Monday, July 19, 2010

Phil Flynn: When Irish Eyes Are Crying

A downgrade of Irish debt, an oil spill in China and two storm systems down in the Atlantic that bear watching has oil being pulled in different directions. The tug and pull between bearish and bullish forces has oil bouncing in both directions. Now with a whole plate of earnings ahead of us, the dollar and the stock market will be our guide unless of course things get nasty weather wise down south. Overnight Moody's Investors Service cut Ireland's sovereign debt rating to Aa2 from Aa1because of what they say is the government's "gradual but significant loss of financial strength."

Moody says that Ireland’s weakening debt affordability, lower economic growth prospects due to the severe downturn in the banking and real estate sectors, as well as liabilities from the bailout of the banking sector all contributed to the downgrade. At first oil broke on this news as it was feared that this downgrade might hit Europe and what is perceived as Euro Zone stability. Yet oil came back as Moody's at the same time lifted the ratings outlook on Irish government debt to stable from negative and said that the risks are now evenly balanced at the new lower rating standard.

Besides we all knew that Ireland was in danger of a downgrade in the first place. Don’t cry over spilled milk but I guess you can cry over spilled oil. The latest oil spill is in China.....Read the entire article.

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