Xi Jinping May Try To Drive A Wedge Between France And The EU

France

In his podcast addressing the markets today, Louis Navellier offered the following commentary. 

Big Energy Bet

I remain confident that my big energy bet will continue to pay off. Between OPEC+ announcing a surprise 1.1 million barrel daily cut in crude oil production and Russia extending its 500,000 barrel cut through July, 1.6 million barrels per day will be removed from world oil markets, just as demand rises in the spring and summer months.

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Q1 2023 hedge fund letters, conferences and more

Multiple energy experts are now raising their near-term price targets to $100 per barrel.  Goldman Sachs, which recently cut its price target for crude oil did an abrupt “about face” and raised its price target to $95 per barrel. Bank of America is maintaining a $90 per barrel price target. Internationally, oil experts are much more pessimistic and many expect crude oil to hit $100 per barrel.

The Institute of Supply Management (ISM) announced that its manufacturing index declined to 46.3 in March, down from 47.7 in February. This represents the fifth straight month that the ISM manufacturing index has been below 50, which signals a contraction. The new orders component slipped to 44.3 in March, down from 47 in February.

The backlog of orders component slipped to 43.9 in March, down from 45.1 in February. New export orders declined to 47.6 in March, down from 49.9 in February. Overall, the manufacturing contraction is getting worse based on these key components. The good news is the weaker ISM manufacturing index should help Treasury yields to continue to moderate a bit.

France/EU Wedge

French President Emmanuel Macron this week decided to flee the protests in France and visit China for three days. It is widely perceived that Chinese President Xi Jinping will try to drive a wedge between France and the European Commission regarding Russia as well as the U.S. European Commission President, Ursula von der Leyen, will also be visiting China this week, who called on European Union members to scale back the risks in dealing with a more assertive China.

French President Macron has warned Europe to not to pick sides between the U.S. and China. Specifically, President Macron said, “We need a single global order.” Interestingly, President Macron is being accompanied by a delegation of executives from French companies, including Airbus, so France is looking to expand its business with China, which is its third largest trading partner after Germany and the Netherlands.

Depressed Economists

The World Bank is warning of a “lost decade” for global growth and is citing the war in Ukraine, the Covid-19 pandemic, and high inflation. The Washington D.C. bank said in a report that “it will take a herculean collective policy effort to restore growth in the next decade to the average of the previous one.”

The World Bank added that “Across the world, a structural growth slowdown is underway: At current trends, the global potential growth rate … the maximum rate at which an economy can grow without igniting inflation … is expected to fall to a three-decade low over the remainder of the 2020s.” Ouch. I think the economists at the World Bank need to be treated for depression.

Coffee Beans

There are now more mobile subscriptions than people on the planet. There were more than 8.58 billion mobile subscriptions in use worldwide in 2022, compared to a global population of 7.95 billion halfway through the year. Source: Statista. See the full story here