Other than Russia meddling militarily in the Ukraine, and the same sending its long-range bombers closer to the USA, the hotspots of the world are as they were yesterday, seeming to not affect the market. Thus, the market is behaving as it should – a bit forward, a bit less back.
As to other “events” in the world that can move the market, well, there are few at the moment, save for two that could have an impact on the market today. The first is a positive development from the Land of the Rising Sun.
- Japanese stocks scaled seven-year highs on Wednesday on growing expectations Prime Minister Shinzo Abe will postpone a planned sales tax hike to avoid damaging a fragile recovery.
The second is a negative/positive from the land of market corruption, the place where greedy folk twist the market to gain personal or institutional advantage.
- Regulators in the U.S., Britain and Switzerland ordered six banks to pay about $4.3 billion in the first wave of penalties since authorities began a global probe into the rigging of key foreign-exchange benchmarks last year.
This is good news in that at least some of the bad guys were caught and punished. It is bad news if you trade Forex. Heck, it is bad news even if you don’t trade Forex because it is one more reminder that the market is a dangerous place, fraught with unseen forces that move it in ways that are counter-productive to the hard work we do to figure it out.
All markets are this way, moved by unseen forces. We think we know the market, from what information we can gather, but underneath the surface, there always lurks the unseen and subtle forces at work to maneuver the market.
For example, in the oil market we have OPEC and the US now fighting for market share, and in that fight, Saudi Arabia has chosen to cut prices rather than cut production.
- Brent crude futures, used to price more than half the world’s oil, traded near a four-year low today on speculation that OPEC’s biggest members will refrain from paring output to drain a global surplus.
The question is whether this is really true, or, put another way, is it a political ruse perpetrated to throw off the market? Here it is …
- OPEC said Saudi Arabia led declines in the group’s oil output last month, weeks before its 12 members meet to decide whether to trim a global supply glut that drove crude prices into a bear market.
Saudi Arabia says it won’t cut production, yet, it is cutting production, even as the report from OPEC says,
- Manufacturing indicators from the U.S., Japan, China and Germany show that the economic recovery is progressing, according to the organization.
This translation, of course, is that the current supply glut will be taken up by the increase in global economic activity, or so one would assume. Yet, from what I can tell, the media is reporting that Japan, Germany, and China are weakening economically. So, which is it?
The Saudis are cutting production because a) the global economy is weak, or b) it is cutting production because the supply is too much. I guess it doesn’t really matter because, in the end, the Saudis are both cutting production and cutting prices, which paves the way for a bear market in oil, which means the speculators will bet the price is going down, which then adds pressure to the downward trend.
So, then, maybe, the OPEC report is all about suggesting any decline in production is temporary, meaning, the global economy is not weak; it is improving, thus the demand for oil will soon increase, thus eating up the glut.
Wow! Just writing about this report from OPEC is convoluting. Maybe it is all about an attempt to stabile the price of oil, even in the face of a possible OPEC revolt and lessening demand for oil.
- OPEC won’t cut its collective crude output at its Nov. 27 conference in Vienna, and global oil prices will stabilize once the surplus is absorbed by the market, Kuwait Oil Minister Ali Al-Omair said in Abu Dhabi Nov. 10.
I guess my point is this – forget what OPEC says. The US is producing more oil than ever. The US Congress will probably kill the export ban on US oil in place since the 1970s, creating a bigger fight for market share, and, perhaps more importantly, the US is actually using less oil and the trend is down.
Trade in the day; invest in your life …
