<div class="entry-content">In recent weeks, energy stocks have encountered volatility, yet they continue to dominate as the top-performing sector in U.S. equities for 2022, as noted from yesterday’s market close (June 27). With global growth on the decline and recession fears increasing, analysts are now questioning whether it’s prudent to make significant changes to their investments.
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<p>* China <a href="https://www.wsj.com/articles/g-7-meeting-to-conclude-with-focus-on-china-11656408428?mod=hp_lead_pos1">takes center stage</a> at G-7 meeting conclusion.<br/>* Larry Summers’ warning on inflation turned out to be accurate, predicting <a href="https://www.wsj.com/articles/larry-summers-nailed-inflation-but-is-he-right-on-what-comes-next-11656343688">secular stagnation</a> ahead.<br/>* Lagarde <a href="https://www.cnbc.com/2022/06/28/ecb-lagarde-plays-down-recession-risks-at-sintra-forum.html">states</a> the ECB is prepared to accelerate rate hikes if necessary.<br/>* A robust dollar is <a href="https://www.ft.com/content/3e8737a0-b4c1-4e7c-b93f-f646e3c699dd">especially concerning</a> for emerging markets this time around.<br/>* US durable goods <a href="https://www.bloomberg.com/news/articles/2022-06-27/us-durable-goods-orders-exceed-forecast-in-broad-advance">surged</a> beyond forecasts in May:</p>
<div class="entry-content">A recent relief rally buoyed global markets during the trading week ending Friday, June 24, according to a selection of ETF proxies. However, questions linger regarding whether this recovery can maintain its momentum or if it’s merely a temporary respite in an ongoing bear market for risk assets.
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<p>* G-7 leaders <a href="https://apnews.com/article/russia-ukraine-nato-g-7-summit-zelenskyy-boris-johnson-3437ebe5d3e167e399af96665d1354b6">confirm</a> their commitment to Ukraine, along with…<br/>* They plan to introduce <a href="https://www.cnbc.com/2022/06/26/g-7-nations-to-announce-import-ban-on-russian-gold.html">new sanctions</a> targeting Russia, including a ban on Russian gold imports.<br/>* The IMF predicts that the US economy will decelerate in 2022-23 but “narrowly avoid recession.” <a href="https://www.imf.org/en/News/Articles/2022/06/24/mcs062422-united-states-of-america-concluding-statement-of-the-2022-article-iv-mission">says the IMF</a>.<br/>* Russia has <a href="https://www.wsj.com/articles/sanctions-push-russia-near-first-foreign-default-since-bolshevik-revolution-11656248212">defaulted</a> on its foreign debt for the first time since 1918.<br/>* The Bank for International Settlements advises that central banks must act decisively to control inflation via <a href="https://www.politico.eu/article/central-banks-must-act-decisively-as-stagflation-risks-loom-bis/">this channel</a>.<br/>* A prominent cryptocurrency hedge fund is <a href="https://www.cnbc.com/2022/06/27/three-arrows-capital-3ac-faces-deadline-to-repay-loans-or-default.html">facing potential default</a> on $670 million in loans.<br/>* Industrial metal prices are <a href="https://finance.yahoo.com/news/metals-haven-t-crashed-hard-074805643.html">on track</a> for their worst quarterly performance since the 2008 financial crisis.<br/>* <a href="http://www.sca.isr.umich.edu/">Revised US consumer sentiment</a> data highlights a sharp decline in June.<br/>* New home sales in the US <a href="https://www.usnews.com/news/economy/articles/2022-06-24/new-home-sales-surprise-in-may-as-consumers-turn-ever-more-gloomy">increased</a> in May, marking the first monthly gain this year:</p>
