Stocks, bonds are gold are all pointing lower this morning. Even most European markets are down. Oil is up slightly.
Last week I suggested that the equity market did not believe $55 oil could stick. A week later that might have changed. The market could be bumpy in here for the next few days. As its been for the last few years the market has a lot to figure out and this may mean some discomfort. As I recall, though, most of January was very uncomfortable and it seems like most people have already forgotten about it.
The point here is if we do in fact have an ugly couple of days it is just normal trading that should not in and of itself cause an emotional reaction.
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2 comments:
I'd be suspicious of any argument that says "$x oil" is unsustainable simply because of the US$ figure. As far as I can see, when you're looking at a chart of the dollar price of oil, what you're seeing is partly oil getting more expensive and partly dollars getting cheaper. $55 oil is EUR40 oil, which is expensive, but nothing like to far out of the general run of things. Another 15% devaluation of the US$/Euro would give us $55 oil, but leave the Euro price right back where it was in 2000/1.
best,
dsquared
thanks for the comment. my thoughts about $55 were short term in nature, apologies if that was not clear. I've touched on the idea of dollar weakness causing gold or oil to go up. For readers who may not be clear about this many of the worlds commodities are prices in US dollars. Everything else being equal when the dollar drops those commodities have to go up.
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