Sheraz Mian
Director of research
Uncertainties related to the image Macro in continuous evolution in oil-rich Middle East are trumping all the rest of the market. Increase in oil prices, resulting from fear of a supply shock, have topped every other story this week. And we could not have seen the end of this trend--not yet.
Nothing else matters as long as we remain in this mode. Favorable reports on jobless claims and durable goods orders-only to become background noise in this environment set with oil. Labor market report today would have cheered the market a week ago, but those were simpler times, it seems now. Matter nor the earnings reports from the likes of General Motors, Target, Sears and Gap.
My sense is that we need to see Muammar Gaddhafi back before this trend reversing begins. And it will, because Libya is the main producer of oil before and the last to get caught up in the wave inversion democracy.
Latent fear in the market centers on Saudi Arabia, the global oil markets. The saudito has its vulnerability in the young unemployed and a minority Shiite disaffected in the oil-rich Eastern province. But as yesterday around 35 billion dollars of new spending plans have shown, the Saudi historicallly have proven to be very good at sprinkling their enormous wealth around nationally.
Suffice it to say that the measure of fear current oil prices is reflecting a worse-than-likely scenario and will come down as history Libyan settles.
P.S. What is Zacks ' Ahead of Wall Street? To learn more about Zacks Ahead of Wall Street, click here.
Zacks Investment Research
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