Just a wild guess but the world’s financial markets were a bit rattled yesterday when Libya’s leader Muammar Gaddafi, “Guide of the First of September Great Revolution of the Socialist People’s Libyan Arab Jamahiriya,” vowed to fight to his “last drop of blood.” Warning of civil war, Gaddafi did his bit to plunge Libya into civil war by pledging that he will use the army and police to restore order, and calling upon his supporters to reclaim the streets.
Gaddafi has called the opposition “rats” and “microbes” and has said that they will face the death penalty after order is restored. On his record, I’d assume that the opposition would take Gaddafi’s threat seriously. Which, of course, gives them no incentive to stop trying to bring him down.
Gaddafi’s Libya is very different from Mubarak’s Egypt in one important way: The army in Libya is not a powerful, unified institution that could easily act to depose the country’s leader. Gaddafi has been very careful to keep the army divided along regional and tribal lines and there really doesn’t seem to be a unified command that could force him out and then form a transitional government. Any move by the army would itself likely come only after much fighting in order to work out those tribal divisions.
There’s a good chance that coming days will be even more violent—which will, of course, continue the flight to safety in the financial markets. In the short-run that means investors and traders are fleeing emerging markets and taking profits from recent market favorites—which explains the big sell offs yesterday in stocks such as engine-maker Cummins (CMI) or Potash of Saskatchewan (POT) down 6.3% and 5.5%, respectively. IShares MSCI Brazil (EWZ) was down 3.1% yesterday, for example. Asian markets were down big yesterday, with Hong Kong’s Hang Seng index down 2.1% and the Shanghai Composite down 2.6%, but showed a much more muted response today with Tokyo’s Nikkei 25 down 0.8%, the Hang Seng down 0.4%, and the Shanghai Composite actually up 0.3%
Should you be bargain hunting? Given the likelihood of even more violence in Libya in the next few days—and greater circulation of stories saying that Gaddafi has ordered the sabotage of Libya’s oil fields—I say you’re early but yes, bargain hunting will be in order not too far down the road. The big worry is that the violence in Libya will produce a permanent rise in oil prices above $100 to $110 a barrel. That would be enough to slow global economic growth. I think the Saudis have enough excess capacity to make up the difference—this time—so I think oil prices won’t stay at current levels once there’s some resolution in Libya. That isn’t to say that oil is headed back to where it was before Tunisia—just that I don’t think we’re going to see $110 as barrel oil as the new default price in the weeks ahead.
my point is that we don’t take all the options seriously when we talk about reducing our dependence on foreign oil. the only options you mentioned were expanding exploration or production but the other side of the equation – conservation – is our only true long-term hope and you didn’t even mention it. as long as the focus is solely on more production, we are doomed to follow an increasingly violent and environmentally destructive path.
semi
what’s your point?
sorry, i meant yx….
XY
too bad you didn’t include conservation in your list of things we can do to lessen our dependence on foreign oil, especially since it’s the single most effective, most efficient method and the impacts of doing so are all positive – except maybe on big oil.
I first time saw Cramer probably more than 10 years ago. I did not like him, because, as nocnurzfred said, he “jumps up and down”. I even dismissed him as doing a SHOW and I considered him a showman. However, several months ago, I somehow started to read the written form of his investment opinion (ie the transcript of his TV show) which is quite different from watching him on TV. Because his opinion in such transcript was very convincing and compelling, I ended up following him on a daily basis ever since. His daily opinion is on top of the must-read list of this highly educated professional.
Just like every other expert out there, he is not perfect either. Not everyone of his picks turned out to be a winner, but I found that he is more right than wrong and possibly more right than most experts. I believe if I had followed him earlier, I would have made much more money! (Stocks and their prices can not lie. It’s all on the records.) After months and months of reading his investment opinion and looking at the results, I has nothing but to say he REALLY KNOWS his craft that is investing. His prediction on market behavior is particularly interesting. Even in this latest market unravel, the market so far behaved very much like he predicted. I think his 30 years experience in investing means something.
Though I do want to mention one thing. Since I got to know him through his written opinion, recently when I had to check one of his video clips on internet, I realized it’s unwatchable. In that video, he wore a pare of boxing gloves and literately jumps up and down, yelling loudly. His action totally shadowed his opinion and I had to turn him off. But it did not degrade my opinion on his opinion. I just go back to his transcript, forget the TV or video.
Regarding his “touting too many stocks”, I believe he was simply answering questions from his viewers. His viewers call or email him about their stocks and it can be any stock. He is able to tell them “buy” or “sell” or “hold” on the spot. His viewers could come from anywhere or nowhere, therefore the stocks are all over the places and looked “too many” to those who are not familiar with. That doesn’t mean you have to buy or sell everyone of them. Juback has 50 in his Best 50, dozens in his picks, 10 in his dividend portfolio. Did you buy all them. I didn’t. It’s not that “he has to be right sometimes”, he is right most time by my observation. Occasionally Cramer was asked about stocks that he does not know, he always promises to study on it and come back with an opinion. I am quite impressed by it.
Now some of you may think I am promoting Cramer. In fact, I am not. Cramer is not for everyone. One needs time, knowledge and judgment to follow Cramer.
Regarding Qadaffy, I do think it’s quite right to call him “insane”.
Kind of sad to realize people actually listen to Cramer. He touts so many stocks, he has to be right sometime. I could do that. Anyway, yesterday CNBC reported that Khadaffy had declined to invest in Bernie Madoffs & Allan Standlers scemes, then Cramer jumps up & down screaming Khadaffy as being “Insane”.
canny:
I agree that market decides the price, but I also agree with Cramer’s notion that US should not be held hostage by the “mad god” of middle east. I do think there are things US president and congress can do at this moment. Such as immediately lift all drilling ban in the gulf, promote use of nat gas, expand drilling in Alaska and others, on and on. (Sorry, wind and solar may be still too expensive for me at this moment.)
Another no-panic argument is that the all important Saudi is QUIET. Read this.
http://www.businessweek.com/magazine/content/11_10/b4218000271863.htm
yx, actually I don’t think Cramer has his facts correct. The “find” in North Dakota is the Bakken shale, which has been producing for a long time. It is just that modern frac techniques are opening up more of it and increasing its production. The US is still a net importer of oil by a long shot, and one reservoir is not going to change that. Natural gas is a different story, but oil is still in short supply and the US will be a net importer forever without some change which is not currently visible.
His comment about pricing the US oil in Brent makes no sense at all. While the gap in pricing between “Light sweet crude” and “Brent” is large and a bit puzzling, it cannot be closed by a presidential statement. It is sort of like saying that more people could buy houses if the president would just say that bond prices must be lower. It doesn’t work that way… Oil is traded on exchanges, and the price investors will pay for the commodity is determined by economics and emotion, but not by presidential edict.
Well said, Jim.
Cramer of CBNC said this very interesting.
http://www.cnbc.com/id/41741130
Also in case anyone worries about spill over to Saudi, CNBC reported Saudi youth came out in joy welcomed king’s return.