drbagel

ETFs For When Oil Falls

Banks are very negatively correlated with oil right now. KBE is -.9 with USO over the last year according to SSGA website. Why? Inflation. Oil is an inflation hedge and a drop in oil would by highly disinflationary. Lenders, like banks, loose money on inflation as borrowers make fixed payments in increasingly more worthless currency. So add KBE to your list of oil hedges.