Oil will stabilize and lead to a Santa Claus rally, says independent strategist Peter Kenny. But he sees oil eventually heading much lower. Fred Katayama reports.
Choppy day on Wall Street following again following a sharp morning rally this Wednesday. How obvious makes sense of all this is Peter Kenny an independent market strategist and the news at any content there. Welcome back you know what's moving the markets this morning it is Willis spoiler again we thought we had good vibes the mergers. Lula well we did have good times this morning or whether it was the merger news or whether it was oil. Because we saw that ten consecutive week of inventory build. Broken by at this morning's EIA report says this petroleum status report. We got a a three million dollars of three main barrel surprise. In draw downs and that was very welcomed by the market because it. One of the principal drivers of market volatility in the in the last several days has been of course the news the cannibal I class Friday. Concerns over further or blog. In weak demand environment. That really drove down the energy sector really pounded crude. Broke forty has tradable would remain below forty today we saw a little bit of a balance in crude. And that was because of the top line inventory takedown. The problem is that that is still its number the second because the closer. Number the number there presents the closer. Connections to close to the consumer. Saw a bill of it's. Wise what was anticipated and that. Once again reignited fears of consumers. Tepid consumer demand so what does that say about investors that there chop it is very choppy and is lacking conviction. We haven't reached a point where in this this most recent downturn or now on day three of it. Where there is a value proposition that it investors cannot ignore we haven't we just don't see that yet. And frankly you know. It's not just the energy sector you know we've seen materials get pounded in conjunction with energy we've seen financials really early in artists well. So the market really has been in downdraft it was a largely triggered. I'll ask Thursday's action we saw in nine triumph Friday. But then it's been four days out of five lower and much of it is being driven by this concern over could petroleum. And consumer demand which are of course get relief they avenues that they do pot tops you take into account I had an hour we'll take it out and yeah. Yeah as oil thing. More downside risks that come oh definitely I mean even if we see some stabilization and oil here in the near near term. 3637. I mean think about 3637 of RO. I do think this gonna continue to mean significant institutional pressure on oil because the global demand. Landscape hasn't changed. And the saudis have made it clear that they're gonna get the price of oil to a point where they can start to build market here again and that means schools there. Would you stuff you still feel there's room for Santa Claus rally I'm still optimistic because I do think that in the near term near term. In the next week or two we were gonna seed oils stabilized. And I think that there is enough of a compelling argument for. Equities to see investors put money to work before the end of the year I do think that we could still seem more fire. Between now and the here and quickly your outlook for 2016. Outlook for 2016. I see earning key expansion the S&P 500. Of roughly 10% nine and a half 10%. I see GDP growth in the 3%. Button from three point 13 point 2% range and constructive on the market some constructive on the economy. And to keep in mind whatever goes whenever you see one thing going down there is something else going up to its benefit need airline to open up performers. It is helping consumers' discretionary spending. That there's a balancing act going on here I'm a net positive. Oil prices also has all thanks it. Thanks to Peter Kenny of canny commentary I'm Fred Katayama this is Reuters.