Russia-Ukraine War
Ukraine Pummeled Russian Oil Refineries and airbases, forcing Putin to halt gasoline exports as local gasoline prices hit a record high. While modern armored vehicles use benzene or similar formulations, the logistical efforts and the rest of the economy run on petrol. Further drone strikes on Russia’s oil export pipelines and a doubling of US tariffs on goods imported from India cut Moscow’s crude flows as weekly crude shipments from Russian ports fell by 320,000 barrels a day in the week to Aug. 24, a four-week low to 2.72 million barrels a day. While Russia gained territory overall, Ukraine pushed back in key areas at the end of the month and into early September. Negotiations to end the war were effectively stalemated as Putin demanded large territorial concessions while security guarantees by Europe and the US were uncertain. In early September, the US decided to phase out military training programs for European armies along Russia’s border, i.e., the Finland, Baltic countries and a few of the former Soviet republics. Will this open the door to an expanded Russian invasion?
In Grains, Ukraine having almost completed its 2025 wheat harvest, increased wheat exports to 1.89 million metric tons in August and may ship abroad at least 1.7 million tons in September. The 2025 wheat harvest was forecast at 21.8 million metric tons, down from 22.7 million tons in 2024. However, the total grain crop forecast was increased to 56 million metric tons from 54 million tons previously, due to a larger-than-expected corn harvest of around 28 million tons. Russian wheat export prices fell amid a seasonal peak in supply and optimistic harvest forecasts. Looking ahead by five years, Russia’s Gazprom announced an agreement to build the long-awaited Power of Siberia 2 pipeline to ship as much as 50 billion cubic meters of gas annually to China for 30 years, in what was seen by the Kremlin as a major political win.
Macro: Asia
China’s Trade Data Beats Expectations in July as exports increased +7.2% y/y in USD terms last month, beating expectations of a +5.4% rise and accelerating from +5.8% growth in June. This was despite exports to the US falling by -21.7% y/y, while shipments to Europe increased +9.2% y/y and 
those to Asia gained +16.6% y/y. Ocean shipping rates from China to the U.S. West Coast have fallen 68% from their June high as the rate for a 40-foot container moved from about $5,500 to under $2,000. Meanwhile, Chinese imports increased +4.1% y/y in July, strengthening from a +1.1% rise in the preceding month as Beijing’s continued stimulus boosted domestic demand (see graph right). July money supply growth also moved higher to +5.6% as the government funds filtered through the economy. YTD through July showed fixed asset investment, retail sales and industrial production all slowed y/y, though still positive. The unemployment rate moved higher to 5.2% from 5.0%. The Evergrande bankruptcy moved along slowly with only $255 million recovered so far against $250 billion in book assets. The funds recovered have primarily been from the sale of non-core assets such as cars, club memberships and artwork, not property or property purchases. At least there was a Monet… The liquidators also sued auditor PWC China, but a recovery from mainland China seems very remote to me. Evergrande was finally delisted on August 25th. In addition, a Hong Kong court ordered the liquidation of state-linked China South City, a smaller property developer but the largest to face such an order since Evergrande, in a sign of the continued fallout of China’s property crash.
Meanwhile, Japan’s Inflation Moved Higher
, and was now higher than the US’, at least on a core level (ex-food and energy). Taking out the one-off periods of sales tax increases, inflation has not been this high since the mid-1970’s… bad years indeed around the world. Japanese bonds likewise have ratcheted higher in 2025, with benchmark 10-year yields at 1.6%, up from 1.1% at the beginning of the year. US 10-year yields were recently at 4.3%, Germany’s at 2.8% and the UK at 4.7%, in comparison.
Macro: US
US Q3 GDP Projections Stayed Strong as the Atlanta Fed projected a +3.5% annualized growth for the quarter. Inflation ticked higher as total CPI stayed at 2.7% in July as core inflation moved up +0.2% to +3.1%, primarily on services inflation, with goods and commodities subdued. US wholesale prices jumped +3.3% but not all that is passed to consumers and other price components (rent, interest, depreciation, corporate overhead, etc.) are the majority of what we pay in the store. Tariffs have had an impact but one must remember that goods spending in America is only about 30% of total spending with services at 70%. Back in 1959, 55% of consumer spending was on goods and 45% on services – a very different situation when the world faced inflation in the 1970s and early 1980s. Housing costs still are a problem but existing home sales increased +2% in July, reaching a seasonally adjusted annual rate of 4.01 million, defying expectations. Mortgage rates have declined slightly, 
hitting 6.3%, and the number of homes for sale has increased (existing homes moved up to a 4.7-month supply, highest since 2016, and new single family homes reached the highest inventory since October 2007). The rate of increase of home prices downshifted to zero in July (see right) but all those high prices from before are still making new ownership unaffordable. Employment disappointed for August, growing only by +22,000 jobs and previous months were revised downward by almost the same amount. The unemployment rate was a legit 4.3% (4.32% unrounded), because of increased participation. Remember – that is still low! Per the JOLTS report, the US had more unemployed people than job openings since 2021, although this was true in the mid-2010s when there was no recession. More worrisome, the number of workers unemployed for longer than 27 weeks also is increasing, moving from 1.45 in May to 1.82 million in July, hinting at greater difficulty in finding work.
No Fed August Meeting but Chair Powell kept all moves on the table during the August central bank conference at Jackson Hole as the market priced in one 25-basis point cut at the next meeting on September 16-17th. 
Weak employment generally cemented that forecast though a wild inflation number the week before the meeting could change minds. The US deficit improved slightly in July as seen left but is still close to the $2 trillion left by Biden. With the new fiscal year starting in October, these numbers could change notably due to the DOGE layoffs and early retirements taking effect, changes in tariff policy (an appeals court ruled many of Trump’s impositions were illegal but kept them in place as the cases will be reviewed by the Supreme Court), student loan collections acceleration and possible interest savings as the Fed cuts rates (however so slowly). A lot of crosswinds out there!
Macro: Europe
Europe Still Struggling on many levels. The UK 30-year 
bonds intraday hit 5.64%, the highest rate since 1998! Deficit spending that shows no end of “bending the curve,” constant cabinet shuffles by PM Starmer and Bank of England reducing its bloated balance sheet by not rolling over as many bonds left from the Great Financial Crisis implied more years of struggle. France’s crisis is more acute with not only a large deficit and debt burden (see right) but a no-confidence vote on September 8 means another prime minister or fresh elections, amping up political uncertainty in one of the EU’s largest members. Eurozone inflation breached the 2% level to hit 2.1%, killing any chance of another ECB rate cut at its September 11th meeting. Germany fell back into ‘recessionary territory’ as its second-quarter GDP was revised down, applying pressure for lower rates.
Macro: World
In case you missed it, World Government Debt Surpassed $100 Trillion Recently with total debt over $324 trillion, per the IMF / United Nations. This puts debt at about 90% of GDP globally with 100% forecasted by the end of 2030, only five years away. Not sure if this what globalization is all about!
All the best in your investing!
David Burkart, CFA
Coloma Capital Futures®, LLC
www.colomacapllc.com
Special contributor to aiSource