This Market is About Fast Money, Not Fundamentals


Author Larry Berman

Posted: 12 June 2012 re-posted from etfcm

There is no fundamental reason for WTI to have a $5 range yesterday from peak to trough. It reminds us that this market is not about fundamentals, it’s about fast money guys punting billions of dollars around front running event risk. We do know that the US is pumping out more oil today than it did in 1998 thanks entirely to Bakkan. This is causing quite a problem for the Canadian exporters, and unlikely to clear up anytime soon.

The TSX energy sector could have notable earnings impairment for an extended period with nat gas prices cratering once again, which might explain why XEG has been behaving so badly for the past year. Do not expect that to clear up anytime soon, so look for bounces to be limited to about $16.50 in the coming months, barring a big QE bazooka that gets world commodity prices juiced up again (but not until things get much worse first).

The TSX is still constrained in our prime economic scenario for the next few quarters though short-term sentiment is an issue.

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: