The drop in crude prices this week is a reflection of zero growth in the world economies. There is no stopping the slippery slide into the low $30 as global growth slows and dollar strengthens.
Depending on the Janet Yellen’s move mid-month, we could see West Texas crude trading near $29 a barrel by year’s end.
Good news coming out of Japan last night, is not good for the equity markets.
The Japanese government said its economy grew by 0.01%, which means it did not slide into a recession. With that “robust” growth for the quarter, it allows the Federal Reserve to hike with impunity.
This is the reason markets are down over 200 Dow points on Tuesday. The fact that Japan is in recession and Europe is grinding to a halt are of little concern to the Fed. They need to raise in order to have dry powder to lower when the US hits the skids prior to the election next year.