vtsnowedin wrote:GoghGoner wrote:Brent rises above $70. It was joined to the stock market and now it is moving the opposite direction. Gold has moved along with oil. Whoever is buying up the oil is also buying up the gold -- the movements in prices are too closely matched for it not to be true. Now, why would big money be buying both and not worrying about the stock market? Oil does some really messed up things in the short term.
A lot of money fled the stock market over the last couple of days. most of it got parked in ten year T bills, enough to drop the yield on those bills. Another fraction of that money went into gold bumping up that price a few bucks. The stock market has dropped 1100 points in two days making a lot of investors very nervous.
That oil stayed up shows that it is not hitched to the stock market and is a separate creature. For one thing it is a world market and events in the US while having a significant effect are not the whole story.
All true.
If this carnage continues another few days (at a rapid pace) and gets traders more nervous, then I might expect the oil market to react as "risk off" becomes a major priority again. Otherwise, no reason that oil fundamentals and stock market fundamentals can't sharply diverge.
In the short term, especially if things are dropping fast, the world stock markets tend to be highly correlated (a "follow the sun" mentality where large market drops tend to cascade around the world). But in the longer run, the regional stock markets will strongly tend to be influenced by regional economic strength.
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Looks like my prediction of higher volatility being "a thing" now is coming to pass, even as I never venture to try to hazard a guess as to short term market direction (because I'm clueless about that).
Given that Trump signed the bill to keep the US from defaulting today, and postponed that issue for 6 months, it can't be a good sign re confidence that yesterday's US market slide continued into today.