Good morning. Oil well that ends well. Okay, I didn’t have a better pun about this but just want to point out the very interesting development about OPEC. For those too young to remember … many years ago … during a previous “oil crisis” … Arab nations banded together and banned oil exports to the U.S. and its allies due to their support of Israel during the Yom Kippur War. This resulted in rather shocking rules in the U.S., such as only being allowed to put gas in your car on alternate dates (figured out by whether your license plate number was “odd” or “even”) and reducing the nation’s speed limit to 55 miles per hour. Now, get ready for this next line … it is not a typo (I checked a few sources including the Fed) as I thought there was some mistake … but the price per barrel at the time went from $2.90/barrel to $11.65/barrel … prices which seem almost laughable today until you consider that on an inflation-adjusted basis, this is around the equivalent of between $20 and $70 today. But a crack has appeared in OPEC’s armor as the UAE (United Arab Emirates) announced plans to leave the group, almost immediately, weaking their political and extortionary powers (my phrase). And we will soon see global reaction. Sorry to vent, but I just read an article telling how Senator John Fetterman bought shares in a Micron Technologies right before a 60% jump in the stock … in one month. While this could be coincidental, the Senator sits on a committee that oversees the CHIPS and Science Act. MoneyWise reports that two members of that committee saw personal or family purchases … in addition to Fetterman … of AI stock while the Senate was considering deregulation of AI last year. Why aren’t enough people complaining about this? When will this stop? Won’t anyone take a stand? Or is everyone doing it? Stocks are down at this moment as some are questioning if there has been too much early excitement over AI … with too much spent by companies out of fear in being left behind. There is also concern that people might lose jobs as organizations look at their budgets and pick up AI spending while reducing money targeted towards salaries. One other thing that really caught my interest is highlighted in the last article below as the plan is to have short “air taxi” flights from downtown Manhattan to surrounding airports … taking around 8 minutes … at a cost comparable to “executive travel.” This is still higher in price than us commoners can afford … but the price will hopefully drop further as I suspect we will see these air taxis grow in number with territories expanded. Uber air taxis? Maybe someday. And before I forget, the Fed is meeting this week, but no fireworks are expected … and while we expect little to be done regarding rates … it will probably be the last meeting that Jay Powell chairs … so the questions asked during his Wednesday press briefing should be interesting. It will also be interesting to see if he stays on as a governor or resigns from that role … as many “retiring” chairs have done in the past. A big question will be how will he be remembered? When we think about past chairmen, we think about how Paul Volker raised rates (tremendously) to slow an overheating economy … and we remember Alan Greenspan spearheading fast action what markets collapsed in 1987 and his famous “irrational exuberance” comment. Will Jay Powell be remembered for the (wrong, in hindsight) comments on inflation being “transitory” or because of his public defiance of Donald Trump? Ignoring the White House tweets that are sure to follow the meeting … I’ll leave it up to the historians. Have a great day, Joseph G. Witthohn, CFA Have any questions? Please contact info@teamemerald.com
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