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<p><a href="https://www.amazon.com/Sinking-Middle-Class-Political-History/dp/1642597058?crid=2DPCK6N9UWFLA&keywords=The+Sinking+Middle+Class%3A+A+Political+History+of+Debt%2C+Misery%2C+and+the+Drift+to+the+Right&qid=1655995316&sprefix=the+sinking+middle+class+a+political+history+of+debt%2C+misery%2C+and+the+drift+to+the+right%2Caps%2C61&sr=8-1&linkCode=li3&tag=thecapitalspe-20&linkId=4b4628675c8a4fc468c5db4d08bce9a7&language=en_US&ref_=as_li_ss_il" target="_blank" rel="noopener"><img decoding="async" class="alignleft" src="https://ws-na.amazon-adsystem.com/widgets/q?_encoding=UTF8&ASIN=1642597058&Format=_SL250_&ID=AsinImage&MarketPlace=US&ServiceVersion=20070822&WS=1&tag=thecapitalspe-20&language=en_US" border="0"/></a><img decoding="async" style="border: none !important; margin: 0px !important;" src="https://ir-na.amazon-adsystem.com/e/ir?t=thecapitalspe-20&language=en_US&l=li3&o=1&a=1642597058" alt="" width="1" height="1" border="0"/>● <a href="https://amzn.to/3na7jpI">The Sinking Middle Class: A Political History of Debt, Misery, and the Drift to the Right</a><br/>David Roediger<br/><strong><a href="https://www.haymarketbooks.org/books/1879-the-sinking-middle-class">Summary</a> via publisher (Haymarket Books)</strong><br/>In “The Sinking Middle Class,” David Roediger critiques the dominating narrative of “saving the middle class.” The discourse often misrepresents complex issues surrounding class, nation, and race. This notion implies that the U.S. is inherently a middle-class society, ignoring the realities of racial justice and the financial plight of the poor. Roediger highlights that the concept of a middle class was not prevalent in American discourse until the early 1900s. Moreover, many white Americans of that era were self-employed, which was markedly different from today’s predominantly employed and surveilled middle class. In essence, the America of today, characterized by stark inequalities, does not signify sustainable support for a middle class.</p>
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<p>Challenges for U.S. growth are intensifying; however, the upcoming GDP report for the second quarter still anticipates a positive output, based on the median projections from various nowcasts collected by CapitalSpectator.com. The concern now is whether economic conditions will worsen prior to the Bureau of Economic Analysis's Q2 release on July 28.</p>
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<p>* EU leaders <a href="https://www.euronews.com/my-europe/2022/06/23/approved-eu-countries-endorse-ukraine-and-moldova-as-official-candidates-to-join-bloc">grant</a> candidate status to Ukraine and Moldova.<br/>* Economists <a href="https://www.ft.com/content/736f82b8-932c-408a-bc14-1fadf2f14aa9">raise alarms</a> regarding heightened recession risks for the U.S. and Europe.<br/>* China and India <a href="https://www.nytimes.com/2022/06/24/business/russia-oil-china-india-ukraine-war.html">emerge</a> as financial backers for Russia to circumvent sanctions.<br/>* Copper prices, viewed as an economic indicator, <a href="https://www.investing.com/news/stock-market-news/stocks-up-as-commodity-slide-offers-a-salve-for-inflation-fears-2840451">plunge</a> to a 16-month low.<br/>* The Kansas City Fed Manufacturing Index <a href="https://www.kansascityfed.org/surveys/manufacturing-survey/growth-in-tenth-district-manufacturing-activity-slowed-further/">highlights</a> a continued slowdown in growth for June.<br/>* A $100 million hack in the cryptocurrency realm <a href="https://www.cnbc.com/2022/06/24/hackers-steal-100-million-in-crypto-from-harmonys-horizon-bridge.html">reported</a> by Harmony, a blockchain bridge.<br/>* U.S. Energy Secretary <a href="https://www.wsj.com/articles/energy-secretary-urges-oil-companies-to-address-high-gas-prices-11656007541?st=7lebjzcj20krlvj">urges</a> oil companies to tackle rising gasoline prices.<br/>* U.S. economic growth <a href="https://www.pmi.spglobal.com/Public/Home/PressRelease/8fd15c4803fd4399bea8d16e1dc06422">slows dramatically</a> in June based on PMI survey findings:</p>
