World economy talk

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pati mga news writers may bipolar disorder

sala sa init, sala sa lamig

--

there's a much simpler way of explaining oil price movement --

oil is trading opposite USD value

USD index


NYMEX crude

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[Jun aka Pekto]

Well, we're headed towards summer, the biggest travel period in the US. It's only natural gas prices tend to be highest during summer. That's been the historical trend for a long time now.

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but things are different now

currently, there's so much oil in storage in Cushing, Oklahoma and even in floating storage (supertankers)

oil price shouldnt be $60 (dapat mga $40)

fundamentals do not support that price (low demand)

oil is trading on inflation worries

investors are concerned about the Fed's QE (printing money)

they are betting on inflation in the near future

oil is THE hedge against inflation

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oil/dollar correlation

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Japan

falling exports

falling domestic demand

falling investments

Japan logs record GDP drop
http://www.reuters.com/article/ousiv...54J0PI20090520

TOKYO (Reuters) - Japan's economy shrank a record 4.0 percent in the first quarter as domestic demand and investment buckled, threatening to crush any export-led rebound later this year.

The data did add to growing evidence that global trade may have bottomed out in the first quarter. Net exports proved to be less of a drag on the world's second-largest economy than in the previous three months, and companies ran down inventory.

While that lent support to the growing chorus of forecasts that the global economy was pulling out of the dive triggered by the financial crisis, there were grim signals on the outlook for Japan, where GDP is shrinking twice as fast as in the United States.

Japan PM says GDP shows Japan econ situation severe
http://www.reuters.com/article/gc06/...54J0LU20090520

TOKYO (Reuters) - Japanese Prime Minister Taro Aso said on Wednesday that Japan's economic conditions were severe and that a worsening of conditions in the corporate sector was starting to have an impact on households.

"The most rapid deterioration was seen in private capital spending," Aso told the budget committee in the upper house of parliament, after data showed Japan's economy shrank 4.0 percent in the first quarter, the biggest contraction on record.

"Personal consumption also fell moderately. I believe that a worsening of conditions in the corporate sector is starting to have an impact on households."

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Nymex crude at $60.29 now

tonight EIA inventory data

if the EIA reports lower crude and gasoline stockpiles (as the US enters vacation season) then that's upside pressure on oil price

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oil price now $61.73 as i type

waiting for EIA inventory data

everyone expecting decline

[tidus1203]

I am one happy customer, I happen to be holding oil ETF's for so long and finally we are seeing some action...

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USO 33.70

52 wk low 22.74

[tidus1203]

Got in at 28 and change. Yep there was a time naipit talaga ako dito pero mataas conviction ko sa oil and commodities so I just took the pain...

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Oil price hit $62 last night after EIA data show crude inventories decline

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a few pages back, we were talking about the bankruptcy filing of Chrysler

Chrysler bondholders got screwed when Obama took the side of the labor union

i said something about investors would now have second thoughts lending to companies with strong unions

the unintended consequence of Obama's populist action --

Fund Managers Burned by Obama Now Say They Are Wary
http://www.bloomberg.com/apps/news?p...jv4&refer=home

May 20 (Bloomberg) -- Hedge fund manager George Schultze says he may avoid lending to any more unionized companies after being burned by President Barack Obama in Chrysler LLC’s bankruptcy.

Obama put Chrysler under court protection on April 30 after lenders balked at a proposal giving them about 29 cents on the dollar for their $6.9 billion in debt. The investors said the president’s plan favored a union retiree medical fund whose claims ranked behind them for repayment. It was offered a 55 percent equity stake in the automaker.

Pacific Investment Management Co., Barclays Capital and Fridson Investment Advisors have joined Schultze Asset Management LLC in saying lenders may be unwilling to back unionized companies with underfunded pension and medical obligations, such as airlines and auto-industry suppliers, because Chrysler’s creditors failed to block Obama’s move. The reluctance may put additional pressure on borrowers seeking capital in the worst financial crisis since the Great Depression.

“Lenders will have to figure out how to price this risk,” Schultze, 39, said in a telephone interview from his office in Purchase, New York. “The obvious one is: Don’t lend to a company with big legacy liabilities or demand a much higher rate of interest because you may be leapfrogged in a bankruptcy.”

[tidus1203]

Yeah the Democrats are know to be socialistic anyway, and during these times socialism sells. Everyone wants easy help. Anyway, socialistic policies will backfire in the long run.

On other news, UK's AAA rating might be in serious jeopardy as the outlook for its debt has been changed to NEGATIVE from STABLE. Meaning S&P will now review UK's sovereign debt if it still is AAA. I say its not and has not been for a year now. They are virtually running the printing press over there...

http://www.bloomberg.com/apps/news?p...qpo&refer=home

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did you see what happened to the Pound when that news came out?

freefall dude

[tidus1203]

Yep. I didn't want any piece of it ang likot sobra its whipsaw heaven...

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yesterday, S&P put the UK's AAA rating on negative watch for possible downgrade

the US will be next

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Everyone moved their cash to gold last night

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U.S. to Steer GM Toward Bankruptcy
http://www.washingtonpost.com/wp-dyn...052104467.html

The Obama administration is preparing to send General Motors into bankruptcy next week under a plan that would give the automaker tens of billions of dollars more in public financing as the company seeks to shrink and reemerge as a global competitor, sources familiar with the discussions said.

[tidus1203]

Publishing the information may increase instability and force the government to take further action to shore up the U.K. financial system, the Treasury said in response to a Freedom of Information Act request by Bloomberg News that sought the test results and criteria used to evaluate banks. U.S regulators said publishing their findings would ease concerns about lenders.
“Keeping the information under wraps will only serve to create more uncertainty in the long term,” Vince Cable, the opposition Liberal Democrats’ spokesman on treasury issues, said in an e-mailed statement. “We need a system that is as open and as transparent as that in the United States.”

http://www.bloomberg.com/apps/news?p...p9o&refer=home


Talking about transparency or the lack of it. The UK is again making more stupid moves. This will just prolong and agonize the pain, when people are doubtful they won't put money. Now if they knew all the bad things sure we will have massive pain but its only short and quick. Hiding the turth will just prolong the problem and not make it go away.