Monday, July 4, 2016

Intertwined Rate Nature Of The Coming Oil Stock Market Divergence

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*We've written about the S&P 500, inflation, the dollar and oil.
*Oil will push inflation, which will push rates, which will shrink production, which will drive oil.
*This report contains an important understanding you may not have thought of yet.
*Bullish on oil, bearish on stocks.
The market has multiple headwinds despite sitting at multi-year highs for coming on two years. We just turned bullish on oil. We think that credit and inflation will bother both oil [(NYSEARCA:USO) (NYSEARCA:OIL) (NYSEARCA:UWTI)] and stocks (NYSEARCA:SPY) where such effects will compound. We will spell out the logic. We will explain the intertwined world we expect in the medium term causing a long coming divergence between oil and stocks.
Rates are at the center
We've said that inflation is what is present. Fed Governor Tarullo said last week that if oil and the dollar hold, inflation will be 1.95% within the next 12 months (at Fed mandate). We think, however, oil is going up (as we showed) and the dollar (NYSEARCA:UUP) is going lower (as we showed). If we are right, that means we will reach and pass the Fed mandate of 2% before "some time in the next year" (if that time frame exists).



Chaim Siegel has been working with hedge funds and mutual funds as an analyst and PM his entire career. Chaim specializes in earnings and predicts, analyzes and reacts to earnings and earnings events as well as developing current company stories with a hedge fund perspective. If you want his analysis real time sign up to the right for real time email alerts. #in, $spy, $qqq, $iwm, $vxx, $ycs, $fxe, $EUO, $YCS, ^GSPC, INDEXSP:.INX, #elazaradvisorsllc, CME Globex: ES Disclosure: These trades can lose you money and principal especially when using leverage BY USING THIS SITE YOU AGREE TO TAKE ALL RESPONSIBILITY FOR YOUR OUTCOMES AND LOSSES AND HOLD BESTIDEAS, ITS CONTRIBUTORS AND ELAZAR ADVISORS, LLC HARMLESS