"Oil prices last year was an under-appreciated cause of the recession, this year’s collapse for crude prices has been an under-appreciated source of stimulus." - Francisco Blanch, commodity strategist at Bank of America Merrill Lynch

SHOOT: Crude is the key to our fortunes and our failures going forward.

clipped from www.ft.com Francisco Blanch, commodity strategist at Bank of America Merrill Lynch, says that just as the rise in oil prices last year was an under-appreciated cause of the recession, this year’s collapse for crude prices has been an under-appreciated source of stimulus. “If oil prices go up, the choice for central banks will be to throw economies [in the developed world] back into recession or to let headline inflation trend higher,” warns Mr Blanch. Earnings growth looks likely to remain subdued, with the headline measure expected to ease from 2.3 per cent in May to 2.2 per cent. The consensus forecast is for second quarter eurozone GDP to contract 0.4 per cent after falling 2.5 per cent in the first quarter. This would take the year-on-year decline from 4.9 per cent to 5 per cent. China will release industrial production data for July on Wednesday with the governments stimulus package expected to lead to a big boost in output.