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Investors Are Giving Up On The "Low Oil Prices Are Unequivocally Good For America" Meme
For 6 months, investors have been buying the idea - pitched by any and every status-quo-sustaining talking head, politician, and central banker - that low oil prices are unequivocally good for America. This has manifested itself in retail stocks handily outperforming the S&P. However, as Bloomberg notes, the last few weeks has seen that reverse dramatically as it appears investors, losing faith in the big-takers, have realized that "consumers aren't spending as much of the money saved from lower gasoline prices."
In the past year, there’s been an inverse relationship between the price of crude oil and the relative performance of retail stocks. An almost 60 percent decline in oil between June 2014 and mid-March contributed partly to the rally in shares of these companies as “investors anticipated a boost to consumption that would benefit retailers’ profitability,” Maley said. “The retail fund’s recent underperformance reflects a partial reversal of this bet,” which could be more pronounced if oil trades above $60 a barrel.
As it turns out, “consumers aren’t spending as much of the money saved from lower gasoline prices,” Maley said.
- Retail sales, excluding automobiles and gasoline, have been below the median forecast of economists surveyed by Bloomberg in each of the last four months.
- Americans saved 5.8 percent of their disposable personal income in February, the highest since December 2012
There are other reasons that underscore a bearish outlook for retail stocks, Andrew Burkly, head of institutional portfolio strategy at Oppenheimer & Co. in New York, said.
- The ETF formed a so-called divergence relative to the broader market, falling this month after nearly matching the previous high reached in October 2013. The ETF’s failure to surpass the previous high relative to the S&P 500 is a bearish signal because it indicates investors are allocating less money to the retail group.
- Short interest is near the lowest level since 2007, reflecting bullish investor sentiment. That may set the stage for early betting against the retail group and invite an increase in short selling.
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Is the dream over?
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High gas prices = Economic Recovery in obama's Amerika,, Everyone knows that.. Duh!
gas is cheap but you lost your job!
Probably the only reason people have been able to make their debt (slave) payments.
Maybe people spent that extra money 'saved' on ground beef?
On obummercare. Fixed it for you.
Well, good. Glad that's settled. Just in time for "low oil prices" to be not all that low again. Just in case anybody noticed.
Hey, since I'm pretty well fired up today, I have a fucking question. Do you think low oil prices CAUSED the downturn we've been seeing the last couple quarters? That seems to be the implication of these articles and I gotta tell you I think that's horseshit.
If there was any single subject where I have consistently disagreed with ZH's slant, it would be almost anything oil-related. From "peak oil" to "fracking wells will all be dry in 6 weeks", to the latest round of "cheap oil is going to be the death of the world economy" hysterical hand-waving nonsense, I can't imagine any other subject I can think of where the Tylers have been so consistently wrong. No matter how the meme changes, and believe me, their story has changed A LOT over the years, they still end up on the wrong side of it.
Dude, you're not yourself. Eat a Snickers.
Ah, much better. I'm back to being myself again. (I am actually Steve Buscemi, so you may not notice much difference.)
I would apply this reasoning to the 'raising interest rates would be the death of the economy' debate as well.....
Gas is cheaper. The average family will spend about $550 less on gas this year than 2014. That's about $45/month.
The problem is, prices at the grocery store have gone up for many essential items like meats, poultry, fruits and vegetables.
If you include price increases for cable, electric, cell phone and water, the average American is worse off than last year.
Look at you with your haughty "essentials" list.
Where's the day old bakery bread? Peanut butter and Jelly? Booze?
The years not even half over yet so how fo you know how much families eill save?
yeah no shit... we just got past "Tax Freedom Day" last week...
*** lower my fucking property taxes and repeal the ACA and I'll show you all sorts of consumer activity ***
"consumers aren't spending as much of the money saved from lower gasoline prices."
...... duh.... the fudgepacker has fukt the middle class with its lousy policies and obamascare jacked up mandatory premiums giving windfall profits to hospitals and health insurance companies..... yet it gets to continue to live its celebrity grand imperial golf lifestyle all on the backs of tax paying U.S. citiizen serfs and peasants.... the turd needs to have its skin sandpapered off and buried in salt several times
Let's see, Bush gave us $4 gas, multi-trillion dollar wars, sky high unemployment, a stock market crash. Is that what you prefer?
Makes you wonder what things would be like if oil was at $120.
its coming...will u comply????
