Washington political decisions are intersecting significantly with the global supply of oil. The State Department announced last week its intention to cut off all Iranian oil exports by November 2018, i.e., driving the rogue nation’s oil exports from 2.5 million barrels a day to zero. The attempt to financially squeeze Iran will greatly test the strength of the White House relationship with China and India, the primary importers of Iranian crude. To replace Iran’s oil in the global market, President Trump is pressuring Saudi Arabia to increase its oil production by 2 million barrels a day, action that OPEC’s largest player could achieve within 6 months but not without additional drilling and expense. The price of oil closed at $73.80 a barrel last week, up +23% YTD (source: BTN Research).
Tariffs on an estimated $34 million of Chinese imports went into effect at midnight Washington time last Thursday night (7/05/18), impacting 818 different Chinese products. Additional tariffs will target as much as $216 million of Chinese imports in the coming months should China retaliate against the US. To the surprise of many stock market watchers as the 2 largest global economies careen towards a possible trade war, the S&P 500 shrugged off the conflict and gained ground last week with the index closing last Friday up +4.3% YTD (total return) (source: BTN Research).
The November mid-term congressional elections, set for 11/06/18, are less than 4 months away. The S&P 500 gained just +2.2% (total return) in the 4 months leading up to the 2014 mid-terms, a fraction of the +16.0% gained in the 4 months leading up to the 2010 mid-terms (source: BTN Research).
Notable Numbers for the Week:
HOW HIGH ARE YOURS? - 45 US states collect statewide sales taxes, i.e., 5 states (Alaska, Delaware, Montana, New Hampshire and Oregon) have no state sales tax. California has the highest state sales tax (7.25%) in the nation (source: Tax Foundation).
FEWER LINES - A draft of the new Form 1040 for tax year 2018 released in late June 2018 has just 23 lines, compared to 79 lines on the existing Form 1040 tax form (source: Internal Revenue Service).
KIDS COST MONEY - The annual household costs of a family with 2 adults and 2 children is 140% of the annual household costs of a family with 2 adults and no children (source: Organization for Economic Cooperation and Development).
NEXT CENTURY - With a life expectancy of 81.3 years, a baby girl born in the United States next year (2019) could anticipate living until the year 2100 (source: National Vital Statistics Reports).
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