A contributor responded to our question last week: How does the current economic situation compare to past periods of high inflation?

“The first house I bought cost $42,000 with an interest rate of 14%,” he says. “I had my savings in a money market account that paid 18% at its peak. So, yeah, been there, done that.

“As to a higher inflation target, that's just a license to steal even more money from the American people. The 2% target seems to be carved in stone, but there is no science for any number other than zero. 

“Clearly they don't need to lower rates to rescue the economy; companies are beating estimates and signaling for more to come. The Fed's motivation to lower rates would be to rescue the federal government from the debt explosion, but it's not their job. 

“I can recall a time when the Fed chair would ask Congress to exert a little fiscal restraint. Monetary policy has to work in tandem with fiscal policy.” 

Lots of food for thought… As it happens, we’re featuring more government “incontinence”in today’s missive. 

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Your Rundown for Friday, June 21, 2024...

Bleeding Oil

In May, China boosted its crude oil stockpiling efforts. 

The country, for instance, added around 1.08 million barrels per day (bpd) to its commercial or strategic reserves in May on top of April's stockpiling rate of 830,000 bpd.

(Analysts, of course, are working with admittedly opaque “official” Chinese data. But close enough for jazz… and government stats.)

In the meantime, what’s plain as day: Russia is now China’s number one oil supplier. By a long shot. 

Last month, Reuters reported: “Year-to-date imports from Russia gained 17% from a year earlier to [about] 2.28 million bpd, making up 21% of total imports into [China] the world's largest crude oil importer.” 

And the U.S. — despite levying so-called “crippling” Russian sanctions — actually welcomes the China-Russia oil arrangement. 

According to an unnamed EU source at Oilprice.com: “The U.S. and EU is happy enough with [it] for the moment, as it continues to take the edge out of global energy prices.”

Speaking of, recall how Biden has periodically drained the Strategic Petroleum Reserve (SPR) to subdue U.S. gasoline prices. 

Circa the 1970s, the SPR stockpile is “America’s ‘insurance policy’ against the volatile nature of the global oil market,” says an article at Fortune. 

But it’s been greatly diminished lately. 

“As of now, the SPR holds just over 369 million barrels… 

• “the lowest level since the early 1980s 
• and a little more than half of the amount it held during its peak, in 2010–2011.”

Fortune adds, however, that everybody’s doing it. 

“Biden is far from the first president to release some of the barrels,” the article reminds, “both Republicans and Democrats have done so, particularly after hurricanes or other natural disasters, or even to generate revenue to pay down the national deficit.” 

(Or ahead of an election?)

Here’s the thing: “Biden sold off the most barrels at one time since the SPR’s creation.” 

In total, about half the SPR stockpile is gone. 

So, if things go drastically sideways, the U.S. currently has 20 days worth of oil to fuel the nation. 

The “good” news? The federal government recently replenished the SPR with 3 million barrels of oil. 

Meanwhile, as of May: CHINA IS STOCKPILING… MOSTLY SANCTIONED RUSSIAN OIL… AT A RATE OF ONE MILLION BARRELS… PER DAY. 

Irony abounds. 

What’s even more ironic? Team Biden plans to sell 1 million SPR barrels ahead of the Fourth of July holiday. 

Because nothing says “independence” like the nation not being able to survive three weeks apart from outside intervention. 

Market Rundown for Friday, June 21, 2024

The S&P 500 is down 0.10% to 5,470. 

Oil is up 0.15% to $81.43 for a barrel of WTI. 

Gold is barely in the green at $2,360.20 per ounce. 

And Bitcoin’s pulled back 1.85% to $63,735.

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