The U.S. equity market is stumbling terribly, with 10-year Treasury bond yields under 4%, yet the front month contract for WTI crude oil has benn stubbornly fixed above $92 per barrel.

What else would the peak in U.S. oil supplies look like?

Look, the U.S. equity, bond, AND housing markets are all foretelling a recession; why not oil? Maybe oil is foretelling the peak in oil supply is of greater import than the looming recession – or maybe not.

But it sure looks that way to me.


On another note, unless the equity market finds its footing FAST, the Fed is going to be forced to cut, stretching the inflation rubber band into a moon shot for 2009. I am not making a prediction here, but will react to the Fed instead. If they cut rates 50 bps, look for the dollar to crater versus commodities (and currencies).

Who knows? Maybe the only way to save housing is with 1% interest rates (and the resultant $300 per barrel oil)… but even that would only forestall the inevitable.

Yours for a better world,

Mentatt (at) yahoo (d0t) com