Investors Turned Off

The lead players Wednesday starred “Da Boyz” in the trading pits at the NYMEX crude oil futures.

There traders often play a game of posting offers only to withdraw them when someone tries to accept. In other words, they game the system.

Wednesday featured the release of crude oil weekly supply and inventory data. The data was, theoretically and momentarily, bullish since EIA Petroleum Status Report revealed a decline in inventories to -3.6 M bbls from 1.2 M bbls. Hmm, this was greeted with an initial rally in crude prices to over $12.00 (US0) only to see it close down nearly 1.00% near the lows of the day. The “run rate” which indicates demand from converting crude to products (gasoline and heating oil of example), but major players in the energy stock sector, (XOM, XLE and XOP), thought conditions were now ripe to do some buying and rallied the equity sector.

Wholesale Trade fell once again to -0.1% vs prior 0.2%. This is just another nail in economy’s coffin.

Investors’ wonder how long the Fed can maintain the fantasy that the economic growth is “solid” and that we’re near “full employment”. Their difficulty remains they’ve maintained “emergency monetary policies” too low (ZIRP) for too long (7 years) well after the recession ended. This was red meat provided to Wall Street allowing stocks to rally as stock buybacks continued to press stocks higher. And, according to Goldman Sacks the game will continue as noted below:

But now the Fed is in a bind of its own making.

They’ve overstayed their WS gift for too long.

With economic data weak, is now the time to raise interest rates, even by an itsy-bitsy amount? It’s hard to know but I think they’ll continue to experiment with other people’s money (us) by doing something unique next week. It will be part interest rate increase, perhaps more QE and a heavy dose of BS just because.