Moody's did not exactly send a Valentine to the global markets yesterday. Downgrades across Europe is putting deflationary pressure on the metals but oil seems to be getting support from increasing geopolitical tension. With Moody's getting moody, they cut the ratings of Italy, Malta, Portugal, Slovakia, Slovenia and Spain and lowered the outlook for eps Austria, France and the U.K. It seems that deflationary pressures are rising across Europe and perhaps the globe. We are seeing markets like copper, cocoa and precious metals fall but oil seems to be getting support from news of an attack on the Israeli embassy in New Delhi, India and an attempt in Tbilisi, Georgia. Israel blamed the attacks on Iran but Iran denied any involvement.
The attacks raise the risk premium in oil as the odds of some type of conflict are rising.
There is a bit of surprise with Japan adding more stimulus to bolster their slowing economy and a bigger than expected drop in Eurozone manufacturing. There are also worries that Obama's new taxes on the energy industry will add more pain to consumers already struggling to overcome the governments oppressive regulations. Barack Obama proposed to cut more than $40 billion in tax breaks for oil, gas and coal producers in the next decade and to spend more for conservation and alternate energy. Apparently he wants more Solyndra at the expense of the American consumer because of his anti energy ideology. The President is overseeing record high gas prices for this time of year as demand is falling because of his policies.
Penn Energy reports that, Proposed US Environmental Protection Agency regulations directed at refiners could put several US refiners out of business and place others at a significant disadvantage to overseas petroleum product manufacturers, American Petroleum Institute officials warned. At the same time, data suggest that the environmental benefits would be modest. The API says that, While the specific elements of these have not all been set forth, they could constitute a veritable tsunami of added requirements that could put some refineries out of business, diminish US fuel manufacturing capacity.
So when the President talks about shared sacrifice, what he means is he wants you to sacrifice so he can enact his ideological dream of what he thinks energy should be. While he squanders the greatest opportunity any president of recent memory has had.
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