oil only matters to the market when the price of it is going down.... otherwise $200 oil is "priced in" $$$
Equities dont care about Crude at these prices because it was undervalued for decades. You can spout any funnymental or ecocrapical data at me all you want. The mkt knows all....and i`ll follow it.
We are experiencing a pulsing wave of global asset inflation ... all assets rise over time, until one or more asset class forms a bubble and pops. Oftentime it takes a spike to prick a bubble - in that sense Goldman's argument that it will take a 'superspike' in oil to get some real change makes a lot of sense. Thus, my argument that we won't see equities get serious about oil until we see that superspike. What might bring this on is falling OPEC production. Just finished "Twilight in the Desert." A must read for all in the markets.
i believe your statistic as it correlates to the DIRECT byproducts of oil...like gas.. but keep in mind...as stated about about menufacturing in metals...OIL IS IN EVERYTHING. and required for almost every aspect of out everyday life. take this scenario... 1. you wake up and hit the alarm...that clock was made from oil byproducts. 2. you get in the shower..turn on the hot water. The water is heated by either electricity or gas...both require oil and gas to be made or extracted. 3. put your breakfast in the microwave, the breakfast was delivered by a truck in some capacity, and the microwave was manufactured using oil and plastics. start to get it? look around.....EVERYTHING is dependent on oil... it takes 2 barrels to make and manufacture the computer we are typing on! your house, your car, your pencil, you paper....all have some type of contact with the oil industry directly or indirectly. When it doubles in price...then the cost of goods and materials go up...hence, our good pal inflation. i think there IS something to worry about....but i am just being a grumpy old bear again!
The market is ignoring oil? Says who? Just because it hasn't reacted the way you THINK it should? Oil at historic highs and you think the market has ignored it. Brilliant. P.S. This is addressed to the op, btw.
"The market" can and will continue to ignore the high cost of oil until "it" decides not to ignore it anymore. Then "it" wont.
BTW, I was not trying to be a smart ass with my post here, but simply to make a point. Not many of us are smart enough to figure out why the market pays attention to one thing and not another, and while it is ALWAYS a good idea to ask yourself why, its not a good idea to get so caught up in it that you either make egotistical trades (They are so stupid, I am right the market is wrong) or become paralized. My own thoughts are that the market is ignoring it because it does not think high energy prices are here to stay, that there is a new oil economy and things are different this time. (sound familiar). Technology always finds a way and I suspect that 15/20 years from now when we look back this will be but a blip on the radar. Brandon
Good lively discussion folks! Thanks for all your fine opinions. This is ET at it's best. Of all the ideas submitted, this one really made me think.