The Federal Open Market Committee left interest rates unchanged this week. No real surprise with the decision. What concerned investors was whether any indication would be given as to when rates might begin to rise. The Fed made clear that they have no intention of raising interest rates any time soon. This leaves the perfect trading environment intact for hedge funds and the big houses to continue borrowing money cheaply, investing in security of choice and earning steady trading profits.
The easy money policy of the Fed can be very frustrating to energy traders focusing solely on fundamentals. The fundamentals of over supplied inventories for crude, gas and distillates continue week after week, month after month, year after year. And yet those continually trying to short the market, with the exception of natural gas traders, have found themselves with negative P&L ratios.
In the long run, all commodities eventually return to obey the laws of supply and demand. However, in the process of returning to the real world, over supplied liquidity will always feed a bull market.
Eventually the Fed will quit feeding the bull by raising interest rates, but until then, buying on the dips, selling on the rips, will continue to turn cheap money into easy trading profits.
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