Gas Prices Are Going Up (Radio Interview)

January 3, 2020

On the Trey Ware Show, Karl Eggerss was interviewed to discuss the impact of the U.S. military strike against Iran on the stock market and the oil & gas market.

Trey Ware:                         That’s it, so the advantage now rests on the United States. Now, my friend Karl Eggerss is here from, and we want to talk a little bit about the futures. I see Dow futures are down, a little bit off this morning. So, what do you expect is going to happen here, Karl?

Karl Eggerss:                      Well, here’s the interesting thing. You mentioned it, that the Dow was up 300 points yesterday. The futures are indicating the Dow is going to open down about 250 points lower

Trey Ware:                         So, you’re 50 points to the good.

Karl Eggerss:                      Yeah, exactly. This takes us back to where we were like, I don’t know, yesterday at 10:00 AM. So, not a huge impact on the markets. I think the bigger impact, and you just alluded to it, was gasoline prices not only will go up maybe today, but we’ll probably see an increase over the next few weeks, because we know a lot of the gas pumps tend to go up on stuff like this, and even when it kind of calms down, they don’t bring their prices down.

We do have oil up almost 4% today, so that’s going to trickle into gasoline prices. And honestly, I mean, we’ve been watching oil and gasoline the last year, and those particular stocks have done very poorly because we’ve had so much oil due to our energy independence. But whenever you get a skirmish like this, you’re going to get a spike in that.

And initially, like you said, gold’s going to go up, stocks are going to go down a bit, but this is not what drives the stock market over the next several weeks or months. It continues to be the economy, what we’re doing with trade and China. China is now loosening their monetary policy, just like the Federal Reserve is here. Those are things that are driving the stock market up to new highs.

This will be a speed bump. People have been looking for reasons to take profits. This is probably a good reason. We’re in a new year here, so I wouldn’t doubt it. You have a pull back, but nothing to change the allocation on a news event like this.

Trey Ware:                         Well, and people at the beginning of the year tend to take profits. Usually in October and again in January they’ll take some profits, so that’s not going to be a big deal.

Goldman Sachs saying yesterday that the economy is structurally less recession prone today than it has been in probably 30 or 40 years. None of the main sources of recent recessions, oil shocks, inflationary overheating, financial imbalances seem too concerning for now. This is Goldman Sachs. As a result, the prospects for a soft landing look better than widely thought.

This is vastly different than what they were shouting several months ago saying, “We’re heading in a recession.” Now they’re saying, “We were wrong about that. Our predictions about a recession then were wrong. The fundamentals are great, and things look solid for us.”

Karl Eggerss:                      Yeah. I mean, look. There was a recession fear July, August, September of last year. I was on here with you saying, “Look. Things are slowing down, but we still don’t see a recession in sight.” Now everybody’s kind of coming on board with that theory and saying, “Yeah, maybe we aren’t going to have a recession,” and now you’re seeing stocks at a high.

And remember, we are now transitioning over the last 20, 30, 40 years to a service economy, so we don’t things sitting on shelves. We have technology to keep just in time inventory very quick. These companies are lean and mean. We have full employment, which is huge, as I mentioned, because we’ve got, obviously, the consumer’s in great shape right now.

So, could the economy be growing faster? Absolutely. We always want it to grow faster. But is it contracting? And the answer is no. [crosstalk 00:03:21]-

Trey Ware:                         You know what I’m going to do today?

Karl Eggerss:                      … event like this, it can continue to go forward.

Trey Ware:                         You know what I’m going to do today? I filled my truck up on the way in this morning because I knew what was going to happen. I know the gas prices are going to spike. But you know what I’m going to do with the stock market today? I’m going to do nothing.

Karl Eggerss:                      That’s right.

Trey Ware:                         Yeah.

Karl Eggerss:                      Because you know what, Trey? You’re calm, you’re cool, and you’re collected.

Trey Ware:                         Yep. Yeah. I’m going to do nothing. I’m going to stay on until 11:00 for Sean today, and when I’m done with that, I’m going to get in the truck, and I’m going to go straight to the house, and I’m going to have a little lunch, I’m going to say hi to Nancy. I’m going to chill out the rest of the afternoon. That’s what I’m going to do.

Karl, thank you, man. Calling, getting on the phone here in the last minute notice like this at I appreciate it. Appreciate you. Thank you, sir.

Karl Eggerss:                      Thanks, Trey.

Trey Ware:                         See you later. Karl Eggerss.