Rate Increase Speculation And Oil Dominate Year End Fundamental Picture

With very little else happening to give the equities fundamental direction, crude stepped in and influenced the U.S. and European bourses.

Crude prices were down. West Texas Intermediate and Brent North were both down and are selling for about the same amount per barrel. They are at parity and trading in tandem.

Part of oil’s difficulty today was that the U.S. dollar was firmer, if not setting the world on fire. The other and perhaps more important part was an unexpected jump in U.S. inventories by 2.9 million barrels. A decline had been expected.

Many players have also begun their prognostication concerning the next – if there is to be one – fed rate hike. That’s made some investors shy of jumping into the chilly waters of January.

Besides the end-of-year slalom that equities normally slash through, another bit of uncertainty looms.

We will be hearing about December employment figures come the first of next week and that should tell us how much working people were affected by what seems to be shaping up as a big retail sales month.

We will also begin to be barraged with Q4 corporate earnings in early January.

Some investors may sit on their hands until some of the data is issued and analyzed.

Gold fell today and is headed for its third yearly loss in a row. As we have said, fundamentally we are looking for a good reason to buy gold.

Silver fell as well today as some contracts are simply getting washed out of the system.

Platinum, which had been showing signs of lie, too a knock down blow today, falling over 1.90%. Palladium was also hit hard.

Quietly, the Nikkei index is looking to end the year up more than 9.00%.

Short-term drag on markets at the moment? Puerto Rico. The U.S. Commonwealth is set to default on two of the thirteen components that comprise its proportionally large debt.

We’re finding a hard reason for the justification that Puerto Rico ought to be allowed to default. A billion dollars amidst the wild-stallion spending elsewhere in the U.S. budget is a drop in the proverbial bucket.

Why make a small “country” suffer when it is attached to such a large, rich country. We think the U.S. should back the debt, restructure it and put in new safeguards.

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Wishing you as always, good trading,