Some of the positive and negative issues facing the US and other major economies are:

For the US: 

• The US CPI accelerated in August as gasoline prices soared 10.5% (month over month). On a monthly basis the overall CPI rose 0.6% (7.2% annualized), the quickest pace in a year. Core CPI rose a more modest 0.3% and is up 4.3% annually. Food prices also hit the data due to drought conditions in part of the US. Wage pressures continue to be passed through to consumer prices. If it occurs this week, the auto industry strike action would add to this concern as the auto workers are asking for very large increases in pay and reversal of cuts made when the industry was in trouble during Covid. Airlines warned of fuel surcharges as jet fuel prices have surged 20% since mid-July (United, Southwest and Alaska all warned). 
• Most economic forecasters still expect no increase in the Fed Funds rate at the end of the September 19-20 FOMC meeting. As usual the Fed is data dependent and there is still a lot of data to come out before that meeting. The one thereafter, on October 31/November 1st, is where the markets are worried about the next rate hike. The risk of a federal shutdown remains a concern as it is two weeks away from Congress’s deadline to fund the government.
• The US banking system remains fragile as regulatory capital increases (effective October 1st) mean less ability for banks to lend and those banks with large real estate portfolios (commercial real estate the big headache) are facing large write-downs. Banks that have a lot of Treasuries on their books, if marked to market versus kept to maturity, would hit their P&L statements. If their liquidity dried up they would be forced to sell. 
• Apple shares have been hit by China planning to ban IPhone use to state owned corporations and the recent new phones have not been well received. The stock reached a high of US$197.96 in mid July and is now down to US$175.12 per share. 

For the rest of the major economies in the world:

• China is facing a difficult economic period as exports fall and domestic spending by consumers withers. More real estate companies and shadow non-bank financial entities are facing interest payment arrears and refunding problems. The Yuan is under pressure and will need more stabilization by their Central Bank. China’s exports fell 8.8% in August, with technology products like computers (which China has led for years) falling 18.2%. 
• German industrial production fell 0.8% in August. Auto sales and manufacturing were particularly hit. 
• The UK economy shrunk by 0.5% in July battered by strikes in the health and education sectors. 

The war in Ukraine is seeing more escalations as one side hits the other. This is now spreading to daily drone attacks on Moscow by Ukraine and the Black Sea Ukrainian grain export ports being blockaded and attacked by Russia. 

Some recent events: 

• The US has announced that they will send depleted uranium anti-tank rounds to Ukraine following the UK. This is an escalation of munition types. These rounds will be used by the 31 M1A1 tanks the US is delivering this fall. 
• The Ukrainian offensive may have only 30-45 days left until the rainy and muddy season halts ‘fighting weather’ according to the US Joint Chief of Staff, General Mark Milley. He has been making more pessimistic comments as the pace of the counter offensive has stalled.
• To gain more trained soldiers, Ukraine has contracted a Spanish company to recruit volunteers at up to 3,400 Euros per month. 
• Putin met this week with North Korean leader Kim Jong Un at a spaceport in eastern Russia. Russia wants more munitions and workers (Russia’s economy now has labour shortages as more Russian men are drafted) and North Korea wants access to oil, food and satellite technology. 
• Russia has been sending more Russian troops to the front lines in Ukraine to halt and to reverse the gains made by Ukraine before the rainy season starts. 
• Ukraine has successfully attacked Crimean shipyards and damaged a number of Russian ships (reports indicate a Russian sub was severely damaged).

Market Movement:  We are watching the 33,600 level for the Dow (today at 34,712), which if breached would complete a topping formation for the Dow. A close below 32,600 would set up the waterfall decline phase to below 30,000. Stay patient with cash reserves and be ready to BUY at the next low risk entry point. Don’t get trapped by the current market enthusiasm.  Investors may want to take some profits in non-taxable accounts due to the sizable move in energy stocks over the last six months. Traders may take a more aggressive approach. We have noted before and have now harvested some of our currently held positions. We are however keeping core weightings. Subscribers please watch SER Ownership releases to see what we have done via our partial harvesting. 

Once this correction has lowered stock prices and fear has returned to the markets over the next few months, be ready to buy the bargains that develop. As the general stock market declines we expect energy prices to back off and the Energy Bullish Percent Index to retreat back to below 10% and ring the bell for the next BUY window. The last BUY signal was in March and we added 14 new ideas to our Action BUY List. Many energy stocks are down from their 2022 highs, and many trade around Proved Developed Producing (PDP) Reserve valuations levels. If you want to see what our subscribers are looking at, sign up now for access to the Schachter Energy Research reports.