SILVER LINING?

Earnings reported by US corporations are unexpectedly good, in contrast to macroeconomic data, positively effecting crude oil and refined products prices, seemingly affirming equity valuations and shifting sentiment back to belief in a viable sustainable recovery.

Additionally, API reported crude supplies fell last week, which should be echoed in EIA's report later this morning. Prices also gained yesterday after the National Hurricane Center said a weather system over Puerto Rico and the Dominican Republic has a 60% chance of becoming the second named tropical cyclone of the Atlantic hurricane season.

A tropical system entering the Gulf has the potential to drive the oil from the BP spill into the coast of Louisiana and Mississippi or dispersing it over a wide area of the ocean. For China, add looming inflation to the woes that torrid economic growth brings. Inflation will increase as workers demand higher wages.

At least nine strikes this year at Japanese carmakers and their suppliers in China have disrupted output. The number of elderly will increase while working-age adults decline, causing further economic slowdowns.

source: