Sometimes it pays to keep things simple.
Yes, energy intensity has gone down (productivity up). And so you see a lot of graphs making the point that an oil price spike doesn’t have quite the same negative punch to income that it used to.
Equally, the humble oil price spike is up there with the term spread in terms of predictive power / track record for calling recessions (of course, even then we quibble with the term premia adjusted spread), and such a signal should at least be recognised, if not necessarily heeded.
For us, it mostly means taking profits on some of our oil plays, but it does mean we are thinking about high beta names that might be (in the context) richly valued.
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