Geopolitics and capital markets
Three Americans, two Egyptians, two Thais, one Briton and one Filipino have been captured by militants in Africa, but the world has been taken hostage. Al Qaeda we all know about, but until today I had never heard of the Movement for the Emancipation of the Niger Delta.
Today (Feb 20, 2006) the rebels, who apparently control a large oil-rich region of swamps and estuaries of Nigeria, where 8 million locals are living dead poor, said they planned to broaden their military action against the helpless government.
The focus of their attack has been against the assets of Royal Dutch Shell (NYSE: RD), which apparently has rejected blackmail demands of $1.5 billion for the nine hostages.
And today, because attacks on oil installations have already cut about 455,000 barrels of daily production, or 20-pct of Nigeria's oil output, April Brent crude futures rose $1.47 to $61.36 a barrel on London's ICE Futures exchange.
Such is the impact of geopolitics. Where a small guerrilla army brandishing rockets against oil drill ships, tankers and pipelines, can immediately make the world pay out billions.
No, this is not a Hollywood movie. It is the reality of the 21st century.
As the world becomes a smaller place, even the poorest people in the most remote places of it, see all. Through satellites, the Internet, and mobile phones, the poorest people of this world can easily see the great financial wealth of others. And they want their piece.
And as it happens, a growing global economy needs the great commodity wealth of these remote places, and it is being taken from these poor people.
Yes, there is a conflict; it is all about capital markets and social equity.
Whether it is in Nigeria or Afghanistan, Palestine or the inner cities of America, this conflict is a simple one to understand.
As I see it, for many years going forward, there will be a growing tension between the haves and the have-nots, leading increasingly to military conflict. And building aggression means building defense, which means that capital that otherwise would be deployed for investment that creates new wealth is going to be increasingly squandered.
Growth in the money supply of nations without a resultant increase in economic returns means just one thing. It means inflation. And that means higher interest rates and more devaluation of currencies, which in turn leads to higher commodity prices.
So whether those commodities are oil and gas, precious or base metals, or agri-related, we are going to pay more.
We have paid much more for oil and gas in the past year. We have also paid much more for the metals. And soon, we are going to pay much more for the food produced from the land and sea in these poor countries.
Many commodities are in short supply. It also takes much in time and money costs to recover them and process them for consumption, and ship them to consumer markets. It takes a lot longer and more work to do all that than it does for governments to print paper money.
But the biggest problem is that these commodities are mostly found in lands controlled by relatively poor people, and relatively rich people, who don't want to pay much, take them.
Wars start this way. They always have - from time immemorial.
Nobody wants war, but then again nobody seems to want to meet the needs of the poor, so war is inevitable at times.
When the world is at war, commodity prices are favored. When the world is at peace, financial asset prices are favored.
As you know, my portfolio is over-weighted in shares of companies of commodity producers, like the oil and gas producers and the metals producers, and their suppliers. And when the global economy starts to pick up, or gives me an indication it will not go into recession, I'll add some shares of the chemical and paper and forestry companies, which along with some of the golds is the place to be looking for values today.
If war (or what President Bush refers to as "national security issues") is going to be a regular event this decade and next, then other than aerospace and defense and heavy construction of the industrials sector, I think these sectors (energy and basic materials) fundamentally are the two safest places for traders to be long.
Without the use of graphics, this is a simple looking list. Of course, it includes many stocks that are presently over-priced for the short-term, based on RSI technical indicator studies of the weekly price data, and the list also contains some companies that are not financially strong or operating successfully today.
Because of geopolitics, it is a starting place to find good candidates relative to market conditions.
Oil and Gas Sector
- Company Sub-industry GICS id Country Local Ticker US Ticker
