Daily Commentary

MarketMinder’s View: The titular release isn’t insignificant but keep it in perspective. First, the proposal: “The release of 400 million barrels of oil would more than double the agency’s biggest prior release, when IEA member countries in 2022 put 182 million barrels on the market after Russia launched its full-scale invasion of Ukraine, the officials said.” But per the International Energy Agency (IEA), global daily oil consumption is approximately 105 million barrels per day—so the release amounts to around four days’ worth of oil use? That is why we doubt the coordinated move would be fundamentally game-changing. The article concludes with a look at two past precedents: the aforementioned 2022 release and the start of 1991’s Gulf War. 2022’s drawdown of strategic oil reserves did little to quell oil prices, “as traders saw the release as a sign the oil crisis was more serious than they had anticipated.” Some observers view 1991’s action as successful because “IEA members joined in releasing more oil from stockpiles in a plan they had put in place ahead of the invasion. Prices fell more than 20% on the first day of the U.S.-led assault.” But we think this shows how both weren’t fundamental gamechangers. What matters is overall supply and demand for the foreseeable (roughly 3 – 30-month) future—and all the uncertainty weighing on sentiment surrounding that. “IEA members hold 1.2 billion barrels in public stocks, plus another 600 million in mandatory commercial inventories, IEA Executive Director Fatih Birol said Monday. By rough calculation, that is around 124 days worth of lost supply from the Gulf.” Nobody can predict when the conflict will end, but markets are aware of the latest developments—and will likely start moving on from this soon, if they haven’t already begun to. Absent a major, unexpected escalation that disrupts activity more broadly, we doubt global oil shortages are looming. For more, see last week’s commentary, “On the Iran Conflict.”

MarketMinder’s View: First, a few quibbles. The headline gives the wrong impression the article is chiefly about the need for Fed “ease,” which is speculative and presumes doing so would auto-reduce long rates. But we think the charts herein—and discussion thereof—mostly show why that isn’t the case, as economic growth has been chugging along. On jobs, the first two charts underscore the ground we covered yesterday: “The 6-mo. annualized change in private sector jobs has been consistently low (between 0.2% and 0.4%) since last June. Viewed from this perspective, [last Friday’s] number was just more of the same slow growth that we’ve been seeing since last summer.” Moreover, from our perspective, headcount changes at the margin aren’t primarily what drives household consumption. Overall income matters far more—and on that score aggregate real disposable personal income growth can continue to drive expenditures (not that consumer spending is historically a key cyclical driver for the economy, as it tends to be very stable over time). It goes on to hit housing, but that is a small economic contributor. Take a broader view. The last chart helps on this front: “the latest ISM survey of service sector purchasing managers. This is arguably one of the most bullish indicators of late. With 3 stronger readings in the past 3 months, it’s a good bet that the economy’s largest sector is improving.” Cut out the headline noise, and the economy is doing better than most appreciate.

MarketMinder’s View: Here is a sobering, uncomfortable stat: “Even with financial advisers helping Americans prepare both boomers and heirs for the largest wealth transfer in history, more disputes are arising, data show. Between 2020 and 2024, the number of probate and estate cases entering state courts rose about 32%, based on data from 39 states, according to the independent nonprofit National Center for State Courts.” Now, all this hype about a massive wealth transfer from Boomers to their GenX and Millennial heirs is quite wide of the mark, presuming extravagant lifestyles and late-life health care costs won’t eat a big chunk of Boomers’ fortunes and that they actually will choose to pass their surviving assets to their offspring rather than donate them to a favored cause. Presuming Boomers’ entire current net worth will belong to younger generations in a couple decades is lazy and wrong. But setting all that aside, as the article explains, inheritances are getting increasingly tricky with blended and non-traditional families, which can make it unclear who has the legal right to certain assets. For instance, “Stepchildren are not automatically considered legal heirs unless they are legally adopted, so they must be specifically named in estate planning documents or risk being unintentionally disinherited.” And in some states, if the stepparent outlives the biological, the deceased’s biological children won’t inherit—no matter what their biological parent wanted—unless the stepparent names them in their will. The legal process to distribute the deceased’s assets and settle their debts can be costly both in time and money—not to mention potentially hurt feelings and damaged personal relationships. As the conclusion here counsels, being proactive in updating documents and meeting with family members and loved ones to discuss plans and intentions can go a long way in smoothing out a touchy topic. For more, see Sam Lerner commentary, “Preparing For ‘Sudden Wealth’ Inheritances.”