First let's pay homage to Martin Luther King. Each MLK Day I take the time to listen to his entire speech and drink in the power, beauty and message he delivered. It continues to have a profound effect on my life...
Unintended Consequences of Iran Hostage Release
When markets fall, may they be equities or commodities, they fall harder and faster than observers expect. Market actions also get unusual catalysts and in this case it is political diplomacy in a hostage swap with Iran which opens the spigot for crude oil and pressure prices lower. This deal creates a river of oil and floods the market at a time when prices are plummeting. This supply is not needed at this time, it is one of the unintended consequences markets experience when they move to extremes. Oil prices falling too far - too fast - is bad for the global economy.
At Equities Research we believe Crude Oil prices (currently around $30 per barrel) will ultimate trade $12 - $15 per barrel or 50% lower than current levels. This would be an unprecendented move in pricing and would put "gas at the pump" under $1.00 per gallon in every state and will have far reaching global effects.
Let us not misunderstand the unintended consequences of action by our government and where this will come out. Everyone has been asking for lower fuel prices - be careful what you ask for .....I do not pretend to understand political diplomacy and few know one of the hostages was featured on the CNN show with host Anthony Bourdain.
Crude prices continue to be pressured in markets this morning. God bless all hostages returned from Iran.
Happy Martin Luther King Day to all !!!!
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