After a surge earlier this month, crude oil could not maintain the $75 level. Friday West Texas Intermediate was back in the middle of the trading range. It is bounded by $65 on the downside and $75 on the upside. Gasoline has backed off its high above $2.10 and now trades at $2.05. The lack of a trend seems to be due to the lack of any shortage.
China, as discussed here, is reeling from self-induced problems. The one child per couple practice has resulted in a shortage of women. Couples preferred males and that is what they got. There is a shortage of available females for marriage. China has a serious aging population problem that is not improving. One result is an over building of houses. There may be some 90 million vacant already. Given a lower level of production, Iran is able to supply China with the energy it needs. And so prices remain in a trading range.
Share prices are doing much the same. Apache trades at $25 between $23 and $27. ExxonMobil has pulled back from its earlier high at $126, now trading at $120.
The NASD 100 NDX has carried to a new high. Look no further than Tesla for the answer. Tesla gapped up from $220 to $265 in the last two days. That is the largest single day gain for TSLA since 2013. Nvidia remains strong trading at the top of its range at $143.
Last week we discussed the wage price spiral. The Longshoremen got a whopping 62% raise over the next few years. The machinists at Boeing have noticed. 33,000 machinists rejected a 40% raise over the next four years. Boeing (BA) had a third quarter loss of more than $6 billion. Boeing’s cash flow is trending negative. This five-week strike seems predicated on the idea that the U.S. Government will find Boeing TBTF, too big to fail and offer a bailout if necessary.
Americans are still upset over the surge in prices at all levels. Home sales have decreased due to higher mortgage rates. Ditto for car sales.
The economic policies of both Haris and Trump are unappealing. Harris would raise taxes to the highest levels in years. No doubt her ‘I like fracking’ pledge would evaporate on winning. Her climate expert is a former Bernie Sanders. This would be a ramp up in the federal war on fossil fuels. Trump’s tariffs would likewise slow world trade as other countries retaliated. The Smoot-Hawley tariffs of the early 1930s spurred on the Depression. The mistake would finally be eliminated with the General Agreement on Tariffs and Trade. But the world had to wait for 1947 for this to happen.
