There has only been one other time in history when the price of oil
has crashed by more than 40 dollars in less than 6 months. The last
time this happened was during the second half of 2008,
and the beginning of that oil price crash preceded the great financial
collapse that happened later that year by several months. Well, now it
is happening again, but this time the stakes are even higher. When the
price of oil falls dramatically, that is a sign that economic activity
is slowing down. It can also have a tremendously destabilizing affect
on financial markets. As you will read about below, energy companies
now account for approximately 20 percent of the junk bond market. And a
junk bond implosion is usually a signal that a major stock market crash
is on the way. So if you are looking for a “canary in the coal mine”,
keep your eye on the performance of energy junk bonds. If they begin to
collapse, that is a sign that all hell is about to break loose on Wall
Street.
It would be difficult to overstate the importance of the shale oil
boom to the U.S. economy. Thanks to this boom, the United States has
become the largest oil producer on the entire planet. (more)
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