Advertisement

If you want to know what has big miner’s rallying as iron ore craters, has banks partying as sell side research guts the economic outlook, has markets surging even the yuan crumbles, and has the Aussie dollar jumping back over 72 cents even as bank’s predict historic lows, then look no further than this chart of Brent oil:

tvc_d09f340071f1b928f962295dbf71c943

It just hit an eight month high. Oil lifts everything because it is so correlated with US credit via shale debt (charts from Deutsche):

Advertisement

But to my mind this cannot last. The oil market has not rebalanced, OPEC is broken and there’s more supply coming, plus a rising US dollar does not work well with oil:

The full text of this article is available to MacroBusiness subscribers

$1 for your first month, then:
Cancel at any time through our billing provider, Stripe
About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.