Surprise! Surprise! US economic quarterly growth slowed to 2.4%. If that news was not bad enough the US government also released three year economic data yesterday showing the recession was much worse than previously reported. Not the kind of input that would inspire energy bulls, yet the market took the news in stride with all components of the energy complex closing higher.
Equity investors also paid little attention to the rearward looking data. July turned out to be the be best month of the year for equity investors.
Bond traders, however, are a bit more hesitant to jump on the better future ahead band wagon. Bonds are still ridiculously expensive, with the 2 year hitting historically low percentage yields.
So who is the smart guy in the room? Perhaps they all are. Short term bond yields have an anchor courtesy of the Fed's low to no interest rate target. Still deftly afraid of deflating hard assets and poor job creation.
Equity traders get the fact that the US consumer are currently retrenched, but are looking ahead to continued world wide growth driving large cap stocks, which will eventually lead to these companies hiring more to meet growing product demand.
Energy traders are seeing increased crude imports and higher refinery run rates in China, giving them confidence demand will continue to eat away at record supply levels. US gas demand has risen to pre-recession levels, also contributing to bullish bets on refined product futures.
We are living in a unique era that has little precedence to base historical trading pattern ideas. Each sector is trading on its own fundamentals. Being a smart trader mean focusing on your sector and not trying to correlate trading positions with other sector traders.
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