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A Potential Gift To Warren Buffett

By Louis Navellier. Originally published at ValueWalk.

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In his Daily Market Notes report to investors, while commenting on gift to Warren Buffett, Louis Navellier wrote:

The Fed released its latest Federal Open Market Committee (FOMC) minutes on Wednesday that confirmed that the Fed will be reducing its quantitative easing by $95 billion per month, which consists of $60 billion in Treasury securities and $35 billion in agency debt.  The FOMC minutes revealed that the Fed wants to shrink its balance sheet, which has swollen to $9 trillion due to the Covid pandemic.  The Fed minutes openly acknowledged that it was behind the curve (i.e., market rates) and that 0.5% increments in Federal Funds increases may be forthcoming.


Q4 2021 hedge fund letters, conferences and more

Interestingly, former Fed Governor, Laurence Lindsey, told CNBC “I do think we’re going to have a recession, probably in the next quarter.”  Lindsey added that “Inflation is eating into consumer spending power, they’re going to have to cut back.”  It is imperative that retail sales in the upcoming months exceed inflation, otherwise, stagflation will persist and erode consumer’s purchasing power.

Dirty Crude

The Wall Street Journal reported that Biden Administration is also seeking ways to boost crude oil imports from Canada, even though it canceled the Keystone XL pipeline over concerns that it would be shipping crude oil from Alberta’s tar sands.  Specifically, the Biden Administration now wants Canada to ship Alberta’s crude oil via rail instead of existing pipelines which are near capacity.  This is effectively driving Canadians nuts, since shipping crude oil on trains is very dangerous, especially during winter months when trains can derail as the train tracks shrink.

Gift For Buffett

The fact that the Biden Administration now wants the dirty Alberta crude oil from tar sands that it previously shunned is naturally ironic.  Even more ironic, is that if Canada ships crude oil on trains to the U.S., it will enrich Warren Buffett (which dominates U.S. railroads at the Canadian border), who backed Joe Biden in the 2020 Presidential election and it makes the ban on the Keystone XL pipeline look like a potential gift to Warren Buffett.

The Commerce Department announced that factory orders declined 0.5% in February, which is the first decline in 10 months.  January factory orders were revised up to a 1.5% increase, up from a 1.4% rise previously reported.  Ongoing supply chain glitches were cited as the primary reason that factory orders declined in February, despite strong order backlogs.

Interestingly, the Commerce Department reported on Tuesday reported that the trade deficit declined by 1% in February, as imports rose 1.3% to $317.8 billion and exports rose 1.8% to $228.6 million.  The trade deficit remains near a record, but surging exports of fertilizer and agriculture products, as well as refined energy products, are boosting U.S. exports.

The Institute of Supply Management (ISM) on Tuesday announced that its non-manufacturing, service index in March rose to 58.3.  One strong component of the ISM service index was the New Orders component which rose to 60.1 in March.  All 17 industries surveyed by ISM reported an expansion in March, which is very positive.  Despite this positive ISM service report, the Atlanta Fed revised its first-quarter GDP estimate lower to only 0.9% annual GDP growth, down from 1.5% annual GDP growth previously estimated.

Multiplicative

The Labor Department on Thursday announced that new weekly unemployment claims declined to 166,000 in the latest week.  Continuing unemployment claims rose a bit to 1.523 million in the latest week.  Economists were expecting 1.302 million in continuing unemployment claims, so this was a negative surprise and likely attributable to new “multiplicative” seasonal adjustments.  Specifically, the Labor Department said, “In times of relative economic stability, the multiplicative option is generally preferred over the additive option.” I wonder what a “multiplicative” option is. I should add that economists were expecting new weekly unemployment claims to come in at 200,000, so at least this was a positive surprise as well as the lowest weekly unemployment claims in 54 years (since 1968.)

Coffee Beans

According to a Bloomberg Markets Live survey conducted between March 29 and April 1, 48 percent of investors expect the U.S. to fall into recession next year. Another 21 percent expect the downturn to happen in 2024, while 15 percent of the 525 respondents expect the recession to come as early as this year. Source: Statista. See the full story here.

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