Beware The Ides Of March

japan tsunami

The world awakens this morning to find Tokyo off 10% overnight, Europe off over 4% and the US set to open off 3%.  

As we mentioned in last night’s special note there continue to be blasts and fire surrounding reactor 4 a Fukishima which is leading the world to conclude that the fuel rods in that containment facility could be exposed.  

This morning the levels of radiation have lowered since the initial blasts and teams from the IAEA and the US are on their way to the site hoping to put an end to this terrible tragedy. We wish them well.

If we were looking at the Kobe situation in 1995 for any guidance we can make a few notes (Thank you BOA/ML, Bloomberg, & Business Insider for Chart)

1) Kobe had much less port damage
2) No Nuclear issue
3) Lower levels of leverage and indebtedness in the world

Last night we had the opportunity to be reminded by our friend David Herro that now is the time to be looking for further opportunities.  Who will benefit from a rebuilding effort.  We are looking very closely as industrial and materials companies.  We are also interested in commodities as any rebuilding effort will surely need large allocations from this sector.

The Fed meets today and will most certainly mention the tragedy and pledge to provide liquidity to the US and other parts of the globe.  In addition the jabbering around a QE3 should begin in earnest today if the US stock market follows the rest of the world.  

German investor confidence took a break this week coming of its recent highs on the back of Jean Claude Trichet and the ECB looking to raise rates.  We think that rate hike is now on hold no matter the price of corn, beans and oil.

Final Jeopardy this morning asks the question:  What happens when Saudi Arabia sends troops into its neighbouring country.

“What We Are Noticing”

  • Equity risk spreads came off only one half a per cent last night
  • Bonds are only up 1 point – that seems curious to us
  • US $ has finally gotten a bid but is seems very luke-warm pushing $ index over 77 for the first time in 10 days
  • Commodities are getting sold – we expect to fuel the stock habit people have
  • We are looking for value

Strategic Financial Group 

Investment Advice offered through Strategic Financial Group LLC, A Registered Investment Advisor.

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