Wednesday, November 24, 2010
Phil Flynn: Happy Thanksgiving!
Now can you enjoy your turkey? It was only weeks ago that oil bulls were basking in the intoxication of the Fed’s Quantitative Easing the sequel. The oil market topped $88.00 a barrel, it was a suckers rally as the market felt confident that all was well as the Fed had the markets' back. What was there to worry about? Tell after the Fed minutes we find out there is plenty to be worried about. The Fed’s grim economic outlook and a sense that perhaps some members of the Fed are questioning fed policy, have helped reduce some oil trader’s optimism about QE2 inspired oil demand.
The Fed lowered its forecast for 2010 GDP down to 2.4 to 2.5% from their previous estimate of 3 to 3.5%. For 2011 they expect GDP between 3% and 3.6%, down from 3.5% to 4.2% previously. As far as 2012 when the market expects rates will finally increse GDP projection is little changed while the new 2013 projection is put at 3.5-to-4.6%. The Fed also downgraded expectations for the unemployment rate which were raised for 2011 to a rate, 8.9% to 9.1% is expected. In 2013, the jobless rate is still seen between 6.9% and 7.4%.
What’s even more of a concern is the members of the Fed may not be on board with all of the printing of money. The Fed Minutes said that participants......Read the entire article.
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