The chart on your left reveals an excellent rebound in the rate of oil as it has actually pierced through both the 50- and 100-day moving averages. Provided indicators of continued weak point in the global economy, its difficult to believe this step represents a true breakout and a return to a bull market for oil. However as I have noted frequently in this missive, all way of modifications in markets might take locationoccur once the present post petro-dollar system is replaced with a petro-gold system, which appears to be the direction the BRICS is heading into.Lets examine the
case for the extension of a bearish market for oil, based upon existing financial indications that the international economy is advancing the roadway to a financial depression.To begin, right here are the headlines from John Williamss letter sent this previous Wednesday, April 15 and April 17: bull; Quarterly retail sales and commercial
production last dropped together in first-quarter 2009, when genuine GDP contracted 5.5 %( -5.5 %)bull; Genuine retail sales contracted at 2.0 %(
-2.0 % )annualized speed in first-quarter, worst showing since depths of economic collapse bull; Small retail sales fell an annualized 5.0 %(-5.0 %
)in first-quarter 2015; March annual growth was weakest because economic collapse bull; Yearly genuine sales development at recession level bull; Pummeled by
declining manufacturing and oil and gas production, industrial production fell an annualized 1.0 %(-1.0 % )in first-quarter 2015 bull; Real estate begins plunged at annualized pace of 31.0 %(-31.0 %
)in first-quarter 2015 bull; Real revenues fell by 0.4 %( -0.4 %)in March bull; March year-to-year Inflation: -0.1 %( CPI-U), -0.6 %(CPI-W ), 7.5 %(ShadowStats )bull; First-quarter 2015 genuine GDP headed for a contraction So Williams is requiring the US to get in into the next economic downturn as the government records it. Obviously, Williamss work suggests we have never ever left economic crisis territory since the financial crisis. However his work also suggests that some months from now, that the government stats, tortured as they are, will certainly reveal we have actually gotten in another recession.Perhaps the most ominous sign that Williams has it right is the massive increase in rejection of business credit applications. The decline began in February and after that plunged over the precipice in March, registering the greatest spike in credit application rejections on record, as shown in the chart on your left! This is especially alarming in this Keynesian world since, instead of driven by profits and cost savings, our economy is driven by the big lie that cash can be produced out of absolutely nothing and growth comes just by favorable mindsets( animal spirits ). When there is no credit and when there are no cost savings and earnings, animal spirits can vanish very, really swiftly! Now kindly! Do not suggest with me by telling me business earnings are strong, because they are not. Exactly what we have are inexpensive money driving stock buybacks and all manner of artificial accounting to make them look excellent. Moreover, with cost discovery damaged by Federal Reserve QE, such that money flows to the scam artist who run our Wall St. betting casino and Washington-based Armed force Industrial Complex, truthful capitalist earnings are really scarce in the American economy these days. But that is another issue.Lets return on track to focus on the subject at hand, specifically, the worldwide economy. Bear in mind when we depended on the enormous development in the Chinese economy to pull the world up after the monetary crisis? You do not hear much talk like that any longer and for excellent reason. The Chinese economy is at finest slowing down and could be moving towards a huge contraction. In any occasion, here are some charts that make the case for a weakening Chinese economy, which is either the biggest or second-largest economy worldwide, depending upon how you count it.(click to expand )The chart straight above on the left titled Production Malaise shows that Chinese industrial output is at its lowest level because completion of the end of 2008 which was the middle of the monetary crisis. The chart above right titled Purchasers Regret shows that retail sales
in China have actually collapsed and are now below the least expensive level during the financial crisis.(click to expand)As in any excellent Keynesian/communist government where there is little or no regard for totally freetotally free markets, with capitalisms hands tied behind its back, what little development that takes locationoccurs outcomesarise from credit growth, and the even worse the economy gets, the more pathological credit heroin that is administered. Therefore, not remarkably, although the rate of credit
growth in China has actually fallen a bit, it is still well above small GDP, as revealed on the chart above left, identified, No China Deleveraging Yet. With a dictatorship directing how capital is allocated instead of enabling freefree enterprises to designate capital according to rate discovery, the Chinese problem of empty cities is growing even worse and even worse, as the chart above identified Space and Board illustrates.Major product market declines seem to fit this worldwide financial weak point. Oil seems to be suggesting it might have discovered a bottom and might be readyprepare to rocket higher. Last week, I heard a theory about why oil is acting in a different way than other commodities at this moment. I will get to that in a minute. However in the meantime, checktake a look at the following charts for key commodities from J Michael Oliver.
(click to enlarge )Copper is expected to be the most vital predictor of future economic development. Thus its name Dr. Copper. Here we see a clear breakdown in copper listed below$3 suggesting/verifying/predicting future financial weakness. Definitely steel is a crucial product that ought to succeed, particularly if the developing world is remaining to grow. But steel too is showing clear signs of breaking down.(click to increase the size of)Then there is lumber, which likewise ought to be doing well if the much ballyhooed recovery in real estate in the US and worldwide is really taking shape. The chart on our left reveals weakness in the cost of lumber. But Michaels momentum chart on your right reveals a more frustrating future for this crucial homebuilding commodity and hence for the house building market.So, now for the topic of oil. Is this, the most important commodity in the industrial world, all set to begin a brand-new booming market?
Michael Oliver stated this past weekend after WTI closed at$51.64 that we might see a bit more of a bounce upward to$56 or $57. As this was being written, oil was offering at$57.45, so once again Michael struck the nail on its head. However he does not think the upside for oil will certainly be sustained much beyond its existing level.