Although I haven't calculated the R squared for S&P 500 and $WTIC, I assume that it is very high. Since March 2009, oil has joined other asset classes, such as US equities, in the meltup in risk assets. So if oil is a joke over 80, then the S&P 500 is a joke over 1120.
There both jokes due to the fact the economy is being pumped up by stimulus and liquidity. All they are doing is creating new asset bubbles to push the economy along, again this will create great problems in the future. It will be ignored until it cannot be ignored any longer and then will witness another collapse in the economy like we always do due to greed and lack of control.
KEY COMMODITIES *OIL 81.88 +1.67 +2.08% As long as equities advance oil will as well, however the breaking point in my opinion is sooner than later, you cannot have equities in rally mode while oil skyrockets to $100+ a barrel, all the out of work people will not enjoy paying $4.00 a gallon. Remember all those millions of people out of work aren't making free money in the stock market like the big guys are.
I agree with most of what you're saying. The big question is what oil price is sufficiently high to kill off (1) stockmarket rally and (2) economic activity. I think the answer to #1 is "over $90", which means there's nothing stopping the stockmarket from going up at least 10% from today's levels. In the big scheme of things, it's important to note that oil rallied more than 100% from its lows of late 2008 and early 2009, despite the economic contraction in the US and other countries. To me this suggests that the we are experiencing the "bumpy plateau" on the global oil production curve, and that peak oil may become more obvious in years to come.
*OIL 84.75 +0.99 +1.18% New high for 2010!!!!! I cant wait for $3.50 a gallon!!!!!!!!!!! The driving season hasn't even started, getting ready for $100 oil, inflation here we come.
The reason we did not see gas over $3/gal is not because oil is not expensive bu because refinery margins are all time low
sounds about right. there is nothing normal about whats gone on in the last 12 months. Bernanke doesnt know what he is doing. one way or another our debts need to come down.
. The only way to go back is to have the public gone on another out of control borrowing binge. Essentially in order to survive we have to go back to what caused the collapse