Good Evening!
Well the fireworks came a little early this holiday weekend. everything I was worried about this morning pretty much came to fruition.
I knew if those oil inventories were light, oil was going to the moon. As you can see here, this is exactly what happened.
Combine this along with a warning of a potential Bankruptcy of an American icon(GM) and you set yourself up for one hell of an ugly day.
As I was explaining yesterday, its not going to take much for stocks to dive with the new sell on any bad news psychology that now dominates the market.
Tomorrow is a short session but it will be action packed!
The jobs number comes out and the ECB votes on interest rates. Oil could go to the moon if the the ECB raises rates and warns that there may be more to come.
You could also see the dollar crash on a strong ECB statement on inflation. We are right at the all time lows versus the Euro as it stands.
If the jobs report is bad, its going to put furthur pressure on the dollar because the speculators and currency traders know the Fed will be hesitant to raise rates as the economy weakens.
The Fed almost never raises rates heading into a weak economy. Oil could see $150 tomorrow if the ECB and jobs reports both are negative on the dollar.
A crash on the dollar would force the Fed to take action and raise rates. The fun would really begin if this scenario comes to fruition. It will be time to buy a gun and some gold if we start raising rates heading into this deep recession.
If the jobs number is over 100,000 then you could see a big selloff. Who wants to hold stocks over a long weekend when a shoe could drop at any second?
Long day today. Sorry for the short update. I will have a more detailed update tomorrow. There is a lot going on behind the scenes. The Lehman situation is getting very interesting. The US/Euro 10 year spread is also widening. I will explain why this is dangerous tomorrow.
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