Debunking The Myth Of An Oil-Driven Market Sell-off [United States Oil Fund LP (ETF), Energy Select Sector SPDR (ETF)]

The combination of greater cash flow and more confidence is starting to translate into faster spending. In November adjusted retail sales rose 5.1 percent year-over-year, the best reading since July 2013.

Middle income and lower-middle income families have largely sat out the stock market rally, and many have not fully benefited from the rebound in home prices. This is why consumer spending has mostly lagged the recovery. Lower oil and natural gas prices will go some way toward redressing this imbalance. With energy prices at multiyear lows, look for consumers to ramp up their spending, particularly at retailers that cater to middle income consumers.

Oilprices

Source: Bloomberg, as of 12/31/14

Sources: BlackRock research; Bloomberg.

Russ Koesterich, CFA, is the Chief Investment Strategist for BlackRock. He is a regular contributor to The Blog and you can find more of his posts here.

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