Shocking

Miraculously, the Fed did not change their tune at all…again. Nor did they speculate in any way, shape or form about enacting further easing anytime within the immediate vicinity of “now”.

Not that that will stop the rumors of further intervention in the slightest. It’s been quiet since the FOMC announcement, but I’ll give it another hour before the die hards are running back through the streets, throwing flaming garbage at people’s doorstep.

More importantly for me, oil corrected hard this morning and has been bouncing around a slight selloff, thanks to a mingling of two developments.

The first was all estimates of oil supplies getting lit up like a Kuwait field at the hands of Hussein, as a 4 million inventory build come through the line. That makes a 22 million barrel build of inventory in the last month.

The second is a report that Iran’s envoy is Moscow has been saying Iran would be willing to hit the brakes on the nuclear program to stop the EU from putting the embargo in place. With regards to this, I doubt it. I’m sure the envoy did say that, but the instant it comes time for the Iranian clerics to actually come to the table, they definitely will back out. They built a regime on appearing in a position of total power. How would that look, if “God’s servants” got forced into submission by “the evil ones”?

Still, there was never going to be a war with Iran. Maybe at best a decimation of Iran masquerading as a war, Iraq and Afghanistan style. One where America loses a few thousand people, pisses away a few billion of borrowed money, and generally crushes their entire civilization. That’s not a secret, so the Iranians aren’t going to do shit, and we know it.

Basically, oil markets are moments (in market time, naturally) away from massive implosion. Risk premium from a supply disruption is far overpriced, and thanks to manufacturing slowing across the entire planet, our inventories continue to swell excessively.

When this realization finally dawns on the crowd, the kinds of estimates for oil prices being ventured by Goldman Sachs and Friends are going to be a distant joke. Of course, $GS will have unloaded plenty of their own stock on Gonzo by then.