Oil inventories take back seat to global economy

Quote of the Day

Make use of time, let not advantage slip.

William Shakespeare

Not that much of anything changed today but the selling in most risk asset markets seems to have subsided with some pockets of gains in commodities and equities as oil traded in positive territory for most of the trading session. G7 had their conference call today with nothing out of the group other than to say that they are watching how things are progressing in Europe in particular. As I have discussed on numerous occasions all of these markets are still very oversold and many participants are looking for any catalyst that could result in a long awaited short covering rally.

As I detailed in yesterday's newsletter the month of June is the month of events with lots of opportunity for any of these events to send the market moving strongly in either direction. The two main events the markets are looking at very closely is what evolves in Europe with Greece's June 17 election as well as what new plan (if any) comes out of the EU to handle the evolving sovereign debt issues around the region with most eyes focused on Spain. The second main issue is whether or not the US Federal Reserve will embark on a new version of quantitative easing...QE3 at their end of June FOMC meeting. Chairman Bernanke is testifying before Congress on Thursday and the market will be parsing his every word to see if he signals his intention before the meeting.

These are major market moving events with the markets starting to slowly price in the outcome...especially the possibility of a QE3 out of the US basis the way gold has been trading since the horrible jobs number last Friday and the fact that the selling has lost some of its momentum in the oil and equity markets. I also think that the EU in conjunction with the IMF and ECB will come up with something to kick the can down the road as I also believe the Greeks will elect the party that is pro bailout. I think this is the view that is slowly permeating around the markets and any deviation from this view will result in quick and sudden selling of most all risk assets. None of this is a sure thing in either direction with uncertainty going forward about the only certainty for the markets.

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