The Fed is finally joining the Rate Cut party.

Chairman Powell officially joined other central bankers at the Jackson Hole conference in signaling more interest rate cuts, particularly in Europe and Canada. Also, the minutes of July 31^St The Federal Open Market Committee (FOMC) meeting opened last Wednesday, revealing that “several” FOMC members saw “a plausible case” for cutting key interest rates by 0.25% last July.

However, the “vast majority” of FOMC members agreed that “it would likely be appropriate to ease policy at their next meeting,” on September 18, if inflation data continues to come in as expected.

The minutes also revealed that “almost all (FOMC) participants noted that while the incoming inflation data was encouraging, additional information was needed … before it would be appropriate” to cut rates. As a result, a discount on September 18^th now it seems practically certain.

Economist Ian Shepherdson expects July’s personal consumption expenditure (PCE) index to come in at 0.13% on Friday. This is the Fed’s favorite gauge of inflation and is expected to be very close to the Fed’s inflation target. PCE has been flat recently – 0% in May and 0.1% in June – so if July’s PCE comes in at 0.1% or less, PCE will be well within the 2% inflation target of the Fed.

As Labor Day approaches, with the monthly jobs report due on the Friday after Labor Day, the Labor Department announced a major statistical “failure” in jobs data last Wednesday, revealing that 818,000 payroll jobs disappeared basically in the last year (through the end of March) due to a massive downward revision, mainly due to people working multiple jobs and/or not having their taxes withheld.

The BLS confirmed that only 2.08 million jobs were created, not 2.90 million, in the 12 months to March 31, 2024. This is the biggest annual revision to the wage data since 2009! This massive downward revision was announced during the Democratic National Convention, but they didn’t bring it up!

Another embarrassing revision is that the Biden economy is slowing down. The Atlanta Fed last week revised its third-quarter GDP estimate to a 2 percent annual pace, down from a previous estimate of 2.4 percent.

In addition to the huge tax hike ($5 trillion), Harris unveiled his “federal ban on food and grocery price gouging” Friday before the convention so that “big corporations can’t unfairly exploit consumers for to trigger excessive corporations’. profits from food and food products”

But a big problem is already emerging, which is that major food manufacturers like Hormel ( HRL ) and Tyson Foods ( TSN ) rely on immigrant labor and actively help their immigrant workers obtain legal status in America. In other words, some of the biggest beneficiaries of the Biden Administration’s open border policies are the large food processors who actively facilitate green card immigration applications.

So, in essence, the Harris campaign is threatening food companies that actively help immigrants gain legal status. As a result, I suspect that Harris’ plan to punish big food companies will fizzle out as her powerful political support forces clash.

The Harris team could also face trouble with unions as a rail strike across Canada began Thursday as the Teamsters union seeks higher wages for its members. If this rail strike persists for a few days, it could start to dampen economic growth in both Canada and the US

You may recall that the head of the Teamsters Union spoke at the Republican National Convention, but was not invited to speak at the DNC. Conspiracy theorists might conclude that the Teamsters Union is trying to disrupt economic growth to help elect Donald Trump, but that would be a stretch.

President Biden banned an impending rail strike as early as December 2022 because it would have been too disruptive to the economy, so the Biden Administration alienated the Teamsters Union, which is now wielding influence in the election.

Overseas challenges in Russia, Europe and Brazil

Ukraine’s incursion into Russia’s Kursk region has caught many Russian soldiers by surprise, so both Russia and Ukraine have seized land that they can trade in the event of any ceasefire or potential peace deal. Meanwhile, as Ukraine continues to blow up bridges and railways, Russian troops are increasingly isolated.

At least two nuclear plants in Ukraine and Russia are at risk, so radiation leaks and meltdowns are possible unless cooler heads prevail. Crude oil prices remain high due to Russia’s troubles, plus the potential for an escalation in the Middle East, especially if Iran retaliates against Israel for the killing of a Hamas leader in Tehran.

I should add that Russia’s crude oil exports are down 13% since April. Over the past week, Russian crude shipments fell by 360,000 barrels per day to 2.93 million barrels.

European Union (EU) tariffs on electric vehicles made in China have come to be highly variable for different manufacturers, following intense lobbying efforts and an investigation into unfair Chinese subsidies.

In addition to a 10% tariff on all imported electric vehicles, the EU implemented a second tariff on electric vehicles from China. The second tariff is now 9% for electric vehicles made by Tesla in Shanghai (down from 20.8%), BYD (OTCPK:BYDDF) is now 17% (down from 17.4%), Geely ( OTCPK:GELYF) is 19.3% (down from 19.9). %) and SAIC is 36.3% (down from 37.6%).

The reason SAIC is paying the highest tariffs (by far) is because it did not cooperate with the EU’s investigation into China’s unfair subsidies. At the other extreme, Tesla’s ( TSLA ) lower tariffs mean the EU is trying to encourage other manufacturers to build EV manufacturing plants in the EU, as Tesla is doing.

As the Biden Administration continues to run budget deficits of nearly $2 trillion a year, we should pay attention to an emerging case study of what happens when a government runs too large a budget deficit.

In Brazil, where Lula da Silva has been president for nearly two years, the Brazilian real (its currency) remains weak on the back of one of the world’s largest budget deficits, at 10 percent of GDP.

Lula’s administration has failed to cut spending, so Brazil may have to follow Argentina and devalue its currency in the coming years. Meanwhile, Brazil’s central bank continues to raise interest rates to defend the real, so Brazil’s key interest rates are now forecast to rise to 10.5% soon.

Amid this chaos at home and abroad, gold prices have risen 20% this year, topping $2,500 an ounce, and could continue to rise as uncertainty and lack of confidence in central banks persist. You can even buy American Eagles at Costco now, but they sell out fast (and Costco doesn’t buy gold back).

Navellier & Associates owns Nvidia Corp. (NVDA) and Costco Wholesale Corporation (COST) in managed accounts, a few accounts hold Tesla (TSLA) at client request in managed accounts. We do not own Hormel Foods (HRL) or Tyson Foods (TSN). Louis Navellier and his family own Nvidia Corp. (NVDA) and Costco Wholesale Corporation (COST), through an account managed by Navellier, and Nvidia Corp. (NVDA) and Costco Wholesale Corporation (COST), in a personal account. I do not personally own Hormel Foods (HRL), Tesla (TSLA), or Tyson Foods (TSN).

All content above represents the opinion of Louis Navellier of Navellier & Associates, Inc.

Disclaimer: Click here for important disclosures found in the “About” section of the Navellier & Associates profile accompanying this article.

Disclosure: *Navellier may hold securities in one or more investment strategies offered to its clients.

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