Today the markets started well up from the pre-market trading. But, wouldn't you know it? We ended down even further today! The futurists were getting optimistic a little too early after the down-200 day, and gave everyone else false hope, like fool's gold.
I'll admit that fears on the core CPI did influence yesterday's selloff, but it was already going to be a down day. The bad news only made a bad situation worse. Even oil was down, although it is up today. I subcribe to the view that markets this year will be down in the first half, but will rise high during the second half.
Oil was down because, as people say, demand is also down from the high costs. But Energy analyst Victor Shum of Purvin & Gertz in Singapore said it remained too early to tell if demand had indeed been significantly hurt by high oil prices, which are still about 40 percent higher than a year ago. The fluctuating price of energy (oil) is determined by those commodity traders who buy and sell oil all day long. The words "Iran" and "nuclear" were mentioned in the same sentence, and traders began buying it all up in speculation. Now, we all pay the price for media hype. There is no standoff, there is no invasion, and the selloff (profit taking) begins. It sickens me how we must pay for speculation, not facts. The FUTURE price of oil is up, so the refineries raise their CURRENT prices in anticipation. Perfectly legal, and we pay for other goods this way, whether it's gasoline or a can of beans on the shelf.
Last Friday, there was a pipeline explosion in Nigeria, a country fraught with insurgents who have been attacking oil facilities. Did the price of oil shoot up in an orgy of speculative fear-mongering? No. The excuse? The explosion was caused by "vandals" attempting to steal oil, not "militants" attempting to disrupt supply. The supply was still broken, but the source will affect the price of oil? Our prices were affected when they blew up part of an offshore platform, taking out 20% of Nigeria's capacity, it supplies about 20% of US oil imports.