Trump at CPAC
Trump makes his first political appearance at CPAC Feb 28. Fresh off impeachment 2.0 “victory”, Trump looks to make his political future a bit clearer in Orlando this weekend. The realization by Nikki Haley, Mitch McConnell and other GOP heavyweights that Trump is here to stay and wont fade away has solidified Trumps grip on the GOP with 2022 looking to be a catalyst for 2024.
Public quick to point out Biden war drums over this air strike on Iranian militias in Syria, however, this was the proper response after repeated attacks on US positions in Kurd controlled areas of Iraq. It is normal for US adversaries to try to take advantage of a Presidential transition period and test defensive perimeters. This was actually a measured strike to set the lines in the sand over action-retaliation. The area’s to watch is Horn of Africa and Libya for US troop increases and drone strike actions in the coming 12 months.
Oil to $75? $100? $125? Even higher as in 2008
It’s no surprise oil has spiked since the November election. Biden policies on renewables, climate action and weak foreign policy was what I initially pointed out in November calling for $65 WTI and increased it to $75 in December. Politically, progressives within the Biden admin need to justify renewable spending programs making gas look expensive and electric looking “cheap”. With increasing state budget gaps, expect a rise in state gasoline taxes further adding to energy inflation going into 2022 midterms.
Fed overnight actions and 30yr bonds
With Trump lurking in the political arena, there is an unlikely chance the Fed, aligned with Biden from the start, are going to allow Trump to have ammo over the weekend at CPAC with “do you miss me yet?” rhetoric hitting the news cycles. Quick pumps overnight in Globex likely to keep the market treading water early today(Feb 28) while they keep an eye on key 30yr bond level at 2.3. It’s likely the Fed is also chasing and twisting QE longer while trying to imply some sort of Yield Curve Control. But the Fed is falling behind the curve, both yield and inflation.
It’s clear after eliminating the $15/hr minimum wage increase over Budget restrictions that the $1.75-$2.1 trillion dollar stimulus package will pass with little opposition. The progressive block will publicly complain over the removal, but look towards 2022 midterms to use this issue for election narratives. Schumer and Pelosi have looked to target March 15 as the date for Senate approval of the bill. There has been a growing sentiment that minority businesses/banks will have special attention in this bill.
EU vs UK vaccineXIT
First Brexit now vaccinations. Brussels continues its missteps over vaccine rollout with only 6.6% of EU citizens vaccinated vs 29% of UK citizens. VDL has now issued a warning on exports of vaccines if producers fail to deliver quotas. A growing number of capitals in the EU have come under serious political strain over this issue and there seems to be no unified EU solution as the bloc fragments further. While the UK looks set to open fully in late Spring/early Summer, the EU member states continue to push lockdowns further into summer with looming German and Dutch elections. As for GDP growth this year, forget the OECD forecasts. UK will outperform.