The final dispatches of an already-dead earnings season and another batch of Fed blather may sway investors’ mood in the week ahead. But perhaps even more relevant to the stock market’s odds of building on last week’s big push — the best of the year so far — is oil’s next move.
Typically, the stock market and crude oil don’t exactly dance to the same beat. Logic would point to falling fuel prices = lower costs = improving profit. Stocks win. But this market is anything but logical, and the two asset classes are locked in a rare bit of correlation lately. In fact, Eric Bush of the Gavekal Capital blog points out the two haven’t been this linked since 1980.
Ben Bernanke touched on the topic last week, when he wrote “on the surface, the tendency for stocks to fall along with oil prices is surprising.” From there, the former Fed chairman took a deep dive into what the ups and downs in one of the asset classes really means for the other.
