Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (74273)	11/17/2006 12:22:04 PM
From: SouthFloridaGuy	Respond to of 110194

US Stocks did not rally "huge" when oil rose, especially if you take out the oil sector which is a good part of the S&P500. US Equities were outperformed by foreign stocks, High Yield credit, Commodities. Until mid-summer, equities had been pressured by inflation and rising rates to combat it as well as post-bubble valuation deflation (happy, I used your favorite word). Interest Rate policy looks stable (for now), valuations are more benign, leverage is low, earnings do not look to fall off a cliff, and most importantly global liquidity is high. All paint a rosy scenario for stocks in the medium term and all corrections will be met with buyers.

To: mishedlo who wrote (74273)	11/17/2006 12:40:55 PM
From: forceOfHabit	Read Replies (3) \| Respond to of 110194

mish, Oil prices rose...here is a chart to prove it...Stocks rallied huge when oil rose and that chart above proves it. Granted. Stating the obvious. If oil was inversely correlated with the stock market that chart would not have happened. Thus it is silly to say that stocks rallied because oil fell. An imprecise, unjustified assertion. Over what time period are we talking (see below)? Are you making an unstated assumption that correlations can't be time dependent? In addition, correlation is not the same as causation, and the debate has been about the latter not the former (see below). The evidence supplied in your first sentence is about correlation. The conclusion in your second sentence is about causation. So your "conclusion" is simply an unjustified assertion. ...you may find periods where oil appears to be correlated and periods where it is not. Stating the obvious. Stocks did not rally for 3 years because oil was headed up then rally for 3 more months because it was headed down. The notion is silly. Indeed it is, which is probably why the only place it has appeared so far is in your post. Let's recap, Crimson Ghost says: Almost everybody credits the big drop in oil prices as being a key factor behind the strong stock rally this fall. [emphasis added] Do you disagree? mish replies: Yes - I disagree Stocks rallied because sentiment got too freaking bearish is more than likely the correct answer. foh sez: And what do you suppose drove bearish sentiment? Maybe record high gasoline prices? Maybe Goldman claiming oil was headed to $100 barrel? Just curious. Stating the obvious, making up ridiculous straw men, and changing the subject of debate, is hardly a good way to answer a simple question. I'm still curious about why you think sentiment got so bearish in the summer. I might add, what do you think were the key factors behind the change in sentiment leading to the stock rally? The drop in oil/gas prices at the pump perchance? foh

To: mishedlo who wrote (74273)	11/17/2006 5:16:37 PM
From: bond_bubble	Read Replies (1) \| Respond to of 110194

Stocks rose because the liquidity was increasing in those periods. Oil rose from 20 to 80 because liquidity was increasing. Liquidity is continuing to increase. Hence stocks are continuing to increase. Oil is falling inspite of its demand increase. You are talking as if sharp fall in oil prices is caused by demand fall!! I used to post 6 months ago that oil price increase is purely due to speculation and hoarding. Almost everyone on this board said, it is peak oil and demand and shit like that (see my link on hoarding in the end. my link on speculation is not retrievable from SI board). For now, the speculation has been restrained (may be because the speculators see excess inventory). But, you are already seeing Canadian oil sands companies are starting to sell their lands!! For them, oil extraction from oil sands is becoming unprofitable (oil has to be above $60, incorporating the increase in project cost). Most of the oil companies are putting off projects to bring additional oil in the future. Thus marginal producers are being shut off. But demand continues to be strong and increasing. The liquidity is strong. I will bet again that oil price will INCREASE because of speculation as the additional demand soaks up the excess inventory while at the same time marginal producers shut down their projects!! Message 22704949