Off the Ash Heap of History
QE 3D is back on the table. Despite the fact that Federal Reserve Chairman Ben Bernanke backed off QE3D telling the Senate Banking Committee yesterday that the Fed was not prepared to take further action at this point (which probably made Ron Paul breath a bit easier and caused oil to sell off) the truth is that because the Fed brought it up after supposedly putting it to bed, it will change the way we interpret the fundamental news for oil as we go forward. The commodity bears will have to be on notice. Bearish news now could become bullish because if it is real bad, the Fed may run those magical printing presses. Instead of the price of oil falling to a level where real demand could help create economic growth the Fed and its preemptive strike against a further deterioration in the economy, it’s possible that we may never see prices fall where, based on supply and demand, they really need to go. So if the U.S. debt talks go poorly or if the European stress tests raise fears of an inevitable global economic collapse and destroy demand, no need to worry, the Fed will print more money and make sure that prices come back up. Still if the news is bad but not so bad prices could fall but if it gets real bad don’t be short! Especially gold and silver that seem to benefit by bad news and really bad news.
Phil Flynn is senior energy analyst for PFGBest Research and a Fox Business Network contributor. He can be reached at (800) 935-6487 or at firstname.lastname@example.org.