Debt Deal Dive and Drives
Obama shook things up suggesting he would support a resurrected “Gang of Six” debt deal sending oil higher and causing a wave of profit taking in precious metals while industrial metals held up. The commodity currencies are faring well such as the Canadian and the Australian dollar showing an underlying bullish outlook for the bulk of the commodity complex. We have Tropical Storm Bret and a possible tropical storm to be named later also supporting oil and causing orange juice to fly. With the hopes of a possible resolution, the budget standoff in Washington may please the market for the moment but as we have seen with other short term fixes, if you do not solve the underlying spending problems in this economy the debt problems just will not go away for long.
Disaster may be averted but if we don’t learn anything from what the markets have been trying to tell us, then we are bound to end up like Greece. Thwarting the private sector and increasing government spending is no way to create the groundwork for a vibrant growing economy. Over-regulation and uncertainty are stifling job creation and growth in the private sector leaving a heavy burden on the Fed to try to use monetary policy for job creation to overcome the ridiculous uncertainty created by this desire to manage every aspect of the economy. Obama blames the woes of the economy on the lack of regulation but what we are seeing is that we can do far more harm to the economy and the average American with bad regulation. While Obama can take credit for helping to stabilize the economy he now has to take blame for now restraining it. His health care bill and his desire to demonize the most productive members of the economy have created an aura that has extended the length of our economic misery. The White House called the “Cut, Cap and Balance Act” passed by the house “extreme, radical, and unprecedented.” Really? What ever happen to “Yes we can”? Are you now saying we can’t? Why can’t we take some radical steps to revolutionize our economy and lay the ground work for another 30 years of explosive growth? We can’t show fiscal restraint? We can’t take the dramatic steps to propel the United States economy to the future so we can compete with the emerging markets and focus our spending on things that really count like the common defense of our 50 States.
We need jobs now. We need to bring confidence back to the marketplace by showing the world that we can cut spending. We need to bring in more tax revenue to the government but not by regressive taxes but by unleashing businesses from the uncertainty of what new regulation or health care tax that they are going to have to pay. Ask any business in America or do a poll! Is Obama and his policy objectives the solution or the problem? This proposal has no chance to pass and won’t be part to the debt ceiling debate but should be on the table in the next election. We can transform our tax system and the way government does business and we can compete in an ever more challenging global economic environment but not if we are going to be saddled with the chains of burdensome debt, high taxation and over regulation.
The API may be playing catch up on the weekly energy supply report from the Department of Energy reporting a whopping 5.18 million barrel draw in weekly crude supply. Of course that drawdown really only caught up with where the DOE was the week before. The DOE pegged crude supply last week at 355,456 million barrels where the API was at a heftier 359.421 million barrels. Now subtract the API Draw 5.18 million barrels from that number it puts the API draw just 1.215 million barrels below last week’s DOE which might mean the DOE should show a drawdown somewhere in that area.
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 email@example.com.