Stock market corrections intensify post-oil peak
The guest argued that the most severe downside pressure on the stock market and economy occurs after oil prices peak, rather than during their rise.
The argument
Historically, market peaks often coincide with or closely follow oil price peaks. Investors mistakenly view the easing of geopolitical tensions and falling oil prices as a green light to buy stocks, but the economic damage of the high prices typically manifests in the aftermath of the peak.
The thesis, stress-tested
✓ What validates it
- ✓WTI crude oil falls below key moving averages after a major spike
- ✓S&P 500 earnings estimates get revised downward following an energy price peak
▸ Risks discussed
- ▸Oil prices remain elevated indefinitely due to structural supply deficits
- ▸Central banks successfully cushion the post-peak economic slowdown
Hear it yourself
"That's the immediate thing. I think, once we get beyond this first, you know, action or first meeting where they have to make a decision officially about whether they're gonna do, they could hide. I mean, you've got a a ten year treasury that's gone up to almost four and a half percent here of late. That's that's certainly got a a quarter or a half point, you know, that could be put into the funds rate, leaving the yield curve where it was when the ten year treasury was at four. So there's room for the private market suggesting a a Fed hike at this point."
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