Historic Slide in Crude Oil Energizes Global Stock markets

Updated 4:00 PM, Nov-19, Sun

The latest 30% slide in crude oil prices from the record $78.40 /bl set on July 14th has energized global stock markets, which climbed to record highs last week, as measured by the MSCI All-world index. The global economy is growing 5.1% this year, after expanding 4.9% in 2005 and 5.3% in 2004. The world has not enjoyed a sustained period of growth faster than 4% since the early 1970’s. However, the latest plunge in crude oil prices might be signaling a significant slowdown in global economic growth in 2007. “A further correction in the housing market could lead to an even sharper slowdown in the US economy and have spill-over effects abroad,” warned IMF Managing Director Rodrigo de Rato on Nov 18th. The US economy slowed to an annualized 1.6% growth rate in Q’3, the slowest since the first quarter of 2003. Housing starts in the US tumbled 14.6% in October to the lowest level in more than six years, and were 27.4% lower from a year ago.

US Crude Oil takes Cue from Tel-Aviv -100

Updated 6:26 AM, Aug-24, Thu

Because Tel-Aviv stood in the cross-fire of the Israeli–Hizbollah skirmish, US traders took their cue for the Tel-Aviv-100 index’s “reversal bottom” pattern on July 16th, which ruled out a wider war with Iran and Syria in the first round, and then dumped West Texas crude oil the next day, from a record high of $78.40 per barrel on July 14th. The TA-100’s recovery to the 840-level on August 17th, where it stood on the eve of the Lebanon war, briefly knocked crude oil below $70 per barrel.

Dow Industrial Rally is an Optical Illusion in Gold terms

Updated 4:17 AM, May-17, Wed

In the US, the Greenspan Fed inflated the M3 money supply by 72% or a whopping $4.3 trillion over six years to a record $10.27 trillion, and then decided to stop publishing the M3 measure on March 24th, 2006. Greenspan’s magic formula for dealing with global crises and restoring the DJI to record highs was his ability to inflate the US M3 money supply, while keeping the bond market vigilantes under wraps. The Fed had plenty of outside help from Asian central bankers. But while the DJI is celebrating its hard fought recovery to record highs, the DJI has also lost 60% of its value to gold since its peak of 42.5 ounces in 1999. Investors were much better off owning an ounce of gold, than a share of the Dow Jones Industrials over the past six years. Nowadays, the gold vigilantes are stubbornly tracking the direction of monetized stock indexes around the globe. Someday, Greenspan’s magic formula could turn into Bernanke’s worst nightmare. The global markets have become increasingly sophisticated over the past few years, and much to the chagrin of G-10 central bankers, traders have imposed a de-facto gold standard on worldwide exchanges. In other words, clandestine attempts by G-10 central bankers to pump up their equity and housing markets by increasing the money supply would be confronted with higher gold prices. As gold becomes more widely accepted among global investors as the best measure for valuing exchange traded assets, the G-10 central bankers’ worst nightmare would begin to materialize – the resurrection of the global bond market vigilantes.

Commodity Super Cycle Tracks Global Stock Markets

Updated 6:34 AM, Aug-24, Thu

The explosive growth of the global money supply in developed and emerging economies after 9/11, might explain the buoyancy of global stock markets at a time when sharply higher oil prices, would otherwise have been as a negative influence. For the past few years, the Reuter’s CRB index has “followed the money” and tracked Morgan Stanley’s All-World Index, for clues about the health of the global economy, consumer confidence, and in turn, the demand for commodities.

The Rise and Fall of UAE -Dubai share Index

Updated 5:03 AM, Jun-18, Sun

Shares across the Persian Gulf region have crashed over the past six months, as burned retail investors bailed out, long before the recent tremors in other emerging markets. Markets in the Gulf region climbed an average of 92% in 2005 on soaring oil prices but have tumbled in 2006 on fears of overvaluation, making them among the worst-performing markets in the world. Dubai's bourse is down 54% this year, while the Saudi market lost half its value or $400 billion since late February. Trading on Gulf markets is limited largely to residents, with governments restricting foreign ownership of stocks, eliminating a key safety net for domestic investors. A downturn in other emerging markets would normally lead to more cash coming back home to the Gulf, but so far, the local bourses have not received a bounce. Yet traders got the good news they were betting on in 2005, on June 12th, when the United Arab Emirates said its gross domestic product in current prices rose 26.4% in 2005 to 485 billion dirhams ($132 billion), mainly due to a rise in oil revenue. The UAE’s trade surplus rose 61.4% over the year to 163 billion dirhams with crude oil making up 38% of the country's total exports.

Booming Exports keep German DAX Afloat

Updated 4:49 AM, Jun- 6, Tue

Germany’s high profile DAX-30 index barreled its way towards the psychological 6000 level, or 42% higher from a year earlier. That’s quite a remarkable achievement for a stock market whose underlying economy, Europe’s largest, failed to grow at all in the fourth quarter of 2005. Germany's $2.6 trillion economy and the DAX-30 have depended on foreign sales over the past four years for growth,. About one third of Germany’s overall economy is linked to exports. Roughly one German job in four depends on the export trade, with over one third of the manufacturing sector’s output being exported. In 2005, German exports jumped 6.2% while import growth was 5%, resulting in a net export surplus of 0.7% of growth. Germany exported a record $1.02 trillion of goods and services, the world’s best performer, followed by the US at $927 billion, China at $752 billion, and Japan with $550 billion. German trade accounted for 10% of total world volume. Domestic demand, however, contributed only 0.2% to growth, with private consumption stagnating and state spending contracting by 0.4 percent.

Archived Comments:
Historic Slide in Crude Oil Energizes Global Stock markets | US Crude Oil takes Cue from Tel-Aviv -100 | Dow Industrial Rally is an Optical Illusion in Gold terms | Commodity Super Cycle Tracks Global Stock Markets | The Rise and Fall of UAE -Dubai share Index | Booming Exports keep German DAX Afloat

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