Based on hopes of the Ukraine war ending – plus other factors – the major stock indexes are up an average of 2% in 1st half of August – normally a weak month.
Commentary
Nothing much happened last Friday in Alaska, when Vladimir Putin and President Trump cut their summit short, but they called it a “good start.” Meanwhile, Ukraine’s President, Volodymyr Zelensky, was furious for not being invited to Alaska. British Foreign Secretary David Lammy told Vice President J.D. Vance that a ceasefire must take place first before there are any territorial concessions. President Trump said he will not discuss changing any borders, but I suspect President Trump may agree to block Ukraine from joining NATO in exchange for a permanent ceasefire. Despite complaints emanating from Europe, the EU will likely reluctantly agree to most of the terms dictated by President Trump and Vladimir Putin.
It seems to me that Vladimir Putin suddenly wants to have a ceasefire since the U.S. is threatening new sanctions on Russia and its trading allies, like Brazil, China and India. So, President Trump is still using tariffs to conduct foreign policy. Ukrainian President Volodymyr Zelensky remains a wildcard, but since Ukraine is conscripting men up to age 60, they are running out of troops and badly need a ceasefire.
Based on hopes of the Ukraine war ending – plus other positive factors – the major stock indexes are up an average of 2% in the first half of August – normally a weak month.
Here are the most important developments recently and what they mean:
– The leaders of France, Germany, Italy, Britain, Finland, the European Union and NATO all were at the White House on Monday to show support for Ukrainian President Volodymyr Zelensky. Interestingly, Zelensky was very complimentary of President Trump, confirmed that he wanted to end the war, and even wore a new suit that President Trump complimented him on. The NATO allies agreed to provide Ukraine with security guarantees, so Zelensky can proceed to schedule a meeting with Vladimir Putin to discuss ending the war between Ukraine and Russia. Overall, the White House meeting could not have gone better, and President Trump seemed very pleased that progress was being made.
– The negotiations with European and NATO leaders are a good lesson that all parties lose when there is a war, and finding a face-saving way to end the conflict is painful, but very necessary. President Trump has been very clear that both Russia and Ukraine are big losers if the war persists. European leaders were at one time reluctant to admit that Ukraine has lost territory to Russia, but now, with reportedly more than two million killed and maimed, plus millions in exile, perhaps they can finally admit to the reality that has unfolded.
– The Commerce Department announced on Tuesday that housing starts surged 5.2% in July to a 1.428 million pace compared to a revised 1.358 million annual pace in June. In the past 12 months, new housing starts have risen 12.9%. Building permits actually declined to a 1.354 million annual pace in July, down from a revised 1.393 million annual pace in June. Overall, this was good news for the housing industry, and it appears that many home builders may be anticipating lower mortgage rates in the upcoming months.
– The Kansas City Fed Conference in Jackson Hole will be big news this week. Much of the rest of the world is in a recession, so it will be interesting if we get some insight into future key interest rate cuts from central bankers. Fed Chairman Jerome Powell is scheduled to speak on Friday, August 22nd, so it will be interesting if he signals an impending key interest rate cut. Since Powell is a lame duck, he will be less influential than in past years.
Overall, the stock market is waiting to hear from Powell. Momentum remains positive, with the very strong earnings season already translating to increased estimates into year-end. Unless Powell is very hawkish, a move higher remains likely.
*Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.
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