This is a syndicated repost courtesy of Confounded Interest – Online Course Notes For Financial Markets. To view original, click here. Reposted with permission.
In this highly volatile market, it is not surprising that the DJIA jumped 250 points (as of 1:15pm EST) with a jump in the West Texas Intermediate Crude Oil price.
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In fact, ever since The Fed’s tiny Fed Funds Rate target hike, the Dow has fundamentally been driven by oil prices.
So now that The Fed is on a mission of raising rates (as with the Bank of England), it is safe to say that crude oil has now replaced The Federal Reserve as the market driver.
That is, without The Fed for markets to be hysterical about, we now have crude oil to fan our flames.
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