In his podcast addressing the markets today, Louis Navellier offered the following commentary.
It is very dangerous for me to venture into U.S. politics, but I think the next President will be the person that calls for diverting Biden Administration’s proposed next installment of $20 billion in aid to Ukraine to Maui to rebuild after the devastating fires in Lahaina.
The news that Ukraine’s regional army chiefs were buying villas and luxury cars in Spain means that some of the aid to Ukraine may have been diverted. President Volodymyr Zelensky recently fired Ukraine’s regional military recruitment chiefs after it was revealed illegal enrichment to by helping eligible military-age men flee the country to avoid military service.
So essentially, President Zelensky is trying to imply that NATO’s aid was not being stolen. Nonetheless, the West is increasingly growing tired of the war between Russia and Ukraine which is a stalemate where everyone is losing.
Growing Food Inflation
Last year was essentially a perfect growing season for crops, so Canada and other nations were able to offset Ukraine’s wheat production. This year it is abnormally dry, so the worldwide production of corn, soybeans, and wheat is down substantially.
Food inflation is a growing problem, especially in poor nations that traditionally relied on Ukrainian crops. With the Baltic Sea transportation now curtailed as Russia tries to intimidate cargo ships after firing a warning shot, Ukraine is trying to sell its crops to its neighbors, but even Poland does not want Ukrainian wheat, because it wants to protect its domestic wheat production.
The West has to decide how long it wants to tolerate higher food and energy prices due to the fighting between Russia and Ukraine. Both countries and now much of the rest of the world are suffering, so it will be interesting if a ceasefire will ensue in the upcoming months. In the meantime, we can profit from acute commodity shortages, especially in the energy sector.
Speaking of energy, seasonal demand for crude oil is expected to peak around Labor Day, so I will be monitoring inventories very carefully. If crude oil inventories remain low, it will be safe to continue to hold many refineries and integrated oil companies.
Ignoring The Economic Collapse In China
Right now, the world is ignoring the economic collapse in China and focusing on the economic recovery in the West. Tuesday’s retail sales report will confirm if U.S. consumer demand remains strong. Right now, the Atlanta Fed is estimating 4.1% annual third-quarter GDP growth, so growth expectations remain high.
Pivotal Jackson Hole
In the wake of a poor 30-year Treasury bond auction last week, Treasury bond yields remain high. The short end of the Treasury yield curve has also risen, so it appears that interest rates may remain uncomfortably high.
This means the upcoming Kansas City Fed conference in Jackson Hole may be pivotal, depending on what central bankers say. The Jackson Hole conference has traditionally been an international event for central bankers, so their prepared speeches will be closely scrutinized.
Coffee Beans: Fresh Legs
A Michigan family made a surprising discovery in their sealed package of spinach — a live frog. The family returned the package to the store, which issued them a refund. Source: UPI. See the full story here.
