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Stock Ideas Investors Daily Edge A Global Sequel to the China Stock Bubble?
Stock Ideas Investors Daily Edge A Global Sequel to the China Stock Bubble? 
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By Chris Johnson Last week, there was some confusion around the retail sector, with retail sales numbers clashing with government data. The former showed that most retailers fell below expectations... |
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| A Global Sequel to the China Stock Bubble? |
| Tuesday, 26 February 2008 | ||||||||
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This German guy, Friedrich Nietzsche, said about 120 years ago, "What doesn't kill you makes you stronger." He wasn’t referring to the price of oil, obviously. But if he were alive today, he might have been. Will $100 a barrel crude drive up prices, spike inflation, and make everything so unaffordable that it kills the economy? Yes, yes, and maybe. The economy is in pretty bad shape and crude’s soaring price will force us to swallow one of two poison pills. What will it be: death by a diminishing dollar or stagnant economy? Not much of choice, is it? That’s the cheery scenario. We may end up swallowing both pills. Ah, but perhaps the economy can rise up from the dead, Lazarus-like. Just like your typical Hollywood movie, it will get a second chance from the very force that almost did it in – the high price of oil. Here’s the math. At $100 a barrel, oil suppliers will be raking in a cool $2.1 trillion a year in oil revenue, $1.3 trillion of which will go to OPEC countries. A small amount of it – maybe 5-10 percent – will probably be reinvested in the infrastructure of the home countries. About half of it, guessitmates Morgan Stanley, will be recycled into Western countries via sovereign wealth funds. For the math challenged, that’s 1 trillion petrodollars pouring into global markets every year. That’s the size of Korea’s GDP ($1 trillion) or Russia’s ($1.2 trillion). The global stock markets, including the U.S.’, are going to have one heck of a second act. P.S. To let me know what you thought of today's article, send an e-mail to: This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
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