9-29-26: Prepare For Some “October Surprises”

by Louis Navellier

September 29, 2026

One potential “October surprise” before the midterm elections would be a sudden end to the Iran War, or at least safer transport of major oil tankers through the Strait of Hormuz, and the backlog in the Red Sea.

Last Tuesday, President Trump addressed the United Nations (UN), saying the options for Iran are “potential greatness or obliteration.” He also told the UN General Assembly his administration could soon bring “fundamental change to the situation in Cuba,” which caused the Cuban delegation to walk out.

After Trump spoke, he said Steve Witkoff and Jared Kushner had “a very good meeting” with members of the Iranian delegation, which included their foreign minister, Abbas Araghchi. President Trump also predicted Iran would make a deal with the U.S. after the U.S. midterm elections to dismantle its nuclear apparatus and end the war. Then, Trump predicted “oil prices will come plummeting down.”  The bottom line is crude oil prices declined last week on hopes of new diplomatic efforts to help stop the fighting.

During his UN speech, Trump again predicted Russia and Ukraine were on the brink of peace, saying “We will get that one done.” Trump also sat down for separate meetings with Ukraine’s President Volodymyr Zelensky and Gulf leaders. Since Chinese President Xi was also in the U.S. for an official White House state dinner on Thursday, I assume President Trump asked Xi to pressure Iran to keep the Strait of Hormuz open, since China has traditionally been the largest buyer of Iranian-sourced crude oil.

On Wednesday, Iran’s President, Masoud Pezeshkian, addressed the UN General Assembly, saying Iran was ready for negotiations, but he also said Tehran would not surrender its nuclear program. Specifically, President Pezeshkiann said, “Iran must be understood by Mr. Trump and those who seek to bully us: that we are ready for dialogue and diplomacy and negotiations without accepting the language of force.”

In the meantime, about 20 refineries in the Middle East have been damaged or temporarily shut down, which has cut global refining capacity by about 3.52 million barrels per day. Furthermore, Ukraine’s attacks on Russian refineries have reduced another 1.42 billion barrels per day in refining capacity.

As a result, the world has become increasingly dependent on U.S. diesel exports, which is one reason I now recommend some key refiners, plus integrated oil companies. American oil companies are opposed to the proposed diesel export ban being floated before the midterm elections. High diesel prices have hit farmers especially hard, while increasing the transportation costs of many other goods.

California’s energy situation is even more problematic, since the state prohibits diesel made from crude oil. They prefer biodiesel made from soybeans, plus organic waste. California refineries are exporting their refined diesel from refining crude oil to make gasoline. Most of the California diesel exports go to Mexico or China, so a diesel export ban would be devastating and likely cause more California refineries to close. Until the pipeline from the Permian Basin to Phoenix is completed, and then to Los Angeles, California remains an energy island with no way to export its diesel and distillates than by boat.

While America is an Oasis, Europe is Struggling

French President Emmanuel Macron is now calling for an emergency G7 meeting about skyrocketing energy prices that hurt Europe much more than the U.S. Essentially, it is easier to make diesel from intermediate to heavy grades of crude oil that Russia, Saudi Arabia and the U.S. refine. With two of the three largest refining countries going offline, Europe is in a pickle, since the light sweet crude oil they get from Africa is not ideal for massive diesel production. Two European oil refiners have been notified by Saudi Arabia that they will not receive any crude oil in October due to the Red Sea pipeline shutdown.

Within the politically polarized EU, upstart parties are overthrowing the EU leadership in Brussels, so the EU is expected to become increasingly fractured and hard to govern. Europe, with its aging population and lack of an assimilated immigrant population, the EU appears to now be on the verge of a recession, complicated by the fact it is being crippled by high diesel prices and jet fuel prices, hindering commerce.

German Chancellor Merz’s Christian Democratic Union (CDU) party suffered another humiliating double defeat in new regional elections by the upstart Afd party (37% of votes) and the hard left Die Linke party (24.5% of votes), with the center-right CDU party receiving only 5.5% of votes. This is the second defeat the CDU party has suffered at the hands of the Afd, which has been left out of ruling coalitions, but now the Afd is the largest voting bloc in the German Parliament. Essentially, the Alternative for Germany (Afd) party represents a political earthquake in Germany, since they successfully argued that German leaders have been systematically destroying the country’s manufacturing base with high electricity prices.

Now that VW and other major manufacturers are in the midst of massive layoffs, the Afd party will likely replace German Chanceller Merz, who is finding it increasingly difficult to maintain his ruling coalition. The powerful union, IG Metall, organized a protest by thousands of auto workers from Bosch, BMW, Mercedes and VW, so the pressure to replace Chancellor Merz is mounting. Targeting revived growth, the Afd party wants to turn Germany’s nuclear plants back on and restore its manufacturing competitiveness.

Meanwhile, the EU has been activity trying to defeat the Afd party, but just ended up empowering them further, similar to Marine Le Pen’s National Assembly party rise to dominance in the French Parliament. There is no doubt now that EU unification is now severely threatened with the two largest EU countries becoming more openly hostile to the EU. As President Trump declared at the World Economic Forum this year, the U.S. is the economic engine of the world and countries need to hitch a ride with the U.S.

Meanwhile, the Commerce Department announced core durable goods (excluding aircraft and military) orders surged 1.6% in August, while July’s core durable goods were revised up to a 0.6% increase. This was a big surprise, since economists were expecting a 0.6% rise in core durable goods. Including aircraft and military orders, durable goods were unchanged in August, which was better than economists’ consensus estimate of a 0.3% decline. Overall, the core durable goods report was excellent and did not put upward pressure on Treasury yields, probably because overall durable goods orders were unchanged.

We are truly blessed to live in America, where innovation and risk taking is often rewarded. China’s visit to the White House last week was essentially a Chamber of Commerce meeting and essentially no different than President Trump’s visit to China a few months earlier. China is in the midst of a horrific demographic decline and domestic deflation, so it needs to boost its exports to grow its economy.

In closing, the U.S. remains a major oasis in the world for innovation, competitiveness and increasingly international capital. After the Fed raised key interest rates, the U.S. dollar strengthened and Treasury yields stabilized. Treasury Secretary Bessent has made it clear the U.S. intends to grow its way out of its deficit problems. On the other hand, the rest of the world with severe demographic and/or debt problems like China and Europe may be forced to devalue their currencies to stimulate their respective economies.

While China has embraced AI, it will be interesting to see if their AI led productivity gains can offset their deflationary spiral. Europe on the other hand, seems more intent on regulating and fining technology innovators, so they are expected to fall behind and exacerbate their long demographic decline.

Navellier & Associates does not own Volkswagen (VWAGY), in managed accounts. Louis Navellier does not own Volkswagen (VWAGY), personally. In the interest of full disclosure, Navellier & Associates and Louis Navellier are not making any recommendation to buy, sell, or hold, or advising whether to buy, sell, or hold, Volkswagen (VWAGY).