Do you ever feel as if you are in a rut, and you just cannot get out? Of course you do; everyone does, now and then. I do now, and it is not the first time I have felt this as I write. When I feel this way, I always wonder why. After all, I can write about anything in the market, so why do I sit here and feel what I am writing about is me in a rut?
Actually, the answer is not about me at all; it is about the market context, which, in my mind, is key to understanding market movement both short and long term. And market context always comes from the news, that ubiquitous force that drives not just the market but our thinking about so many things. So, back to my rut …
- U.S. stocks rose with European equities and Greek bonds on speculation that officials will reach a compromise on the country’s debt negotiations. American crude renewed a selloff on concerns of a supply glut.
Ain’t that just the way I said it would go? No, I am not thinking I am so smart; rather, I am thinking that these things are not nearly as complicated as both the breathless media and some “analysts” would have us believe. They need us to think we need them to tell us the way things are, so they make reality more complicated than it truly is.
Think about. What choices does Greece have? Stay or quit the Eurozone. To quit is to basically go bankrupt and to stay means it can ask and then hope for some mitigation in its commitment to restructure its economy. These are the only two choices it has, unless I am missing something. And just to make that point, it appears Greece has chosen the latter, which is the obvious choice, as opposed to bankruptcy.
Now, as to my rut …
- The oil market is slightly oversupplied, making another downward move possible in the first half before supply and demand balance in the last six months of the year, Ian Taylor, chief executive officer of Vitol Group, said Tuesday. There are no signs of slowing U.S. output even as the country’s drillers idle rigs, he said.
At some point, the debate over oil prices will diminish, meaning, it will be obvious that oil prices are destined to stay low for some time, perhaps forever. This does not mean there will not be a few voices screaming that oil prices will go up to $100 plus again, but, generally, all will understand that until the fundamental dynamics change, oil has no reason to go back to $100. Sure, it might bounce around a little between here and there …
- The United States will remain the world’s top source of oil supply growth up to 2020, even after the recent collapse in prices, the International Energy Agency said, defying expectations of a more dramatic slowdown in shale growth.
Again, the point of all this rut business around oil is that is such a key component in both the attitude and consumption of the US consumer. Strike that. I meant global consumer. So, the market context is this – Greece is not an issue and oil will remain low, which means the US/global consumer will have more money to spend, which means the market will see continued solid corporate earnings, which means the market will not have a fundamental reason to go down precipitously short or long term. In fact …
- Job openings in the U.S. rose to the highest level since 2001 as employers faced improving demand for their goods and services. The number of positions waiting to be filled in the U.S. increased by 181,000 to 5.03 million in December, the most since January the Labor Department reported Tuesday.
Fundamentally speaking, the above just about says it all, now doesn’t it?
Trade in the day; invest in your life …
