Oil at $100 by Xmas?

[LeTim]

Any thoughts chaps? We're at $93 and the trend seems well set. If the FED do cut rates surely that's going to send oil over $100 and gold steaming up to $1000?

Should I be investigating the cost of a bicycle and hand cranked generator?

[g4ry13]

Very easily if Iran starts getting bombed or things start moving that way. The cold winter will also reduce supplies.

Edited by g4ry13 on Monday 29th October 10:36

[LeTim]

g4ry13 said:

Very easily if Iran starts getting bombed or things start moving that way. The cold winter will also reduce supplies.

Edited by g4ry13 on Monday 29th October 10:36

I was thinking if the Fed goes for it and cuts rates.

I can see 3 scenarios:

1 - Fed cuts rates, equities soar, hiring rises, recession averted, $ falls even more, oil spikes.

2 - Fed cuts rates, $ falls even more, oil spikes, recession happens anyway because consumers are truly exhausted now in a way they weren't in 2004.

3 - Fed doesn't cut rates, $ stabilises, oil falls, recession happens, stocks fall around 20%.

[mogul]

LeTim said:

g4ry13 said:

Very easily if Iran starts getting bombed or things start moving that way. The cold winter will also reduce supplies.

Edited by g4ry13 on Monday 29th October 10:36

I was thinking if the Fed goes for it and cuts rates.

I can see 3 scenarios:

1 - Fed cuts rates, equities soar, hiring rises, recession averted, $ falls even more, oil spikes.

2 - Fed cuts rates, $ falls even more, oil spikes, recession happens anyway because consumers are truly exhausted now in a way they weren't in 2004.

3 - Fed doesn't cut rates, $ stabilises, oil falls, recession happens, stocks fall around 20%.

Looking good then either way

[g4ry13]

LeTim said:

g4ry13 said:

Very easily if Iran starts getting bombed or things start moving that way. The cold winter will also reduce supplies.

Edited by g4ry13 on Monday 29th October 10:36

I was thinking if the Fed goes for it and cuts rates.

I can see 3 scenarios:

1 - Fed cuts rates, equities soar, hiring rises, recession averted, $ falls even more, oil spikes.

2 - Fed cuts rates, $ falls even more, oil spikes, recession happens anyway because consumers are truly exhausted now in a way they weren't in 2004.

3 - Fed doesn't cut rates, $ stabilises, oil falls, recession happens, stocks fall around 20%.

It depends what the fed say if they go for a cut. Also, it depends if they go for 25bps or 50bps like last time. 50bps will be a shock to the market and we'll see a large movement ~100 points in 2 minutes like last time, 25bps would probably still see a spike but not like 50bps as the markets have been factoring in a cut and may see Wall Street get back to around the 14,000 within a few days of it.

Situation #3 sounds a bit over the top, if the fed doesn't cut rates this week there won't be a huge economic melt-down. The markets have been expecting a cut so there would be some initial drop, but the market fundamentals are good. The housing and credit issues are the most plaguing issues. The way I currently see Oil prices, they are being dominantly determined by macro-economic factors and even without fed cuts oil prices can still easily increase if the political landscape takes on a harsher reality. On another Oil note Opec have a meeting scheduled pretty soon and they may opt for increases in supplies. It's all really speculative stuff though and a lot of ifs and buts.

[Welshbeef]

When is the Fed setting the rate - 1st working day of the month?

Whats your view on the BoE given that the 50points dropped last month and there may be a further 25+ points now? Usually the UK follows the states and if it does not then our export comps are just not going to be able to compete with a reducing $ value.

[LeTim]

Welshbeef said:

When is the Fed setting the rate - 1st working day of the month?

Whats your view on the BoE given that the 50points dropped last month and there may be a further 25+ points now? Usually the UK follows the states and if it does not then our export comps are just not going to be able to compete with a reducing $ value.

First off I'm not an FX trader, I work on the commodities side of things. But to balance what you've said about the FED cutting rates, remember that the ECB is looking at raising rates.

We're sort of in the middle.

But with inflation already stuck at around 4% ( RPI ) and all sorts of oil related inflation, food, utilities etc, is the BOE really going to want to stoke up further inflation with wages growth strong already and the economy running flat out just to save the housing market.....which is where alot ( all of ) the sentiment about rate cuts seems to be coming from.

[g4ry13]

Welshbeef said:

When is the Fed setting the rate - 1st working day of the month?

Whats your view on the BoE given that the 50points dropped last month and there may be a further 25+ points now? Usually the UK follows the states and if it does not then our export comps are just not going to be able to compete with a reducing $ value.

Wednesday, you can use this site for all upcoming economic announcements. http://www.digitallook.com/cgi-bin/dlmedia/uk_shar...

Fed cut rates, we didn't and neither did the ECB. I don't think the BoE will jeopardise our economy to accommodate that of a floundering US economy with its housing problems, unemployment, budget deficit and paying off for the wars and possible future conflicts. They've just got inflation back to manageable rates here and sentiment previously was another rate increase. Obviously the economic picture has changed a little since august, but further rate cuts will only start to push inflation back towards the 3% mark. The BoE may just go for a "wait and see" approach and see how things pan out and then make a decision in December.

[Welshbeef]

g4ry13 said:

Welshbeef said:

When is the Fed setting the rate - 1st working day of the month?

Whats your view on the BoE given that the 50points dropped last month and there may be a further 25+ points now? Usually the UK follows the states and if it does not then our export comps are just not going to be able to compete with a reducing $ value.

Wednesday, you can use this site for all upcoming economic announcements. http://www.digitallook.com/cgi-bin/dlmedia/uk_shar...

Fed cut rates, we didn't and neither did the ECB. I don't think the BoE will jeopardise our economy to accommodate that of a floundering US economy with its housing problems, unemployment, budget deficit and paying off for the wars and possible future conflicts. They've just got inflation back to manageable rates here and sentiment previously was another rate increase. Obviously the economic picture has changed a little since august, but further rate cuts will only start to push inflation back towards the 3% mark. The BoE may just go for a "wait and see" approach and see how things pan out and then make a decision in December.

One thing which drives me insane is the exclusion of the House price inflation within the CPI however when determining the rate house price inflation is specifically discussed.

Call me a sceptic but the change from RPI to CPI was another Labour sneeky move so that they could cheaply fund the huge NHS expenditure (and give us negligable visable & actual improvements apart from hyped Doctors & nurses salaries).

However they cannot exclude the export companies in the UK otherwise if they cannot compete as sterling is so high they will have less employment which leads to less highstreet spending etc. Also the HPI 2 months now of falling prices this could totally kill the high street (which leads to job losses lower profits for companies and a marked fall in the FTSE).

The other thing is that they held last month however due o the credit crunch the effective increase LIBOR went up significantly higher than the 0.25base points they usually sting us with.

$100 a barrel will mean huge UK inflation which will force the BoE to raise rates... which could be the tipping point of the property market & how many years does that take to stop falling and how many years then before they reach the ave price of today....