The GOOD NEWS is…..

Posted on 08/04/2011


Gasoline prices have fallen (as measured by the near term RBOB contract) markedly over the past few sessions.

Granted the move is largely correlated to expectations for slowing global growth (there was some?), but I’ve read countless times that every .01 move in RBOB (gasoline) equates to about $600 million in disposable income (nationwide).

For the better part of the past month, wholesale gasoline prices have vacillated around $3.10/gallon. Now front month Gasoline is selling for ~$2.75/gallon.

35(600)= 21,000 or what…….$21 billion (more) in disposable income? That translates into a lot of Ipads, Netflix subscriptions, 3D televisions, and back to school clothes.

I must point out that prices at the pump do not typically fall in lockstep with futures, but you can expect less pain when  you fill up the Hummer you bought (0% financing) in 2007 after you refinanced your house.

Speaking of refinancing – this race for liquidity has pushed rates to very near record lows, so if you happen to have enough equity in a home…….perhaps now it makes sense. TWO bits of good news on an otherwise scary day.

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