What can I say, other than the market thinks this is the time to retrace, to rebalance, so, let’s get on with it.
- U.S. stocks are falling, extending the week’s decline for the Standard & Poor’s 500 Index, as energy shares renewed a selloff after OPEC cut its forecast on 2015 demand for crude.
- A U.S. exchange-traded fund tracking the Greece’s’ equities has had a record streak of redemptions, losing money for four straight months. The wagers proved well-timed: the benchmark ASE Index plunged the most since 1987 yesterday after Prime Minister Antonis Samaras opened the door for the ascent of an anti-austerity party in Greek politics.
Of the above two “reasons” given for today’s market decline, the latter is, well, irrelevant and the former is, well, antithetical to a market decline. In fact, it is, arguably, the most important reason the market will move past this recent rebalancing and move into a boom phase soon after 2015 begins.
WTI crude is dropping another 4% (give or take) today, which brings that per barrel cost to right around $61. Brent crude is below $65, and the together are headed for breaking the $60 line, which will push the US median gas price toward $2.50 and foreign gas prices lower as well. It could not come at a more opportune time.
Although Iran’s issues right now are political, the country does control a hefty portion of the world’s oil and they cannot get much of that onto the market right now because of sanctions. Now, imagine if this big drop in the price of oil pushes the country to capitulate on the nuclear issue, that it signs on to curbing its nuclear production and sanctions are lifted. What do you think Iran will do?
Yup! I knew you would know the answer. Iran will dump as much oil as fast as it can onto the world market, thus, right again, driving the price down even further.
As I have written recently, US consumer and US business confidence (Germany as well) is on the rise, as are US employment and US wages. With all of the oil politics and the good economic data, it is fast becoming a “perfect storm” for an economic boom in the US, which will filter out to the world.
Anyway, as I wrote yesterday, let’s see what tomorrow brings in terms of economic reports. It might well be that much of what we have lost in the last three days gets recaptured if the reports are positive. As always, we will see …
Trade in the day; invest in your life …
