4 Responses

1. Drew R

   29|Jan|2010 1

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   depends on what level you are talking about. the global market is doing fine, and that is how that arab countries that give the world most of the oil justify the high prices. the rest of the world does not look at the economy in america as an a major issue.

2. sue

   31|Jan|2010 2

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   In my judgment, the speculator’s The people who are working in the stock market, who are in [ futures} are driving everything up because they are gambling on what ’s going to happen in the future of certain stock’s and bond’s { most all commodities} Not really what’s happening today… Make sense?

3. Formerly known as Frank Castle

   02|Feb|2010 3

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   Yes.

   A Box of Chocolates going from Los Angeles to New York costs $100.00 USD with Oil at $50.00 USD.

   This box is moved by truck and trucks use diesel.

   A Box of Chocolates going from Los Angeles to New York costs $110.00 USD with Oil t $100.00 USD.

   This problem can be solved only in two ways:
   1) The company reduces their profits by $10.00 USD and the CEO gets fired.
   2) The company increases their profits by $10.00 USD and the CEO gets a $100,000,000.00 USD bonus.

   Let’s imagine you are the CEO and you choose the second option.

   You don’t need to be an expert in economics to understand the first option reduces the stock price and the second options increase the stock price.

4. eric c

   05|Feb|2010 4

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   Yes, and there is not a small chance there is a very large chance.

   Gas price can affect the economy, which will affect the stock market and these two can affect interest rates.

   The American consumer’s consumption makes up about 70% of our gross domestic product, which is the $ value of everything that is bought and sold in our country. As gas price increase due to the fact that the raw material prices of oil are going up we spend more $ on gasoline and less on other discretionary items. Sales of these other sectors drop and energy spending increases. Since we buy most of our oil from foreign countries like OPEC for example we are sending more and more $ to these other countries. They ship us oil and we ship them $’s, we use the oil and it is gone forever, the $’s we send them don’t simply disappear; they end up with something of value we end up with more CO2. We are transferring wealth out of the country to these places that sell us oil. It ends up being a drain on our economy. This is more complicated but I dont want to write a novel here.

   Stock value is derived from perceived value and expectation of future earnings. If a company is expected to make a lot of money for the next 30 years investors expect that they will share in the company’s success and stock price goes up. If a company is expected to make little money or lose money of the next 5 years or possibly go out of business investors perceived there is little or no value there and the stock price drops (this is a little more complicated but you get the idea). If the economy slows most areas of business, but not all, are expected to make less and in general stock prices drop.

   Gas is essential to how we conduct business in the USA. Imagine if the cost to transport a perticular product doubles, the price of that product goes up on store shelves to offset the additional cost of bringing them to market. This causes inflation; interest rates are sensitive to inflation levels. Would you want to keep you money in the bank if they are paying you 1% interest if the cost of you lunch is increasing 10% per year. Any money you save in the bank is losing spending power or its ability to buy goods or services. Investors demand higher interest rates if inflation is very high, this protects their spending power by giving them a higher rate of return which offsets inflation.

   All of these things are interconnected and can affect each other. If one has a major change it has a ripple affect on the other areas.