Markets can move quickly. The economy takes a bit more time. A couple months ago was the end of the world according to markets. Today, all is well.
▶️ 3Speak
Markets can move quickly. The economy takes a bit more time. A couple months ago was the end of the world according to markets. Today, all is well.
▶️ 3Speak
I have a count that this was the low and we will see 120$ next but I have not much confidence in this as fundamentals are still screwed for years for oil.
But if this is the maintrade now and 90% are short, it will happen.
Summary:
In this video, the speaker discusses the significant changes in the markets over the past month, with a focus on the oil industry. He mentions that while oil prices have rebounded since hitting negative values a month ago, there are underlying factors such as decreased production and slow demand that will impact its future price. Additionally, he touches on the overall market sentiment, mentioning a potential V-shaped recovery and challenges faced by businesses and individuals due to the economic downturn caused by the COVID-19 pandemic.
Detailed Article:
The speaker starts by highlighting the drastic change in oil prices over the past month. He mentions that while oil futures were negative last month, the current prices are expected to be around $30, indicating a turnaround in the market sentiment. This shift demonstrates how quickly market dynamics can change, grabbing headlines but not necessarily altering the underlying fundamentals. Despite the recent price increases, the speaker emphasizes that the oil industry is still facing challenges due to reduced production and subdued demand.
An essential point made by the speaker is the cyclical nature of the oil industry, suggesting that the current slowdown in production will eventually lead to a surge in oil prices in the future. He predicts that within the next 12 months, the reduced supply and increasing demand will cause oil prices to skyrocket once again. This cyclical pattern, he notes, typically operates on seven-year timeframes, referencing the last major collapse in 2014 and the subsequent recovery.
Moving on to a broader economic outlook, the speaker brings attention to the stock market's rebound following the crash in March. He acknowledges the significant impact of the COVID-19 pandemic on businesses, highlighting cash flow issues, revenue problems, and challenges regarding unemployment and consumer spending. He cautions against overly optimistic perspectives on a quick recovery, pointing out that the market's reaction may not necessarily reflect the true state of the economy until it affects corporate earnings directly.
Furthermore, the speaker touches on the ongoing lockdown measures in various regions, noting their severe economic consequences. He references the Fed Chair's warning of a potential 30% drop in GDP in the United States, equivalent to almost $6 trillion in lost production. With the government's stimulus efforts falling short of compensating for this massive economic impact, he underscores the disconnect between the market performance and the real economic conditions on Main Street.
In conclusion, the speaker expresses a cautious outlook on the market's future, recognizing the challenges posed by the current economic environment and the uncertainties surrounding a potential recovery. While the optimism surrounding vaccines and market trends persists, he stresses the need for patience and a clear understanding of the complex interplay between market dynamics and fundamental economic realities.