Oh no! The dreaded vote of confidence. You know in professional sports when your team is playing lousy and just put in a dismal performance and the owner of the team or the GM gives you a "vote of confidence" and you're fired the next week? Well it is a good thing that the Treasury Secretary isn't a baseball manager or he would be gone. After the dollar took another drubbing, the White House came out and said that Obama has "tremendous confidence" in Treasury Secretary Timothy Geithner right after the dollar hit an 18 month low. Oh sure, the vote of confidence in question may not be in the US dollar but as the weakening dollar adds to inflation and increases the cost of oil and almost every commodity the average American buys, I would not feel too easy if I were Tim Geithner right now. The President has confidence in Mr. Geithner but do they have confidence in the dollar? The silence about the dollar out of the White House right now is deafening to the markets.
When it comes to the dollar, it is all about confidence or the lack thereof. The dollar got a momentary bounce out of comments from Jean Claude Trichet who sang the praises of a strong dollar by saying a strong dollar is extremely important in the given circumstances. Of course this is the same guy who about a year ago said the strong dollar might be in the best interest of the US but was not really his concern.
Different circumstances I guess. Fed Chairman Ben Bernanke said he would raise interest rates when he was darn good and ready and the dollar can go to Hades in a hand basket for all he cares. All right perhaps the Fed Chairman didn't quite put it that way but he should have. Yet overnight Bernanke seemed to lift the dollar by saying that the U.S. Federal Reserve stands ready to hike interest rates if necessary. Let me tell you Ben, if the dollar keeps falling like a rock it is necessary.
As far as oil goes some bulls may be a bit disappointed that the International Energy Agency did not increase oil demand more than they did. For the fourth month in a row the IEA raised its demand forecast as expected but only by 200,000 barrels per day. The IEA said 2009 world oil demand is expected at 84.6 million barrels a day. That is still 1.7 million barrels a day less than demand in 2008 and was not as big of an increase according to the whisper numbers.
The numbers for distillate demand was disappointing for China. The IEA forecast China's average fuel oil demand to hit 650,000 barrels a day this year and should stay that way for next year which is, as Dow Jones points out, sharply lower than the 880,000-barrel-a-day peak reached in 2004. And then every once in awhile you hear a story that it is so heart wrenching you hate to repeat it because it hurts your heart so much. Yet I must tell you that a terrible thing may be happening to Saudi Arabia. You see as the world moves to turn their back away from fossil fuels as it fights climate change, it is cutting into the wealth of Saudi Arabia! This is an awful development and the Saudis are demanding a bailout due to lost oil revenue. And yes we think the Saudi bailout is on the drawing board as we speak!
You can imagine the terrible stress the Saudi Princes may have dealing with not being able to afford premier properties and Swiss watches. What, they can't afford a Patek Philippe and may have to settle for a Rolex! How devastating! Or instead of buying their Lamborghini they may be forced to lease it! Oh the inhumanity of it all. How can we let this happen? And all for our piddling desire to save the planet. If the Saudi's can't afford the finer things in life is this planet even worth saving? I think not! We need to rethink saving the planet or we need to start taking up a collection to replace Saudi oil wealth. Every little bit helps. Let's hold bake sales or raffles or maybe just use more gas.
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