Oil and Gas and an explosive market. via /r/wallstreetbets #stocks #wallstreetbets #investing


Oil and Gas and an explosive market.

Disclosure: No position directly in Oil, and do not plan on taking one. Merely a speculation as to how it affects the rest of the market and why I believe oil will pop hard. Currently still holding Tesla sept 22 $200 puts I bought in December.

Political analysis: Biden has said it. Eric Adams, mayor of New York City, has said it. Leaders are pushing (whether we like it or not) to get workers back into their office and to end the “work from home era”. This means commuting once again which fuels (pardon the pun) the demand for gas and oil.

Fuel consumption analysis: remember during the start of COVID when the price of gas popped because of scarcity concerns and then we realized if we’re in lockdown, we don’t need gas? Well that dip eventually lead to a steady increase that I do not believe to be from inflation, but rather, people decided to travel while working remotely or homeschooling. Zion NP, near where I live, saw it’s first year ever surpassing 5m visitors, and it’s not an anomaly in the data set.

The price of gas rose steadily because people were still driving, just not necessarily to work and back.

Inflation analysis: I don’t think we’ve reached peak inflation as this renewed demand for gas and oil to be used for commuting will bring a heavy burden in the supply chains, not even considering Russia and that whole fiasco.

If gas and oil prices explode as demand heats up, we could see the worst inflation we’ve every experienced in the US.

Overall market analysis: Many Americans are already struggling financially, China is pulling an 08 in their commercial real estate market and the US is trying to push people back to the office to prevent the same fate stateside in major metros. The supply chains for chips, especially in light of Russia attacking Ukraine (whom supplies a lot of raw materials for chips), is going to further strain an economy that already lacks faith in its leadership.

If the cost of borrowing goes up, just like the cost of pretty much everything else has, people will not have enough funds to contribute to notable growth in the economy. Stocks are still priced way above reasonable P/E, except surprisingly Meta which isn’t super overly priced now. While this may not be a 1929 or 2008 style crash, I feel like we’re in for an above average correction that may take us a while to recover from.

That’s all thanks bye.

Submitted March 03, 2022 at 07:43PM by good-wolf
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