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Afternoon Note

Tightrope Many Investors Are Walking

By Charles Payne, CEO & Principal Analyst
7/10/2019 1:01 PM

On June 7, 2019, US crude oil inventories, not counting the strategic reserve, peaked at 485,470,000 barrels after months of massive builds.  Today, we learned inventories have declined for the fourth straight week, this time by nine million barrels. The news sent West Texas Intermediate toward $60.00; a key resistance point.  

Interestingly, as oil rallied, equity markets stalled and began to lose altitude quickly.   I’m not sure if there was something said during Powell’s testimony that might have formed that air pocket. But if the notion is that there is a clear correlation between petroleum demand and economic strength, maybe that drawdown spooked investors.

This gets back the tightrope many investors are walking with respect to rooting for a solid, but not-too-strong, economy.  Of course, Jay Powell has been answering questions about the economy and other issues, including those covering the woes of poor and middle-class Americans.   Powell has exuded confidence the Fed has the tools to deal with the next recession, and he says he wouldn’t leave the job even if requested to by President Trump.

I’m surprised how many questions were asked about the proposed Facebook (FB) crypto currency “Libra,” although one Congressman got it confused with LIBOR.  I thought Powell’s answers seriously jeopardizes the offering unless Facebook can adequately answer how they would “know their customer” and counter money laundering.   Bitcoin has come down, although Facebook shares are holding slim gains.

Gold is moving higher. 

Looks like the market has regained its footing, and now investors are awaiting the remaining testimony, and they will even more information from the FOMC minutes.

As for the investors watching the Fed and monetary policy, Jay Powell made it clear fiscal policy is more impactful.  This is something all investors should keep in mind.

Because we have become a net exporter of oil seems USA domestic consumers should have significantly reduced prices at the pump.

J. T. on 7/10/2019 6:25:19 PM

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