Woo Hoo! How about them bond auctions in Europe, huh? I hear Spain was only $300 million short of what they needed to raise.
On a positive note, it appears that manufacturing in the NY district rebounded marginally after plunging since May. However, if you look closely, future orders are way down and inventories are falling; not good signs if you’re trying to keep a sanguine stance ahead.
But even if American manufacturing did modestly expand, it does not fix what is coming. Europe is going into a full recession. Their shortfalls are not going to be covered by borrowing; two options remain to them.
They can enforce austerity (demand destruction, recession) or they can print (euro falls).
One of those two trades I will win on. I’m long EUO, ERY and short UCO.
Even now, as the European economy contracts, the excess gasoline and crude oil not being traded over there is desperately looking for a home.
And hey, look over here! America is expanding. I bet we could use the oil.
As the European crisis deepens, it will necessarily lower the prices we pay at the pump and for raw materials. It’s just a matter of how long before the tankers start arriving.
Worse, Europe is the biggest trade partner of developing economies, like China. How can you count on emerging market growth to keep demand elevated, when the men and women who have been buying the most goods out of these places are about to experience a recession?
It’s nonsensical.
In an odd sort of way, I’m comfortable with oil at $98, as there is little that could possible push it back towards the $110 mark. My losses are uncomfortable, but there’s nothing but the potential for catalysts to send it screaming back lower.
Watch for crude to move back below $90, and the euro to move below 1.3, soon.
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I suppose Corzine was absent from the Euro bond auctions.
Lol