How Bin Laden Death Will Affect Oil?
This piece will probably be the first of many that you will see from us regarding the impact of Bin Laden’s death on the global markets. Markets rallied on the news of successful military maneuver, and expectedly, oil traded lower. Is this too simple ? Probably. Does anyone really think that Al-Qaeda is simply going to close up shop because of Bin Laden’s death ? That just seems naive to me. Now don’t get me wrong, the Obama administration deserves a ton of credit for executing what seemed like a flawless plan, while taking a major amount of political risk. However, if you read between the lines, airlines are increasing random passenger checks, and the U.S. State Department has issued a travel alert. In other words it’s just not that simple for stock traders to simply go short oil related stocks and long most other sectors. Do you really think a stock like Exxon Mobil (XOM:NYSE) is going to sell of sharply because of this event ? Do you think that penny stock traders will lose interest in oil related micro caps because of Al Qaeda losing their figurehead ?
For instance, what happens if we see even more unrest in the Middle East because of Bin Laden’s death, and North Africa due to this event ? How would that impact oil prices and stocks ? Now it’s obviously a possibility that some selling in oil related investments may take place in the near term. But will that selling just be creating buying opportunities? Right now, there are just far too many moving parts to this announcement to take any type perceived market direction for granted. The situation is just too fluid at this point. This is why we will be providing color on the story and how it impacts the market on a fairly frequent basis this week. We will also provide some specific stocks to watch too, but only after the market action plays out a little bit. At this point, the best approach might just be to sit tight, and start forming a list of stocks that will react to this event. Stay tuned, we will be back with some specific names soon.
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