"The idea of abolishing or even constraining physical bank notes is anathema to a lot of people. If there’s one thing that militias and Tea Partiers hate more than “fiat money” that’s not backed by gold, it’s fiat money that exists only in electronic form, where it can be easily tracked and controlled by the government. “The anonymity of paper money is liberating,” says Stephen Cecchetti, a professor at Brandeis International Business School and former economic adviser to the Bank for International Settlements in Basel, Switzerland. “The bottom line is, you have to decide how you want to run your society.”
As long as paper money is available as an alternative for customers who want to withdraw their deposits, there’s a limit to how low central banks can push rates. At some point it becomes cost-effective to rent a warehouse for your billions in cash and hire armed guards to protect it. We may be seeing glimmerings of that in Switzerland, which has a 1,000 Swiss franc note ($1,040) that’s useful for large transactions. The number of the big bills in circulation usually peaks at yearend and then shrinks about 6 percent in the first two months of the new year, but this year, with negative rates a reality, the number instead rose 1 percent through February, according to data released on April 21.
Bank notes, as an alternate storehouse of value, are a constraint on central banks’ power. “We view this constraint as undesirable,” Citigroup Global Chief Economist Willem Buiter and a colleague, economist Ebrahim Rahbari, wrote in an April 8 research piece. They laid out three ways that central banks could foil cash hoarders: One, abolish paper money. Two, tax paper money. Three, sever the link between paper money and central bank reserves.
Abolishing paper money and forcing people to use electronic accounts could free central banks to lower interest rates as much as they feel necessary while crimping the underground economy, Buiter and Rahbari write: “In our view, the net benefit to society from giving up the anonymity of currency holdings is likely to be positive (including for tax compliance).”
http://www.bloomberg.com/news/articles/2015-04-23/negative-interest-rate...
So, banks are actively encouraging the death of the only thing that they control, fiat money (paper and electronic)? Once people go back to barter the world will truly be cashless.
Get long sharecropping and guillotine manufacturing, beat the rush.
"Bank notes, as an alternate storehouse of value, are a constraint on central banks’ power"
Shit, we don't want to have that. We don't want to withhold more power from the hands of insane lunatics, said no rational thinking person ever.
Edit: Obviously this tool has never heard of black markets.
If we still had a real, viable economy it would be a positive but the casino that is the market is only interested in their bonus checks. The entire system is broke and nobody wants to fix it, a perfect storm coming.....
Heaven forbid that people choose to save some money when an expense is unexpectedly lessened. "Financial Responsibility Will be The Death of This Economic Recovery!" seems to be the meme of this era.
Reducing the amount you go in debt is not saving money.
I once stole every paper out of the corner paper machine just to get the coupon pages. I then went and bought 77 of each item on coupon and saved $4,372, which I then used to pay off my car loan......
I'm not giving up on the low cost fuel is good for me meme.
It's sometimes at the point where I can't listen to Larry Kudlow over this "low oil prices are an effective tax cut and irrefutably good" issue. He is coming around slowly though. On Saturday, he admitted that the declining CAPEX is worrying him.
"Investors", That word cracks me up every time I hear it.
Yeah and we all 'invest' in America by paying our taxes and are 'customers' of the IRS...
Counterweight Stacking: The Politics of Identity Projection & Association
Appearance, the basis of legal doctrine, the dress, is the poorest form of judgment, which is why equality under the law has such poor outcomes. The more laws the critters write, the further behind they get, always focused on the past, and extrapolation with dc computer scripts, increasing the efficiency, is no exception, to measuring the fall of the counterweight as work.
Knowledge, sharing perception to scale, the basis of public education, with the pretense of diversity based upon appearance, is even more suspect, because it multiplies the misdirection away from the shared behavior, resource exploitation measured as GDP.
Automating a dairy farm and converting the fertilizer directly to energy, for consumption in a city of growing gravity, trading currency for toys and ignoring the falling living standards, while blaming climate variability on symptoms instead of the resulting gravity, solves nothing for no one.
Controlling energy to maximize tax on inflated real estate, through Iran, is just the latest iteration, trading immigrants to deflate wages and feed the actuarial ponzi with poverty behavior. Politics is dirty work, but someone is going to do it, because that is the nature of gravity in the counterweight, expedient welding of the feudal state, as resource exploitation becomes increasingly limited.
Sometimes a problem is a solution. In the empire, the problem is always the solution, and it goes both ways. Learning to work ahead, and then go back to install the bridges, is the hardest lesson for most, who busy themselves rebuilding the first two bridges, as a make-work project, always repeating the past, with the latest and greatest technology.
