Another dismal oil inventory and despite a better than expected ADP jobs report, the bulk of the news has been bad or worse. Oh sure the Dow recovered on an oversold bounce due in part to some who believe that maybe somehow, someway this granddaddy of all jobs reports tomorrow might not be that bad. Of course the numbers from the oil patch are not giving credence to such optimism as demand seems to be on a downward spiral.
As the Department of Energy reported demand for oil products was at a miserable 18.9 million barrels per day falling 2.0 percent below a year ago. Gasoline product demand averaged 9.1 million barrels down by 3.6 percent from year. Distillate fuel product did average 3.5 million barrels per day over the last four weeks, up by 1.7 percent from the same period last year but was not enough to shake off the bearish demand mood. Before long deflationary pressures may begin to build unless we see a miraculous turnaround, and the odds of quantitative easing go up dramatically. Yet the question is: can the Fed help stop the red.
QE2 did stop the red in the stock and commodity complex and helped the banks shore up their balance sheets yet as far as pumping money into the real economy the impact was disappointing. Banks failed to lend money and basically made millions by playing the carry trade and the money never went to the real economy where the Fed hoped it would go. You can't really blame the banks due to extreme regulations and a Washington administration that was hampering business, creating more uncertainty with a disastrous healthcare law and causing uncertainty in business like this country has never known.
The Fed had to do the heavy lifting as Washington believed that capitalism was the problem as opposed to the answer to the problem. Washington's politicians and their inability to shoulder not even one iota of responsibility for our economic collapse means they will never our nation's biggest problem. Arrogance in Washington and massive sized heads. Instead of eating humble pie they decided to meet arrogance with more arrogance.
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