Was That Oil Spilling Out of the Bubble?
It’s brutal to watch a market go down and have to deal with the anxiety it creates. TV commentary then whips the events of the day to an even higher level of dread. Who really got hurt this week as the market sold off? Let’s look at the boring stuff first, the economic news, how bad was it? Housing Starts came out on Friday showing a strong number above 1 million units up 17.8% from a year ago, not bad. Jobless claims continue to drop to 264,000 the lowest level since the recovery began and a level not seen in 13 years. Industrial production rose 1% which was higher than analysts projected and inflation as measured by the Producers Price Index stayed in check with little signs of inflation. What about the monetary front? Our Fed once again proved they understand markets reiterating they might provide some new economic stimulus if needed. Even the start of the earnings release this quarter was positive. So what was this week’s excuse for the market sell off? One word seems to bubble to the surface, collapsing oil prices. What does it mean when a single product like oil goes down in price from $120 a barrel to $80 barrel in a short period of time? Was this a bubble bursting event?