Markets Lift for the Day on the Strength of Energy

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In what is likely a premature move higher in energy prices energy stocks moved the market sharply higher the last hour of trading today. At 2 pm the DJIA was flat on the day after being down over 100 points early on–and then did a giant lift in the last hour–based on mostly nothing. Energy prices were up–based on nothing and the Greek Finance Minister came out with what is likely just another junky debt deal.  But regardless the markets move based on the hot air. No doubt (at least in our minds) that movements in markets are being driven by thieves–again we simply realize that is what is happening and move ahead with whatever our plans are for the year.

Crude oil (West Texas) traded up toward $50/barrel after hitting a low of $43.76 just last Thursday. This move is based upon nothing other than we have speculators ‘guessing’ we have seen lows–not sure why they would think that–maybe we have and maybe we haven’t. There remains no fundamental data to show prices should move up here.  Crude inventories havemoved up 5, 10 and 9 million barrels over the course of the last 3 weeks and there is no data showing that production has dropped off yet. Maybe the only real data is that rig counts are coming off substantially as we knew they would–North Dakota is down to 145 as of today–down from a high of just over 200 2 years ago. Since we are not speculators were will not be participating in those markets, but for those that are nimble there is fun to be had as the large swings provide plenty of volatility to do some option playing.

The 10 year bond just yawned today and fell off a tiny bit.  We are not too far away now from the low of 1.40ish% from 2 1/2 years ago–if you use oil as a proxy for the global economy these rates are getting near a bottom. But just like energy prices there is no global evidence of an improving economy–so we will simply have to await further data.

Economic releases for the week include crude oil inventories on Wednesday and of course the important employment data on Friday (with ADP on Wednesday). Unfortunately we have 4-5 Fed folks speaking this week where each will do their best to try to be important–we say ‘just shut up!‘.

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