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Saturday, August 07, 2004

oil's up and the market's dancing....

well there seem to be a number of conflicting developments that could potentially affect the local economy mainly:
- high oil prices - $45 a barrel.. it seems like just yesterday that the american were bawling over oil at $35! now they just wish it would stabilize at 40! one always has to be thankful i guess. well what this means given the likelihood of high to somewhat high prices over the next year is that kuwaiti foreign reserves will just keep building up and given a rather overprudent approach to spending it should be another bumper year.. (in other words there will be huge contracts galore and a money glut that may make the last year look pale in comparison - where's greenspan with his irrational exuberance now?)
- interest rates have (rather rightly) been raised 50bps. this is much tamer than the previous point. relatively speaking this will not do much given that deposit rates still look paltry when compared to the gains to be made by investing in the products of the previous point (oil induced spending it can be called).
no wonder business class to kuwait has been sold out for the last year with no slowdown in sight... the carpetbaggers are back!


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