In London three years ago, Arab shoppers were everywhere. They were a mercantile phenomenon - rich,free-spending, clad in distinctive garb. This year, if one visits London, American shoppers are everywhere - just as free-spending, if less unusually clothed.
If anything can symbolize the difference between the world economy in 1981 and that of '84, it might well be those two sets of shoppers.
Today the dollar is mighty. Oil prices are a continuing source of concern in places like Riyadh, Abu Dhabi, Kuwait. As a result, London, the Anglophonic midpoint between the United States and the Arabian Peninsula, is drawing a more noticeably American crowd these days.
The world may well turn around again someday, just as it did for the oil nations in the early 1970s and against them in the early '80s. But for now, oil prices should continue to drop - perhaps precipitously, perhaps not. But drop, most analysts believe, they will.
That should ensure a continuation of low inflation (now at 4 percent a year). That, in turn, should assurethe Federal Reserve that easing up on the money supply will not spark off a new round of high inflation.
Extending the scenario, looser money should mean continued softening of interest rates, permitting economic growth to continue. Consumers (particularly home buyers) can continue to borrow. And investors can see more and more favorable relative performance of stocks vs. fixed-income investments such as money-market accounts.
Except, of course, if you are buying oil stocks.
Lower interest rates appeared to spark a 35-point surge last Tuesday. But then came a flurry of concern that oil prices might drop sharply, and the Dow (which closed Friday at 1,1xx.xx d/up xx.xx points for the week) lost ground. The oil group is a significant component of the Dow average.
It appears unlikely that the Organization of Petroleum Exporting Countries can indefinitely hold back market forces that are pushing down oil prices. Oil ministers meeting in Geneva last week patched together an agreement keeping the benchmark price of oil at $29 a barrel. Then they adjourned until Dec. 27 to get their nations' approval of a system under which OPEC will monitor member countries to try to prevent cheating on oil production.
That may work for a time. But lower - or, at the least, not higher - oil prices seem more likely in the future. And yet, given OPEC's determination to prevent a free-fall of oil prices, few analysts think that a ''price war'' is likely, either.
Suresh Bhirud, a stock market analyst at First Boston securities in New York, for one, sees it as more probable that ''North Sea oil will continue to nibble away at OPEC, and the (spot market) price will drop by 50 cents or a buck every few months.''
An all-out price war might endanger the world financial system. But a slow drop should continue to keep inflation moderate, which boosts the fortunes of companies in America's energy-dependent economic sectors. In particular, this means transportation stocks should do well, Mr. Bhirud says. At the same time, he notes, ''oil stocks could go to their 24-month low.''
This environment also helps companies that benefit from low inflation - the so-called consumer disinflationary sector. Moreover, the simultaneous decline in interest rates works in favor of capital-intensive corporations. Bhirud says an investor can feel relatively confident accumulating stocks ''in the quality sector,'' with the notable exception of oil stocks.
And even oil stocks are not as tainted as might appear, notes William LeFevre of the Purcell, Graham & Co. brokerage in New York. He points out, for example, that Exxon was trading around $44 a share last week and that its high for the year was $45.50.
Mr. LeFevre does not see the weakness of oil prices as a particularly troublesome problem for the Dow. The 35-point rally on Tuesday, he says, was followed by only modest losses, and these were to be expected after such a big gain.
In addition, he says, the stock market has been hit by crosscurrents: A number of options contracts ended Friday, and that caused some repositioning. Also, after that 35-point jump, he says, ''a lot of traders just began a long Christmas vacation.'' Trading volume has decreased steadily, and the market will probably not make a major move until after Jan. 1.
But like Mr. Bhirud, Mr. LeFevre is bullish in the longer term.
A bit more cautious is David Garcia of Howard, Weil, Labouisse, Friedrichs, a regional brokerage in New Orleans.
His state, Louisiana, has been particularly hard hit by weak oil prices - ''our core sector is energy,'' Mr. Garcia notes.
At the same time, he sees value today in smaller capitalization stocks, particularly those that are technology-oriented. He says the overall market should maintain a ''definable trading range,'' with a low end of 1,180.
Garcia views the energy sector acting as a drag on the Dow - just as it may have boosted the Dow back in those years that saw all those Arab shoppers in London.