It seems like so much has changed since the holiday but yet at the same time, everything kind of remains the same. For oil the market not only has to deal with the aftershocks of a weaker than expected jobs report but also the hope that new talks with Iran could erase the $20 or so Iranian war premium. Friday's jobs data seemed to suggest that Ben Bernanke was right to be worried as U.S. payrolls grew by only 120,000 in March, which was below the expected gain of 203,000 jobs for the smallest rise since October.
For China inflation data is raising more questions about just what is going on in the Chinese economy. China’s consumer price index rose 3.6% in March, year over year heating up from a 3.2% increase from the February reading and coming in hotter than expected at 3.3%.
Is it too hot or not too cold but just right? Surging Chinese inflation may reduce the odds of a China quantitative ease yet it was just last week we were more worried about China slowing. Is it possible that China inflation is surging as growth is faltering? The hotter than expected inflation data would seem to give more credence to the official manufacturing data that China released. Either that or China is entering a form of stagflation that would present a new host of issues for China and the global economy at large.
Gold seems to be getting a boost on the China data but that may be a reflection of the fact that India gold dealers have ended their strike on buying gold because of an Indian import tariff.
For crude oil a weak jobs number may not be all that bearish. If oil becomes convinced that this weakness in jobs will once again heat up talk of QE3, then things could really get going. If not then it is bearish as the US economy continues to struggle.
Yet can we possibly see a reduction of the Iranian war premium? The AP reports that, “Iran's nuclear chief signaled Tehran's envoys may bring a compromise offer to the talks this week with world powers: Promising to eventually stop producing its most highly enriched uranium, while not totally abandoning its ability to make nuclear fuel. The proposal outlined late Sunday seeks to directly address one of the potential main issues in the talks scheduled to begin Friday between Iran and the five permanent Security Council members plus Germany. The U.S. and others have raised serious concerns about Iran's production and stockpile of uranium enriched to 20%, which could be turned into weapons-grade strength in a matter of months. But the proposal described by Iran's nuclear chief, Fereidoun Abbasi, may not go far enough to satisfy the West because it would leave the higher enriched uranium still in Tehran's hands rather than transferred outside the country."
"Abbasi said Tehran could stop its production of 20% enriched uranium needed for a research reactor, and continue enriching uranium to lower levels for power generation. This could take place once Iran has stockpiled enough of the 20% enriched uranium, Abbasi told state TV. The 20% enriched material can be used for medical research and treatments. The enrichment issue lies at the core of the dispute between Iran and the West, which fears Tehran is seeking an atomic weapon — a charge the country denies, insisting its uranium program is for peaceful purposes only. Uranium has to be enriched to more than 90% to be used for a nuclear weapon, but with Iran enriching uranium to 20% levels, there are concerns it has come a step closer to nuclear weapons capability. Abbasi said production of uranium enriched up to 20% is not part of the nation's long-term program — beyond amounts needed for its research reactor in Tehran — and insisted that Iran "doesn't need" to enrich beyond the 20% levels.”
MarketWatch reports that, "Iran has stopped shipping oil to Greece and may halt supplies to Royal Dutch Shell PLC over unpaid bills as the impact of sanctions widens." The news suggests a decline in Iranian oil exports last month may accelerate as banking sanctions add to an upcoming European ban on Tehran oil. That could lead to upward pressure on oil prices, which have recently surged to a four-year high. The Mehr news agency said that, "Due to unpaid bills, Iran stopped deliveries to Greek refiners Hellenic Petroleum and Motor Oil. Greece has long been the European Union country relying the most on Iranian oil--sometimes for as much as a third of its supplies.” What we are seeing is an uneven recovery. It is going to lead to some choppy and large moves.