In his podcast addressing the markets today, Louis Navellier offered the following commentary.
Rolling Recession
I mentioned on Fox Business with Maria Bartiromo on Tuesday about just “how many industries does the Fed need to destroy,” since there are now growing problems with subprime loans and car loans in addition to housing woes.
Q4 2022 hedge fund letters, conferences and more
Ed Yardeni likes to call the current economic environment a “rolling recession,” which I believe is an excellent description of the conundrum we are now in the midst of at the present time as the Fed continues to raise key interest rates.
Suspicious Resignation
I do not mean to be a conspiracy theorist, but I said on Fox Business that I did not trust the January payroll report and retail sales report due to “positive” seasonal adjustments.
Furthermore, my comment that Labor Secretary Marty Walsh resigned after the January payroll report remains suspicious, so perhaps Maria Bartiromo can interview Marty Walsh now that he is no longer a member of the Biden Administration.
Walmart's Earnings
Walmart Inc (NYSE:WMT) announced better-than-expected sales and earnings, but it lowered its guidance, so worries that consumer spending may be sputtering persists, despite a spectacular January retail sales report that was apparently distorted by seasonal adjustments.
Food and energy inflation persist in the latest inflation numbers, which will likely be re-confirmed in the Personal Consumption Export (PCE) update on Friday.
Moderating Rent
Speaking of the upcoming PCE report, my favorite economist, Ed Yardeni, on Tuesday issued a “QuickTakes” bulletin that illustrated that rent inflation is on the verge of moderating. Specifically, owners' equivalent rent has leveled off in the past five months thru January.
Why this moderation in owners' equivalent rent has not shown up in the CPI yet is frustrating, but perhaps it will finally show up in the PCE on Friday. As soon as we have evidence of moderating rental and home prices, inflation will be cooling off fast, which will trigger a big stock market rally.
Let’s hope and pray that the PCE report on Friday will signal that inflation is cooling off faster than the January CPI and PPI reports signaled.
The National Association of Realtors on Tuesday announced that existing home sales declined 0.7% in January to a 4 million annual pace, which is the 12th straight monthly decline as well as the slowest annual pace since October 2010.
Interestingly, economists were expecting existing home sales to rise 1.2% in January, so this was a major disappointment and prove that economists cannot hit the broadside of a barn. Compared to a year ago, existing home sales declined 36.9% as mortgage rates declined.
One-Year Anniversary Of The Russian Invasion Of Ukraine
I should add that Friday will be the one-year anniversary of the Russian invasion of Ukraine, which has turned into a proxy war with NATO. President Biden’s visit to Kyiv on Monday and his meeting with Poland are raising eyebrows on the escalation of the proxy war with Russia.
Naturally, President Biden is promising more money, including funding some Ukrainian pensions. Wars are clearly expensive and it will be interesting how long Congress will continue to fund NATO’s proxy war via Ukraine.
All this spending is helping to increase the federal budget deficit and is expected to put more upward pressure on Treasury yields.
Naturally, the federal government’s deficit ceiling will have to be lifted, but since the Treasury Department is implementing extraordinary measures to avoid hitting the deficit ceiling, it will be interesting when Congress and the Biden Administration decide to debate the deficit ceiling and whether the Ukraine spending will be curtailed in any manner.
One thing that I can tell you is that Vladimir Putin was not pleased with President Biden’s visit to Poland and Ukraine this week. On Tuesday, Putin suspended Russia’s participation in the New SMART treaty to control nuclear weapons. Due to this suspension, Russia can now resume testing its nuclear weapons to torment the West.
Putin said regarding NATO and the U.S. that “They want to inflict a ‘strategic defeat’ on us and try to get our nuclear facilities at the same time.” Ouch, clearly Putin is trying to torment the West with a nuclear threat. In conclusion, we are not in World War III yet, but we are getting dangerously close.
In the meantime, global energy production remains at a record level and Russia is anticipated to increasingly go offline as Western sanctions bite. Russia’s energy business is in chaos and its pipelines are now backing up, which is expected to cause Russia to shut down many of its wells.
Already Russia’s crude oil production has been reduced by approximately 1.5 million barrels a day compared to a year ago. Due to wellheads and pipeline complications in the Artic, another 3 to 5 million barrels a day of Russian crude oil could disappear in the upcoming months. Not surprisingly, crude oil prices are firming up as the tension between Russia and the West escalates.
Coffee Beans
A Texas man who bought a second-hand CD from a small-town thrift shop made a surprising discovery inside the case -- a Polaroid photo of President John F. Kennedy on the day of his assassination.
He hasn't yet decided whether to keep the photo or try to sell it to a collector. Around 97% of the Kennedy collection is now available to the public after the National Archives and Records Administration released nearly 13,000 documents in December 2022. Source: UPI. See the full story here.
