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I am Electrical Engineer working in the field of Information technology. I am Interested in world economics and politics. Beginner investor interested in reading books and blogs on investing ideas and listen to what the leading economists have to say.
  • My Views To Spur The Tepid Economy 0 comments
    Sep 27, 2013 12:20 PM

    The Fed reiterated on September 18th that taper will depend solely on long term unemployment and underemployment data. Economic growth is generally proceeding at a moderate pace and there is uneven improvement in labor market conditions. A month or two more from now will not make it any better. Mr. Bernanke's quote from the Sept. 18th FOMC meeting "Conditions in job market today are still far from what all of us would like to see." clearly indicates that we are no close to taper and with the coming holiday season there is very little likelihood of a job market improvement other than temporary hiring for holiday sales. Ben Berneke is dovish but we have a group of hawkish people in the Fed who keep on issuing statements that the taper is going to come sooner this October. In a way this induced scare is good because it keeps the market away from breaking all-time records and thus preventing a stock market bubble.

    The best way I see to improve the economy and labor market is by bringing down the crude oil price to 70 to $80 a barrel. This will put more money into the hands of people also spur job creation that would in turn stimulate economic growth. And I see a case for the same over the next few months. With the EIA(Energy Information Administration) yesterday stating that the U.S. stock piles increased by 2.64 million barrels, compared to 1 million barrels decrease that most analysts were expecting. Gasoline consumption declined 2 percent to 8.85 million barrels per day.

    According to Steve Briese who studies the CFTC(U.S Commodity trading futures commission) report has seen consensus among the hedgers(produces/refiners) a case for lower oil prices. These hedgers are not speculators. Producers are the ones who take a short position to protect against price declines and refiners are the ones who take a long position in futures and option to protect any rise in oil price. Hence falling oil prices can be good for the economy and also the refiners. I am long HFC!

    Disclosure: I am long HFC.

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