Further escalation of the Libyan conflict is "a much greater threat to the global financial markets than the radiation leaks in Japan," writes CLSA's Christopher Wood this morning. Add in further interest rate tightening in China and the World Bank prediction that it will take 5 years to rebuild Japanese infrastructure and you've got the recipe for a slower global economy.
Wall Street is just waking up to the aftershock of the Japanese earthquake and tsunami -- the global supply chain of just-in-time delivery of electronic and auto parts from Japan. The basis of much productivity and profit gains in recent years has been severely interrupted. Industrial production of batteries, circuit boards and parts for Toyota and Nissan autos will cause a slowdown in global commerce. No doubt about it.
The only trade Streettalk sees good as gold is crude oil, which is already up 17.62% in a month. I'd be long crude oil futures and global producers away from the Middle East. And for good measure I'd own a coal producer like Peabody Energy, which is bound to profit from the blow to nuclear power, and the rising cost of oil. You're looking at unrest rolling across the region; demonstrations in Syria, a state of emergency in Yemen, a Day of Rage Protest in Saudi Arabia and he little understood prospect of continuing risks in the oil producing areas of Kuwait and Saudi Arabia where Shiite population present a threat to stability.
What's more: crude oil demand in the US rose 4.4% last month, further indication of a recovering economy.
Add in the very real blow to nuclear power prospects by the the existence of iodine and cesia in the Tokyo tap water and the uncertainty of getting the reactors in northern Japan completely under control and in repair. This Japanese meltdown has reduced electric power in Japan. It has caused the Chinese to review plans for their building of 37 additional nuclear plants and caused the Germans to review the safety provisions of 7 nuclear facilities.
Face it: the conflagration in Libya will be over soon. But the entire Middle East will never be the same. The new $67 billion Saudi royal family bribe for popular support is a bloody sign of weakness. The only timetable you can count on is an uneven, long lasting period of political volatility that will thrust oil prices up in fits and starts. Be long oil. Probably be long gold and silver as well, as the charts for both precious metals are in remarkable tandem.
You must protect yourself against the unleashing of political and social unrest through oil producing regions: Libya, Iran, Kuwait, Saudi Arabia, the Emirates.
�
Follow Robert Lenzner on Twitter: www.twitter.com/boblenzner
Christina Ricci Leslie Bibb Jodi Lyn OKeefe Whitney Port Kristy Swanson
No comments:
Post a Comment