According To Reuters, Soaring Energy Prices Are A Good Thing

Tyler Durden's picture

When it comes to reporting the news, Reuters ability to get the scoop first may only be rivaled by its ability to "spin" analysis in a way that will make a normal thinking person's head spin.  Such as the following piece of unrivaled headscrathing titled "The good news behind oil prices" whose conclusion, as some may have already guessed, is that "the surge in crude oil is looking more like a harbinger of better days." Let's go through the arguments.

From Reuters: The good news behind oil prices

  1. "the Iran-driven spike masks a broader underlying trend, and as long as military strikes are avoided, it appears to pose only a limited risk. In other words, there is a good news story."

Translation - Logic aside (namely that there is absolutely no connection between the precedent and antecedent sentences, but we'll let that slide) the fact that at least $140 billion has been removed from consumers' pockets YTD on an annualized basis (0.9% of GDP per $10 oil price increase), and has offset all the benefits from the payroll tax extension and then some, is not only irrelevant, but is apparently good news. Ignore that retail sales are abysmal for 3 months running, consumer spending has plunged and has already cost the US economy 0.3% in Q1 GDP, and all this happened even before the oil price surge, not to mention and European inflation is already above expectations on record Brent in Euros. All that matters is consumer confidence which is based on media "arguments" such as the one being deconstructed.

   2. "Equity prices have risen in lockstep with oil's advance. When the two rise together, it usually indicates a broad-based economic expansion."

Translation - Reuters appears to have forgotten those long ago days of, oh, 2011, when equity prices and oil rose in lockstep too.

Then everything came crashing down. And no, it does not indicate a broad-based economic expansion, although first-year journalism grads are excused for thinking that (if not so-called 'strategists' from Deutsche Bank) - what it does indicate is an exponentially rising central bank balance sheet which is seeping into and inflating asset prices across the board, in the process sowing even more seeds of runaway inflation when the velocity of money finally picks up.

   3. "The world's factories are churning out goods at a faster pace, a key indication of the economy's strength, meaning it is in better shape to handle a supply shock from Iran than a year ago."

Translation - ignore consistent sub-50 prints from Europe, a once again sliding Chinese economy, and a US Manufacturing ISM which was just barely above the lowest Wall Street expectation. Also ignore an abysmal Baltic Dry Index, and now sliding rail index. Just focus on the fact that the "world factories" are supposedly churning out goods at a faster pace, in some magical universe. Perhaps global channel stuffing, ala GM is considered an indication of the "economy's strength" - we are just a little more skeptical, and think it is a "key indication" that the economy is about to take the Chevy Volt out to pasture courtesy of a massive inventory glut.

   4. "We think that crude oil prices have risen more because of improving sentiment regarding global growth than because of geopolitical risk concerns," Deutsche Bank told clients."

Translation - Speaking of Deutsche Bank, here is the "The Trinity of Bull." Nuf said.

   5. "A sterner test will be whether consumers can absorb the higher costs at the gasoline pump, since their spending accounts for about two-thirds of all economic activity in developed economies. And that will depend upon wage gains."

Translation - There's myth. And then there is the truth is that in order to pad his reelection campaign, Obama has forced wage gains to be annihilated as proven yesterday, and even though the US economy has supposedly added 1.9 million people in the past 12 months, the aggregate tax withholdings - the most realistic indication of cash flow - are lower than a year ago, meaning that the low wage job additions have come at the expense of high wage losses. In other words: quantity of jobs up, quality of jobs way down. But how cares about details.

   6. "A warm winter and a 30 percent plunge over the past three months in prices for natural gas, the fuel used to heat most American homes, have cut the average household energy bill. And more people have jobs today, providing more of a cushion to absorb costlier gasoline."

Translation - a warmer than average winter has done nothing but pull consumption forward. As Goldman showed on Friday, this one-time climatic aberration will now result in a drag on the economy, as warmed weather unfortunately did not help money to grow on trees any faster.

