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While most other asset classes have been stuck in the doldrums amid the credit crunch, oil just keeps on rising.
In fact, it hit a new record yesterday the New York price tipped above $80 a barrel briefly, and is still trading at above $79 a barrel this morning.
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The papers rushed to attribute reasons for the surge a disappointing production increase from oil cartel Opec, a larger-than-expected fall in US crude oil inventories while others were sceptical, citing massive speculation in the market.
But one thing seems certain if oil prices can manage to stay afloat in the midst of a massive credit crisis, and hit a record in the middle of a remarkably quiet hurricane season there seems little prospect of them ever returning to $40 a barrel any time soon
People still seem to have difficulty accepting the case for higher oil prices. This is good news for investors in oil.
Continued expectations that the oil price will fall towards $40 a barrel just as soon as all this ridiculous speculative money comes out of the market, or just as soon as the global economy slows down - mean that big oil stocks are still trading on low p/es. BP and Royal Dutch Shell both trade on forward p/es of around 11, while they yield around 3.5%.
We've made the case for investing in oil several times before global demand is rising as people in developing markets become richer and more urbanised; while oil itself is becoming harder and more expensive to get out of the ground. It's basic supply and demand. You can read the in-depth case here: Why oil investors are still smiling.
But in any case, this simply isn't being reflected in the price of big oil stocks, which are also well-positioned to weather the current credit crunch. Economist, stockbroker and regular MoneyWeek columnist James Ferguson recently wrote about one of his favourite oil stocks, Royal Dutch Shell, in the magazine. He reckons its share price could grow massively from current levels. Subscribers can read the article here: Oil investment what would Jean Paul Getty do?
James also runs his own email investment newsletter, Model Investor - you can find out more about it here: Model Investor.
Something else we covered very recently was the likely impact of the credit crunch on the UK housing market. As you might have guessed, we were anything but upbeat on the property market's prospects. And today we've seen the first signs that a genuine decline has begun.
The Royal Institution of Chartered Surveyors reported that more of its members saw house prices fall last month than rise, the first time that's happened since October 2005 (that was at the tail-end of the last big slowdown in the property market, if you'll remember).
The number of new buyer inquiries has also fallen at its fastest rate since August 2004 (which again, if you'll remember, was around about the start of the last big slowdown).
As you can see, the Rics survey has been a pretty good lead indicator in the past. So it seems very likely that we're at the start of another slump.
Of course, back in 2005, prices took off again. The Bank cut interest rates, boosting buyer confidence, and in the meantime, it hadn't actually become that much harder to borrow, despite a rising base rate, because banks were still comfortable with making their lending criteria even more relaxed.
So some might expect that the Bank can just bail out the market again - say, in six month's time or so. But this time around, interest rates are much higher than they were at the start of the last slowdown. Worse still, as the turmoil in the credit markets continues, mortgage rates have been getting further away from the Bank of England's base rate. Abbey and Halifax have put up their tracker rates in recent days, and it can only be a matter of time before rivals follow them.
In the meantime, the housing market has had a full two years to become even less affordable than it was then. Buy-to-let investors and first-time buyers have had an extra two years to stretch their wallets to their limits and beyond.
Somehow, we think it'll take more than a quarter-point rate cut to save the property market this time. In fact, our publisher, Bill Bonner, reckons the UK's coming housing crisis could make the US subprime slump seem tame by comparison. You can read his views in the latest issue of MoneyWeek, out on Friday.
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Turning to the wider markets
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In London, the FTSE 100 ended the day higher thanks to a strong start on Wall Street and gains for oil majors as the price of crude hit a record high. Defence stock BAE Systems topped the FTSE risers on news that it is in talks to supply 10,000 trucks to the US military. For a full market report, see: London market close
Elsewhere in Europe, the Paris CAC-40 closed moderately higher, up 29 points to 5,508. And in Frankfurt, the DAX-30 was 15 points higher, at 7,472.
Across the Atlantic, stocks gave up earlier gains to end the day broadly lower. The Dow Jones was 16 points lower, at 13,291, although there were good gains for oil giant Exxon Mobil Corp. The tech-rich Nasdaq was off 5 points, at 2,592. And the broader S&P 500 was flat at 1,471.
In Asia, rising property stocks including Sino Land helped the Hang Seng climb as a high as 24,537, a 226-point gain. Trading on the Japanese Nikkei was subdued as investors awaited the appointment of a new prime minister to replace Shinzo Abe. The benchmark index was just 23 points higher, at 15,821, today.
Crude oil futures hit the $80 mark for the first time ever in New York yesterday, but had since fallen back to $79.77. And in London, Brent spot was at $78.09.
Spot gold rose to $711.40 in New York late last night, but had eased to $707.90 in Asia trading. And silver was at $12.54.
Turning to the forex markets, the pound was at $2.0274 against the US dollar and 1.4569 against the euro. And the dollar was at 0.7185 against the euro and 114.5 against the Japanese yen.
And in London this morning, a Bank of England survey showed that consumer inflation expectations in August were at their highest level for at least eight years. The survey also showed that just 32% of respondents were satisfied that the Bank is doing its job 'to set interest rates and control inflation' properly.
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