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Self explanatory chart: Oil remains bid despite the Chinese economy facing a recession or in a 'recession', due to geopolitical issues from 2022. Please refer to 'call out' notes and the season (% of change) chart from 2022, 2023 and 2024. 2024 was probably a year of stagflation - lite, Iran/Russian sanctions and possibility of Iran military action in 2025, will lead to full stagflation if China cannot come back on line.
The oil price is bid over 73, despite oil consumption from China and U.S. in freefall. Heading towards pandemic lows of 2020. China's construction industry could already have collapsed with a -9% plunge in oil usage. U.S., refineries are cutting 90% of storage capacity. Sounds recessionary? Except, an oil shock cannot be ruled out on Middle Eastern, Ukraine/Russia conflicts.
Stocks are bouncing off 10 YR yields falling, after safe haven inflows. HFTs bidding a little too hard as a precursor that risk has been priced in. It hasn't. Oil is still trading above $69 and below $97, average price at $85. MArkets are on hope that the bond market will be supported in another full blown crisis. Problem: we do not have deflation.
