hey cash, here's what Yardeni says...Hope you didn't run out and get that SUV yet..lol
The plunge in energy prices has coincided with the dramatic rebound
in the US dollar. That isn't a coincidence. I believe causality runs
mostly from lower oil prices to the stronger dollar rather than the
other way around. Forex traders recognize that the US economy is the
one likely to benefit most from dropping energy prices. This is
confirmed by Treasury bond yields, which have edged up in recent days
despite the fact that headline inflation is increasingly likely to
fall sharply over the rest of the year. If energy prices stay down
for a while and headline inflation rates decline around the world as
a result, the outlook for global economic growth will improve.
Central banks will no longer be focusing on tightening their monetary
policies. All these developments could set the stage for a broad-
based bull market in stocks in 2009. Near-term uncertainties about
the credit crisis, economic growth, geopolitics, and the US elections
could keep stocks trading in a volatile range through November 3. For
the next few weeks, Consumer Discretionary and Financials may
continue to outperform the S&P 500 in reaction to lower energy
prices. If OPEC does cut production and the $100 support level holds,
then Energy stocks should also perform better than they have since
July. There will certainly be plenty of business for oil and gas
equipment manufacturers, drillers, and producers. Improving prospects
for global growth in 2009 should revive Materials, Industrials, and
Information Technology.
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