Is The Declining Price Of Crude Oil Actually Responsible For The Declining Stock Market?

By | December 18, 2015

The pundits on TV have all glommed onto the common argument that declining crude oil prices are responsible for declining stock prices!

I, however, am of the opinion that declining crude coupled with the overall decline in the CRB, are merely symptomatic of a greater potential problem.

That is the real possibility for the US economy to dip into recession leading to lower corporate earnings meaning that stock prices are currently overvalued (Commercial Real Estate: Is The ‘Smart Money’ A Buyer Or A Seller?‘). Perhaps investors are now coming to that realization.

Add to the mix that the Fed has now tightened ‘in the face of a still struggling U.S. economy, turmoil in emerging markets, angst in the high yield bond market and inflation that remains below the Fed target‘ (Source).

With this recipe what you get is the possibility for 2016 to be a difficult year!

One-Year CRB Index Chart

CRB Index chart

One-Year Crude Oil Chart

Crude Oil chart

One-Year S&P 500 Chart

S&P 500 chart

Michael Haltman is President of Hallmark Abstract Service in New York. He can be reached at mhaltman@hallmarkabstractllc.com.

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