   7. "The U.S. jobs report for February due out on Friday is expected to show 210,000 new jobs were added outside the farm sector, the third month in a row of gains above 200,000."

Translation - It is quite possible that adjusted, birth-death'ed jobs, pro forma of a labor force participation collapse will come in great. Or whether we will have another record surge in part-time workers? In fact if the LFP rate is under 58%, America will have a negative unemployment rate! The only question is just how many millions in "vapor" jobs will have to be added to the real number (2.9 million in January) to make the US economy appear to be growing on part-time fumes, 7 months ahead of the US breaching it debt ceiling again.

   8.  "Inflationary pressures would complicate the role of central banks, possibly quashing prospects for further monetary support for the recovery."

Translation - Wait, so recent journalism grads do know about the linkage between inflation and central bank balance sheets. But wait, why need monetary support? Isn't this whole article premised on the fact that the economy is in a sustainable recovery? Oh who cares...

But the best is Reuters uncontested conclusion: "But for now, rising oil prices largely are a growth story."



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djsmps's picture

I just posted in the article below about the most bizarre CNBC article ever:

he most totally bizarre article I've ever seen on CNBC.  LET'S ALL PARTY FOR HIGHER GAS PRICES!\

Tyler Durden's picture

If it's CNBC, it would be not only understandable but accepted. Alas they are syndicating a Reuters article, which is supposed to exhibit at least some amount of rationality.

kito's picture

"what good fortune for governments that the people do not think".........


economics1996's picture

Herbert Hoover though high oil prices were the path to prosperity.  He did everything in his power to ensure consumers paid as much as possible.

hedgeless_horseman's picture



We could sure use a man

like Herbert Hoover again.

Didn't need a welfare state;

Everybody pulled his weight.

Gee, our old La Salle ran great.

Those were the days!'s picture

Can we work in a line about no free condoms for thirty year old law school sluts?

Conrad Murray's picture

One day her children's CIAbook accounts will get flooded with comments along the lines of:

- "Your mom was such a slut she needed over $1,000/yr for condoms"
- "Your mom was such a poor skank, she used some of the condoms she spent $1,000/yr on as bubblegum. I guess that's why you're here today"

tmosley's picture

I think they'll more likely say "you can't even get a single condom for $1000, what's the big deal?"

fockewulf190's picture

I'm waiting for the "Foodstamps Stimulating Consumer Demand" story. You just know it's coming.

KickIce's picture

I believe Pelosi has already done this with unemployment.

Conrad Murray's picture

Pelosi put it out in October of 2010:

For every dollar a person receives in food stamps, Pelosi said that $1.79 is put back into the economy. The U.S. Department of Agriculture cites an even higher figure of $1.84

TheTmfreak's picture

"But how cares about details." You mean "Who" cares about details?

They say the devil is in the details right?


Yes We Can. But Lets Not.'s picture

FWIW, condoms are already essentially free, selling for 9 cents per, a dozen for a buck at the dollar store.

Saro's picture

How much at the second-hand store?

The Big Ching-aso's picture



"How many fingers, Winston?"

Michael's picture

If you want to get perfectly technical about the national debt, that 15.5 trillion in debt belongs to The Corporation of the United States of America, not the American people.

We the people protected ourselves from a runaway federal government and its un-sustainable buildup of debt by passing  The Act of 1871, making the Federal government a corporation unto itself, thus absolving the non-corporate entity's, sovereign people of the USA, from being responsible to pay the Federal corporate debt.

This short film explains a lot about it;

UNITED STATES is a Corporation - There are Two Constitutions - Sovereignty

smb12321's picture

"Awesome" used to mean inspiring fear.  Decimate, gay,momentarily have all changed meanings.  The point is - while this law may have accomplished what you claim, it has zero effect on current policies. No 19th century law will allow 21st century folks to escape the debt.

