Chillin' out till it needs to be funded
Retail inventories finally moved into higher gear for Oil and distillates for the first time after March with utilization at refineries up to 91% for the week, up 8% from the last data. Gasoline inventories rose 3.3 M barrels, Distillates 2.3 M barrels and crude inventories finally stopped rising with Oil and Brent near $85 and $100 respectively. Oil is still down $21 in one month and the price acceleration from used supplies does mean the fall in prices at retail stops will have a limited plateau and not continuous corrections like the fall witnessed in the last month after continuing pile up of inventories.
Meanwhile, a drop in productivity of 0.9% on last month threatens profits for the June quarter again and salaries are not rising either with an anemic 1.3% increase in labor costs a seeming plus for corporate profits. Also the Purchase data from MBA suggests the 1.8% drop to April levels has confirmed a halt on the Housing recovery for May though the price has swung to a positive. Scott Walker was an overwhelming winner in the recall vote in Wisconsin, so Obama should be the most worried by this flurry of bad Economic data. However it will still be a passing slip of Weltschmerz for him and the US as the US is more or less on the same path for the next 20 years with low growth and yet apparently no nearer to a deflation scenario than mere gimmicks could foretell. The good news from Retail and Auto sales followed by an uptick in bank lending will still keep the growth number mnorth of 2% and inflation is healthy at 2%
ECB’s standoff on rates is also unlikely to disturb the deteriorating conditions in Europe as Spain’s formal application to rescue its banks is considered by the EU and the Germans