Prices of equities did not back off on account of record oil prices, as I thought would be the case. To compound that, Talking Heads Tuesday were discussing the prospects of $200 oil, which I think is irresponsible chatter or paid infomercial – take your pick.
Whatever anybody says that the US economy can grow through further spikes in crude oil prices, I disagree. In effect the tax rebates in the US will just go to paying the higher cost at the fuel pumps for a few months. Who wins by that other than the already booming oil companies?
I think we are all agreed at this point that Fed pumping is what is keeping the equity market afloat in the face of calamity in the Financials and record high fuel costs. But the Fed money is simply more debt, which is supposed to be temporary. Can we trust the Fed statements that these transactions with the commercial and investment banks (loans and dubious asset-backed paper purchases) will one day be reversed? We already have evidence of being misled.
So the bottom line is that many traders are waiting out the present speculation in the equity market. Yes, it’s hard on the psyche when central banks can simply print money and use it to boost the fortunes of the bankers. But, there is no need to act imprudently.
What it does mean is that bankers have made day-trading in vogue. That’s not good because the majority of the public are not equipped to trade against the best brains and computers of the largest banks.
At least this blog is trying to fight back for the People.