Chris Lehmann The president’s targeting the Federal Reserve governor over a technicality is blatantly politically motivated. The post Trump’s Attempt to Fire Lisa Cook From the Fed Is a Naked Power Play appeared first on The Nation.
The 10yr term premium has risen, as has the 5yr TIPS-Trsy breakeven, in the wake of Mr. Trump’s campaign to subjugate the Fed. Figure 1: Ten year term premium, in % (blue). Light orange shading denotes period between Vought letter to Powell and Trump’s visit to Fed. Source: NY Fed. Figure 2: Five year Treasury-TIPS breakeven, in % (blue). Light orange shading denotes period between Vought letter to Powell and Trump’s visit to Fed. Source: Treasury via FRED. If Trump continues to browbeat the Fed into lowering the fed Funds rate, then the path of future nominal rates may be lowered, but higher expected inflation will tend to increase the term premium. Which dominates? That’s ambiguous. Believers in the Fisherian relation know the answer.
The U.S. economy did post a headline-grabbing 3.3% gain in Q2, but that figure is misleading. It’s driven largely by the collapse in imports—not by true domestic growth. Remember the GDP formula: GDP = C + I + G + (X – M). A sharp drop in imports boosts that (X – M) term artificially, making GDP look better even while the underlying fundamentals stagnate. Consumer spending rose only modestly at 1.6% and private domestic final sales rose 1.9%. They relay a lower estimate and then state the true figure, acting as if the figure should be celebrated. Meanwhile, business spending remained weak. We’ve also noted that household debt surged by $185 billion in Q2, with rising mortgage, credit-card, auto-loan, and student-loan balances. Delinquency rates are up, and real incomes are under pressure. Consumers are treading in deep waters. Imports tanked by 29.8% after nations began to panic buy last quarter ahead of tariffs. Exports declined 1.3%. The import volatility has inflated figures and does not mark sustainable economic growth. Investment into the US has also improved as capital has nowhere else to go, but again, the expansion is not enough for the long-term. The economy contracted 0.5% in Q1, and the Commerce Department is reporting that the economy rose 3.3% in Q2, with growth averaging 2.1% or a bit above 1% per quarter. Stagflation is not simply high inflation with low growth. It is the direct result of government mismanagement. When politicians and central banks try to manipulate the economy, they destroy confidence. That is the fuel behind stagflation.
Leer en Español The mid-2010s doldrums: In the mid-2010s, uranium prices languished below USD 20 per pound. This was a small fraction of the over USD 100 per pound prices reached in the heady days before the global financial crisis of 2007–2008. In the post-crisis years, the uranium spot price was weighed on by the Fukushima disaster in Japan—which led to some developed countries going off nuclear power—rising uranium supply and a tapering of the irrational market exuberance that marked the 2007 price bubble. Impressive resurgence: Over the last decade, however, uranium has made a comeback, with prices increasing more than fourfold between 2017 and 2024. Multiple factors have been at play. Asian countries, in particular, added nuclear power capacity at a brisk rate during the period—China’s was up around two-thirds, for instance. This was coupled with producers reining in output in the face of low prices. In addition, the Russia-Ukraine war fueled many countries’ concerns over the security of fossil fuel energy supplies, sparking renewed interest in nuclear as an alternative and reliable energy source. Another key development has been the increasing financialization of the market. Most notably, the Sprott Physical Uranium Trust launched in 2021 and has since rapidly accumulated tens of millions of pounds of uranium, tightening spot market supply. Price outlook for the rest of this decade: The Consensus among our panelists is for uranium prices to remain well above the levels that prevailed in the 2010s for the rest of this decade, with prices forecast to hover between USD 65 and 80 per pound. The latest edition of the World Nuclear Association’s Nuclear Fuel Report penciled in a 28% increase in uranium demand from 2023 to 2030 vs an 18% increase in supply. Higher demand will be driven by several factors: Rising economic development levels in emerging markets, higher electricity demand caused by AI, greater interest in modular nuclear reactors, and governments’ ongoing desire to ensure energy security in a more uncertain world. That said, panelists don’t see a return to the highs of 2024, a period when the spot price likely got ahead of underlying market fundamentals due to investor exuberance. Insight from our panel of analysts Economists at Goldman Sachs said: “Supply/demand dynamics are supportive of higher uranium prices: We forecast a structural supply deficit of ~20mn lbs in 2025 to grow to ~130mn lbs by 2040, or representing 40%-45% undersupply. This view is supported by increasing demand for uranium as the global nuclear fleet expands to support growing power needs amid a lack of meaningful potential supply to come online.” Our latest analysis Argentina’s economy continued to boom in annual terms in June, but shrank month on month. New Zealand’s central bank cut rates again in August amid a dour economic panorama. The post What’s the outlook for uranium prices? appeared first on FocusEconomics.
