Technical & Fundamental Oil Reports Specialists

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OPEC is too relaxed

Published Friday, May 30th, 2014

The worse the reported US GDP growth rate in 1Q the higher goes the stock market. Investors it seems love hearing historical bad news. The Department of Commerce has revised its 1Q growth estimate down from +0.1% to -1.0%, an enormous and significant adjustment. Wall Street had forecast a contraction of 0.5%.

Contrarily the S&P500 closed at a third record high in four sessions, propelled by the bad news and by unemployment benefit claims that on a four-week average basis are at their lowest level since August 2007. For stock watchers the 1Q bad news was good news because it re-affirmed the cold weather anomaly promising a very healthy rebound this quarter.

In particular, 1Q inventories built much less than expected and will need replenishing this quarter. Citi raised their US 2Q growth forecast to 4% and Goldman to 3.9%. With action expected form the ECB next week global equity markets had a good day reflected in a new record high for the MSCI World Index.

to read the rest of the report, please click here 

Posted by David Hufton