Ron,
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''There is a reasonably strong chance that it could invite the Federal Reserve to take back one of the
reductions in interest rates that it made last year,'' he said.
And as the Wall Street saying goes: Bull markets don't die of old age. They are slaughtered by Fed
rate hikes.>>
Even if oil prices go up, the Fed still won't "have" to tighten. Real rates are extraordinarily high right now. The bond market itself will take care of inflation problems by going lower, making it more expensive for people to get financing. Stocks will probably tank for awhile as well, a la last summer/fall, but Uncle Al (or someone) will be there to help if things start to look too bad.
That sounds complacent (the Mother of all Evil) even to me, but I still don't see the end of this economy without a serious "external" (i.e., political) disruption, and oil prices rising because of an agreement among producers (as opposed to, for example because of a drawn-out war in the mideast, or serious terrorist sabotage of several important pipelines at once) doesn't qualify. They'll stick to what they agreed to for awhile, then someone will cheat, because they "need" the money. Or Iraq will suddenly be able to export more oil for "humanitarian" purposes. Or demand will ease because they cut too much off. The capacity is there, it will get used one way or another. |
