JAPAN’S FINANCE MINISTER SUZUKI: WE ARE KEEPING A CLOSE EYE ON THE FX MARKET WITH A SENSE OF URGENCY.
The stock market closed lower Wednesday as the Fed’s Beige Book was not enough to change investors’ concerns about the economy.
The Nasdaq closed 0.9% lower, leading the major indexes downward. The Dow fell 0.4% and the S&P 500 lost 0.7%. The small-cap Russell 2000 dropped 1.8%.
The yield on the benchmark 10-year Treasury note rose 11 basis points to 4.12%. The 2-year yield rose 10 basis points to 4.546% today, a new 52-week high. It’s the highest yield since Aug. 8, 2007.
Housing starts tumbled 8.1% in September from the previous month. That reading marked a big slowdown from the 13.7% increase in August and was below forecasts for a 6.7% decline.
XHB was down almost 5.0% as a result.
I’ve been saying energy will rally in the final quarter of the year and so far so good. XLE was +3.0% today and oil service OIH, rallied 5.6%.
It seems energy “stocks” are leading crude, the actual commodity. Stay tuned for this. Could be a year-end run-up.
The oil market has successfully tested the lower bound. Not only are we seeing US oil demand now confirm that a bottom has taken place, but we are also seeing 1) OPEC+ defend $80/bbl with a production cut and 2) the US announcing a refill of the SPR around $70/bbl.
Politicians can masquerade the oil market with SPR releases, but the reality is straightforward. US oil inventories are draining and draining at an alarming clip.
XLE
OIH
I love energy but trust little else for now.
Credit …..
Total credit worldwide is $350 trillion, but you have derivatives pushing $2 quadrillion.
The real economy runs on credit. Everything you look at, everything you touch runs on credit.
So, once credit freezes up, it’s completely game over. The derivatives cannot perform. They have to pull the plug because, mathematically, the debt cannot be paid.
I’m thinking there are serious systemic problems brewing in many places, so although we are bouncing, there is too much Black Swan potential.
Too many idiots running the show from all points on the globe.