The Weekly Bear: How to Play The Gas Slump

Gas tax collections declined 3.6% in July. This followed increases in May and June but collections have mostly been trending lower as gas prices have risen. This is consistent with the EIA data on gasoline demand, which shows a trend of weaker demand (chart below).

The US EIA reports gasoline demand weekly with a lag of less than a week. This is another source of near real-time data, which the media ignores, that is useful as an indicator of how the economy is doing right now.

Here we see the weakness of most US consumers. Despite the tax cut and tales of job growth and a growing economy, demand was barely higher in the July peak driving season than July 2017. That followed a stronger June spurred by lower prices. May had been very weak and demand slowed again in July.

Ignore Turkey. Something Else Is Skewing the Markets Here

Stocks fell sharply on Wednesday – then they gained it all back, and even rose a little further, on Thursday.

Ostensibly, that was because the Turkey crisis deepened on Wednesday and was resolved on Thursday.

The market’s gyrations are enough to make your head spin.

And so are the changing stories.

But I don’t buy them.

Instead, I have a theory on what is actually driving these market movements, and I want to eshare it with you today…

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