put a chart together that shows S&P in nominal terms, and S&P in real terms divided by crude price. This show's the dollar's (and its buying power) impact on the value of our stock market. Thought it might be interesting for you guys. What is interesting is how there was a sharp sharp falloff in the value of our stock market in oil terms when GW Bush took helm. The trend has been largely uninterrupted since then.
Here's some details. This is S&P by the way, which i consider a more accurate depiction of the broad stock market. Sep 2000 was the peak of the US market in crude terms. From Apr 2000 to Nov 2000, crude made a meteroic ascent from $25 to $35. As you may recall, this was also the same period where the bear market in stocks started. Crude price came down to track equities (but not moreso than equities) in the following year or two. Crude bottomed in Dec 01, shortly after sep 11 at $19.40 [monthly close]. Of course, due to the Greenspan liquidity injections, crude and economic growth clearly outpaced the stock market rebound. Dec 01 was the beginning of the crude bull, interestingly enough.
I don't know how tradeable this is. Just points to how the S&P is definitely not highly valued, and judging by the trend, may continue that way. Energy is holding the economy hostage.
Energy will break the economy, well maybe not I keep forgetting about the index futures and their magic overnight powers.
I find it fascinating that in oil terms, we've lost 5x off the S&P (not the nasdaq!! the s&p) since the bubble popping. [or even 3x if you leave out the most excessive froth period of the US equities boom) Or basically the stock market is worth nothing more than it was 20 yrs ago. So to all the bears: We already have a bear market. Its just a 'real' bear, not a 'notional' one (yet... although maybe it will formally be soon).
Is spy to spx as ny brent is to nigerian sweet crude? or, is nigerian sweet crude to ny brent as ES is to SPX? a riddle for the oracle....