America Is In Denial

The Standard & Poor’s 500 Index has staged the steepest four-day surge since 1933 this week, as a rally in oil prices lifted energy shares and investors speculated President-elect Barack Obama’s economic team are a cross between Stephen Hawking and David Blaine.

The S&P 500 climbed 3.5 percent to 887.68 Wednesday, the index has now surged 18 percent since dropping to an 11-year low on Nov. 20.

Benchmark indexes erased earlier declines after Obama picked former Federal Reserve Chairman Paul Volcker to head an economic advisory board and said he will implement a plan to bolster growth on “day one.” This week, Obama also named Fed Bank of New York chief Tim Geithner as Treasury secretary and former Harvard University President Lawrence Summers as White House economic director.

Crude oil rose after China, the world’s second-biggest energy-consuming country, cut interest rates by the most in 11 years to bolster economic growth. Crude increased $3.67 to settle at $54.44 a barrel.

Crude oil supplies rose a staggering 7.28 million barrels to 320.8 million barrels last week, according to the U.S Energy Department. It was the ninth-straight increase, the longest stretch since April 2005.

Astonishingly, the markets brushed off the data (inventories were only expected to rise 1 million barrels), as the U.S. slapped each other on the back about what a great guy Obama was, and how he was going to sort everything out in January, before going home to get the turkey ready.

I think that it may take until Monday for reality to kick in.