Stocks down, oil down

Stocks down another 3%. So,  yesterday, pension funds had to crowd the market due to synchronous regulatory demands, and the next day, congest is gone, and prices down. The pension funds paid an additional cost of 1% for that stunt.

On the margin, we want oil at about $60 to save the frackers, otherwise we get bad and sudden layoffs, a possible recession. Oil is $45 and dropping, the frackers will take a dive.  This is important because fracking was a big employment driver for about two years, after the stimulus drove oil prices back above $100 in 2010.

Cities in CA are taking a big pension hit, there will be layoffs.  Oil cities in Tx are taking a big hit, there will be layoffs.  Together they are a tipping point I fear. The rather sudden drop in oil should drive us to almost negative inflation for at least a quarter, causing a compound effect on debt costs. I do not consider this a crash, yet, but that point seems to be a lot closer today. Another 5% market drop and we are in deep doo doo.

The one,two, and five year points on the treasury curve are still contracted, so banking will have to hit the brakes, issue some lay offs. The mass layoffs will start to pile up, and we crash.