Besides central banks, the falling price of oil is one of the dominant market moving forces as we move into end of year trading. Here is what is and looks to be the winners and the losers.
The consumer. Every 10 cent drop equals about $10 billion in the consumer’s pocket…and that’s just here in the U.S. The longer prices stay down…the better.
Airlines, air freight, air anything. A huge percentage of their cost is fuel.
Truckers, drivers, Uber, taxis, the post office…ditto.
Mr. Obama: Notwithstanding a deflationary spiral, Mr. Obama can take credit, right or wrong, for the lower prices.
Business: Combining 0% rates with crashing oil prices means the cost of doing business continues to plunge…which equates to higher profits.
SUVs, gas guzzlers and big trucks: Consumers will be less worried because of the plunging price of gas.
Retailers: More discretionary buckos to spend.
Energy companies and their underlying stocks. Just take a gander of the charts of the XLE,XOP,OIH. We wonder how companies that have not planned for a new cost structure will do in this environment. The whole industry is used to having prices much higher.
Start watching Texas, North Dakota and oil producing states. Profits are going to plunge which will directly affect these state economies which have done so well because of higher prices.
Inflationists: I think we just made up a new word. There are many pundits that have been calling for major inflation because of Central Bank’s money printing. We can understand their argument. But now, it looks like commodity deflation is at hand. Remember, it is not just oil. It is copper, gold, silver and others that are being crushed.
Russia, Venezuela, OPEC countries…but especially Russia and Venezuela. Couldn’t happen to nicer governments. Unfortunately it will be the people that pay the price in worsening economies.
Gas saving cars: Obvious reasons.
Solar and wind power: Who the hell needs them with prices coming down so much!