I’m sorry, I don’t see the US or any other country being substantially less energy intensive, even if there is a recession. So if it does tank to 83 or 84, I would think that’s a buying opportunity.
Probably true bchad, but I worry about how much of the oil price was speculative. But I broadly agree, oil is great lt
CFA_Halifax Wrote: ------------------------------------------------------- > KJH Wrote: > -------------------------------------------------- > ----- > > Do I dare ask what oil will do today? > > likely down quite hard. The recession fears which > have been confirmed by the fed will have serious > downward pressure, plus alot of liquidity hungry > speculators will likely dump their profitable > contracts. > > The LT dollar fears will be tempered today with > the flight to treasuries Can you bear with me? My understanding is that oil prices and market performance are inverse. Likewise with the rate cut, the dollar valuation would be harmed substantially resulting in a higher price.
I put this in the “doubling down” thread, but the rate cut thread is getting more press (and is just as relevant), so I’ll put the post here: ---- So I primarily have gold and energy exposure, and have tried to get market neutral otherwise (though am not as close to neutral as I had wanted). So now I’m trying to think through: do I stay exposed, because the dollar is going to pot again, or do I sell, because recession means that demand will drop for commodities in general? Or is there an options strategy that fits?
KJH Wrote: ------------------------------------------------------- > CFA_Halifax Wrote: > -------------------------------------------------- > ----- > > KJH Wrote: > > > -------------------------------------------------- > > > ----- > > > Do I dare ask what oil will do today? > > > > likely down quite hard. The recession fears > which > > have been confirmed by the fed will have > serious > > downward pressure, plus alot of liquidity > hungry > > speculators will likely dump their profitable > > contracts. > > > > The LT dollar fears will be tempered today > with > > the flight to treasuries > > > Can you bear with me? My understanding is that > oil prices and market performance are inverse. > Likewise with the rate cut, the dollar valuation > would be harmed substantially resulting in a > higher price. Yes, because higher oil acts as a drag on the economy, hence equity prices. When equities go down, oil doesn’t necessarily go up. Oil is the X variable, Equity prices the Y
On oil, there are competing drivers. 1) If the dollar tanks, it takes more dollars to buy oil, so the price goes up. If you are a US investor, that isn’t necessarily bad. If your primary currency is not the dollar, it doesn’t help, because the oil price increase is neutralized by the exchange rate change. 2) If there is a recession, economic activity slows down and not as much energy is required to run things. However, I think that energy consumption just isn’t all that flexible. 3) There is a substitution effect also. Recession means less disposable income for consumers and less free cash flow for companies. This means that some companies will substitute other energy sources, and reduce demand for oil until the price drops to accommodate. Trying to figure out which one will dominate is a challenge.
CFA_Halifax Wrote: ------------------------------------------------------- > The fed has just admitted we have a big enough > problem that they can’t wait 8 days to cut rates. > Only Guns, God and Gold can save us now indeed. Many of us think Greenspan caused 2 recessions by his failure to cut rates enough, and bernanke seems to have gone to the other extreme at the moment, although again he is reacting after the event.
The Storko called the Cut.
First crude future down 73 cents to 89.78 as of right now. Not a huge move honestly.
Nope. This wasn’t at all what I expected for oil or equities. I really can’t believe the market is buying this crap and pretending yesterday didn’t happen.
CFA_Halifax Wrote: > Only Guns, God and Gold can save us now second only to “faith, family, freedom” as an election slogan