1.12.2007

Oil down means stocks up

Oil prices are dropping rapidly. If they stay down it means good news for stocks for two reasons. First, it will lower CPI numbers. This will allow the Fed to pretend that inflation isn't happening, so they won't need to raise interest rates.

Second, cheaper energy will be a big boost to corporate profits. Remember how they charged "energy surcharges," or other, nameless price increases when oil went up? Yeah, well they are not going to give you "energy discounts" now that oil is going down. They are pocketing the difference, straight to the bottom line.

Oh, and this is good for gold, too. An easy Fed will eventually bring a weaker dollar.

No comments:

White House considering new tax-deferred accounts to encourage investing

CNBC : As part of a forthcoming package of proposed tax cuts, the White House is considering ways to incentivize U.S. households to invest...