Quote:
Originally Posted by DOHCVTEC
True, but the amount of oil released is only 60 million bbl, a small amount. The drop in oil prices would only be temporary, lasting perhaps 2-3 months at most, the oil being released over a period of one month. The key problem is that if the economy does slow down even more, there isn't much more the Feds can do. They shot all their bullets with QE1 and QE2 - that's why the next market collapse will make the one in 2008 look like a correction, or so they say.
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its a total of 90 million barrels.
What was the major causes of the slowed down GROWTH (remember, people, we are STILL growing) were the disruption from japan, the euro debt crisis, and inflation, significantly caused by rising fuel costs.
The effect of japan has mostly passed - at least the significant portion, the euro debt crisis, whilst still a major concern is being dealt with, austerity measures are being passed - its not an easy process, but its happening.
and commodity costs, including fuel have now dropped from their highs - its simple cyclical macro economics - things were getting too hot, commodities & fuel rose (based on this but also other reasons which I'm not getting into here), well now commodities have dropped a lot and fuel is coming down, thanks in large part to the release of 90 million barrels of oil to calm the spikes associated with teh summer travel months in the northern hemisphere.
It puts the economic growth story back on for Q3 for sure, and maybe if we get traction from all this, into Q4 - QE3 would have been a disaster, the oil release was a smart move and I'm telling you right here, right now, unless there is some significnat unforeseen issue (Japan), stocks will go up in H2 2011.
2012 - well, that's a long way away, but tightening in China will likely stop in the coming month as pressures are taken off of inputs to production (fuel, commodities, etc)
macro economics make me long stocks, micro economics make me select which stocks to buy - investing should NEVER get more complex than that