Monday, December 8, 2014

Crude Reality?

For some time I have contended that the reduction in energy costs that we are seeing with the collapse in crude and natural gas prices over the past few months is good for the economies of the world. Good because low energy costs make more things possible. Good because businesses have lower costs of operation, and good due to the money most people will save and spend otherwise.

But from a market perspective a continued decline in energy prices is problematic from the predictive aspect. If the world economy is going to do better on low energy prices, demand for energy will pick up. But if "the market" keeps marking down the price of energy, at some point one must ask if "the market" actually thinks that economies are on the mend, or not?

Perhaps demand is not expected to increase.  Perhaps business profits will not continue to increase.

A sharp drop in the averages today.
Gold catching a bid.

Is the Grinch coming?

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