The rise in crude oil prices this year underscores the durability of the US equity market’s recent rally, argues Nicholas Colas, chief market strategist at BNY ConvergEx.
He says financial assets such as stocks are historically cheap when compared to physical assets like oil. “Our analysis shows that the Dow Jones Industrial Average is cheap when it trades for 100 times the price of a barrel of oil, and expensive when it is more than 300 times a barrel. The current ratio is 140 times.”
