Since the peak in 2008, the Dow Transports and the price of crude oil has been extremely highly correlated. Whether this is due to the inextricable factor of central bank liquidity flushing 'money' into each and every market around the world - or an increase in the link between demand for energy and increasing transportation needs - it seems something has recently changed. Oil prices have been stymied in the last year as global growth slowed and in spite of a plethora of hot-spots for geo-political risk flares has been unable to see premia rise. On the other hand, the Dow Transports have screamed higher. Different this time? It would appear so... or is this a return to the anti-correlated (somewhat more sensible) energy-cost-to-transports world that existed before the crisis?
Post-Crisis - extreme correlation...
Pre-crisis - anti-correlated...
Charts: Bloomberg