Oil price effect on equities

[AyeYo]

I really don't know a thing about marco issues like this, so I figured I'd ask some people that might. With cracking higher today, it makes me wonder... at what point to do people say, "Hmm... I think this is going to start hindering any hope of a recovery. Maybe the future isn't so bright."

I just don't understand it. It seems like high priced oil is going to slaughter the US consumer, but no one seems to care. Green shoots!! Bid oil higher!!

And is it me or is the price of retail gasoline higher vs. the price of oil than it was last year. We've been in the $70-75 range on oil, and gas (87) around here is $2.90/gal. I could have sworn we didn't hit that high of a gas price until $80-90+ oil last year, I could be wrong.

 

[Martinghoul]

I share your puzzlement...

As to the gasoline vs oil, you appear to be correct. If you look at crack spreads in the mkt, we were roughly at 2.5 at the end of Aug08, whereas we're at arnd 5.1 now (I'm using the second contract).

 

[Kassz007]

Invest in oil and you will no longer complain about higher gas prices. Why is it going up? Who cares. But it is. So buy and be happy. Just make sure to be diligent and get out at the first sign of a collapse (IF a collapse happens).

 

[college_trad3r]

Oil is not getting more expensive

Dollar is getting weaker, so oil priced in dollar seems more expensive

 

[Ivanovich]

In case you're trying to figure out a correlation with equities, please first consult the following table:

Cheat sheet: reacting to data and market releases

weak data = Fed ease, stocks rally

consensus data = lower volatility, stocks rally

strong data = economy strengthening, stocks rally

bank loses $4bln = bad news out of the way, stocks rally

oil spikes = great for energy companies, stocks rally

oil drops = great for the consumer, stocks rally

dollar plunges = great for multinationals, stocks rally

dollar spikes = lowers inflation, stocks rally

inflation spikes = will inflate all assets, stocks rally

inflation drops = improves earnings quality, stocks rally

From: http://bigpicture.typepad.com/comments/2007/10/market-cheat-sh.html

 

[AyeYo]

Quote from Ivanovich:

In case you're trying to figure out a correlation with equities, please first consult the following table:

Cheat sheet: reacting to data and market releases

weak data = Fed ease, stocks rally

consensus data = lower volatility, stocks rally

strong data = economy strengthening, stocks rally

bank loses $4bln = bad news out of the way, stocks rally

oil spikes = great for energy companies, stocks rally

oil drops = great for the consumer, stocks rally

dollar plunges = great for multinationals, stocks rally

dollar spikes = lowers inflation, stocks rally

inflation spikes = will inflate all assets, stocks rally

inflation drops = improves earnings quality, stocks rally

From: http://bigpicture.typepad.com/comments/2007/10/market-cheat-sh.html

lol winner! Thanks for the morning laugh.


As for getting in on oil. Don't you think it's just a tad late at this point? Even missed all the decent pull backs on USO.

 

[Kassz007]

Quote from AyeYo:

lol winner! Thanks for the morning laugh.


As for getting in on oil. Don't you think it's just a tad late at this point? Even missed all the decent pull backs on USO.

BP gives you about a 6.5% cushion if you are concerned about falling prices.

 

[achilles28]

Anticipated inflation is bullish for most asset classes. Commodities & equities, especially. Real estate, not so much after the banking crisis. Although, we could see a paper resurgence if borrowing resumes.