Crude Oil's Implosion
"I think we could see $38 dollar oil within twelve to twenty four months..........I realize I'm likely considered a loon by posting this but..........."
That was taken from a post on this blog back in September of 2006. Well, I was wrong. It was a little more than twenty four months. But, then this economic cycle lasted substantially longer than the economic realities. I am extremely confident the peak in U.S. equities and oil would have been May of 2006 were it not for exogenous factors including all of the money coursing through the global economy. Anyhow, how's that Peak Oil theory working for you? On an inflation adjusted basis, gasoline is now the cheapest it has been in my life time. At least it is in Missouri. Long before oil peaked we wrote that we were awash in oil. More so than at any time since the generational lows seen in 1998.
There is substantial support for oil at $38 (why that data point was chosen as a possible down side target on here back in late 2006) and equities are trying to hold the 2003 lows. We might finally be entering a period of price stabilization for stocks that could last months or could even see a sustained rally develop within the next month or two. The fundamentals show no signs of stabilizing yet so my position is relatively neutral here. Yet, the massive burden of high energy prices has been lifted from the American economy and the impact is much more substantial than any stimulus package both in psychological and real dollar terms. And, the Fed's policies are having some impact, even if temporarily. This environment isn't even close to resolving itself and stocks are NOT cheap but money, not fundamentals, moves markets -a major reason why bears are often caught off guard. The bulls only need a reprieve from the selling pressure to ram stocks higher for some period of time. I am still concerned shorter term about a drop from 600-724 on the S&P given there appears to be tremendous Wall Street enthusiasm building for a rally but it might be getting close to time to take a break from being bearish on stocks and other assets for a while.
In the mean time enjoy gasoline at $1.29 a gallon. ( 90 cents before gas taxes) And, enjoy the Peak Oil books, blogs and prognosticators. A lot of people made a fortune off of people lapping up this notion - even hypothesizing we were at peak commodities. More like peak insanity.
That was taken from a post on this blog back in September of 2006. Well, I was wrong. It was a little more than twenty four months. But, then this economic cycle lasted substantially longer than the economic realities. I am extremely confident the peak in U.S. equities and oil would have been May of 2006 were it not for exogenous factors including all of the money coursing through the global economy. Anyhow, how's that Peak Oil theory working for you? On an inflation adjusted basis, gasoline is now the cheapest it has been in my life time. At least it is in Missouri. Long before oil peaked we wrote that we were awash in oil. More so than at any time since the generational lows seen in 1998.
There is substantial support for oil at $38 (why that data point was chosen as a possible down side target on here back in late 2006) and equities are trying to hold the 2003 lows. We might finally be entering a period of price stabilization for stocks that could last months or could even see a sustained rally develop within the next month or two. The fundamentals show no signs of stabilizing yet so my position is relatively neutral here. Yet, the massive burden of high energy prices has been lifted from the American economy and the impact is much more substantial than any stimulus package both in psychological and real dollar terms. And, the Fed's policies are having some impact, even if temporarily. This environment isn't even close to resolving itself and stocks are NOT cheap but money, not fundamentals, moves markets -a major reason why bears are often caught off guard. The bulls only need a reprieve from the selling pressure to ram stocks higher for some period of time. I am still concerned shorter term about a drop from 600-724 on the S&P given there appears to be tremendous Wall Street enthusiasm building for a rally but it might be getting close to time to take a break from being bearish on stocks and other assets for a while.
In the mean time enjoy gasoline at $1.29 a gallon. ( 90 cents before gas taxes) And, enjoy the Peak Oil books, blogs and prognosticators. A lot of people made a fortune off of people lapping up this notion - even hypothesizing we were at peak commodities. More like peak insanity.
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