Here Comes $4 Gas

Tyler Durden's picture

With Egypt's stock market jumping its most in a year and US equities exuberant over the bad data this morning, it seems the world is ready to ignore Egypt for now. Of course, as we noted here, there are some growing concerns about what is possible and probable should the coup occur. Suez Canal closure fears and US infrastructure problems have smashed WTI crude prices above $99 - its highest in over 9 months - and overlaying the lagged retail price shows we could see near $4.00 gas at the pump by August. As a gentle reminder of why US equity investors should care... there's something scary about the $3.80 level.

Given historical correlations (and in this case we pre-suppose that correlation is causation), it appears gas prices are set to jump notably in the next month...

 

and as we noted previously, that will cap P/E ratios (which will hurt stocks in a dismal earnings environment)...

 

Charts: Bloomberg