The problemsolution is the efficiency of population density and the associated stupid SMART technology, not the absolute population of human biomass, which remains relatively trivial. Natural diversity is declining because empire behavior shorts it, layer by layer, as it sees them. Of course the critters need new infrastructure, but all they can do is go to the office, print and exchange paper, and pay automatons to do what they are told, increasing control in exchange for falling living standards, poorly hidden by inflation.
A complimentary marriage nets a new result. A contract marriage merely multiplies the existing result, with a more complex dress on an increasingly barren frame. Family Law exists because the majority wants it to exist, creating their own threshold to exit, waiting for Nature to respond at the aggregate level, when it is far too late, every time.
The females that take advantage when the law is geared against males, and the males that take advantage when the law is geared against females, are the monkeys. The males and females mimicking marriage to take advantage of their own, with event horizons by class, are the apes, black, white or pink. The Clintons didn’t invent the game, breeding ignorance to take advantage of it.
If you subsidize transgender psychology with equal rights and affirmative action, the expected result, do you expect more or less, and where must the additional work come from, other than a disappearing workforce replaced by technology, in a perennially bankrupt empire, welding the stack. In the beginning, the stack is dynamic and may be reorganized in real time, but America is not at the beginning. Haiti was no accident.
The work is carrying the growing dead weight up the hill and throwing it off the cliff, to raise your children, reorganizing the local counterweight component accordingly, and the politicians will pit gravity against itself for you if you let them. The money changers can no more replace labor with technology than they can replace the universe, by defining their knowledge as the universe, leaving nothing but the illusion of misdirection.
Instinct beats knowledge doctrine every time, because there is always much more you don’t know than you do know, even at the global organization level, and getting emotional about it only gets you one step further, in the drink, with blind trial and error. If all the doors are closed, you are looking at the past, with critters busying themselves with busy work. It’s the development of your instinct that matters, not the problem.
Have you ever calculated how much accounting labor goes into an oil well, and how much accounting money comes out in the duration mismatch, or what went into that Qualcomm spy technology, and what comes out in the form of patent accounting profit? Paying artists to paint portraits of cats, while collecting rent from below and paying rent up, blaming Jeb and Hillary for the outcome, is not a real economy.
Hitler’s voice was simply a function of gravity, resonating in the head of public education, depravity by bell curve, a roads scholar replacing intelligent labor with arbitrary doctrine, leading the so-manufactured majority into the black hole of stupidity. People serving a machine, for toys produced by that machine at an increasing loss, with mark to fantasy financial pricing, new empire always the same as the old, exploiting resources until it can’t, moving backward, is the counterweight.
The moneychangers have to print, in any and all cases, to maintain it. Where they print from, who writes the laws, and upon what theory, is of no concern to labor, because the outcome is always the same: media noise, feudalists chasing their own tale, and middle class war.
Remember back your when supply and demand drove prices....as opposed to Goldman...Citidel trading MEME. It is compelete BS saying that high or low oil prices drive the health of the economy. The health of the economy is what most people take home! Next up....we are all better off becuase the average bonus on Wall Street is at a record! The money changers have taken the soul of the country!
Low gas prices??????
The gas station near me went to $2.79 today. I have gas receipts from September where I paid $2.29 per gallon and oil was $25 more expensive.
If oil dropped to $60 and stayed there we would be paying $2 a gallon or less. But since oil dropped to $40 and bounced the blood suckers have driven gas prices higher than they have ever been to a corresponding barrel.
We'll have $5 gas on a $85 barrel.
Retailers buy blocks of gas at given prices. they also hedge with long-term contracts. The price at the pump today has nothing to do with the price of oil today.
The solution is to invert every preconcieved notion that you have had. In the QE world, where pushing on the string is the WS thing to do, everything is backward.
wait, i thought we were supposed to be spending our savings on gas on the (un)Affordable Care Act premiums?
still robbing peter to pay pauline either way :-/
Even if I didn't drive at all and saved every penny I pay for gas I'd still be in the hole ten grand on Obamacare.
So wait, there are investors now?
We WILL get your money one way or another.........
The savings may be not be as large as the predictions. Oil was supposed to go below $30, remember? And it was supposed to stay there for a loooong time. Instead, it's gone back up to $57.
The low point, as usual, didn't last more than a few weeks. But everybody benchmarked off that and did their estimates.
Wrong, as usual.
The job losses are much more hurtful to spending than the decrease in the price of gas, duh.
Meanwhile Americans are paying off old debts with the few extra dollars, which isn't new spending on goodies as predicted by those in the wrong.