Oil prices surge to two-week winning streak as Iran supply fears grip markets
The protests in Iran are now in the third week, and human rights groups have reported that over 500 people have been killed by the security forces loyal to the Mullahs. Bloomberg reported that President Trump is considering options on Iran, including military strikes, cyberattacks, and sanctions. However, Bloomberg also said that President Trump’s fondness for low gasoline prices means that he may not curtail exports from OPEC’s fourth-largest crude oil producer.
President Trump on Air Force said the Iranian leadership reached out to him and wants to talk. Trump also said that “We are looking at some very strong options.” Clearly, there is going to be a leadership change in Iran, and the U.S. should not do anything to interfere with a potential relationship with the new leadership of Iran.
The potential threat to Fed independence has rattled the currency market, since the U.S. dollar sold off in the wake of the DOJ investigation news. Fed Chairman Jerome Powell revealed in an interview that the Fed has received a grand jury subpoena that could result in a criminal indictment. The DOJ investigation is about the billion-dollar construction project at the new Fed headquarters. Obviously, if Fed Chairman Powell is being investigated by the DOJ, it may be hard for Chairman Powell to do his job. So, the real question is whether the DOJ investigation intended to oust Chairman Powell?
President Trump will be announcing the new Fed Chairman this month, which is expected to be Kevin Hassett, who leads the Council of Economic Advisors. However, as I discussed on Navellier Market Buzz, President Trump will likely pick a good media window to make the new Fed Chairman announcement, since he needs to generate momentum for quick Senate confirmation.
The Consumer Price Index (CPI) will be announced on Tuesday, and economists are expecting a 0.3% increase, but due to weak shelter costs, I am expecting a pleasant surprise. Then on Wednesday, the Producer Price Index (PPI) and retail sales will be announced.
President Trump, in addition to directing Fannie Mae and Freddie Mac to buy mortgage securities, is also considering capping credit card interest rates. Obviously, lower credit card interest rates would be widely popular with struggling consumers and boost President Trump’s popularity. Financial stocks, as a group, are expected to post strong quarterly results this week, since the yield curve has gotten steeper and will help boost their profitability.