OIL VS STOCKS - THE RISK ISN’T PRICED IN Despite oil’s recent gains, the oil-to-S&P500 ratio remains in the lower end of its long-term cycle, 89% below its 2008’s peak. This last peak, which happened during a disinflationary cycle, remains itself well below its 1980’s peak (the last inflationary top). Indeed, at its current level, the ratio would need to be multiplied by 33 to reach the 1980’s level. So, while none knows where would the top happen this time, under both inflationary and disinflationary scenarios the risk seems to be on the upside, which could be a combination of higher oil and lower S&P500. This risk doesn’t seem to be priced in by the market for the moment. #OOTT $XLE