As we head into Memorial Day weekend, let's talk about oil.
Two year's ago (this time of year), the national average price on gas was $1.87. Last year: $3.04. Today, it's $4.60.
Throughout much of the past two years, the "climate actioners" were convinced that oil demand was rapidly eroding, on the fantasy of a rapid change to a world of ubiquitous electric vehicles and wind farms. So, they underestimated demand, while simultaneously regulating away (oil) supply.
The result has been ceding control on oil prices, completely, to OPEC. And that guarantees higher and higher prices (no limit).
With that, as we've discussed in recent weeks, the energy price input on the cost of living, has become a primary headwind for demand.
Add that to a reset in mortgage rates and a haircut in equity valuations, and we have an economic slowdown that will lower the standard of living, but may contribute to avoiding an economic crash (as the slowdown provides some relief against more aggressive Fed monetary policy action).
With that, as we discussed yesterday, the bounce in stocks looks early, and set to continue.
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Have a great weekend!
Best,
Bryan