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$130 Oil Will Crush Transports
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Wednesday, 28 May 2008
$130 Oil Signals Doom for the Transports
It seems like the most intuitive of trading theorems: Shippers use fuel to move goods and people around the world, so when oil skyrockets, the cost of shipping shoots up, too.
In good times, the shippers can pass these costs on through raw material producers, manufacturers and retailers and on to “end-users” (that’s us!). This is how crude oil inflation can infect an entire economy.

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In bad times, when regular folks are squeezed between a rock and a hard place, customers balk and shipping sales and profits fall off a cliff. Note that oil and the Transports ran neck and neck until last May. We got our first look at just how bad things can get when this critical sector fell 9%.

Now we are seeing the exact same sell signal all over again. Only this time oil is rising twice as fast. It’s time to sell off any and all shippers!


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