Leer en Español The mid-2010s doldrums: In the mid-2010s, uranium prices languished below USD 20 per pound. This was a small fraction of the over USD 100 per pound prices reached in the heady days before the global financial crisis of 2007–2008. In the post-crisis years, the uranium spot price was weighed on by the Fukushima disaster in Japan—which led to some developed countries going off nuclear power—rising uranium supply and a tapering of the irrational market exuberance that marked the 2007 price bubble. Impressive resurgence: Over the last decade, however, uranium has made a comeback, with prices increasing more than fourfold between 2017 and 2024. Multiple factors have been at play. Asian countries, in particular, added nuclear power capacity at a brisk rate during the period—China’s was up around two-thirds, for instance. This was coupled with producers reining in output in the face of low prices. In addition, the Russia-Ukraine war fueled many countries’ concerns over the security of fossil fuel energy supplies, sparking renewed interest in nuclear as an alternative and reliable energy source. Another key development has been the increasing financialization of the market. Most notably, the Sprott Physical Uranium Trust launched in 2021 and has since rapidly accumulated tens of millions of pounds of uranium, tightening spot market supply. Price outlook for the rest of this decade: The Consensus among our panelists is for uranium prices to remain well above the levels that prevailed in the 2010s for the rest of this decade, with prices forecast to hover between USD 65 and 80 per pound. The latest edition of the World Nuclear Association’s Nuclear Fuel Report penciled in a 28% increase in uranium demand from 2023 to 2030 vs an 18% increase in supply. Higher demand will be driven by several factors: Rising economic development levels in emerging markets, higher electricity demand caused by AI, greater interest in modular nuclear reactors, and governments’ ongoing desire to ensure energy security in a more uncertain world. That said, panelists don’t see a return to the highs of 2024, a period when the spot price likely got ahead of underlying market fundamentals due to investor exuberance. Insight from our panel of analysts Economists at Goldman Sachs said: “Supply/demand dynamics are supportive of higher uranium prices: We forecast a structural supply deficit of ~20mn lbs in 2025 to grow to ~130mn lbs by 2040, or representing 40%-45% undersupply. This view is supported by increasing demand for uranium as the global nuclear fleet expands to support growing power needs amid a lack of meaningful potential supply to come online.” Our latest analysis Argentina’s economy continued to boom in annual terms in June, but shrank month on month. New Zealand’s central bank cut rates again in August amid a dour economic panorama. The post What’s the outlook for uranium prices? appeared first on FocusEconomics.
PRIVATE BLOG – LOOKING AT THE NASDAQ Private blog posts are exclusively available to Socrates subscribers. To sign-up for Socrates or to learn more, please visit Ask-Socrates.com. https://ask-socrates.com/
Leer en Español Major Geopolitical Events and Their Effect on Oil Prices For decades, the price of crude oil has been a sensitive barometer of global stability. More than just a commodity, its cost is a fever chart of geopolitical health, spiking with conflicts and crashing with unforeseen calamities. To understand the ebb and flow of the world’s most critical energy source is to read a history of modern crises. From Arab-Israeli tensions to a global pandemic, major events have consistently demonstrated their power to convulse the oil market, reshaping economies and international relations in the process. The Oil Crisis of the 1970s: A Rude Awakening The 1970s shattered the post-WW2 illusion of cheap and abundant energy. The decade was punctuated by two major oil shocks that fundamentally reconfigured the global economic landscape. The first, in 1973, was a direct consequence of the Yom Kippur War. In response to American support for Israel, the Organization of Arab Petroleum Exporting Countries (OAPEC) imposed an embargo on the United States and other nations. This was not merely a commercial dispute; it was the weaponization of oil. The effect was immediate and dramatic. The price of oil per barrel quadrupled, soaring from around USD 3 to nearly USD 12 by the time the embargo was lifted in March 1974. For a world built on cheap oil, the shock was profound. The United States, where domestic production had peaked in 1970, was particularly vulnerable, having become increasingly reliant on imports. The iconic images of the era are of long queues of cars snaking around petrol stations, a visceral symbol of a new era of energy scarcity. The second shock of the decade arrived with the Iranian Revolution in 1979. The overthrow of the Shah and the ensuing chaos crippled Iran’s oil industry, removing millions of barrels from the daily global supply. The subsequent Iran-Iraq War further decimated the production of both nations. While other OPEC members increased their output to compensate, it was not enough to prevent another price surge. By 1980, oil prices had more than doubled again, reaching over USD 36 per barrel, a fourteen-fold increase from the start of the 1970s. The decade served as a harsh lesson in the strategic importance of oil and the immense power wielded by those who control its flow. The Gulf War (1990–1991): A Swift, Sharp Shock The summer of 1990 brought another stark reminder of the Middle East’s critical role in energy security. Saddam Hussein’s invasion of Kuwait in August immediately threatened a significant portion of the world’s oil supply. Iraq and Kuwait together accounted for a substantial slice of OPEC’s output. The invasion, motivated by Iraq’s heavy debts from the Iran-Iraq war and its accusation that Kuwait was overproducing and depressing prices, sent a jolt through the market. Oil prices reacted with predictable alarm. The average monthly price of a barrel shot up from USD 17 in July to USD 36 by October. The fear was not just the loss of Iraqi and Kuwaiti oil, but the potential for the conflict to spill over into neighboring Saudi Arabia, the world’s largest oil exporter. The United Nations responded by imposing an embargo on Iraqi and Kuwaiti oil, further tightening supply. However, the 1990 price shock proved to be less severe and of shorter duration than those of the 1970s. The swift and decisive military intervention by a U.S.