Crude Oil Sets Another Record High

How long can the US stock market hold up with crude oil prices setting another record high above $90.00 a barrel, with another round of ARM resets underway, with credit card debt exploding, and hot spots around the world getting hotter?

While an old wall street maxim is that the stock market climbs a wall of worry the present worries look more like a mountain to me, not just a wall. To answer the question posed above my own opinion is not very much longer.

The quality of debt held by leading financial institutions around the world has been very much effected by the over use of financial leverage. The packaging of sub prime mortgage loans into toxic mortgage bombs now held by these institutions is only part of the story. In addition, trillions of dollars have been “invested” in exotic derivations, many which have no liquid market.

This is not a time to believe the TV talking heads and to be bold. It is a time to protect your assets. All hell will probably break lose within the next few months. Stock market sentiment may well abruptly change once crude oil tops the psychologically important $100.00 a barrel level. That may not take very long given the current trend.

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