Jonock's Blog : Revisiting Oil is just taking a break during the Recession

In a Last August (Jonock's Blog : Oil is just taking a break during the Recession.) I mentioned that oil would start up when the non-demand factors were removed from the economic equation. As JJJ can verify, (See JJJ's comment, on original) oil is not $25 a barrel, oil is on the way up. But dont get too, excited, remember there are three additional conditions that must be met before the economy can be declared healthy. They are:
1-- Housing supply < 8 months.
2-- Personal saving > 7% of personal disposable income.
3-- Percentage of total debt service charges < 15% of household net income.
(U.S. economists consider the above figures as historic norms)

Current readings of the above indicators for US Market

1-- Housing supply April 2009 > 12 months
http://www.housingbubblebust.com/HsgData/CB/New/Sales/Supply.html

2Personal savings = 4.2 % of personal disposable income. http://www.bea.gov/newsreleases/national/pi/pinewsrelease.htm

3-- Percentage of total debt service charges = 13.9% of household net disposable income.
According to the Feds DSR (Household Debt Service Ratio) which measures the percent of debt payments to disposable income, the ratio for Q4 2008 was 13.9, which means that 13.9% of our Disposable Income goes towards outstanding mortgage and consumer debt. The reason for this low figure is the government stimulus program to support delinquent mortgage holders.

Money made in bear rally spends just as well as money made in a bull rally. But remember different investment rules apply in bear and bull rallies. This bear rally has legs he won't hibernate till fall. But when he does its going to be a long cold winter.