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What Does Oil Say About the True State of the Global Economy?
The markets erupted higher this morning on a surprise interest rate cut from China. For those who like to keep track of the madness, this brings the total number of interest rate cuts by Central Banks since the 2008 crisis to well north of 520.
US stocks as denoted by the S&P 500 have been in a large megaphone pattern since September. The megaphone, like most technical patterns, is in fact a consolidation pattern that can breakout either way. We’ve now broken out to the upside.

Stocks are extremely overbought in the short-term. In the medium-term, forecasting just where this move will lead is a fool’s errand as it entails attempting to predict just what the dozens of Central Bankers of the world will say or do in the next week or so.
In simple terms, stocks need to correct. Whether the Central Bankers will let this happen or not remains to be seen.
Elsewhere in the markets, Oil has broken out of a massive multi-year triangle pattern and is now back at levels not seen since 2010.

It’s been a brutal bloodbath and has brought many of the Oil majors down to levels at which they are looking attractive from a valuation perspective. Some, such as BP, are approaching Price to Cash Flow multiples not seen since 2008. Others, such as Exxon and Conoco Phillips still have a ways to go.
|
Company |
Symbol |
2008 P/CF |
Current P/CF |
|
Exxon |
XOM |
6.9 |
8.6 |
|
Conoco |
COP |
3.5 |
5.1 |
|
BP |
BP |
3.9 |
4.2 |
|
Chevron |
CVX |
5.1 |
6.3 |
Remember, Oil is closely linked to the global economy. What does it say about the true state of affairs that oil is back at levels last seen in 2009-2010… while stocks are at new all time highs?
Take note and prepare.
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Megaphone, schmegaphone! Somewhere between 2035 and 2168 the S&P 500 goes south and doesn't return for a very long time...
http://www.globaldeflationnews.com/sp-500-indexelliott-wave-update-for-w...
Gold will do well for a while though...
http://www.globaldeflationnews.com/gold-elliott-waves-forecast-a-multi-m...
A lot of these problems could be averted if the United States used federal resources not state ones as well, what lots don’t think of one is either a republic or democracy it’s one or the other, Russia is the lesser of the two evils
Tells me that prices can be fixed and controlled at will. Oil is down because it hurts Russia. Russia needs high energy cost to rebuild and stand up to the fascists in America.
the majors lost control over the price of oil once the governments started playing....
the world is awash in oil and only a cartel can keep PRICE up...
opec was styled after the texas rr commission to keep prices UP..
ESSENTIALY OIL SAYS NOTHING ABOUT THE WORLD ECONOMY EXCEPT THE CURRENT SUPPLY OF OIL EXCEEDS THE DEMAND = PRICE DROP... SAUDI AND RUSSIA FACE MAJOR SOCIAL UNREST IF PRICES GO MUCH LOWER... CHINA IS TRYING TO REVIVE A STALLING ECONOMY... LABOR COSTS WILL ONLY GO UP AS MORE ARE EDUCATED AND DONT WANT FACTORY WORK... THE ONLY "ECONOMY" LEFT IS THE USSA.... FOR HOW LONG AFTER ACA COSTS, EPA REGS AND ENTITLEMENTS ESCALATE... NOT TOO LONG AMIGO... THE USSA IS IN A SOCIALIST SLIDE DOWNHILL FOR THE NEXT TWO YEARS...with a sideways at best stock market, unless the new congress acts in a bold way... and if interest rates rise...kiss the market adios..
please show us exactly where these huge new oil fields are and how they will take equal or less energy to reach, extract and process compared to the fields of the past. Please also show us how many less humans are competing for and using the stuff compared to oh fifty years ago
Businesses that find Chinese labor too expensive are moving to Vietnam.
Someone once said that the purpose of the space program was to find someone willing to work for 10 cents an hour.
Question, Why Obama won't allow the pipeline to go thru?
Just saw this. A map of the states with republican governors.
http://en.wikipedia.org/wiki/List_of_current_United_States_governors
I have a solution to the pipe line. Theses states should defy Obama and start laying pipe.
Then use the tax revenues from the oil to protect the US/Mex border for TX,NM and AZ thereby funneling illegals to California.
Well, why is Chalky selling our coal to China while preventing US from having coal power plants?
Fuck that pipeline. That oil ain't for Americans, son unless your name is Exxon.
It's the aquifer issue you dumb a**hole...
Siluria - who's gonna need oil soon?
Priced in what?
Jesus H. Criminy. Read a book or something, will you please? You don't need to price energy in terms of energy. How about Gold in ounces of gold, etc?
I appreciate that you recognize that it's a world of finite resources. Good. Now can you please do some reading and report back here afterwards?
http://en.wikipedia.org/wiki/Num%C3%A9raire
http://en.wikipedia.org/wiki/Unit_of_account
www.fischer-tropsch.org
Just so you know. Hydrogen and carbon are everywhere.
Just so you know, making fertilizer from N2 takes a lot of energy. There's a reason Fischer-Tropsch only started making sense once we started extracting a massive amount of fossil fuels.
Leonard Da Vinci was just one of best of many pre-industrial genius designers/engineers. But, they didn't have enough energy to power their machine concepts. Not until the Brits started burning coal in order to power mechanical pumping of water out of coal mines, that is...
Yes, but calories are still required in order to make reduced hydrocarbons. Flux matters asshat.
LoP Explain please?
He thinks he's being clever, calling the guy an asshat. He thinks it's a rapier wit worthy of the Algonquin Rountable.
I'll translate: he's saying that it takes energy to unlock energy.
I know.