EYE OF THE BEHOLDEN

A falling dollar and expectations that crude supplies will have fallen when EIA  reports tomorrow, unleashed buyers yesterday. Upward momentum is still vibrant with prices topping out in the early going at 82.47. The Institute for Supply Management’s manufacturing gauge dropped less than expected, as well.

The sentiment pendulum has shifted again. Structural economic changes have not occurred to accompany them, rather it suggests that conditions may not be that bad and positioning to anticipate Armageddon was either too early or miscalculated altogether. Treasury Secretary Geithner's op-ed piece in the New York Times today says as much.

Still the conditions that brought this sentiment about in the first place, were structural in nature and are not going to go away anytime soon, particularly in Europe. Even Secretary Giethner admits that it will be a length process to bring the economy back to its full potential.

Oil prices ran higher, on the expectation that improving economic conditions will bring about energy demand growth and that too is a process. Financial markets can clearly run ahead of economic reality, as has been demonstrated time after time. Ergo, beware a "blow off top."

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