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<p>The key topic on the minds of financial and commodity markets is when inflation will peak, and for good reason. A decline in price pressures would lead to reduced pressure on interest rates and, consequently, a lighter burden on the economy—at least to some extent. This journey toward stability has to begin somewhere.</p>
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<p>* Powell <a href="https://www.cnbc.com/2022/06/22/powell-tells-congress-the-fed-is-strongly-committed-to-bringing-inflation-down.html">reassures</a> Congress that the Fed is “strongly committed” to managing inflation.<br/>* Powell will <a href="https://www.wsj.com/articles/feds-jerome-powell-to-head-to-the-house-with-interest-rates-in-focus-11655976603?mod=hp_lead_pos1">return</a> to Capitol Hill today to testify on interest rates.<br/>* European leaders <a href="https://www.cnbc.com/2022/06/23/ukraines-eu-candidate-status-decision-kosovo-says-eu-needs-to-do-more.html">prepare to welcome</a> Ukraine as a candidate for EU membership.<br/>* Growth in the Eurozone <a href="https://www.pmi.spglobal.com/Public/Home/PressRelease/e22ba30b9fa8473fbbd96965a45d76db">has slowed</a> to a 16-month low as demand wanes.<br/>* Germany <a href="https://apnews.com/article/russia-ukraine-germany-government-and-politics-bc7bdf033d249f673275b537bf2d3d19">raises</a> concerns over possible disruptions to Russian gas supplies.<br/>* The UK sees growth plateau at a 15-month low in June, according to <a href="https://www.pmi.spglobal.com/Public/Home/PressRelease/834511f716ac401a8c27e90d556d6a8c">PMI survey data</a>.<br/>* The U.S. 10-year Treasury yield has eased to 3.16%, the lowest level in nearly two weeks:</p>
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<p>* Tensions <a href="https://www.cnbc.com/2022/06/22/russia-and-nato-member-lithuania-are-clashing-over-kaliningrad.html">heighten</a> between Moscow and NATO regarding Russia’s Kaliningrad enclave.<br/>* Japan remains on <a href="https://www.ibtimes.com/japan-alert-after-three-chinese-warships-spotted-circumnavigating-archipelago-3547730">high alert</a> in light of activities by Chinese and Russian warships near its territory.<br/>* The IEA <a href="https://www.ft.com/content/f7990162-395f-488e-9d23-13f3cce83e24">calls on</a> Europe to brace for a complete cessation of Russian gas exports.<br/>* Russia is generating higher oil revenues than it did before the war due to support from China and India <a href="https://www.nytimes.com/2022/06/21/world/europe/ukraine-russian-oil-embargo.html>.</a><br/>* Biden is <a href="https://www.cnn.com/2022/06/22/politics/gas-tax-suspension-biden/index.html">expected to propose</a> a three-month suspension of gas taxes.<br/>* The Fed is expected to raise rates by three-quarters of a percentage point again in July <a href="https://finance.yahoo.com/news/fed-lift-rates-75-basis-001415420.html">again in July</a>.<br/>* UK inflation has surged to a new 40-year peak, with an annual rate of <a href="https://www.cnn.com/2022/06/22/economy/uk-inflation-may/index.html">9.1% in May.</a><br/>* Existing home sales in the U.S. <a href="https://www.nar.realtor/newsroom/existing-home-sales-fell-3-4-in-may-median-sales-price-surpasses-400000-for-the-first-time">declined</a> for the fourth consecutive month in May.<br/>* Economic growth in the U.S. has slowed as indicated by <a href="https://www.chicagofed.org/research/data/cfnai/current-data">the Chicago Fed business-cycle index</a>.</p>
