Dead Cat Bounce

There is a lot of cautiously good news for the energy business these days. The market is up, strongly so. While there remains plenty of bad economic news, like tulips in the spring, there are now occasional bits of good news on the economy. The price of oil, that bellweather of our industry, is over $ 60 a barrel. The tsunami like shock wave of bad news has swept over us the past 6 months, crushing everything before it. But like a shock wave, it is now past and we raise our heads out of our cellars and look around. Mirabile dictu - new projects are beginning. Today, it is easy to believe in spring.

But the question that haunts us all - Is this spring or is it Indian Summer? To use the language of the trading floor - Is this the beginning of a new bull market or is it a Dead Cat Bounce? The market uses the phrase "Dead Cat Bounce" to describe a market rally in a falling market. Metaphorically, it works off the fact that even though a cat is dead and has no life, it will still go up (bounce) somewhat if dropped far enough.

While I believe it a gruesome image, I do like the phrase. It has that combination of dissonance and vaguely scandalous thought that I strive for in my daily life. And it speaks so well to our current dilemma. Are we seeing the beginning of new and vigorous growth, or are we watching a dead cat that has fallen several hundred feet? No one knows the answer until well into the future, at which point it only allows us the pleasure of saying, "I told you so."

In the here and now however, decisions need to be made. Decisions that must be made in the fog. Decisions that can be ridiculed at some future date by those who know the outcome. The decisions that are made will affect peoples' lives. Across the country, people are struggling with this decision. Should I buy a new car, or should I keep the old one? Should we buy that bigger house our growing family needs, or do we make do for awhile yet. Do I commit our company's resources to a new capital project, or do I save my cash to buy my competitor's facilities out of bankruptcy? Our futures are being shaped by these decisions.