Every coin has two sides. Same thing can be said about soaring oil prices in global market place. Higher oil prices reflect a better economic outlook, as speculators bet on better gross domestic product (GDP) growth in the U.S. economy. This translates right into the stock market. But you don’t need to be economic analyst to guess that higher oil prices will reflect in higher gasoline prices. It could invite high inflation rates. It also could directly affect customer’s income.
Uncertainty about Iran’s nuclear program and clouds of war on Persian Gulf are worsening the case. Curtsy Iran tensions there is marginal increase on oil prices per barrel. Though it is minor increase expert’s guess is that it might be around 5 $ per barrel. In current scenario the stock market is not afraid of the raise in oil prices. The Federal Reserve has got back of their equities to be concerned. Stock market place investors are buying because of unprecedented monetary stability and the hope for better corporate visibility. Oil prices are going up because of demand and supply, coupled with some speculative fervor.
If rumors in stock industry are to be believed, oil prices are heading towards 125$ a barrel in near future. Oil has rapidly joining group of gold and silver. Concerns in stock markets are not only limited to raising oil prices. Speculations about geopolitical issues are also rife in the stock market. War in Persian Gulf will not help the economic growth of the country. Wall Street is expecting more oil price rises in the future. Street analysts have not predicted about how it would affect on U.S. Economy. Four dollars for a gallon of gas seems like the new norm and gasoline prices could go higher yet throughout the summer.
Though Government and The Federal Reserve have done good job to help to stock marketplace and supporting commodity industry since recession, policymakers and administrators should be more careful regarding soaring oil prices. Issue of inflation should be taken care by first preference. Not controlled M2 money supply give glitters to the US economy. Central banks and government are print friendly. They would love to print new currencies. They just prefer inflation scenario instead of belt tighten scenario. hot penny stocks Though at this moment we need not to worry about inflation but the white elephant in the room has already arrives. We can’t ignore the elephant. This inflation could affect our long term growth prospectus.
Though the clouds are gathering on US economy the current scenario is very promising. Distant future is lucrative too. For quite a while now, oil prices have been trading commensurate with the stock market place as a call on economic growth in the U.S. economy. This goody goody situation can be last till next year but then oil price factor could cause next recession to the global economy. So prepare for the worst and accept the best will be the investor’s mantra. For more details profit confidential