- Amerada Hess 10102010 USA AHC AHC
- Anadarko Petroleum 10102020 USA APC APC
- Apache Corp. 10102020 USA APA APA
- Ashland Inc. 10102030 USA ASH ASH
- Baker Hughes 10101020 USA BHI BHI
- BG Group 10102010 UK BG.L BGR
- BJ Services 10101020 USA BJS BJS
- BP plc 10102010 UK BP.L BP
- Burlington Resources 10102020 USA BR BR
- Canadian Natural Resources 10102020 Canada CNQ.TO CNQ
- ChevronTexaco Corp. 10102010 USA CVX CVX
- CNOOC Limited 10102010 China 0883.HK CEO
- ConocoPhillips 10102010 USA COP COP
- Devon Energy Corp. 10102020 USA DVN DVN
- El Paso Corp. 10102040 USA EP EP
- Enbridge Inc. 10102040 Canada ENB.TO ENB
- EnCana Corp. 10102020 Canada ECA.TO ECA
- ENI SpA 10102010 Italy ENI.MI E
- EOG Resources 10102020 USA EOG EOG
- Exxon Mobil Corp. 10102010 USA XOM XOM
- Halliburton Co. 10101020 USA HAL HAL
- Husky Energy Inc. 10102010 Canada HSE.TO HUSKF.PK
- Imperial Oil Ltd. 10102010 Canada IMO.TO IMO
- Kerr-McGee 10102020 USA KMG KMG
- Kinder Morgan 10102040 USA KMI KMI
- Marathon Oil Corp. 10102020 USA MRO MRO
- Nabors Industries Ltd. 10101010 USA NBR NBR
- Nexen Inc. 10102020 Canada NXY.TO NXY
- Nippon Oil Corporation 10102020 Japan 5001 NPOIF.PK
- Noble Corporation 10101010 USA NE NE
- Norsk Hydro ASA 10102020 Norway NHY.OL NHY
- Occidental Petroleum 10102020 USA OXY OXY
- OMV AG 10102020 Austria OMVV.VI OMVKY.PK
- Origin Energy Limited 10102020 Australia ORG.AX
- Petro-Canada 10102010 Canada PCA.TO PCZ
- Petrobras (Petroleo Brasileiro) 10102010 Brazil PETR4.SA PBR
- Petrobras Energia Part - Cl. B 10102010 Argentina PBE.BA PZE
- PetroChina Company Limited 10102010 China 0857.HK PTR
- Precision Drilling 10101010 Canada PD.TO PDS
- Repsol YPF , S.A. 10102010 Spain REP.MC REP
- Rowan Cos. 10101020 USA RDC RDC
- Royal Dutch Petroleum Co 10102010 Netherlands RD.AS RD
- Santos Limited 10102020 Australia STO.AX STOSY
- Schlumberger Ltd. 10101020 USA SLB SLB
- Shell Transport & Trading Co 10102010 UK SHEL.L SC
- Statoil ASA 10102010 Norway STL.OL STO
- Suncor Energy Inc. 10102010 Canada SU.TO SU
- Sunoco., Inc. 10102020 USA SUN SUN
- Talisman Energy 10102020 Canada TLM.TO TLM
- Tenaris SA (ADR) 10102010 Argentina TS.BA TS
- Tonen General Sekiyu 10102020 Japan 5012
- Total SA 10102010 France TOTFn.PA TOT
- TransCanada Corporation 10102040 Canada TRP.TO TRP
- Transocean Inc. 10101010 USA RIG RIG
- Valero Energy 10102020 USA VLO VLO
- Williams Cos. 10102040 USA WMB WMB
- Woodside Petroleum Limited 10102010 Australia WPL.AX WOPEF.PK
- XTO Energy Inc. 10102020 USA XTO XTO
Basic Materials Sector
- Company Sub-industry GICS id Country Local Ticker US Ticker
- Abitibi-Consolidated Inc. 15105020 Canada A.TO ABY
- Acerinox, S.A. 15104050 Spain ACX.MC
- Agrium Inc. 15101030 Canada AGU.TO AGU
- Air Products & Chemicals 15101040 USA APD APD
- Akzo Nobel NV 15101020 Netherlands AKZA.AS AKZOY
- Alcan Inc. 15104010 Canada AL.TO AL
- Alcoa Inc 15104010 USA AA AA
- Allegheny Technologies Inc 15104050 USA ATI ATI
- Alumina Limited 15104010 Australia AWC.AX AWC
- Amcor Limited 15103010 Australia AMC.AX AMCR
- Anglo American 15104030 UK AAL.L AAUK
- Aracruz-PNB (ADR) 15105020 Brazil TARCZ6.SA ARA
- Arcelor SA 15104050 Luxembourg CELR ARLOY.PK
- Asahi Chemical Ind. 15101020 Japan 3407
- Asahi Glass Co. 15102010 Japan 5201 ASGLY.PK
- Ball Corp. 15103010 USA BLL BLL
- Barrick Gold Corp. 15104030 Canada ABX.TO ABX
- BASF AG 15101010 Germany BASF.BE BF
- Bayer AG 15101010 Germany BAYG.BE BAY
- Bemis Company 15103020 USA BMS BMS
- BHP Billiton 15104020 UK BLT.L BHP
- BHP Billiton 15104020 Australia BHP.AX BHP
- Bluescope Steel Limited 15104050 Australia BSL.AX BLSFF.PK
- BOC Group 15101040 UK BOC.L BOX
- Boral Limited 15102010 Australia BLD.AX BOALY.PK
- Cameco Corp. 15104020 Canada CCO.TO CCJ
- Cemex S.A. de C.V. -CPO 15102010 Mexico CEMEXCPO.M CX
- China Steel Corporation 15104050 Taiwan 2002.TW CISXF.PK
- Ciba Specialty Chemicals AG 15101050 Switzerland CIBN.VX CSB
- CIMPOR-Cimentos de Portugal, SGPS 15102010 Portugal CMPR.IN
- Clariant AG 15101050 Switzerland CLN.VX CLZNF.PK
- Companhia Siderurgica Nacional 15104050 Brazil CSNA3.SA SID
- COPEC Cia.de Petroleos de Chile 20105010 Chile
- Corus Group Plc. 15104050 UK CS.L CGA
- CRH plc 15102010 Ireland CRH CRHCY
- CSR Limited 15102010 Australia CSR.AX
- Dofasco Inc. 15104050 Canada DFS.TO DFSIF.PK
- Domtar Inc. 15105020 Canada DTC.TO DTC
- Dow Chemical 15101010 USA DOW DOW
- DSM NV 15101020 Netherlands DSMN.AS
- Du Pont (E.I.) 15101010 USA DD DD
- Eastman Chemical 15101010 USA EMN EMN
- Empresa CMPC 15105020 Chile
- Engelhard Corp. 15104040 USA EC EC
- Formosa Chemical & Fiber Cp 15101020 Taiwan 1326.TW
- Formosa Plastic Corporation 15101050 Taiwan 1301.TW
- Freeport-McMoran Cp & Gld 15104020 USA FCX FCX
- Gerdau S.A. -PN (ADR) 15104050 Brazil