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NYT: Rising Gas Price Good For Stock Market

From a section of the New York Times aptly named ‘strategies’:

Numbers That Sway Markets and Voters

By JEFF SOMMER
Published: March 3, 2012

SOMETIMES a number is just a number. But on Tuesday, when the Dow Jones industrial average closed above 13,000, it was treated as much more than that

Largely because of tensions in Iran and other countries in the region, oil prices rose more than 22 percent in the six months through Thursday, according to John LaForge, commodity strategist at Ned Davis Research.

While those numbers may be disquieting, they haven’t had much of an effect on either the stock market or consumer sentiment, said Ed Yardeni, an independent economist who has analyzed the price surge.

Partly because energy companies including Exxon and Chevron account for 12.3 percent of the market capitalization of the Standard & Poor’s 500-stock index, rising oil prices “may actually be good for the stock market, up to a point,” he said.

Since the second half of 2008, Mr. Yardeni says, there has been a strong positive correlation between energy prices and the stock market.

And never mind the economic collapse in Europe, which could be driving investors into the US stock market.

If prices continue to rise, though, that benign influence is unlikely to last, he says

Ned Davis Research has found that when oil prices climb by more than 33 percent in a six-month period, stock market performance then tends to weaken, Mr. LaForge said. Prices may not be a big problem right now, he said, but that could change quickly.

[Richard B. Hoey [sic], the chief economist of BNY Mellon] said that oil prices might spike further, but that they were likely to come down without much lasting harm

In the past, the domestic effects of rising gasoline prices have sometimes included a decline in auto sales. So far, though, the most recent energy price surge hasn’t had that effect.

To the contrary, auto sales rose sharply in February, carmakers and analysts said last week, with the seasonally adjusted selling rate for new vehicles climbing to about 15.1 million, the highest level since February 2008

So, apparently, we have nothing to worry about. Obama can go full steam ahead in jacking up the cost of gasoline. And yet:

Thanks in part to the long-term impact of rising prices, the nation has become far more energy-efficient in recent decades, so high fuel prices today shouldn’t hurt as much as they once did

Thank you high fuel prices!

What’s more, inflation in the United States is quite low at the moment — largely because of the weak economy.

No, this is largely due to the fact that gasoline and food are not counted in the Consumer Price Index, which is the government’s measure of inflation.

Whereas housing is. And we all know how great it is that the value of housing has gotten so low.

Yet the apparent relationship between rising gas prices and falling presidential approval ratings appears to be as strong as ever, Mr. LaForge said. “President Obama will need to be paying close attention to gasoline prices, even if they don’t have the impact they once did,” he said.

This is a warning to Obama from The Times.

Even we won’t be able to cover for you much longer.

This article was posted by Steve on Monday, March 5th, 2012. Comments are currently closed.

6 Responses to “NYT: Rising Gas Price Good For Stock Market”

  1. GetBackJack says:

    NYT is obviously crewed by fools and captained by inbred dunces.

    This, editors of the NYT, is how far the dollar has fallen …

    http://www.investmentlogs.com/wp-content/plugins/wp-o-matic/cache/e473d_mmw20120204a.jpg

  2. tranquil.night says:

    Wow, talk about stretching to find a silver lining.

    Whenever journalists try and explain market forces, I wonder if they grasp how truly ignorant and transparentally agenda-centered they sound to market professionals. And even amateurs that understand a few basic rules.

    • Rusty Shackleford says:

      Reporters know very little. Someday, you may witness a report by some talking head who also wrote the piece they are mouth-farting at you, and it’ll be about something you know a great deal about. The absolute ignorance will astound you.

      My first exposure to this was many years ago when Dan “Dead-Air” Rather was reporting on the F-15E’s taking off from Saudi-Arabia to go to Kuwait in the early morning hours and kept talking about the flame emanating from their exhaust. He kept reminding the viewing public that the planes were “not on fire” and that it was absolutely normal when they would light the *sigh*

      thruster-boosters

      Yeah…he said “thrusterboosters” about 17 times.

      I have been involved with aviation all my life. The term is “afterburner” and the Brits used to call it, perhaps more accurately, “reheater”. The process involves dumping raw fuel into the already hot exhaust of the engine in a metered way to produce additional significant thrust.

      But every time he said “thrusterbooster” I winced. It also occurred to me that since he was displaying his ignorance about it, what else could he be ignorant about. As it turned out, pretty much everything. The term “talking head” became ever more clear to me and it was the beginning of the end of my watching any news that was on television. In fact, to do so these days is painful because where I have spent time getting more educated in our political process, those who “report” the news seem just ever that much more stagnant intellectually.

      But you clearly spelled it out TN, the newspeople are and always were, the butt of jokes on the college campuses and for good reason.

    • tranquil.night says:

      “He kept reminding the viewing public that the planes were ‘not on fire’ and that it was absolutely normal when they would light the *sigh* thruster-boosters”

      LOL great memory Rusty. What a perfect representation of the MBM’s general disposition: always trying to sound intellectual and informative while displaying abject ignorance in the same sentence.

      I get so used to it because Steve picks it apart so regularly here. But you’re right, they’ll promote some narrative on which you personally are well versed in the details, and it’s a complete reminder of what BSers they are on just about everything.

  3. beautyofreason says:

    LOL I remember all of the negative news coverage when diesel went to 4.00 a gallon near the end of Bush’s second term. How times have changed.

  4. wirenut says:

    Why Not , Excessive Food Prices Eases Starvation! Luv the NYT’s. All the news that fit to spit.


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