What a kidder! Jean-Claude Juncker had them rolling in the aisles in laughter when he said that Greece would be given an extra two years, up to 2022, to meet its debt reduction target of just a mere 120% of the Gross Domestic Product! Ha! Is he hilarious or what? Wait, he was serious about that?! Yup! After a burst of laughter from the crowd he said he was not joking? Oh boy! Apparently International Monetary Fund Chief Christine Lagarde rolled her eyes and said despite Jean- Claude Juncker’s humorous time table insisted the existing target of 2020 should remain. The news conference that then had a heated tone, sent traders back in the risk aversion mode.
U.S. bonds popped after the post Veterans Day re-open. We saw gold and silver drop, the euro fell and the dollar rallied and oil pulled back. The reaction may be temporary because this could be just a negotiating ploy ahead of next week’s meeting. In the meantime Jean-Claude Juncker will be entertaining in the Rumpus Room all week, two drink minimum!
Of course the market has been pricing in more doom and gloom for some time as well as weaker demand for oil. The VIX index has rebounded as traders are sensing greater unease with the stock market as well as the rising odds of a global recession.
When you get beyond the exciting news about the United States over taking Saudi Arabia as the world’s largest oil producer, you then have to look at the International Energy Agency’s bleak oil demand expectations. In its monthly oil market report, the IEA forecast oil demand growth in 2013 unchanged at 0.8 million barrels a day but warned that risks remain skewed to the downside. This is a big admission for an agency that likes to error on the high side when it comes to demand projections.
They warn that, "A weak economic backdrop continues to restrain oil demand growth throughout the forecast, and that the risks are particularly acute for the world's richest industrialized nations,” the agency said, highlighting the ongoing economic problems in Europe and the looming U.S. fiscal cliff. Darn, that fiscal cliff again! The IEA cut estimates for global oil demand in the fourth quarter by 850,000 barrels a day since June, including a decrease of 300,000 barrels a day this month as Hurricane Sandy destroyed demand.