-led coalition to oust Iraqi forces from Kuwait calmed market fears of a prolonged supply disruption. As the coalition’s military success became apparent, prices began to fall. The episode demonstrated that while the market remained highly sensitive to geopolitical ructions in the Gulf, a rapid and effective international response could mitigate the economic fallout. The 9/11 Attacks: A Demand-Side Shock The terrorist attacks of September 11 2001 were a tragedy that shook the world. Their impact on the oil market, however, was different from previous crises. Rather than a supply shock, 9/11 triggered a sudden and severe demand-side shock. The immediate aftermath saw the world’s aviation industry grind to a halt. The grounding of aircraft and the subsequent deep aversion to air travel led to a collapse in the demand for jet fuel, a key component of oil consumption. This precipitous drop in demand sent oil prices tumbling. The attacks created a climate of profound economic uncertainty, further dampening consumer and business confidence and, consequently, energy consumption. While the price drop was significant, it was relatively short-lived as the global economy gradually found its footing. The 9/11 attacks highlighted a different kind of vulnerability for the oil market: Its deep integration with the rhythms of the global economy and the sudden impact that a non-energy-related catastrophe could have on demand. The Global Financial Crisis: A Cascade of Collapsing Demand The financial contagion that began in the American subprime mortgage market in 2007 and erupted into a full-blown global crisis in 2008 delivered the most significant demand-driven oil price shock in modern history. In the first half of 2008, oil prices had surged to unprecedented highs, peaking at over USD 147 a barrel in July. This was driven by a combination of robust demand, particularly from emerging economies like China, and stagnant production. Then, the bottom fell out of the market. As the financial crisis crippled the world’s leading economies, industrial activity seized up and commerce slowed dramatically. Demand for energy plummeted. As a result, oil prices went into a freefall, collapsing to a low of USD 32 a barrel by December 2008. This represented a staggering 80% drop in just a few months. The crisis demonstrated with brutal clarity how intertwined the fate of the oil market is with global economic health. No amount of supply-side discipline from OPEC could counteract a demand shock of this magnitude. The Iranian Nuclear Deal: A Glimmer of New Supply For years, Iran’s vast oil reserves were largely kept off the mainstream market by stringent international sanctions aimed at curbing its nuclear program. The Joint Comprehensive Plan of Action (JCPOA),
California has been repelling capital through overregulation. The energy sector high-tailed out of the state in recent years under Governor Gavin Newsom’s net-zero policies. Now, even retailers feel forced to evacuate as California becomes increasingly anti-business. Bed Bath & Beyond announced that it must close all retail stores within the state of California. “This decision isn’t about politics—it’s about reality,” company head Marcus Lemonis said in a social media post. “California has created one of the most overregulated, expensive, and risky environments for businesses in America. It’s a system that makes it harder to employ people, harder to keep doors open, and harder to deliver value to customers.” Newsom’s office commented that Bed Bath & Beyond was already a dead business, failing to take any responsibility. To begin, California’s minimum wage continues to rise year after year at a pace unsustainable for businesses. Automation is replacing the human workforce, and some studies have shown that minimum wage workers in California are simply receiving fewer working hours as employers aim to cut costs. Newsom believes he can continue spending and rescue the state from the debt through taxation. Fleeing businesses can’t pay taxes, and California forces both businesses and residents to pay some of the highest taxes in the nation. All corporations operating in the state must pay a flat corporate income tax rate of 8.84% on net income. Banks and financial institutions pay a bit more at 10.84%. There is an annual franchise tax of $800 for businesses as well. But wait—corporations are still beholden to the 21% federal corporate income tax, which means businesses are paying roughly 29.84% on corporate income taxes alone. Payroll taxes in California are higher than the national average, largely due to social programs like State Disability Insurance (SDI) and the Employment Training Tax (ETT), which must be paid in addition to Unemployment Insurance (UI). There is a personal income tax withholding of up to 14.63% that employers must withhold from employees as well. The state was forced to overturn its policy regarding shoplifting and burglary after criminals used the minimum $950 amount for petty theft to avoid felony charges. Countless businesses shuttered their brick-and-mortar locations as a direct result of light-on-crime policies. Capital flees excessive regulation and it’s almost a no-brainer for corporations to move beyond state lines where operating costs are drastically lower.
