The fluctuations in crude oil have dictated the direction for the stocks. A slide in oil futures has more times than not resulted in a tumble in the broader stock market. Conversely, a rise in oil prices, as was seen on Monday when West Texas Intermediate oil CLZ5, +0.60% saw a 2.5% pop to settle at $41.74 a barrel, has delivered a bump to stocks. The following table from Dow Jones data show that a strong positive correlation between oil and stocks has really taken hold in July and August of this year.
All the main U.S. indexes surged sharply higher on Monday, highlighted by a more than 230-point rally in the Dow Jones Industrial Average DJIA, +1.38%
|Year||Same Direction (Down days)||Same Direction (Up days)||Total Same Direction||Total Days||% of Days|
|Since Aug. 19||25||20||45||63||71.43|
|Aug. 19-Nov. 14, 2014||17||17||34||63||53.97|
|Aug. 19-Nov. 15, 2013||26||19||45||64||70.31|
More than 70% of the time that oil has moved in a given direction, stocks have followed. Compare that with a roughly 52% correlation for 2014. For all of 2015, the correlation is a little over 60%, according to Dow Jones data.
Our larger purpose, though, was to engage with local politicians. It is worth recalling what sparked the revolution in 2010 – which spread from Tunisia across North Africa and the Middle East. The risings began when Mohamed Bouazizi, a market trader, was driven to the horrific extreme of self-immolation because he had been denied ownership of his own goods and the right to engage in commerce. His was a protest against the violation of property rights, and he was not alone. In an authoritative study of the Arab Spring, the Peruvian economist, Hernando de Soto, chronicled hundreds of cases of entrepreneurs in Arab countries being driven to suicide by police corruption and harassment.
The Arab Spring, in other words, began as a movement against arbitrary government. Citizens were fed up with living under regimes that could make up the rules as they went along, seizing property without due process, rigging the law in favour of their clients. They wanted freedom: freedom of speech, freedom of assembly, freedom of worship, freedom of association and, not least, freedom to enjoy their own property.
The answer ought to be obvious. Religion isn’t going to disappear, much as some Leftists might like it to. The question is whether observant Muslims can be represented by values-based democratic parties, of the sort that the Western Right takes for granted, but that have so far barely existed in the Arab world except in Morocco and Tunisia.
No one can definitively answer that question, and the recent history of North Africa cautions against excessive optimism. Still, as Benedikt Koehler – a fellow CapX contributor and also a conference delegate – has regularly argued here, freedom and free markets were an integral part of early Islam. The aspiration to liberty is universal. Don’t write off an entire region.