Quick Take: Stocks Mixed, Oil Climbs
NEW YORK (TheStreet) -- With the Federal Reserve minutes looming, equities are mixed while oil remains strong. Ben Willis of Albert Fried & Company talked about oil and the markets with TheStreet's Debra Borchardt.
While the U.S. economy is growing slowly and China is showing apparent weakness, why is oil continuing to climb? The answer is easy, according to Willis: speculation. As money continues to leave other commodities such as precious metals, it is very abundant in crude oil despite a record amount of supply.
He added that crude doesn't trade based off supply and demand, making it the key beneficiary of increased money supply and speculation. This is obvious since supply is obviously outpacing demand. Yet, the price refuses to decline. This is good for some industries such as railroads, which have seen increased business transporting crude.
However, the stock action will likely remain light as investors wait for the announcement from the Fed at 2 p.m. EDT.
Willis said that most investors will only be asking one question during the Fed minutes: When is tapering likely to begin? Based on conversations with analysts and others he said September is most likely when the Fed will look to trim its purchases of mortgage-backed securities and Treasury bonds.
"Other than that, I don't think we can expect much more," he concluded.
-- Written by Bret Kenwell in Petoskey, Mich.
Bret Kenwell currently writes, blogs and also contributes to Robert Weinstein's Weekly Options Newsletter. Focuses on short-to-intermediate-term trading opportunities that can be exposed via options. He prefers to use debit trades on momentum setups and credit trades on support/resistance setups. He also focuses on building long-term wealth by searching for consistent, quality dividend paying companies and long-term growth companies. He considers himself the surfer, not the wave, in relation to the market and himself. He has no allegiance to either the bull side or the bear side.