Technical & Fundamental Oil Reports Specialists

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IMF alarmism & Greek brinkmanship

Published Monday, April 20th, 2015

We leave behind a week dominated from a financial perspective by the latest set of IMF biannual reports and from an oil perspective by the latest monthly reports from the EIA, IEA and OPEC. The big financial issues of the day are whether the stock and bond markets are teetering on the brink of collapse or poised for further gains and whether Greece will be in the eurozone in a month’s time. The big issue on oil is whether the impressive rally that has taken place to new yearly highs is sustainable or a golden sell opportunity.

Financially the data picture is confusing. China is slowing down but its stock market is on a roll, Europe is picking up and the US is delicately poised. The IMF’s latest growth forecasts are not encouraging. Global growth is unchanged for this year at 3.5% compared to the previous report released six months ago but on a one year comparison it is down from 3.9% and there are big downgrades for China, Brazil and Russia. The emerging and developing market category as a whole is downgraded from 5.3% to 4.3 %.

The markets are therefore expecting additional monetary stimulus from China, which they have received over the weekend with a 1% cut in bank reserve requirements to 18.5%. They believe that a US interest rate increase will be delayed until the autumn at the earliest and have been assured by Mario Draghi that the ECB’s QE programme will be completed in full. It is these expectations and promises that are supporting inflated equity and bond valuations and this is what is alarming the IMF.

to read the rest of the report, please click here

Posted by David Hufton