By: Chaitanya

Chaitanya — Mon, 01 Oct 2007 05:21:35 +0000

Could it be that recent spike in oil prices is temporary ? Surely, the stock markets are acting this way. Earlier, the stock markets used to correct, when the oil prices are high. These days, they are simply not reacting to crude prices. Also, i read somewhere that lot of recent spike in oil is due to speculative fund buying. anyway, next few months should tell. If the oil prices are indeed to stay high, i suspect gas would follow soon, after the lag effect is gone.On the Dollar — purely looking from inflation point of view, i think Dollar is in a better position than other currencies. Everyone talks about inflation in US, but trust me, its nothing compared to what we have here in India. I continue to believe US dollar is a long term winner, and after next elections, will strengthen if better policies are followed. Everyone and their uncle is talking about collapse of the Dollar, i suspect that’s a sign that the bottom is near.anyway, i may well be wrong in the above.. but one thing is for sure. All markets seem to be in massive turmoil. Stock markets, crude, currencies, Gold, emerging markets. It seems like they are going out of control. It seems like we are approaching the breaking point of the system. Each Fed acts on its own country’s interests, but we have a *global* economy here. So we have an economy thats global, but decisions are made mostly on a national level. That seems broken.

By: Janene

Janene — Sun, 30 Sep 2007 23:19:49 +0000

Hi Dave –Looking at your question, I thought I would go look for a chart showing oil prices over the last year to see if i could see anything…. instead I found this on my first click:”Oil and other commodities denominated in dollars are actually falling in price in the eyes of foreign investors. That’s because the dollar has been sliding against other currencies since the Federal Reserve cut interest rates last week. The dollar fell further on Friday on expectations that the weak U.S. economy means another rate cut is coming.” from: http://www.chron.com/disp/story.mpl/business/5173980.htmlCould it be that simple? Perhaps. Another possibility… time lag in the industry. Usually gas prices are several weeks to a couple months behind oil prices (except when they can get away with adjusting in ‘real’ time as if that were appropriate (when I was in the industry, gas prices always reflected oil increases in real time, and oil decreases in lag)– the politics may be making this less feasible to do)Third possibility? Political pressure at the highest levels… more of the thumb dragging, try and convince people everything is okay — combined with the outrageous profits of the last couple years making such pressure feasible.so what’s that… three cents? :-)Janene

Comments on: Sunday Open Thread – September 30, 2007

By: Chaitanya

By: Janene