due to fraud.  Another example is that many prisoners in California that fight the wildfires in exchange for a lower sentence, have been freed due to Covid concerns, so there is an acute shortage of firefighters.  Finally, when your power is shutoff every fire season, like the folks in Marin County know all too well, you may not be too happy with your governor.  The California recall is expected to set off a political “earthquake” that will ripple across the U.S.

The Rise In Home Sales

The economic news this week was mixed.  The National Association of Realtors announced that existing home sales rose 2% in July.  Median home prices have soared 17.8% in the past 12 months to $359,000.  Interestingly, median home prices slipped slightly, down from $362,000 in June when many expensive luxury properties distorted median home prices.  There are currently 1.32 million homes for sale, which represents a 2.6-month supply.  I expect median home prices to remain high until exciting home sales slow a bit and inventories rise.

The Commerce Department announced on Tuesday that hew home sales rose 1% in July.  New home sales remain stronger in the West and have risen 14.4%.  Interestingly, of the 367,000 new homes for sale in July, 29% have not been started yet, since many builders are striving to pre-sell new homes due to erratic building material costs.  The 226,000 new homes under construction represent the highest level since 2008.  At the current annual sales pace, the supply of new homes for sale represent a 6.2-month supply.

The Commerce Department announced that durable goods orders decreased 0.1% to $257.2 billion in July, due largely to a 2.2% decline in transportation orders. The global semiconductor chip shortage continues to impede vehicle production and Toyota is the most recent auto manufacturer to announce that it had to curtail its production.  I should add that economists were expecting a 0.5% decline in July, so the durable goods report was better than expected.

Tapering In 2022

The European Central Bank (ECB) and the Fed are apparently diverging on their respective monetary policies.  While the ECB recently increased its quantitative easing, the recent FOMC minutes reveal that the Fed wants to announce that it wants be begin tapering in 2022.  As a result, the euro has declined 3.9% against the U.S. dollar this year due to slower economic growth forecasted for the eurozone.

Odd News:

A male elephant in Khao Yai National Park in Thailand was searching for food when he spotted an elephant sculpture and charged it, knocking the model over.  Keepers at zoo said it's likely that the bull mistook the model elephant for a rival, as elephants will often fight for breeding rights.  Source: UK Mirror.

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Louis Navellier

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