Surveying the market landscape

In the US, the June jobs report came in strong at 213,000 jobs, handily beating the expectation of 195,000.

While the jobs number was robust, wages remain under control. However, some industries are reporting shortages, especially in the transportation industry.

The yield curve continues to flatten, so many investors believe a recession is imminent.


Oil Prices

The thesis is that an inverted yield curve, where the short end of the Treasury curve (2-year notes) gets elevated above the longer duration period (ten-year bonds), has always accurately predicted a recession.

In the oil market, in my opinion, supply concerns about production in Venezuela, Libya, and Nigeria continue to bolster oil prices.

President Trump made waves with his comment urging OPEC to reduce the price of oil, and the Iranians were especially irked in my view.

The Saudis have indicated they will try and make up for whatever supply is disrupted by the US sanctions on Iran.

Russia Rethink

At the Group of Seven summit a few weeks back, Trump floated the idea of inviting back Russia into the group.

Russia had been pushed out of the group after its invasion and annexation of Crimea in 2014.

Trump was derisively criticized, but there may be a logic to his idea, in my opinion.

Putting aside the questionable ethical and aggressive conduct of Russia, the country is a huge oil and gas producer.

Energy Giant

In fact, Europe gets over half of its gas supplies from Russia. China is also quite beholden to Mr. Putin in terms of energy supplies, more with oil than gas.

As energy remains a strategic asset all over the globe, to not include such a large producer in high level meetings like the G7, is poorly considered, in my opinion.

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