Japanese Markets Calm…
On Wednesday, Japan’s central bankers continued flooding the country with a fresh infusion of cash in an attempt to stop the financial bleeding after that nation’s worst earthquake on record. So far this week, the central bank has increased the nation’s money supply by 55 trillion yen ($688 billion.) The Japan quake, and the ensuing meltdown at several of the nation’s nuclear reactors, drove investor panic to new heights leading to the worst two day market plunge in that country since 1987. On Wednesday, buyers swooped in, sending Japanese stocks up. The Nikkei 225 average closed the day up 5.7%.
Nuclear Energy Stocks on Sale…
In related news, the nuclear crisis that Japan is currently facing is immense. And while the devastation is the main concern currently, this single event could have ramifications for the nuclear energy industry globally. Before this crisis, the nuclear energy industry enjoyed a 62% approval rating among the public, according to a recent Gallup poll. However, the terrible impact that this crisis has created will certainly change some views on the matter. While nuclear energy represents a much cleaner and efficient alternative to petroleum-based energy sources, the political issues and safety concerns have always been a problem for the industry. Consider these three charts.
First, there is Cameco Corporation. (NYSE: CCJ) The Canadian-based Cameco is one of the largest uranium miners in the world. The stock is down 23% in the last five trading sessions.
Then, there is Babcock & Wilcox Company. (NYSE: BWC) Babcock makes nuclear power plant components and was recently spun-off from McDermott International. BWC has fallen over 17% over the last five trading sessions.
Finally, there is the Global X Uranium ETF. (NYSEArca: URA) This ETF invests in a basket of about 25 uranium miners. URA has been hit particularly hard, falling 31.5% over the last five days.
FORECAST: Uranium miners are currently oversold in the wake of this crisis. But I am not buying yet as there I believe there will be more downside in the coming days, and even weeks. Any new reports of damage will hammer the sector. But I remain convinced that global demand for nuclear energy will remain intact. I have been waiting for a nice pull back in the resource sector and it may soon be time to go bargain shopping. I will be adding at least one stock from this sector to our FTM Investment Portfolio as soon as a bottom appears. To receive our buy and sell alerts, subscribe to our FTM Quarterly newsletter. You can learn more here.
On Wednesday, the Labor Department released its monthly Producer Price Index numbers. The February PPI rose 1.6%, up dramatically from last month’s 0.8% increase. The usual culprits were in play: food and energy.
Food prices are up 3.9% from last month, the biggest gain since November 1974. Most of that increase came from vegetable prices, which were up 50%, and to a lesser extent, meat and dairy products.
Energy prices rose 3.3 percent last month, led by a 3.7 percent increase in gasoline costs. The national average price for gasoline is $3.56 a gallon. That is up 13.7% over last month, according to the AAA’s Daily Fuel Gauge.
Clothing prices saw their biggest increases in 21 years, rising 1% over last month. Prices for jewelry, plastics, and automobiles also saw increases.
The Housing Crisis Continues…
This week, the Commerce Department reported that home construction fell 22.5% from the previous month. Current levels show an annual rate of 479,000 units — far below the 1.2 million that economists call “healthy.” These are their lowest levels since April 2009 and right now, they are at their second-lowest level on record.
In February, housing starts saw their biggest decline in nearly 27 years. Building permits fell to 517,000 units — their lowest level ever recorded.
Radio shock jock and TV entertainer, Glenn Beck, said that Japan’s earthquake may have been caused by an angry God. To read my thoughts on this topic, click here.
Until Monday, (on vacation until then)
Jerry Robinson – FTMDaily.com
Jerry Robinson is an economist, published author, columnist, international conference speaker, and the editor of the financial website, FTMDaily.com. In addition, Robinson hosts a weekly radio program entitled Follow the Money Weekly, an hour long radio show dedicated to deciphering the week’s economic news.