Markets Plummet Over Oil Games
Fight between Saudi Arabia and Russia over oil production sends the global markets into a panic.
Following last week’s volatility in the stock market over Wuhan coronavirus fears and the impact the virus may have on the global economy, the unexpected news of an “oil war” erupting between Russia and Saudi Arabia over the weekend sent the markets plummeting once again on Monday morning. As The Wall Street Journal reports, “Oil prices fell through the floor Monday with Brent crude closing at $34.36 a barrel, down 24% from Friday and 50% from its recent peak on Jan. 6. The shock triggered a fall in equities around the world, as investors fled to gold and bonds, with the Dow falling 7.8% Monday. A morning plunge of more than 7% triggered the New York Stock Exchange ‘circuit breaker’ to pause trading for the first time since 1997.”
Fortunately, the market appears to be gaining a good bit of that back as we go to press, but stay tuned.
Yet again, the ridiculous Democrat and Leftmedia narrative that President Donald Trump was Vladimir Putin’s puppet is once again refuted by reality. Russia’s actions against Saudi Arabia are in many ways directed at the U.S. and Trump in particular. As reported by CNBC, “It was only three weeks ago that the Trump administration imposed sanctions on Russian oil giant Rosneft for transporting Venezuelan oil. Secretary of State Mike Pompeo believes that in helping Venezuela sell oil, Russia is effectively propping up the Maduro regime. Rosneft is run by Igor Sechin, a former employee and close friend of Putin.” It appears then that Putin’s actions are ultimately a retaliation directed at the U.S. oil industry.
Lower gas prices are great, but this is not good news for the U.S. economy, which has been humming along with record-low unemployment levels and a lot of other good indicators. The bottom falling out of the oil market would produce a much more serious blow to the economy than media-ginned panic over COVID-19. To help prevent a serious economic slowdown, President Trump called on Congress to pass a temporary payroll-tax cut and expanded sick leave. “It’s not their fault. It’s not our country’s fault,” Trump argued in pressing Congress to act on his plan. “The main thing is we’re taking care of the American public.”
Predictably, the Democrats who have been longing for an economic downturn in the hopes of pinning it on Trump have no interest in working with the president.
The Federal Reserve last week announced an emergency interest-rate cut in hopes of combating the presumed negative economic impact of the virus and to stabilize markets. Now CNBC is reporting, “The New York Fed said Monday it will increase the amount of money it is offering to banks for their short-term funding needs. To make sure the funding, or repo, markets are working properly, the central bank said it will up the amount it offers in overnight operations from $100 billion to $150 billion through Thursday.”
Wall Street is obviously worried, but the “oil war” between Saudi Arabia and Russia could be short-lived, especially if Trump reminds Saudi Crown Prince Mohammad bin Salman who’s had his back in his conflict with both Iran and Yemen and encourages him to pull back on production. In the meantime, if you have any disposable income and some patience, now might be a great time to buy energy stocks.
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