"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat
Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput
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As trading takes place in the Asian session, the US equity futures market are solidly higher as risk appetite returns on news coming out of Italy that a proposal to cut some 30 billion euros worth of debt is in the works. While the commodity futures markets are not particularly excited about this, the stock world surely seems to be taking it as a harbinger that something is going to come out of this Friday's meeting in Brussels which has the potential to provide a healthier environment for the risk trades.
One market that is certainly reacting higher is the Crude oil market which is solidly above the $100 barrel level (WTI) and is threatening its former recent top near the $103 level. One of two things now happens - it either fails at this level sparking a round of long liquidation with talk of a double top emerging or if the risk appetite is strong enough, it takes out $103 in convincing fashion and kicks another leg higher on the price charts.
If it is the latter, here comes the fallout to the consumer from this liquification game being played by the monetary officials and political leaders. Rising energy prices cannot be separated out from a general round of risk trade money flows. If the bureaucrats and money masters want to stave off the deflationary implications of a meltdown in the sovereign debt markets, then they MUST BE FORCED into accepting surging energy prices which will certainly have a negative impact as far as growth goes on the overall global economy.
We are looking at the CATCH 22 scenario once again.
If traders suspect on the other hand, that nothing is going to come out of this Friday's summit, then crude oil will move lower reflecting the disappointment of the market that the punch bowl is not going to be spiked any further.
Please click on the following link to listen in to my regular weekly radio interview with Eric King on the KWN Weekly Metals Wrap.
