Mar 31, 2011

Even Before The Middle East Crisis, Oil Was Already Going Up

Even before the recent Middle East political shocks, oil prices had risen above 80- 90 a barrel, an increase driven not only by energy-thirsty emerging-market economies, but also by nonfundamental factors: a wall of liquidity chasing assets and commodities in emerging markets, owing to near-zero interest rates and quantitative easing in advanced economies; momentum and herding behaviour; and limited and inelastic oil supplies.

If the threat of supply disruptions spreads beyond Libya, even the mere risk of lower output may sharply increase the "fear premium" via precautionary stockpiling of oil by investors and final users. - in BusinessDay

Related: United States Oil Fund LP (ETF) (NYSE:USO), iPath S&P GSCI Crude Oil Total Return (NYSE:OIL)

Mar 30, 2011

Political Turmoil In The Middle East Increases The Risk Of Stagflation

Political turmoil in the Middle East has powerful economic and financial implications, particularly as it increases the risk of stagflation, a lethal combination of slowing growth and sharply rising inflation. Should stagflation emerge, there is a serious risk of a double-dip recession for a global economy that has barely emerged from its worst crisis in decades.

Severe unrest in the Middle East has historically been a source of oil-price spikes, which in turn have triggered three of the past five global recessions. The Yom Kippur war in 1973 caused a sharp increase in oil prices, leading to the global stagflation of 1974- 75. The Iranian revolution in 1979 led to a similar stagflationary increase in oil prices, which culminated in the recession of 1980- 81. And Iraq’s invasion of Kuwait in August 1990 led to a spike in oil prices at a time when a US banking crisis was already tipping America into recession. - in Business Day

Related: United States Oil Fund LP (ETF) (NYSE:USO), United States Natural Gas Fund, LP (NYSE:UNG), iPath S&P GSCI Crude Oil Total Return (NYSE:OIL), ProShares UltraShort DJ-UBS Crude Oi ETF (NYSE:SCO)

Mar 25, 2011

The Last Thing The Japan Needs Is A Strong Yen

"The Japanese already have a weak economy, the last thing they can afford is having the yen sharply higher. If the strengthening of the yen becomes excessive, Japan can make a case that "we are already on our knees" and further intervention is likely." - in The WSJ

Related: iShares MSCI Japan Index (ETF) (Public, NYSE:EWJ)

Mar 24, 2011

If An Agency Downgraded The US...

"If an agency downgraded the U.S. I think they'd probably have to headquarter themselves somewhere else. Politically it would not be popular." - in WSJ

Related: Moody's Corporation (NYSE:MCO)

Mar 23, 2011

There Are No Alternatives To The US Dollar As A Reserve Currency

"I'm not in the camp of those who think there's a chance of a long-term dollar collapse. What are the alternatives? People are sort of unhappy with the dollar, but the reality is there is no real alternative. A loss of the U.S. currency's preeminence will be gradual process, but I don't think the key role of the dollar is in jeopardy." - in The WSJ

Mar 21, 2011

Japan To Further Ease Monetary Policy

"They have already done QE I, QE II, now there will be a third round, and the third round might be larger than the smaller amount of quantitative easing that they have done so far." - in reuters

Related: iShares MSCI Japan Index (ETF) (NYSE:EWJ)

Mar 15, 2011

Japan Is Going To Need A Significant Depreciation Of The Yen

"Japan is going to need a significant depreciation of the yen to increase its net exports because domestic demand is going to be anemic for a while. Therefore on a fundamental basis, the yen is going to be much weaker rather than stronger because you need improvement of external balance given the shock to the domestic economy." - in CNBC Asia

Mar 11, 2011

Bloomberg Video Interview: Japanese Earthquake, Euro Zone Debt Problems And Markets

Video: Roubini Says Japan Quake 'Worst Thing' at Worst Time

March 11 (Bloomberg) -- Nouriel Roubini, founder of Roubini Global Economics, discusses the earthquake in Japan and the European debt crisis. He talks with Maryam Nemazee on Bloomberg Television's "The Pulse." (Source: Bloomberg)

Mar 9, 2011

If Oil Goes Up Another 15 to 20 Percent...

"If oil goes up another 15 to 20 percent [from the current prices], there's a risk to the US, the Eurozone, Japan." -

Mar 8, 2011

With Oil At 140 USD, Advanced Economies Will Start To Double Dip

The oil price going up to where it was in the summer of 2008, at $140 a barrel, at that point some of the advanced economies will start to double dip. In the U.S., where growth is accelerating fast, a 15 to 20 percent increase in oil prices, there won’t be double dip but growth reaching a stalled speed again. - in Bloomberg

Related ETFs: SPDR Gold Trust (ETF) (NYSE:GLD), United States Oil Fund LP (ETF) (NYSE:USO), iPath S&P GSCI Crude Oil Total Return (NYSE:OIL), SPDR S&P 500 ETF (NYSE:SPY), ProShares UltraShort S&P500 (ETF) (NYSE:SDS), iShares Russell 2000 Index (ETF) (NYSE:IWM), PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQQ)

Mar 4, 2011

European Debt Situation: Portugal & Spain

"I fear that Portugal is going to need an IMF and EU program … I think the biggest issue is going to be Spain, that is right now too big to fail but also too big to save." - in CNBC

Mar 3, 2011

Oil Could Rise To 150 Dollars A Barrel If Troubles Spread To Bahrain And Saudi Arabia

“If troubles spread to other countries such as Bahrain and Saudi Arabia, this could push oil prices up to 140 to 150 dollars per per barrel, which could trigger a double-dip recession in the periphery of Europe and the U.K.” - in a Paris conference

Related: Exxon Mobil Corporation (NYSE:XOM), Chevron Corporation (Public, NYSE:CVX), Halliburton Company (NYSE:HAL) , Schlumberger Limited. (NYSE:SLB), Repsol YPF, S.A. (ADR) (NYSE:REP), Murphy Oil Corporation (NYSE:MUR), ConocoPhillips (NYSE:COP), Marathon Oil Corporation (NYSE:MRO), Occidental Petroleum Corporation (NYSE:OXY) , Hess Corp. (NYSE:HES), Petroleo Brasileiro SA (ADR) (NYSE:PBR), United States Oil Fund LP (ETF) (NYSE:USO), iPath S&P GSCI Crude Oil Total Return (NYSE:OIL), Energy Select Sector SPDR (ETF) (NYSE:XLE)

Mar 2, 2011

The Muni Bond Market Outlook

"The municipal bond market has generated tremendous debate in the past months, with Cassandras predicting another “subprime” disaster, while apologists (often with vested interests) claim there is little justification for these warnings. We take an unbiased, detailed look at history beyond the halcyon largely default-free post-war era, and an honest assessment of state and local finances, present and future. Our base case sees close to US$100 billion of defaults over five years, but typical 80% recoveries are far higher than on corporate bonds." - in RGE