By Timothy S. Snyder, Matador Economics
Still a lot of push and pull in the markets, as tensions heat up again in the Middle East along with a looming price war.
Excessive tariffs can set the stage for a protracted price war, which nobody wants to occur. The problem in the U.S., however, is the nearly $37 trillion debt. The interest alone is crippling. By increasing tariffs, the U.S. is trying to balance trade while working to have the U.S. government work within its means.
Tensions are escalating in the Red Sea and the Mediterranean Sea, as Houthi rebels fired a barrage of missiles and drones toward a U.S. aircraft carrier for the third time in 48 hours. While details are sketchy, it is important that the U.S. is keeping its cool, but our patience is running out.
This aggression from the Houthis … is creating inflationary issues, as ships are once again rerouting away from the reach of the Rebels and that’s adding to the price for goods coming from or through that area.
OPEC+ production increase will apparently move forward, as the Saudi’s fear a price war with the West. They are moving to advance production to increase market share and keep at least dollar levels where they are, to some degree. If they continued to push for a toe-to-toe confrontation with the U.S. the cartel cannot sustain a protracted price war.
Weekly retail fuel prices were posted last night by the EIA as gasoline fell 1.1 cents per gallon and diesel fuel fell 3.3 cpg. This is on the national average category.
Additionally, yesterday’s retail sales numbers came in much lower than expected. The headline month/month number came in +.2% on expectations of +.6%. The year/year number missed as well at +3.1%. January’s year/year number was 4.2%. Slower retail sales are a key economic macro and lean toward predicting consumer confidence. Right now consumers are a bit concerned.
On the weather front, more hot, dry winds will blow from Texas to Missouri today, with snow in the Rockies and the North Central U.S. This front will create conditions for development of severe weather, mostly centered on Iowa. ‘Tis the season!
More energy commentary is available at www.matadoreconomics.com
