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Show of hands? How many more days can oil rise before something seriously breaks again?
It took $140+ to kill the global economy last time around. I don't think it will take anywhere near that this time around.
Friday: No Major Economic Releases
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[image: Mortgage Rates] Note: Mortgage rates are from MortgageNewsDaily.com
and are for top tier scenarios.
Friday:
• At 10:00 AM ET, *University of Michig...
5 hours ago
11 comments:
Stag,
I just read the following AP headline on Yahoo! Finance:
Stocks Turn Positive as Oil Soars.
Reminds me of "Mission Accomplished".
It also reminds me of the when the wall street eCONommists said that Hurricane Katrina would "good" for our GDP.
At some point, you'd think we would be questioning the notion that "higher" is always better.
Stag,
I just noticed that oil has quantitatively (dis)eased to > $65/bbl. Ouch! And silver has quantitatively eased to over $15/oz. Both on falling end user demand. Keep up the good work Brownie (Bennie).
mab,
"Stocks Turn Positive as Oil Soars."
That's the very headline that inspired my post! No joke!
mab,
"I just noticed that oil has quantitatively (dis)eased to > $65/bbl. Ouch! And silver has quantitatively eased to over $15/oz."
I hear that. However, how is it possible that I can still buy a 6.4 oz. Crest Toothpaste for 99 cents on sale at Bartell Drugs?
The rich has the money to hoard but main street doesn't? That's my theory and I'm sticking to it. Of course, if the global economy's main street doesn't have the money then perhaps inflation might never be a big problem (except for those who wish to drive gold plated Hummers to work).
Pumping money in all directions isn't going to solve that problem any time soon.
This is yet another instance of "knowing" something versus "inferring" something. The talk of higher oil meaning a recovering economy (not unlike the rise in the ^TNX yield meaning the same) means that someone "knows" that higher oil = better economy. The problem is that they are "inferring" that relationship. Say a gunshot victim comes into the ER an presents with massive blood loss and severe low blood pressure. The doctor may give the patient some coagulants and also try to directly stem the bleeding. The blood pressure monitor suddenly spikes up, and the "inference" is that all will be well, but the doctor knows he has to check for blood clots which will achieve the exact same result (and usually death). Maybe higher oil (priced in dollars) means the economy is wundaful (typo on purpose) or maybe something is very wrong with the dollar. Any takers?
PS: on fire again Mark! Love it
GYSC,
My take is that we're entering round #2 of oil euphoria and it will rise until something breaks.
I'm not all that worried about the dollar right now. I would be worried if the rest of the globe was doing well though.
I think China is in big trouble. They've captured the very best of our 1930s Great Depression by taking on all that manufacturing and I actually believe that it has shaken them. Millions of college grads not finding work isn't helping their situation.
I was an early heckler of the Chinese growth story, for what it is worth. Here's what I wrote in 2007.
"Savvy Chinese Know Exactly When Bubble Will Burst!"
http://illusionofprosperity.blogspot.com/2007/11/savvy-chinese-know-exactly-when-bubble.html
"We've finally found a sure thing that simply can't lose. May the Olympics do far better for the Chinese than the Olympics did for the Americans!"
...
"That's a relief! People haven't even lost their jobs and foreclosures are up. See! It isn't even remotely the same. I'd also like to point out that much of our manufacturing base is apparently in China these days. Therefore, if manufacturing plummets, it isn't even our problem. It is their problem. Hurray!"
blog tag Mark, your it!!
notice time stamp!
GYSC,
I'm not seeing a difference. Perhaps I blew open a wormhole though when I went back to re-heckle those savvy Chinese stock investors!
"Zhu Qiuxia, for one, is not worried about a bubble. The power grid worker has put all her savings into shares, and is planning to keep them there until the Olympic Games next year, when she plans to put her original principal back in the bank and continue to speculate with the profit she's made."
Correction. I meant to say I am seeing a difference! I must be experiencing heat stroke from mowing the lawn. Yeah, that's it.
The rich has the money to hoard but main street doesn't? That's my theory and I'm sticking to it,
For every "rich" person holding money as an asset, there are scores of debtors to whom that money is a liability. The durability of the rich's money is very much based on the government at this point. Free markets - hahaha!
Anyway, I'm not that worried about inflation for numerous reasons (at least for a few years). I just don't see inflation taking hold with our truckload of household debt not to mention stagnant wages/employment.
Oil & commodities may get bid up, but I tend to think that will just force many Americans to cut back in other areas (especially now that credit is tighter). That mirrors my personal situation and response.
In his latest piece, Hussman sees the potential for general prices to double within the decade. I see more potential for a Japan like outcome. But here's the thing. Either way, TIPs look like a decent value against the alternatives. Right now, Inflation expectations are tame and real yields are reasonable given the landscape and uncertainty(~1%/5yr, >2%/30yr). The assumptions of real growth and inflation reflected by TIPs look reasonable to me. And if they are accurate, I don't see stock returns being very exciting over the next ten years. Corporate bonds look better but have huge inflation risk.
Just thinking out loud (or digitally).
mab,
"Just thinking out loud (or digitally)."
You should be to the crying out loud stage by now! For crying out loud, I am!
I'm still up from last night. I'm clearly giddy. That one really works for me, lol.
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