In his Daily Market Notes report to investors, while commenting on the spiking energy prices, Louis Navellier wrote:
Energy Fears
Spiking energy prices is putting a cloud over peak inflation hopes. This weekend, the EU agreed to ban most Russian oil imports by year-end, and crude oil jumped immediately. WTI hit $119 a barrel this morning, the highest price in well over a decade.
Q1 2022 hedge fund letters, conferences and more
Adding fuel to the fire was a relaxation of Covid lockdown restrictions in China and the expected rapid return to normal energy demand in the world's second-largest economy. All in a global crude market with remarkably tight excess crude capacity recently characterized by the Saudi oil minister as less than 2%.
While the Fed focuses on core inflation - excluding food and energy components, which the Fed characterizes as transitory - rising energy costs find their way into every corner of the economy, including fertilizer, chemicals and plastics, and electric bills. If energy costs stay high long enough, they will push on wages and other components of core inflation and force the Fed to maintain a more aggressive monetary stance.
June Macro Numbers
All that said, the market rally last week was a reminder of the strength of the American consumer and the pent-up post-pandemic demand that should still play out over the course of the summer.
Note that while interest rates responded to the new high in crude oil, with the U.S. 10-year jumping 11bps to 2.86%, rates remain well below recent highs. Likewise, the U.S. dollar is higher this morning but also below its high earlier in the month.
Earnings have been steering the boat, both up and down this month, and with the 2Q numbers several weeks away, it's likely that macro numbers will be more influential in June.
Strategy Intact
The strategy remains the same; take advantage of pullbacks like today to add to strong earners and reduce exposure to high valuation stocks with weak earnings on rallies like last week.
Coffee Beans
Larger ships make up the vast majority of black carbon (BC) emissions, with container ships, bulk carriers, and oil tankers emitting 60 percent of all BC emissions, according to the 2021 European Maritime Transport Environmental report. Although cruise ships make up only 1 percent of the global fleet, they account for 6 percent of BC emissions, releasing the highest amount of black carbon per ship of any vessel. Source: Statista. See the full story here.
