Daily Commentary

MarketMinder’s View: While it is a Republican Congress and White House flirting with a diesel export ban today, fuel bans are a bipartisan temptation whenever prices get high, so set aside the politics here, remember MarketMinder favors no party nor any politician, and let us look at the issue itself. This piece does a great job explaining why banning exports of diesel (or gasoline, if that were in politicians’ sights) would be an own goal. “That’s because a ban could prompt U.S. oil refineries to make less diesel, which would cause the fuel’s price to rise again. Restrictions on diesel exports could even reduce the supply of gasoline, jet fuel and other fuels that are made alongside diesel in refineries.” Currently, US refiners produce more diesel than the country consumes, exporting the surplus. That adds to global supply, helping prices worldwide. If refiners couldn’t export excess production, they would produce only what they could sell here, reducing global supply and lifting prices, since global supply and demand determine prices. Adding insult to injury: “Refineries configure their operations to produce various petroleum products from the crude oil they process. Although refineries could produce more of certain products — such as jet fuel rather than diesel — making such changes is expensive and time consuming. It would be far simpler for refineries to cut production of all fuels, causing the prices of gasoline, jet fuel and other products to increase.” Moreover, refineries have been running at full tilt this year and many require shutdowns for maintenance nearly annually. Banning diesel could encourage that to happen, reducing production quite broadly. Markets are familiar with these tradeoffs, and an export ban isn’t guaranteed to happen, but a backfiring ban could hit sentiment temporarily.

MarketMinder’s View: While a lot of writing about scams focuses on what happened and how to avoid them, the psychology is important, too. This is a deep dive on that topic, exploring how scammers thrive on victim-blaming. “Police, psychologists and antifraud groups increasingly see shame as more than an emotional consequence of scams; it’s part of the machinery that helps them work, isolating victims, suppressing reporting and leaving them vulnerable to being scammed again.” It is easy to see fraud as something that happens most commonly in a group that you aren’t a part of, be it elderly people, technologically challenged folks or people who aren’t native speakers of their country’s language. But everyone is vulnerable because scammers play on basic human needs and fears, triggering the fight-or-flight response that makes folks act quickly and thoughtlessly. “Vulnerability to a scam often has less to do with who you are than the circumstances you’re in when you fall prey to it. Scammers rarely find us on a good day. They find us when we’re tired, stressed or distracted — and the scams frequently manufacture urgency of their own: a payment that must be made now, an opportunity about to disappear, a threat of penalties or even arrest. In that moment, we’re expected to recall the many dozens of scams that now exist and spot the deception, even as artificial intelligence makes it easier to produce convincing messages, voices and images.” Instead, you may find it helpful to try to recognize when an unexpected communication puts you in this mental state and use that as a trigger to set it aside, take three deep breaths (or a walk or whatever) and return when you are clearer headed. And if you still fall for a scam, remember it isn’t your fault. It is the criminal’s fault, and they are probably part of a sophisticated international organization. Report it, spread the word, help empower your friends and society to fight the bad guys. For more, see our new feature, “ScamWatch.”

MarketMinder’s View: As a reminder, MarketMinder is nonpartisan and prefers no political party or politician over another. We share this story about far-left presidential hopeful Jean-Luc Mélenchon’s plan to “cancel” around 14% of France’s total debt to discuss a broader point: Radical-sounding campaign promises from both sides of the aisle can shake sentiment but often prove difficult to enact, creating room for reality to exceed expectations. As the article discusses, Mélenchon has claimed, “… France could simply ‘take’ bonds accumulated by the Banque de France during years of ECB quantitative easing and ‘throw them into the fire’.” Sounds spicy, and plenty of public figures, including European Central Bank President Christine Lagarde, have rebuked the idea. Yet before presuming one of the presidential frontrunners in next year’s election risks a French default, consider how Mélenchon’s own La France Insoumise (LFI) Party has softened the rhetoric: “LFI has clarified more recently that it wanted to convert the sovereign debt into perpetual zero-coupon bonds. Mélenchon would not act unilaterally, said Éric Coquerel, an LFI MP on France’s parliamentary finance committee, but a Europe-wide solution was needed as financing and investment needs ballooned across the bloc.” Now, a perpetual zero-coupon bond isn’t exactly worth the paper it is printed on, and an involuntary swap would still be a default, but the rest of that sentence sounds mostly like an exercise in bureaucracy, debate and nothing changing. Politicians are in the business of winning votes, and given three-quarters of voters say they are worried about the national debt, Mélenchon’s rhetoric is likely finding at least a somewhat receptive audience. But don’t let hot rhetoric spook you into thinking French politics may torpedo the French economy. As the economist quoted in the conclusion notes, “… Like Mélenchon, politicians in the US are making seductive pledges ahead of November’s midterm elections. ‘We’re in this impasse in which there are so many imperatives to spend on, no one wants to increase taxes … every politician is seeking a way to manoeuvre,’ [Allianz economist Ludovic Subran] said. ‘Donald Trump promises $5,000 cheques. In France we’re promising to cancel debt.’” But talk is cheap. For more, see our September 4 commentary, “About Those ‘Spiking’ French Yields.”