For months, I’ve been pounding the table on oil and gas being overpriced. Algos have relied heavily on rising oil and gas prices to keep stocks from melting down again. Central banks, however, could not keep interest rates under control as long as inflation was being driven higher by rising oil and gas prices.
A few of our recent missives:
Our premise has been that oil and gas prices, which have ignored supply and demand-based pricing on countless occasions in the past, would be driven lower out of necessity.
With May’s CPI data about to written into the history books, we’re finally seeing the payoff from that stance. Gas has tagged our initial downside target from May 21 [see: Once More, With Feeling], with oil close behind.To make matters even tougher on stocks, Italy is (again) not quite as fixed as the Masters of the Universe would like folks to believe. This has driven the euro progressively lower……and opened the door for the interest rate decline we’ve been expecting.It even made it possible for DB’s next downside target to be tagged.The big question this morning: can the damage be contained, or is SPX’s 2703 support in jeopardy again?
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