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Yellen Decoupled Stocks From Oil, BofA Warns It Won't Last
As we have noted in the last two days, on the heels of Janet Yellen's mutterings, US equity markets have exploded higher even as the highly correlated and causative oil prices have done anything but rise. This 'fact' has not escaped BofA's Hans Mikkelsen's attention as he warns, "While stocks currently are getting a break from oil, it appears most likely that they reconnect when the decline in oil prices accelerates – especially if we see associated weakness in credit and EM." And sure enough, modestly at first, the two are starting to converge this morning...
Chart: Bloomberg
As BofA notes, Yellen unchanined stocks from oil (for now)...
Since just prior to yesterday’s release of the FOMC statement Brent oil is down 4.2% while stocks have surged 3.2%. That represents a massive break from the first part of December where the two markets traded down in lockstep. This recent decoupling reflects partly on Fed Chair Yellen’s press conference where she explained how declining oil prices are expected to be a net positive for the US economy. Furthermore, she went out of her way to dismiss any downward pressure on inflation as “transitory”. As lower oil is good for the economy it makes sense that even the Energy sector in the S&P is up nicely (+2.0%) post the FOMC statement, despite the further decline in oil.
While stocks currently are getting a break from oil, it appears most likely that they reconnect when the decline in oil prices accelerates – especially if we see associated weakness in credit and EM.
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And then there's this...
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old news for those that read ZH
it's a big Club and you ain't in it BITCHEZ
Preface (old news?) :: Regurgitated perhaps, but nevertheless meaningful in context of what the markets will do monday... sweet mo[a]nday?
Foreward (?news?/ current in a juxtaposed tymeline of deja`vu!) :: "Farewell to riches of the earth" 6/26/2000 http://www.telegraph.co.uk/news/uknews/1344823/Farewell-to-riches-of-the-earth.html
& Onward :: "Guzzling in the Gulf" (The Monarchies Face a Threat from Within-- 12/19/14) http://www.foreignaffairs.com/articles/142692/jim-krane/guzzling-in-the-gulf
List of Characters:: http://en.wikipedia.org/wiki/Faisal_of_Saudi_Arabia
http://en.wikipedia.org/wiki/Ahmed_Zaki_Yamani
Note1: Both men were good honest people. Perhaps that is why Faisal was assasinated and Yamani barely was spared in the assasination attempt. King Faisal was like Ataturk of Turkey and Nasser of Egypt. All wanted very much to modernize his/their respective country's, thus precipitating the quasi formation of a unique to each, their own hybrid-Republic/Monarchy?!? All, Nationalist and advocates for a strong, efficient and self-governing democracy (if and when the tyme comes) were they! Note2: None were greedy or malicious/ nefarious with their treasuries, period!
Ref:
http://www.eia.gov/countries/country-data.cfm?fips=SA *Read Full Analysis Brief Link**
http://www.eia.gov/countries/analysisbriefs/OPEC_Revenues/data/real_2005.csv
http://www.eia.gov/countries/regions-topics.cfm?fips=OPEC ***Impo?tant Chart: Per Capita???***
*pay close attention to how wealthy Kuwait's are regarding a small population and the mean/avg. of GNP distribution and that of SA which are by contrast very misleading and skewed! In other words, 'the-sharing-of-the-whole-pie' goes to the thousands of Sheikhs with a Reagan-type 'Trickle-Down`esque myth'tisicm?
Epilogue:: The OPEC members are scared,..! And when your scared, 'You-Do-Stupid-Stuff'? Already, Bahrain has signed contracts for Russian gas deliveries for perhaps early 2016. Saudi Arabia uses a huge percentage of oil to run the massive desalination plants haven't much natgas, as do all the energy consuming OPEC countries.
Somethings got to give in Saudi Arabia when the regular folks figure it out and subsidies begin to shrink with the thounsands of Sheikhs in the bulleyes of a ARAB-Spring`Saudi-Style voodoo-bushwacker`faux'economy and a USSA hegemony that the others are running as fast away...as the bionic-FX'bots can algo-me-this?, disaster de`jour a Yellin?
jmo
"when the decline in oil prices accelerates"
hmmmn
time to buy oil? WW3 coming for the holidays?
" I love the smell of fussion in the morning"
Updated for modern technology of course.
https://www.youtube.com/watch?v=bPXVGQnJm0w
So when the crash becomes crashier and crashiest.
If BofA says it, then we know the opposite will happen.
what b of a says has no coorelation to what will happen. dont give them any credit for anything except sub-prime and their complicity in their own bail out and riding on golden chariot lead by GS's ms. dimon. in a revolution...all b of a executives are 'fair game'. stupid, no conscience, holier-than-thou whores.
Calling them whores is a compliment.
Calling them whores is a compliment.
An appropriate double post.
Hey thanks for re-stating your spam article's title for us. It wasn't apparent from the link...
You have to admire the sheer dipshit arrogance of people who truly believe in their heart of hearts that they can, by fiat, counteract the forces of nature, economics, human tendencies, etc.
