{"id":2247,"date":"2014-11-30T15:47:34","date_gmt":"2014-11-30T20:47:34","guid":{"rendered":"http:\/\/olduvai.ca\/?p=2247"},"modified":"2014-11-30T15:47:34","modified_gmt":"2014-11-30T20:47:34","slug":"cheap-oil-a-boon-for-the-economy-think-again-the-automatic-earth","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=2247","title":{"rendered":"Cheap Oil A Boon For The Economy? Think Again – The Automatic Earth"},"content":{"rendered":"

Cheap Oil A Boon For The Economy? Think Again – The Automatic Earth<\/a>.<\/p>\n

I thought it might be a nice idea to question a certain someone\u2019s theories using their own words, while at the same time showing everybody what the dangers are from falling oil prices. There are many \u2018experts and \u2018analysts\u2019 out there claiming that economies will experience a stimulus from the low prices, something I\u2019ve already talked about over the past few days in\u00a0The Price Of Oil Exposes The True State Of The Economy<\/span><\/a>\u00a0and\u00a0OPEC Presents: QE4 and Deflation<\/span><\/a>. And I\u2019ve also already said that I don\u2019t think that is true, and I don\u2019t see this ending well.<\/p>\n

Today, our old friend Ambrose Evans-Pritchard starts out euphoric, only to cast doubt on his self-chosen headline. He\u2019d have done better to focus on that doubt, in my opinion. And I have his own words from earlier in the year to support that opinion. Ambrose is bad at opinions, but great at collecting data; his personal views are his achilles heel as a journalist. That\u2019s maybe why he fell into the propaganda trap of picking this headline; after all, if you write for the Daily Telegraph you\u2019re supposed to write positive things about the economy.<\/p>\n

Oil Drop Is Big Boon For Global Stock Markets, If It Lasts<\/span><\/a><\/p>\n

\n

Tumbling oil prices are a bonanza for global stock markets,\u00a0provided the chief cause is a surge in crude supply rather than a collapse in economic demand<\/b><\/i><\/p>\n

Roughly one third of the current oil slump is a shortfall in expected demand, caused by China\u2019s industrial slowdown and Europe\u2019s austerity trap. The other two thirds are the result of a sudden supply glut, which Saudi Arabia and the Gulf states have so far chosen not to offset by cutting output. This episode looks relatively benign. Nick Kounis from ABN Amro says it will add $550 billion of stimulus to world markets.\u00a0\u201cThat is fantastic news for the global economy,\u201d<\/b>\u00a0he said. But it comes at a time when stocks are already high if measured by indicators of underlying value. The Schiller 10-year price earnings ratio is at nose-bleed levels above 27.<\/p>\n

Tobin\u2019s Q, a gauge based on replacement costs, is stretched to near historic highs. Andrew Lapthorne from SocGen says\u00a0the MSCI world index of stocks has risen 38% over the last three years but reported profits have risen just 3%<\/b>. \u201cValuations, as measured by median price to cash flow ratios, are near historical highs. As US QE has come to an end, depriving the world of $1 trillion printed dollars a year, there are plenty of reasons to be nervous,\u201d he said.<\/i><\/p>\n<\/blockquote>\n

…click on the above link to read the rest of the article…<\/p>\n","protected":false},"excerpt":{"rendered":"

Cheap Oil A Boon For The Economy? Think Again – The Automatic Earth. I thought it might be a nice idea to question a certain someone\u2019s theories using their own words, while at the same time showing everybody what the dangers are from falling oil prices. There are many \u2018experts and \u2018analysts\u2019 out there claiming […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[3],"tags":[246,1529,588,592,600,723],"class_list":["post-2247","post","type-post","status-publish","format-standard","hentry","category-energy-2","tag-economy","tag-global-stock-markets","tag-oil","tag-oil-price","tag-opec","tag-shale-oil"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/2247","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2247"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/2247\/revisions"}],"predecessor-version":[{"id":2248,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/2247\/revisions\/2248"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2247"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2247"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2247"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}