In previous posts I’ve ranted that interest rates would be going up as soon as the U.S. election is over. Hoping we would get one more rally in the stock market before that happens now seems to be very unlikely. The indexes are plunging on a daily basis. Television pundits have an endless supply of excuses why the markets are tanking. Here’s my take.
I referred to the book “The Only Three Questions That Count” by Ken Fisher. In this book he explains how to data mine using the correlation coefficient function on an excel spread sheet. What it does is tell you if one price increase has any relationship to another price increase. In this case it’s oil and interest rates.
On my spread sheet I list oil prices from 1971 to 2008 during the month of July. Next to it I listed the prime rate for the same years. Then I made a column showing election years and the year after the election marking with an o and x respectively.
As stated in the book a number closer to 1 indicates a positive correlation and to -1 a negative one. So here’s what happens.
- From 1971 to 2008 we get .234 which means very little in itself.
- Next I matched up 1971 oil and 1972 rates and went down the whole list and get .338 a lagging indicator.
- Then I do the entries marked X , the year after the election for a number of .655
- Lastly I did a small sampling of when oil doubled with entries marked X and got a number of .915
So it’s easy to see that the year after the election is important as far as interest rates in relation to oil prices, especially when it doubles. I would think that this data is more reflective of what’s happening than any views by the TV gurus. They know this but aren’t telling you. I’m putting the prime at 14% and oil at $90 within two years. It’s going to be ugly.
In summation the sheiks get their money now, the banks will get their money later.

















