This week we have two key price numbers: Feb PPI on Wed and Feb CPI on Thursday. Also on Thursday we have Claims, Feb Ind Production and the Mar Philadelphia Fed manuf outlook survey. There are other releases but only these five carry potential mkt-moving hrsp. As we approach these numbers we will review each in more detail but all in, they are likely to indicate more vigor ahead, and building price pressures.
The tragedy in Japan remains a key near-term consideration. We suggest objectivity, which requires a distancing from the headlines.
Having the advantage of working closely with Japanese institutions, past years, we can confidently advise our clients to look for more rapid resuscitation than is now priced in.
Recall the Kobe quake of Jan/95 which killed 6400 people and caused damage observers put at 2% of GDP. Kobe is a key container port. Recovery was so fast that, according to Alan Wheatley of Real Clear World although Japan’s Ind Production fell 2.6% in Jan it rose 2.2% in Feb and again in Mar. GDP rose 3.4%, Q1 ‘95.
The “experts” put the Kobe recovery at a decade. But as we are reminded by the late George Horwich of Purdue, Kobe’s manufacturing was at 98% of pre-disaster levels in 15 months.
Japan not only has abundant resources, physical and human capital but the social and economic infrastructure to utilized resources in a hurry, including those contributed by the US and others. And - KEY - the current disaster is in a region far less populated and far less an economic factor than Kobe.
Finally, the word “meltdown” is a gift from heaven for the world press, very useful for bottom line purposes. It’s application is made by the media not only to single power units, but to the world industry. We must be cautious in this regard. Conventional wisdom has it that the renaissance in nuclear power is now finished. Perhaps not. The plants in question are very old.
We spoke this weekend with a nuclear engineer assigned to PGE’s Diablo Canyon nuclear plant. He advises that new back up systems likely would not have suffered the same fate - loss of power. He adds that the key now is to observe success +/- in Japan’s shut down process..
Caution is in order before leaping to oil and coal sectors; don’t write the obituary for nuclear just yet.
Robert Craven
The tragedy in Japan remains a key near-term consideration. We suggest objectivity, which requires a distancing from the headlines.
Having the advantage of working closely with Japanese institutions, past years, we can confidently advise our clients to look for more rapid resuscitation than is now priced in.
Recall the Kobe quake of Jan/95 which killed 6400 people and caused damage observers put at 2% of GDP. Kobe is a key container port. Recovery was so fast that, according to Alan Wheatley of Real Clear World although Japan’s Ind Production fell 2.6% in Jan it rose 2.2% in Feb and again in Mar. GDP rose 3.4%, Q1 ‘95.
The “experts” put the Kobe recovery at a decade. But as we are reminded by the late George Horwich of Purdue, Kobe’s manufacturing was at 98% of pre-disaster levels in 15 months.
Japan not only has abundant resources, physical and human capital but the social and economic infrastructure to utilized resources in a hurry, including those contributed by the US and others. And - KEY - the current disaster is in a region far less populated and far less an economic factor than Kobe.
Finally, the word “meltdown” is a gift from heaven for the world press, very useful for bottom line purposes. It’s application is made by the media not only to single power units, but to the world industry. We must be cautious in this regard. Conventional wisdom has it that the renaissance in nuclear power is now finished. Perhaps not. The plants in question are very old.
We spoke this weekend with a nuclear engineer assigned to PGE’s Diablo Canyon nuclear plant. He advises that new back up systems likely would not have suffered the same fate - loss of power. He adds that the key now is to observe success +/- in Japan’s shut down process..
Caution is in order before leaping to oil and coal sectors; don’t write the obituary for nuclear just yet.
Robert Craven
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