Leer en Español No commodity is more important for the world economy than crude oil. It, along with coal and natural gas, powers our electricity grids and transport networks, greasing the gears and cogs of our modern life. And when their price shifts, as many readers will painfully remember from the 2021–2023 global energy crisis, the effects on our personal finances and the world economy are considerable. Forecasting what will happen to the price of crude oil and other energy commodities has never been more challenging. The world is destabilizing, with huge implications for oil, gas and coal prices. The U.S.—which, just over 20 years ago, welcomed China into the World Trade Organization—shifts its trade policy erratically, and sometimes via the social media account of its President. Moreover, the nation’s withdrawal from its role as the world’s “policeman” has contributed to the number of conflicts to double globally since 2020, according to the think-tank ACLED, threatening disruption to oil production and shipping. In this fast-moving world, quarterly or even monthly updates to commodity forecasts go out of date quicker than before. Recognizing this, at FocusEconomics, we have expanded our offer to include daily updates of our forecasts via our data platform, harnessing the latest projections from our panel of expert analysts into one number—our Consensus Forecast. Nobody has a crystal ball, but, equally, nobody—businesses, consumers and investors—can afford to wait to see what happens in the future before making investment or spending decisions that need to be made today. Daily Consensus forecasts are the most accurate picture of what the market thinks will happen ahead at any given time. Oil market In the past few months, economists have become more bearish about crude oil prices: In 2025, the price of Brent crude oil is projected by our Consensus to decline 14%, and then by a further 1% in 2026, falling to their lowest level since the pandemic in 2020. Two big developments have led to this greater bearishness. After U.S. President Trump announced his tariff plan in April, the International Energy Agency (IEA) slashed its 2025 outlook for worldwide growth of oil demand by 30%. And then, that same month, OPEC+ began what has ended up being so far a six-long set of pledges to accelerate output hikes, leading the IEA to hike its projection for worldwide growth of oil supply by a whopping 75%. Our panelists were quick to respond to these developments, as explained by economists at ING in early May: “OPEC+ is implementing another aggressive supply hike […]. This increase solidifies a shift in policy. With prospects of further large supply increases in the months ahead, we revised our oil forecasts lower.” Natural gas market In the natural gas market, things have been different. In recent months, our panelists have become more upbeat about the price outlook for the fuel. Our Consensus projects the main U.S. natural gas benchmark, Henry Hub, to trade 51% higher this year than last, and rise a further 8% in 2026. Analysts at the EIU commented: “The heavy draw on stocks during the 2024-25 winter will contribute to the increase in Henry Hub prices in 2025. Rising demand from LNG exporters and increased production costs arising from Mr Trump’s tariffs will also drive up prices.” In contrast to oil, in the natural gas market, the political shock of Trump has made investors more optimistic about prices ahead: He’s rushed to approve licenses to export liquified natural gas, the shipments of which hit 9.1 million tonnes in July—over 1,000% higher than at the start of his first term in November 2016. Meanwhile, a relatively cold U.S. winter drained inventories of natural gas to far below seasonal averages. In this case, our panelists also reacted speedily: Coal market The coal market, already the black sheep among the energy commodity complex as it is the most polluting, has seen the sharpest downgrade in price forecasts since the start of the year. The prices of both Australian coking and thermal coal—the former used for smelting, the latter for electricity generation—are seen falling roughly 20% in 2025 year on year. Samantha Dart and Hongcen Wei, analysts at Goldman Sachs, explain: “We believe global coal balances remain soft and particularly, softer than our previous expectations, given weaker-than-expected coal consumption in H1 2025, attributed to a warmer-than-expected Q1 in Northeast Asia followed by a cooler-than-expected Q2 in South Asia. We accordingly nudge lower our Aug-Sep/Q4 [benchmark Australian thermal coal] price forecasts by 3.0/5.0 USD per metric ton to 117/113 USD per metric ton.” Moreover, Trump’s tariffs have hit especially hard North-east Asian economies, like China, Japan, South Korea and Taiwan. These nations depend on exports to fuel growth and are the main consumers of Australia’s coal. Prices have also been dampened by a supply glut in China, plus bad weather impeding exports from Australia. Take a look at how our panelists have reacted to these developments below: The post The best way to get oil price forecasts less wrong appeared first on FocusEconomics.
Steve Bullock Across the country, rural hospitals will close, and the empty towns will mirror the quiet halls where doctors and nurses once rushed to heal. The post Montana Doesn’t Need Any More Rural Ghost Towns, but That’s What Republicans Voted For appeared first on The Nation.
