A three dollar drop today (that is HUGE, by the way) is a nice precursor to settling crude prices. That is not supposed to happen on the heels of a howling winter storm in the midwest, so we should see some good downward action in crude over the next few months. Any way you cut it, this is great for our economy. Oil prices are reflected in everything we do. The wild card in all this is still China, with its voracious appetite for oil.
China may be in for an ugly choice soon, though, as many traders are claiming we are letting the dollar slide for many reasons, but not least is to force China to revalue the yuan. If that happens, the humongous trade deficit will shrink, (the ostensible goal, if you listen to some people) and China's appetite for foreign goods (of ALL kinds) will shrink. Not the least of these would be gold, which has enjoyed a nice run. If we do hit a slump in crude that looks like it is going down to the 35 dollar range, I am betting that shorting gold is a good side bet.
Final note: Anyone who thinks that the political process here in the USA and the perceived stability (broadly speaking) in Iraq has no influence on the price of crude is an idiot. A good trade is always to go long the US Marines. Fallujah seems to be a big hit in settling the fears down re: Iraq.
If I know so much, why ain't I rich?
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