When you consider the S&P, oil is dirt-cheap

Savita Subramanian, Chief U.S. Equity Strategist at Merrill Lynch says that oil is “extremely undervalued” when considered against the current level of the S&P500. “Last month, the ratio climbed to its highest reading since March 2002. The peak occurred on March 17, when crude retreated to a six-year low of $43.46 a barrel. Yesterday, the indicator was 40 percent above its 30-year average -- displayed in the chart -- even after crude rose 29 percent from its low.” (Source: Bloomberg)

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