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02-13-2019 10:33 AM
correlation is not necessarily causation but there's something there.
The sharp and out of the blue sell off in the stock market and the CRB* that began in October perfectly coincided with oil prices finally rolling over.
That was sort of a weird one because oil stocks had been building for quite a while but the market kept focusing (or so it was said) on future reduced output due to the return of Iranian sanctions, even as it became abundantly clear that so many waivers were being issued that the impact on supply was nil.
Stock market, and oil, have found some footing with the Venezuela sanctions.
Dunno, as far as how Risk On for Almost Everything seems to be dictated by the oil price.
Certainly a huge amount of our massive subprime, junk bond debt is related to the fracking boom. It is merely a slow bleed Ponzi at $70 but a catastrophe in the waiting under $50. That's a fact but still doesn't explain it for me adequately.
Anyway, I'm guessing that oil has found some footing here, at least for a while, which is supportive.
Another related note- The Fed on hold. Da Boyz on Wall Street managed to scare Mom and Dad by holding their breath and turning blue. Fed on hold, and also supportive.
But an economy that is running at or near full employment and can't sustain a 10yr yield at 3% has something wrong with it.
Since I'm sort of free associating here I think I'll consider that in the next post.
02-13-2019 11:20 AM
The age of ultra-low rates arrived as a policy response to the NASDAQ collapse in 2000* and a fairly honest conversation about the need to replace that asset bubble with another- housing.
Might have not even turned out so catastrophically had deregulation not resulted in a massive white collar crime wave.
Anyway, that was an important ingredient in the best farm boom in a century although the means by which it actually got turbocharged is weird. The Bush Admin's relentless drive to devalue the dollar led to massive short dollar/long commodity carry trades and most importantly, drove oil to $150 eventually. I regard the confluence with the MTBE debacle and the need for the gubmint to pretend to be doing something about "energy" as completely coincidental.
*If you look at a very broad average, all the stock market has been able to do since then is eke out an annual return of a 4.5% return (with dividends) since then. And that's with the lowest rates since the 30s.
Question: what were the two best years of annual return over that period? Answer- 2009 and 2013.