There are a number of them out there, and they shurely must be cut from the same cloth.
Oil crisis over. Goldman just downgraded Sdrl .. was a conviction buy not to long ago.
Buy all you can.
All the banks are giddy because they know DC signed the deverative bailout.
No matter how bad the bedt are they'll steal from the taxpayer.
"they know DC signed the derivative bailout"
This is another act of financial terrorism and an act of war on The American People.
Oh well, what's on TV????
Oh? Look at those big blue buses that all the neighbors are boarding?
Good night
LOL. Soylent Green.
LOL. Soylent Green.
My God, you mean they could meet in the middle with Oil at 60 and the S&P at only 2030?? Run for the hills! Its over, Johnny. Its over.
Randolph Duke: It should be a very happy New Year!.......................
What about Yellen!?!? I mean Beeks!?!?
So they decoupled ... 50% of all marriages end in divorce anyways ... nothing to see here folks, move along.
2/3, so 66%, but i see what you mean.
Has anyone heard that Putin has invited Kim-Jong-un to Moscow on the 9th may to celebrate the defeat of Nazi fascism? Those Russians, it sure does makes you wonder.
Mr Yellen can stuff wall streets turkey all they want but it still won't fly.
Or maybe oil decoupled from stocks? Why does ZH ALWAYS take the view that is bearish on stocks?
How about this? If stocks discount the future, then why did they not respond to oil like in 2008? Maybe because the fundamentals don't jive with the drop in crude. Yes, there is an oversupply, but does anyone honestly believe that can account for 50% DROP IN JUST A FEW MONTHS? That is not reasonable. Something else was going on.
For all I know, the US was intervening directly in the futures markets. What happens when they close their "position"?
My post of the day.
Fuck you Bernanke!
I guess the same as the price action will be when they close their positions in spoos. Stocks are ridiculously overvalued in the US. People only say they are over valued when they fall. When they rise, the douche's on tv tell you "well, i didn't understand why we sold off".....
I question whether there is even an oversupply, but your point is well taken.
oil's going back up as soon as Putin says uncle, fucking bank of america doesn't know shit, where were they predicting oil 6 months ago???? I mean, is oil going back up not an option, at $56 it's going to accelerate to the downside?????
someone must take this cunt out once and for all. her and all her fucking fed partners. fuck them all.
I still fail to see the recovery.
Oil prices have collapsed not fallen.. That says to me recovery in debt not equity. So junk debt gets bought by the yield hungry types...meh.
Still haven't solved the recovery problem.
Expect more price collapses.
This focus upon stocks or correlations is laughable. It would not surprise readers here who likely know this, but I will post if nonetheless: stocks are a distraction from where the real money is and will not be: CREDIT MARKETS. Bond moves move markets, all of them and secondarily, we have our FX market. BUT, the real fortunes are made in bonds and buying and selling derivatives against them. Remember that it was the derivatives on Mortgage Bonds, and the CDS window that closed that caused world-wide misery and we are still stuck in that rut.
This focus upon stocks or correlations is laughable. It would not surprise readers here who likely know this, but I will post if nonetheless: stocks are a distraction from where the real money is and will not be: CREDIT MARKETS. Bond moves move markets, all of them and secondarily, we have our FX market. BUT, the real fortunes are made in bonds and buying and selling derivatives against them. Remember that it was the derivatives on Mortgage Bonds, and the CDS window that closed that caused world-wide misery and we are still stuck in that rut.
I'm sure i've read that somewhere before....
Oil will form a V bottom recovery here....why wouldn't you buy? Everyone wants a gift for Christmas, this is it!! Auntie Yellen loves big oil!
You lost me at BofA. I mean, really Tyler. The subprime people?
The US is actually doing it right. For US power elites of course.
They cannot keep giving large amount of moneyt to Russia thru the high prices of Oil.
Saudi is a Team player. They return all the extra dollars back to US thus preventing inflation. Russia has stopped being one. And thus USA has no other choice but to play this dirty game with Oil prices. And do everything possible to keep the stocks up.
Russia has only one choice. Reduce spending and hang on. It is already doing it.
But I know what everyone is waiting for. it was the same back in 1998 in Indonesia. Everyone was waiting for the dictatorial President Soharto to fall. Then they went into spending spree using all the money hidden away during the last 30 years.
You should have seen the change in Indonesian roads. It was pure invasion of luxury cars. And the fun part is they all claim Suharto was corrupted, when in fact everyone was corrupted.
I suspect it is now being played in the global level. Everyone has been hiding their money in innovative means and passing the debt back to US Government. Just as Indonesians did to their Government.
Then too, Indonesian Rupiah was getting stronger and stronger until the fateful 1998 when all hell broke loose.
I see the same happening in USA. Anyone who thinks it is not possible, should check out who actually controls the US Banks. Is it US Government?
Yellen should be shot right after Feinstein for treason - both traitors