Analysts are increasingly wary of the fundamental logic behind model-based financial trading,the link between the weakening US dollar and the sharp rise in oil prices as exaggerating the cause-and-effect.
"There are some arguments as to causation, but certainly not to justify the strength of correlation. To some extent oil has been used as a bit of a scapegoat to explain dollar weakness," State Street senior strategist Michael Metcalfe said According to reuters
"Anybody with a spreadsheet can throw out a correlation. It's a clear analytical error however to infer that correlation implies causality," said Steven Pearson, chief currency strategist at Bank of Scotland Treasury Services.
Many law makers and some experts blame hedge funds, pension funds and speculators for much of the rise in oil prices.
"There are people out there who have short-dollar, long-oil trades set up, that to a certain extent might be algorithmic or just react automatically to changes in those variables," Michael Waldron, Lehman Brothers energy analyst has said.
"If people do think in the short- to medium-term that there will be a
strong relationship between the two and they trade to capture that
relationship, it can reinforce the price movements."
The suggestion by a growing number is bad financial policy and a lack of regulations and enforcement of existing regulations are at the root of the issue.
"If you go back and look at the last 6-1/2 years and you ask what's behind the strength of the oil price, I would say it's the same thing that is behind the strength of other things and that was the extremely accommodative U.S. monetary policy," said Simon Derrick, head of FX research at Bank of New York Mellon.
Peter Beutel, president of oil consultancy Cameron Hanover, "At some point we'll come back to an era without the dollar mattering, I guarantee. Because we'd been going 25 years without this as a factor until last summer."
More and more this is on the minds of American tax payers, government failures and big money funds caused this problem and it's big money the government is now bailing out.
If they worked for me I would fire them all.
"There are some arguments as to causation, but certainly not to justify the strength of correlation. To some extent oil has been used as a bit of a scapegoat to explain dollar weakness," State Street senior strategist Michael Metcalfe said According to reuters
"Anybody with a spreadsheet can throw out a correlation. It's a clear analytical error however to infer that correlation implies causality," said Steven Pearson, chief currency strategist at Bank of Scotland Treasury Services.
Many law makers and some experts blame hedge funds, pension funds and speculators for much of the rise in oil prices.
"There are people out there who have short-dollar, long-oil trades set up, that to a certain extent might be algorithmic or just react automatically to changes in those variables," Michael Waldron, Lehman Brothers energy analyst has said.
"If people do think in the short- to medium-term that there will be a
strong relationship between the two and they trade to capture that
relationship, it can reinforce the price movements."
The suggestion by a growing number is bad financial policy and a lack of regulations and enforcement of existing regulations are at the root of the issue.
"If you go back and look at the last 6-1/2 years and you ask what's behind the strength of the oil price, I would say it's the same thing that is behind the strength of other things and that was the extremely accommodative U.S. monetary policy," said Simon Derrick, head of FX research at Bank of New York Mellon.
Peter Beutel, president of oil consultancy Cameron Hanover, "At some point we'll come back to an era without the dollar mattering, I guarantee. Because we'd been going 25 years without this as a factor until last summer."
More and more this is on the minds of American tax payers, government failures and big money funds caused this problem and it's big money the government is now bailing out.
If they worked for me I would fire them all.
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