(Actually it would make a good Dirk Pitt novel - those in which an obscure paper givens Switzerland control of Russia or China owns Indiana).

Revert_Back_to_1792_Act's picture

From the Declaration of Independence:

Emphasis Mine:

..."For abolishing the free system of English laws in a neighbouring province, establishing therein an arbitrary government, and enlarging it's BOUNDARIES so as to render it at once an example and fit insturment for introuducing the same absolute rule into these colonies"...

Boundaries are a very interesting subject to study, Notice how the word is used in this article...(also references a corporation).

Also Jefferson has something to say about Corporations owning land in this opinion.


Unprepared's picture

In statistics, there is something called implicit factor or lurking variable that I think the author of this article never heard of.


I hearby call the Bernank the "Lurking Variable"

Cadavre's picture

I hearby call the Bernank the "Lurking Variable"

Maybe not so much a variable as a fixed constant. Despite the "what if-ing" lame stream does every time the Bernank lifts her skirt to speak", the Bernank's moves are as predictable as a starved hound in a of dumpster fermenting spoiled meet. So are his contemporaries at the ECB. E-COLI appetizers followed by blood sharts.

Here's the shtick that will sink us into a depression beyond anything we can imagine. It has already been executed. The so called die has been set. We got about 180 days before we are form tent city choruses and pine songs like "Those were the days", as we wait for the tender sweet child meat spewed from loins of Wall Street and DC Boss Hogs, slow roasts on our spits.

It is so obvious and to be sure ZH has been drilling this info home and it went right over over my head. Then littles bits and pieces from other sources help fit it all together.

1) The EZ Bailout is not limited to just the PIIGS.

2) EZ countries get bailout cash by sailing high yield (junk) bonds to EZ banks

3) EZ Banks buy the the high yield junk bailout bonds with 0% loans from the ECB (we're talking two digit spreads between the cost of buying the junk bailout bonds and the yields offered by bailout bonds - looks too good to be true and - in this case - that is the case!).

4) The ECB is not buying bailout bonds bonds, but it is guaranteeing the bonds banks purchased with 0 percent loans offered at the ECB's "cash for junkers" windows. THE ECB IS GUARANTEEING COLLATERAL FOR THE LOANS IT MADE - just like the FED in the US - where can I get a loan like that?.

6) The ECB claims it ain't printing EUR tokens used to by the junk paper - but even a 3 day old brown clod floating on a kitty litter carpet in Tabby's pee-pee / poo-poo box blows milk out its  nose when it hears the auto-replay that same old same old song and dance.

The junk paper is worthless. It won't be any more redeemable than the UST in Chinese and Japanese Vaults. The ECB will admit to gross print omission and fess up (maybe an AL KADA clerk will be held responsible). Confession is good for the soul - but is is even better because [THEN] the dark - pool counterfeiting will the be heralded as the only thing that can save the EZ and can move out of the closet.

The operative words are unsustainable, inevitable, irrefutable, irreversible downward spiral and banker tenderloin kabob buffets at tent cities all across the planet..

SP 400 - overly optimistic if you ask me.







Bobbyrib's picture

"Herbert Hoover though high oil prices were the path to prosperity.  He did everything in his power to ensure consumers paid as much as possible."


They were...for his kind of people.


Soaring energy prices are a good thing only if you hate low energy prices.....

SumSUN's picture

I'm pretty sure sheep hate soaring energy prices.

FlyoverCountrySchmuck's picture

"I'm pretty sure sheep hate soaring energy prices."

It makes the shears more expensive to operate..

Van Halen's picture

Or if you're an Obama-protecting JournOList.

Bobbyrib's picture

IMHO, it's mostly speculators. Obama and Bernanke definitely have to share some of the blame too though.

johnnynaps's picture

They are good for energy corporation shareholders who are worth more in fiat than the general public.

Falkor's picture

These buggers want us to buy in here.. naa that ain't happening! Look for your fools somewhere else.

