Aftermath and Going Forward – Japan 2011

Wednesday morning Tokyo markets closed higher as investors figured stock sell off was overboard. Tuesday our domestic markets recovered half their losses before settling at over 130 points down on the Dow. Some information as we move forward:

• Nuclear energy dead for at least a decade. That leaves oil, natural gas and coal as primary energy fuels and expect costs to continue to rise. Mid-East tensions continue with Saudi putting down dissidents in Bahrain.
• On Monday ETFs that specified Nuclear energy fell NLR –13%, NUCL –11%. Uranium ETF URA –18%.
• Up were ETFs that specified Solar, Wind, Natural Gas and Clean Energy.
• Oil down since it is traded in dollars. Flight to safety caused Treasuries to rebound and dollar strengthen. Don’t expect oil to remain below $100.
• Almost all commodities off as dollar strengthened.
• Gold fell and according to Mark Hulbert there is and was no fundamental reason why. Euphoria has been in the gold market lately and this usually leads a selloff. Bullish sentiment has pulled back from those overheated levels, according to Hulbert, and he suggested to sell gold first and ask questions later. He doesn’t have an answer to the reason why expect it is time for gold to settle down and then trade on fundamentals rather than emotion.
• Domestic stocks with huge Japanese market exposure according to Barrons.com: Pru, MetLife, Tiffany, Coach and Aflac.
• GE fell 2% but experts not worried about liability for reactor.
• Biggest losses among US mutual funds investing in Japan: Brandes Institutional International Equity Fund with 33% in Japan fell 2.7% on Monday and Columbia International Value Fund owned by Ameriprise fell 2.5%.
• Barrons.com suggested Exxon Mobile as strong buy going forward on Wednesday.
• Hedge Fund owner Barton Biggs made it clear he was buying Japanese stocks on Tuesday, adding to his portfolio as fundamentals were more attractive. Also mutual fund family First Eagle were being more selective in adding certain Japanese company stocks to their Worldwide fund portfolio.
• Most vulnerable holding in First Eagle Worldwide portfolio, according to them, may be MS&AD Insurance Group Holdings and SKSJ Holdings, two Japanese insurers.
• Many investors believe that the tragedy may in fact boost the Japanese economy forward when rebuilding begins.

Questions call Paul @ 877 783 7080 or write him at pstanley@westminsterfinancial.com.