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By Carlos Guillen

After a very encouraging trading session yesterday, equity markets are hesitant to continue the nice up swing of the prior four trading days as investors suddenly refocus on all things Fed.

On other domestic economic items, the Commerce Department said today that U.S. wholesale inventories declined by 0.5 percent in May to $500.9 billion, compared with a revised 0.3 percent increase in April. During the same period, sales of wholesalers climbed 1.6 percent, while the inventory-to-sales ratio fell to 1.19 from 1.21. The small decline in inventories is a bit discouraging as this is an important component in gross domestic product (OTC:GDP). During the first quarter of this year, inventories added more than half a percentage point to GDP growth, which advanced at a 1.8 percent annual rate. As it stands, forecasts for second quarter GDP growth currently range below a 2.0 percent pace.

While the inventory decline was a bit concerning, investors are not likely to pay much attention to it, particularly in light of the fact that the minutes from Federal Open Market Committee meeting will be released at 2 P.M. Investors will be dissecting these notes in search for any signs of Fed tapering. While investors appear to have been looking past the possibility of the Fed winding down asset purchases lately, these minutes are just irresistible and are sure to reignite discussions of Fed actions or inactions. The interesting thing is that for the most part everyone on the Street already expects the Fed to begin tapering actions sooner rather than later, particularly after the stronger than expected employment report most recently, but nonetheless all eyes will be on those Fed minutes later today and will surely cause some wave action on stocks.

Back to Triple Digit Oil
By David Urani

Don't look now but oil is back above the $100 mark. Actually, it's now solidly above $100 at $105.73 today following a bullish inventory report. The EIA says crude oil inventories were down last week to 373.9 million barrels from 383.8 million the previous week, a surprisingly large draw. On one hand higher oil prices are somewhat of an endorsement of a global economy that really hasn't been very strong of late, particularly in the manufacturing sector. It's also interesting that it has been able get here in the face of the sharp spike in the dollar since mid-June on Federal Reserve speculation.

That said, the latest week's change in crude inventories, and much of the gains in the past week, are likely attributable to the unrest in Egypt. Of course, the Suez Canal is a major outlet for petroleum shipments and there are no guarantees that the waterway remains in operation.

Given that some of the movement may be temporary (assuming Egypt gets resolved) oil prices may not stay up here forever. Nevertheless, at this level it's one potential negative headwind on the global economy so long as it stays here.

Crude prices are up more than 2% today following the EIA report.