Macro picture is interesting for AOK with stock markets having seizures all around us.
The stock markets are crashing because QE in the USA is coming to an end. Usually a tanking economy causes the stockmarket to drop. In this case its because the economy is recovering! Stock markets around the world have gone up because its not worth putting money in bonds / banks at 0% interest. Now some of this is being unwound.
The oil price tends to follow economic activity. So a strengthening US economy should cause the oil price to remain strong in the face of a tanking stock market. Contrast this with GFC II.
The strength in the US economy is also reflected in the $US. $AUD is losing ground which is good for AOK - assests are mainly in $US. A double whammy is the slowing / reversal in:
- China economy
- mining infrastucture boom
- issuance of Ozzy Government debt
All of this should further devalue $AUD
Its counter intuitive when you look at the daily "shocks and scares" reports, but logically US Oil looks like a great place to invest right now.
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