Price supportive developments were in abundance of supply, and they were impossible to resist. The only surprise, if there was any, was that oil prices rallied $1/bbl and not more. To begin on the old Continent business growth in the euro zone slowed in June significantly – maybe one more ECB rate cut is in order this year. In its second biggest economy, France, the far right might not be able to win the majority of the seats in Sunday’s run-off election much to the chagrin for the Le Pen clan and to the delight of the proponents of the common market.
Sailing to the other side of the pond reveals that a disheartening set of economic data firmly brightened investors’ mood. Judging by the private payroll figures and the weekly jobless claims, the labour market is easing. Factory orders fell in May and the trade deficit widened whilst the service sector sputtered last month. Marvelous, sighed several monetary potentates in D.C, a cooling economy vindicates a September rate cut. Evidently, this is what the market is hoping for as equities rose and the dollar weakened, aiding oil to climb towards the April peaks.

In addition to the weak dollar the long-awaited improvement in the summer demand outlook was the other factor that incentivized the rally, and it came disguised as the weekly US stock report from the EIA. As refiners stepped on the accelerator and because of healthy exports reading crude oil stocks plummeted 12.1 million bbls. Product inventories also fell, gasoline by 2.2 million bbls and distillates by 1.5 million bbls. Net refined product exports rose over 5 mbpd and proxy demand broke above 21 mbd with the volume of gasoline supplied by refiners advancing 500,000 bpd week-on-week. The sentiment remains one of buoyancy and in case this developing trend is confirmed in next week’s stock report, and it is coupled with a comparatively sombre dollar due to rate cut expectations oil prices will soon provoke the $90/bbl barrier.

Project 2025

What’s common in Cristiano Ronaldo and Joe Biden? Both have been loyal and passionate leaders of their respective countries with indubitable accomplishments. Yet, both have stubborn personalities, they have passed their sell-by dates and have become much more of a liability and maybe even embarrassment than effective advocates of the causes they represent. Analyzing the recent calamitous performance of the former on the football pitch is beyond the scope of this report. The disastrous televised presidential debate of the latter last Thursday, on the other hand, will have ominous political and economic consequences and will bear inevitable impacts on our segment of the market.

It will prove irrelevant that Donald Trump, a convicted felon with no moral compass lied throughout the debate, what it will be remembered for is an incoherent incumbent who frequently froze, lost his train of thought and was unable to complete sentences. And the presumptive Republican nominee took full advantage of the blunders. The result of the November election was always on the knife edge and was going to be decided by a few tens or hundreds of thousands of voters in the swing states of Georgia, North Carolina, Pennsylvania, Michigan, and Wisconsin but after last Thursday the odds of re-electing Joe Biden has been slashed considerably. His reluctance to throw the towel in makes Donald Trump the undeniable favorite. Unlike during his first term when he dug his own political grave throughout his spontaneous and often confusing governance, this time he will occupy the White House armoured with a strategy. The most talked about scenario is dubbed Project 2025 and although it is only one of the several think-tank proposals, many of its recommendations have already been endorsed by Donald Trump, thus it is worth having an arbitrary look at the most significant components of it.

The paper sets out strategies that will be implemented shortly after January 2025 (provided, of course, Trump wins). Although numerous proposals in it will face legal challenges the likely president will most probably not be concerned about it. The 900-page blueprint, prepared by the conservative Heritage Foundation, foresees laying off thousands of civil servants, taking apart several federal agencies and proposes tax cuts. Its four main pillars are to restore the family as the centerpiece of American life, dismantle the administrative state and return the self-governance to the people, defend the nation’s sovereignty and borders, and secure the God-given right to live freely.

As for governing the nation, the paper proposes that the federal bureaucracy including independent agencies, will be put under the direct control of the president. Job protections would be eliminated and sacked public servants would be replaced by political appointees. It envisages increased fundings for building a wall on the US-Mexican border, suspending the issuance of temporary worker visas, blocking federal financial funding to states that allow access for immigrants to in-state tuition and calls for an end of the Dream Act. (Independent projections estimate a gain of $7 trillion over 10 years due to immigration.) It advocates the elimination of the Department of Education and anything that advocates ‘diversity, equity, and inclusion’.

In addition to corporate and income tax cuts the document calls for abolishing the Federal Reserve, effectively ending its role as the lender of last resort. It proposes slashing federal money available for research and investment in renewable energy and emphasizes the importance of increasing energy production and security. It also demands ‘stop the war on oil and natural gas’, whatever that means. Although Donald Trump is floating the idea of a 10% tariff on all imported goods, Project 2025 offers two alternatives: one is to boost free trade and the other is the exact opposite, to raise barriers. And our favourite, which could undoubtedly push the hesitant voter to the embrace of the Republicans come November: the document calls for the culling of wild horses. There are apparently just too many of them.

It paints a picture of a rather Orwellian nation with inward looking, isolationist and damaging economic policies and a fragmented society that aims to obliterate American liberalism, to damage the democratic system of governance and severely constrain the fundamental rights that made America one the greatest democracies of the past 250 years. Should a possible Trump administration even remotely consider of relying on this blueprint, God will most plausibly not bless these United States of America between 2025 and 2029, at least not with wealth, prosperity, and unity. Bring on Michelle Obama?
 

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