Watching oil and the 10yr climb together while the broader market just kind of shrugs has me thinking. Historically that combination has been a headwind for equities — higher energy costs compress margins, higher yields compress multiples. But the market seems to be treating this as fine. My read is either the market is pricing in a soft landing where oil demand rising is actually a SIGN of healthy global growth, or we're in late cycle where everyone knows a correction is coming but nobody wants to be first out. Curious what others are seeing — are energy names starting to look interesting as a hedge here, or is oil at these levels already priced in for most energy stocks?
Oil at war-time highs while stocks near ATH — is the market just ignoring macro risk or is this actually healthy rotation?
byu/Fluid-Membership1356 inStockMarket
Posted by Fluid-Membership1356
3 Comments
What about parabolic moves is ever healthy? Would have loved a stair step up, this just guarantees we give back 50% of the gains at minimum at some point.
Probably when the market realizes “Oh shit there’s no oil?”
There is a part of this that is quite simple.
There is still a lot of people/organizations believing that Trump will do anything he possibly can to keep the stock market high and will act if Oil/Gas gets too high.
If that mentality ends up being broken the market and oil/gas markets will break.
As we keep eating into reserves there will become a point in which that idea will be untenable.
That is when things will get very interesting..
(Honestly this whole thing is a mess – A really really really bad mess)
The markets ignoring this is ironically the catalyst that’s going to take a horrible situation and make it completely catastrophic. Trump sees the markets at all time high as a green light to keep doing what’s he’s doing.
Currently both sides view this conflict dragging on as more damaging for the other side, which is effectively the worst case scenario for the world.
Trump has no idea how to get out of this. All of his options involve giving up something to Iran and leaving them in a potentially stronger position than before the war.
That’s to say nothing of the fact the the US keeps increasing its military presence and it increasingly looks like a hot war will resume when Iran inevitably fails to capitulate.