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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: ViperChick Secret Agent 006.9 who wrote (17110)	3/29/1998 8:49:00 PM
From: FJV	Read Replies (1) \| Respond to of 95453

Cara Mia, It isn't altogether incongruous for higher oil prices to create nervousness in the markets while concurrently creating a firmer underpinning to the broader markets. Two phenomena are operating simultaneously. Higher oil prices spook the bond market as a result of the possible inflationary consequences. Conventional wisdom dictates that the inflated p/e ratios in the Dow and the S&P can only be sustained if the market can experience both high liquidity and a sanguine interest rate environment. High oil prices spark fears of jeopardizing the latter. Thus the nervousness. Remember though, that the Dow and S&P are populated by a significant number of integrated oil companies, as well as oil services firms which obviously benefit from firmer oil prices. Assuming oil prices don't sky rocket to over $20/barrel, it is unlikely that oil price in and of itself would have a lasting detrimental effect upon the bond market, which in turn, may not adversely affect the equity markets. If you then factor in firmer prices for the likes of Exxon, Mobil, etc., and one can envisage a scenario in which the oils actually support overall market prices. But then what the hell do I know. (Love your website). Ciao Bella Franco