The market moved up nicely today, as investors continue to play a Whac-a-mole version with the cute little creatures replaced by not-so-cute members of the Federal Reserve Board.
As the debate intensifies over whether the Fed is raising interest rates or not, the U.S. energy sector, already under pressure, is about to feel a whole lot more of it.
It makes no difference if the Fed raises rates in June, July, or September (nothing happens on this front in August). And it makes no difference whether we end up with only one or two more hikes this year.
Any way you look at it, a wide swath of U.S. oil and natural gas producers are going to take it on the chin. Bankruptcies, mergers and acquisitions, and asset sales one step ahead of the sheriff will be increasing.
Oils short reprieve should continue its downward slide and link back up with the it's comrades in the commodity clique.
In May, there has been a clear divergence between Oil and other commodities. But believe that Oil is the errant outlier, helped by deep but temporary supply outages in Canada and Nigeria, and is more likely to catch down to other commodities going forward rather than the other way round. look for Oil gyrations as short-term heavy volatility, within a long-term downward trend.
The fed raises rates , China devalues, pop goes the weasel
