First, the good news.
Oil prices and the stock market remain positively correlated.
As you can see, the red line — which represents the 30-day correlation between the stock market and oil prices — remains above 0.0%. For now, when people are buying oil they’re also buying equities, which is a signal that oil prices represent strong end demand, and not the kind of supply shock that would really derail the global economy.
That chart is from a new report form Nomura’s Ian Scott and Robertas Stancikas.
Unfortunately, there’s another more worrisome fact from Scott and Stancikas.
The grey line shows oil consumption as a percentage of GDP, and as you can see, it’s easily in the territory where oil prices could dropkick the market.
Anyway, keep an eye on the correlations between oil and equities, and if you see days where oil keeps its bid, while stocks fall: be concerned.