Great news. Oil went below a $100 a barrel on Friday. We're rich.
That's how you're supposed to think now that the short-term top in crude has burst, and oil prices slumped nearly 15% in a week. Of course, it will be days -- if not weeks -- before any of that discount makes its way to the pump, but don't get bogged down in that. This is a celebration. A victory for consumers.
For the record, as your surly bear in all of this, I'm not buying into it, but that doesn't deflate the beliefs of people like Jim Paulsen, the chief investment strategist at Wells Capital Management. He points out that when you combine lower energy costs with lower household debt burdens and solid job growth, history shows that we Americans react accordingly.
"We have been underweight the discretionary sector since the middle of last year and are now back to overweight again," he says, while pointing to five similar periods of falling energy prices and consumer outperformance since 1990.
I'm not convinced. Consumers need relief in a lot more places than just gasoline. Inflation is running rampant. Paulsen agrees, saying that household debt burdens actually matter more than energy does, and they've slipped to 1985 levels.
By now, this surly bear is getting tired and looking to hibernate in the face of all this hope and optimism, just waiting for the day when he's proven right. Probably by the middle of next week.
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- For the record