Wednesday, June 30, 2010

Phil Flynn: Firecracker!

Did someone light the fuse so the global economy could blow up again? Bullish dreams for oil exploded in a spectacular array of global economic worries. Forget about Hurricane Alex for the moment because the oil complex sure has. It is time to start worrying about the Euro zone, China, the end of the quarter and whether or not you can get reservations at the beach for the 4th of July fireworks. All of these issues played into yesterday massive stock market selloff. Traders worried about protecting any profits they may have and a terrible drop in consumer confidence sent the market on huge downward spiral. This raised fears of rising oil demand destruction and left traders to wonder what could governments do to stop the move and all was bleak as traders sold just about everything and went home early.

Yet good news today out of Europe and the fact that yesterday's selling was more than likely overdone is bringing the market back. The euro is a major reason why oil prices go up or down and it was under pressure in recent days as the market feared a liquidity squeeze in Europe due to the thought that the European Central Bank was going to have to lend banks more money. But it appears the banks took less money than thought. The ECB loaned banks 131.9 billion Euros (($161.4 billion) at its 3 month lending auction which was less than expecting giving a boost to the Euro and a boost in the price of oil.....Read the entire article.

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