Taint Boil's picture



Well ... don't forget Fox.


Bill O'Reilly is Misinforming Americans About Oil Supplies

The Oil Drum is full brainiacs (Makes ZeroHedge comments look like the Romper Room) but notice how all the comments immediately dismiss Fox as a joke and not to be taken seriously.

Go figure ... Fox News makes you stupid.


Taint Boil's picture



ROFL, looks like I am going to beat MillionDollarBonus_ on the down arrows ....... maybe I'll beat Trav7777,,,

The Oil Drum is loaded with Ph.D's ... 

CPL's picture

MSM trolls, they all showed up over the summer.  MillionDollar bonus is a flagship of moron's in action but he's here, it'll take about a year to convert him with strange things called facts, math and news.

Zero hedge does two things very well.


Deliver news that is untwisted and usually pretty funny.

Remove those nasty blinders that traders have put on themselves.

trav7777's picture

naw, you can't beat me...your statement on TOD is correct.  People don't like to hear that because it makes the message there a lot harder to ignore.

Flakmeister's picture

The background, experience and education level of the editors is very impressive, n'est ce pas?

Never realized that HeadingOut was Professor Emeritus...

tmosley's picture

What other group of fully discredited idiots has a high number of PhDs?


Flakmeister's picture

Based on the results on display, one discredited group of PhDs must be your university professors...  

Big difference between an Economics Ph.D. and one in Geology.... but you might not be aware of that....

tmosley's picture

Your geologists apparently can't think of anything but geology, and that is why they all think everyone is going to die next Thursday.

IE their premise is wrong.

Flakmeister's picture

Is that really the best you can do?

You used to almost add something of value here, you have slipped a loooong way...

Hell, MDB at least adds comedic relief...

clawfoot tub's picture

Two questions:

Who owns Reuters?

What makes Reuters trustworthy?

Hugo Chavez's picture

Probably some joos right? Dont they dominate media and banking considering their demographic percentage?

Arthor Bearing's picture

Reuters is supposed to be a front-line fact reporter similar to AP, not mainly known for its opinon pieces. This article shows why it's probably best they don't cross that line often! But Reuters is huge so anyone behind them is definitely elite, CFR etc etc

vato poco's picture

One other Reuters question: Is there any way to short those dumbshits?

BeetleBailey's picture

I've read Reuters over the years. I don't know that answers to your questions, but I do want to know where I go to re-claim many of the minutes I spent reading their claptrap. Please update this thread when and if you do find out, so I can file a complaint.

DavidC's picture

Reuters is owned by Thomson Financial, a Canadian company. It is now known as Thomson Reuters.


Crab Cake's picture

Yeah... about the rationality thing from msm sources, not so much. I have a rule of thumb I find helpful, if they don't cover Bilderberg/Trilateral then they are surely in deep with tptb. It all goes to the Rockefeller quote about we couldnt have gotten here w/o the help of.... If they don't cover the underbelly then I assume propaganda, and must be dissuaded of that notion, from the get go. In fact I open most msm content asking myself what do they want me to believe and why.

FlyoverCountrySchmuck's picture

Funny that....

I'm old enough to remember when the Magic Swauking Box in the living room told me, night after night, that high gas prices were the fault of the "EVIL OIL WHORES IN THE WHITE HOUSE!!!", with NBC Evening News doing live reports from the stations with the highest-priced stations across the nation.

Isn't it funny how things change when a Democrat is in charge?

No more stories about the evils of high gas prices,

No more stories about the homeless,

No more stories about High Food Prices,

No more stories about Food kitchens, and women's shelters

No more nightly update on the number of Soldiers killed in the wars (just ONCE on NBC Evening News since election night, 2008!)

No more stories about how bad debts and deficits are, yada, yada

Just IMAGINE all those Pulitzer Prize stories awaiting our Obama-worshipping media when a Republican becomes President again!