We have finally broken the 88 dollar a barrell mark and touched the 89 range. Crude is headed higher and possibly to 90 before 2011. The employment report was a downer today with unemployment expanding to 4.8 (for more detail on this report visit bloomberg.com). However with this report being negative it implies a positive. The Fed has to increase QE2 to keep this economy afloat. The positive of it is that the government in my opinion want to keep America number one and producing. The negative is that I'm starting to believe the rest of the world doesn't believe in us.
Once the report came out markets took a dive with crude dropping 1 dollar before correcting. The report also lead investors to exit the dollar and start buying gold, euro and other equities and commodities. This in turn sent crude soaring off its lows over 2 dollars. This kind of sentiment is whats going to push crude to new highs. Not because of demand or supply reason but because of fear reasons.
We have seen a lot of debt problems for Europe these days but some are fearing that the US is the next in line. If we are that means an even weaker dollar but it also means a commodity bubble for 2011. Investors will poar into commodities at a record pase pushing prices higher across the board and creating an inflation level that will be unsubstainable.
I feel the recipe is there for this. US liquidity trap, more printing of money, higher unemployment, and inablitiy to raise taxes = inflation = commodity bubble. If Im wrong I accept it but by looking at the crude market we are moving into a new trading range between 90 and 80 dollars to soon 100 and 90 dollars. This could be bigger than 2008!! Im positive we will see 120 crude as some bloomberg articles say but I am aiming higher.
