WASHINGTON, August 29, 2012 – Another day, another lack of dollars. In the market that is. Wall Street is increasingly in pre-Labor Day cryo-freeze mode, and it’s likely to stay there unless Ben Bernanke and the Fed come through with some QE3 hype during the Chairman’s Jackson Hole remarks scheduled for this Friday. Yawn.
Meanwhile, in spite of Hurricane/Tropical Storm Isaac, which made landfall in Louisiana last night, oil prices are actually down this morning. This may seem counterintuitive as the storm has shuttered, at least temporarily, a significant amount of Gulf oil rigs, not to mention the large amount of coastal refineries that have either battened down the hatches or have contingency plans to do so.
The reason for the price drop, however, is quite simple: oil inventories were significantly up, which generally puts downside pressure on prices. That plus the fact that Isaac, thus far, doesn’t seem to have permanently damaged any oil facilities, reverses perceived supply and demand issues for now, pending a post-Labor Day refocus on the danger of an aggressive, nearly-nuclear Iran. As for today: yawn.
News sources pointed out the obvious this morning, namely that Iran’s Revolutionary Guards are providing significant assistance to the murderous Alawite minority-led Assad regime in a desperate attempt to hold onto Iran’s overweening and damaging influence in the internal affairs of a largely Sunni-dominated Syria.
But the attention of the HFTs and algos this morning focused mainly on the oil surplus plus seemingly nifty housing price numbers. And, since HFTs and algos seem to be about the only “playahs” this week—with actual trading humans mostly occupying beaches and watering holes up and down the East Coast—the market continues to levitate and sink on either jaunty or damaging headlines. Big yawn.
The Republican Convention, now in session, doesn’t seem to be influencing things too much. But that’s to be expected. The HFT machinery is programmed largely by rich, instinctively Democrat-supporting institutions whose wealthy-as-Croesus owners fear a Republican victory in November might lead to fiscal responsibility—a clear and present risk to their usual obscene bonus checks. In the short run, they might be actually right.
But this week, at least, that kind of news is both too spooky and too esoteric to attract the machines and/or the lefties who write the headlines. So the Convention may continue to be a trading non-event.
In any case, things are so boring this week that we’re going to take one, perhaps two days off from this column. No point in wasting your time if we have to keep repeating the same thing.
So we’ll be off tomorrow for sure, and perhaps Friday as well, although we might surface with a late version of this column if Bernanke surprises with some genuinely bullish news. Maybe. Right now, we’re getting tired of all this yawning.
Disclaimer: The author of this column maintains several active trading and investment portfolios and owns residential and investment real estate.
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