Why don't we do this? Why don't we stand everything on its head? Why don't we ponder the opposite of what is happening and see if we would like the world more?
First, let's take oil. The market doesn't like lower oil, right? We can all accept that analysis? Isn't that the correlation these days? The market sees no benefit to paying a dollar-and-a-half less at the pump. It just sees the cutbacks in drilling and the suspension of some buybacks.
So, let's flip it.
Would we be happy at, say, $90 a barrel? Would we be thrilled at $100 where we pay $4? How about $120 and paying $5? Think of all the dividends that Conoco (COP) could offer? How about all the shares that Chevron (CVX) could buy back? Wowza! That would be great. Texas will have an even lower unemployment rate. It might spill over to New Mexico, even. And Continental (CLR) would be at $100!
Oh, and the overseas ramifications. For every dollar at the pump, our friends in Venezuela get 10 cents! Or how about our buds in Saudi Arabia? Twenty cents? We get to support that super government in Iraq that did nothing for us and they are easily rolled by ISIS. Hey, we support Iran and Russia?
Is that better than the consumer getting $1,000 more in disposable income?
If you say so.
I just think that when you think of it like that, you have to be insane to be wishing for oil to go higher. And don't give me that sweet spot stuff, either. I am a big fan of the oil and gas renaissance, but it never created as many jobs as I cared about. The real job growth comes from our country being the lowest-cost energy producer, which we are. It's just a fact that we are much better off economically with lower oil. It would be different if 90% of the S&P were oil and oil related instead of 10%, but it's not.
So enough, already.
How about rates? Here's one for you. We now hate lower rates. So, you know what? Let's take them back up, maybe to 3%. How would we be doing? I think you would have sellers of every single stock that yields more than 4% because their valuations are all stressed. Oh, make that 3%. You would have just a gigantic decline in the market. Housing, which is at recessionary levels as it is, would be crushed. Back to the 2008 blast zone, most likely. Every stretched oil company would be going bankrupt right now. We would have massive layoffs. That's what we are supposed to wish for?
How about if the dollar were in tatters? Now, I think that central bankers around the world have decided to make U.S. manufacturing the whipping boy and make us less competitive on just about everything. That's terrible. But if inflation were raging because of a weak dollar, then we would be seeing rates at say 4-5% for the 30-year and I think we'd get a major selloff.
Now here's what's really important: all three of those nightmare scenarios are indeed rational. You should sell stocks off them. I would be screaming that you have to cut back your stock positions because we are way too exposed up here to be able to sustain dramatically higher rates, inflation or oil
Why don't we think of it like that?
When you do, you understand why. Although I don't like this market now and think it is too crazy -- even for this guy -- I know it is a heck of a lot better of a market than what would happen if we got what most people seem to wish for.