OVERVIEW
The weekend ended in disappointment as the G-20 meeting yielded very little concrete solutions to the financial crisis that is gripping the world.  The G-20 nations did issue a statement basically blaming investors who “sought higher yields without an adequate appreciation of the risks.”  A couple of directives from the meeting were a call for financial institutions to keep more capital and an increase in surveillance of these firms.  As far as the global recession was concerned, the G-20 basically left it up to the individual central banks to solve the problems.

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ENERGIES
Recessionary news is keeping pressure on the energy complex.  The lack of consumer demand for gasoline and industrial demand for fuel is likely to continue to put downside pressure on crude oil over the near term.  News that OPEC is not going to cut production until December 17 is also putting pressure on the markets.  Traders had been speculating that OPEC was going to announce another production for the end of November.

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I recently observed the pendulum clock on my fireplace mantel and noticed the similarities between the recent price action in the gold market and the back and forth motion of the pendulum. Both have pivots, mid points, full and half swings, time and length. Pendulum swings in the markets are usually based on opinions. When talking about opinions, the famous author Arthur Schopenhauer stated it best: “Opinion is like a pendulum and obeys the same law. If it goes past the centre of gravity on one side, it must go a like distance on the other; and it is only after a certain time that it finds the true point at which it can remain at rest.” The latter part of this statement is of interest since gold has seemingly found its comfort zone.

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While yesterday’s word of the day was aversion, today the word for investors was value.  Global equity traders snapped up cheap shares of energy-related shares on Thursday triggering a huge short-covering rally in stocks which whet the risk appetite of a few traders.  I will not say that the appetite for risk is strong at this time as that will not be known until the trend in equities actually changes to up, but nonetheless, even bearish traders have to eat sometime.  Let’s hope that today’s rally was just an appetizer before the main meal.

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