1. Oil Just Exploded Higher
Have you looked at oil lately? It’s up roughly 35% over the past 14 sessions.
We warned that WTI could spike above $90 as soon as it crossed its 50-day moving average. Oil is now trading around $91, after breaking above that moving average just yesterday.
The catalyst here, though, isn’t the 50-day moving average. It’s the serious escalation of the war in the Middle East. It’s getting scary, with the Bab al-Mandab Strait on the cusp of closure too.
Watch out for energy shock-related noise. Europe and Asia will likely be the most affected. Jet fuel related noise could also increase. That impacts airlines.
2. More Headwinds for the Global Economy
The ECB kept interest rates unchanged.
Canadian retail sales for May came in lower than expected. June’s advance figures suggest only modest growth. Once again, Canada continues to face significant near-term headwinds, and consumers aren’t happy.
Apparently, the U.S. and China are working on a tariff reduction plan.
At the same time, the war that’s currently raging has the potential to hurt the global economy far more than it did just a month ago.
3. Another Bubble Bursts
On June 16, SpaceX stock hit a high of $225. Yesterday, it closed at $115.26. That’s a decline of almost 49%. Truly, SpaceX IPO buyers are getting rinsed. We warned about this several times.
Meanwhile, the S&P 500 continues to sit on the edge of its 50-day moving average. A move below it could bring in sellers. We’ve seen this happen several times before, so if it happens again, it shouldn’t come as a surprise.
Don’t forget: earnings season continues. Know what you own and why.
4. Japan Remains a Major Risk
The Japanese yen is now trading above 163 against the U.S. dollar. Is it time for another currency intervention?
We also get Japanese inflation numbers tonight.
Don’t forget that higher oil prices hurt Japan. U.S. bond yields are rising too, and Japan holds a significant amount of U.S. Treasuries. That’s another source of pressure.
In our view, Japan remains one of the biggest risks that very few people are paying attention to. It is the fourth-largest economy in the world.
5. Markets Are Missing the Bigger Picture
Gold is reacting to rising bond yields and a stronger U.S. dollar.
Bitcoin couldn’t break above the $66,000-$67,000 resistance zone.
Canada is still trying to figure out how to respond to the new Trump administration tariffs.
Be extremely careful here. We are reaching a point where energy-led inflation is becoming a “certainty,” yet very little attention is being given to how much demand destruction is happening. That combination has the potential to break a thing or two.