In hisDaily Market Notes report to investors, while commenting on the surge in China’s exports, Louis Navellier wrote:
Q2 2021 hedge fund letters, conferences and more
Peace Dividend
I was happy to see that The Wall Street Journal on Wednesday featured an article entitled Global Economic Warfare Intensifies as Military Conflict Recedes.
This is essentially the “peace dividend” that I have been talking about and that future wars would be predominately economic in nature. The Biden Administration is matching the Trump Administration’s pace regarding economic sanctions according to Castellun. AI and has hit 13 different countries with sanctions for human rights violations, election interference, narcotics trafficking and other violations.
Right now the biggest economic wars are over 5G and electric vehicles (EVs).
China's Exports Surge
The most surprising news this week was that China’s General Administration of Customs on Tuesday announced that outbound shipments surged at an annual pace of 25.6% in August, following a 19.3% increase in July. Despite the Covid-19 Delta variant hindering China’s service and manufacturing sectors, China's exports remain robust, which may help to alleviate some supply shortages. The upcoming holiday shopping season is going to be very interesting if the current supply shortages persist, so I expect that gift cards are going to be very popular! semiconductor chips shortage.
The Fed on Wednesday released its Beige Book survey in preparation for its upcoming Federal Open Market Committee (FOMC) meeting and stated that economic growth “downshifted.” Overall, the Beige Book survey was dovish, so it will be interesting if the Fed will kick it tapering decision down the road due to slowing economic growth.
The Labor Department on Thursday reported that new claims for unemployment declined. Continuing unemployment claims in the latest week declined to 2.78 million, down from a revised 3 million in the previous week. Both weekly and continuing claims are now at pandemic lows. The expiration of supplemental unemployment benefits may help reduce continuing claims continue to decline in the upcoming weeks as more people return to the workforce.
ECB To Scale Back Its Quantitative Easing
The other big news on Thursday was that the European Central Bank (ECB) announced that it would scale back its quantitative easing via its bond buying program due to a resurgence of inflation in the eurozone. Essentially, the ECB will begin “tapering,” so I now expect that the Fed will announce the same thing in its September 22nd FOMC statement. This will effectively put the ECB and Fed in “synch.” Interestingly, the ECB left its key interest rate at -0.5%, even though inflation in the eurozone is running at 3%, which is well above its 2% inflation target. The truth of the matter is due to massive budget deficits for many eurozone countries, raising interest rates may no longer be an option for the ECB.
Speaking of budget deficits, Treasury Secretary Janet Yellen informed Congressional leaders on Wednesday that the deficit ceiling needs to be raised, otherwise the U.S. could default on its debt in October. With the proposed $3.5 trillion spending program and related tax increased stalled in the Senate, a watered-down spending program may be tied to debt ceiling. However, since ten Republican Senators are need to increase the debt ceiling, I suspect that the debt ceiling will be lifted without being tied to any spending programs or tax increases.
eCommerce Trends
Global eCommerce sales were $2.9 trillion in 2020. China’s total sales of $1.3 trillion were more than double North American sales of $590 billion. Global eCommerce sales are expected to react $4.2 trillion in 2025, a 47% increase.
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