Don't Stay at the Casino Too Late

I see the President is out today again reminding everyone not to be a "Panican" due to a booming stock market and falling oil and gas prices, as well as falling egg prices. 

Putting to one side the sustainability of this type of a micromanaging/cheerleading the daily moves in markets from the White House, I do take issue with the President assuming that gas prices are falling. 

As we have noted both here and with Members, crude oil and gasoline prices have been tightly consolidating, overall, for three and a half years or so.

Gasoline prices, in particular, using the UGA ETF as a proxy for rolling gasoline prices nationwide, are actually on the move higher over the last week, as seen on the first daily chart below for UGA. Beyond that, they are threatening to breach multi-month highs.

The second monthly chart of UGA shows an attractive, three and a half year consolidation ripe to break higher. 

We know that the consumer (restaurants, etc.) and retail stocks have broadly taken a shellacking in recent months. With the exception of the wealthiest American most consumers are tapping out. And a surge in gas prices into the holidays will likely be the straw that breaks the camel's back. 

Although President Trump has been on an impressive hot streak of things breaking his way for a while now, in terms the economy and markets he continues to play a dangerous game of nonstop micromanagement and cheerleading every single move the tape makes. Much like his prior foray into the Taj Mahal in Atlantic City, he would be wise not to overstay his welcome at the casino this time as Americans clearly do not buy into the notion that things are more affordable now.