If oil drops below $30 a barrel, brace for a global recession…(Depression)
By WALLACE WITKOWSKI
MarketWatch.com
Jan 22, 2015
SAN FRANCISCO (MarketWatch)—The price of oil is about $17 a barrel away from signaling that a global recession is inevitable, according to a new survey of investment professionals.
The survey from ConvergEx Group polled 306 investment professionals, asking, among other things, what oil price would show that a global recession was inevitable.
“The idea behind this question was simple — at some point oil prices aren’t just a nice theoretical tailwind for global economies,” said Nicholas Colas, chief market strategist at ConvergEx, in a note. “Rather, they become a signal that worldwide demand is contracting so quickly that oil prices must quickly decline to reflect that fact.”
The most common answer was $30 a barrel, from 26% of respondents, with $35 a barrel being the second most common answer (16% of respondents). All told, 62% of respondents said $30 or lower crude was a global recession’s canary in a coal mine.
More than half those surveyed represented buy-side firms such as asset managers and hedge funds, and about a quarter of them were from sell-side firms such as banks or broker dealers, according to ConvergEx.
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