Brent oil slumped to a 13-month low and West Texas Intermediate slipped as the euro bloc’s economic recovery stalled amid signs of ample global supply.
Futures fell as much as 2.1% in London and 1.7% in New York. Euro-area gross domestic product in the three months through June was unchanged from the first quarter, according to the European Union’s statistics office. Libya will reopen its largest oil export port within days, the National Oil Corp. said. U.S. crude supplies rose 1.4 million barrels last week, government data showed Wednesday.
My main focus on the Greek crisis is how it will impact the global economy, and especially the United States, but nobody covering this issue can avoid the morality lessons. First, Greece borrowed too much. That’s bad. Second, Greece cooked its books to conceal the magnitude of its deficit spending. That, too, is bad. Third, other European countries knew that Greece was doing this, but ignored it so as not to embarrass them or weaken the European Monetary Union. That may have been the worst error of them all.
While everyone likes to hate on Cyprus, it is Italy that is the focal point of today's European "omnishambles" that has seen the EURUSD tumble to a five month low as of this writing. First it was economic data that scared investors, with Industrial Sales and Orders tumbling far below expected, posting numbers of -1.3% and -1.4%, respectively, on expectations of an increase. Retail sales were just as ugly, declining by -0.5% in January, on expectations of an unchanged print, with the December 0.2% number revised also into negative territory.
Sometimes it is extremely difficult to tell the difference between economic idiocy and self-serving bullsheet. I am a big fan of Occam's Razor which says the simplest explanation, the one with the fewest assumptions, is likely to be best.However, which explanation is simpler - stupidity or self-serving propaganda?While pondering that question, let's take a look at how the question arose. It comes from a statement made by the Chief economist at Deutsche Bank in an article written by Ambrose Evans-Pritchard for the Telegraph.
Italy will not need a bailout to survive the economic debt crisis, Prime Minister Mario Monti said in an interview with German radio on Tuesday, amid fears Rome may be forced to call for aid."Italy even in the future will not need aid from the European Financial Stability Fund," Monti told Public Radio ARD according to Italian media reports.The former EU commissioner, who has been working hard to deny rumours that Rome is at risk of contagion, called on the markets and financial observers "not to be governed by cliches or prejudices."
In what should have been expected, but somehow wasn't, Eurozone weakness is across the board except for Ireland bucking the trend for now.
Markit says Eurozone Composite PMI® Signals New Recession in Eurozone
Key Points for March
For the second day in a row non-US markets are largely unchanged and US equity futures begin the session where they ended (that they will close much higher is a different question). The AUD responded adversely following news that Australia saw a substantial drop in job creation, with 10.8K jobs lost, roughly the same as was estimated should be gained: perhaps that Chinese "recovery" is not trickling down because it is purely on Excel?
By Will Bancroft:Only weeks ago Italian technocrat Prime Minister Mario Monti proselytized that the Eurozone crisis was "almost over". It felt like more propaganda from the European establishment, and since returning from the Easter break the markets don't seem to be agreeing with him. Spanish and Italian yields are firmly on the rise again, marking a reverse of the trend helped into action by €1bn of refinancing money from the ECB.