Earthquake & Tsunami

An enormous 8.9 earthquake rocked Japan on Friday. A horrifying tsunami followed shortly thereafter. The combination has caused an enormous loss of life and displacement of hundreds of thousands of people. As if that was not enough, there are now multiple nuclear power plant failures which could possibly lead to a meltdown.

Our prayers and thoughts are with the people of Japan and all those trying to help them.

This catastrophic event will stifle the worldwide economic recovery. Japan’s GDP will take a big hit and the damage to farmlands and manufacturing facilities will cause food shortages and reductions in exports.

Japan is the #3 user of oil on earth and certainly their demand will be cut back. This could partially offset the reduction in worldwide supply resulting from the Libyan crisis, possibly stabilizing the price of oil for a few months.

The Japanese stock market took a 6% hit on Monday, March 14, the first day after the triple calamity. The Mideastern/Africa turmoil does not look like it will end soon. Ghadafi is fiercely pushing back against the rebels in Libya and Saudi Arabia is attempting to squelch the uprising in Bahrain.

One thing is for sure – news events that are non-financial can drive the markets, as investors are emotional. No one knows for sure how the stock market will react in the short term to these calamitous disasters, especially with the uncertainty of the nuclear issues still to play out. These events could cause the stock market to consolidate. Let’s be cautious and vigilant as these events unfold.

Let’s pray for those less fortunate, and help however we can.

Sincerely,

Edward J. Kohlhepp, CFP^®, ChFC, CLU, CPC, MSPA

Edward J. Kohlhepp, Jr., CFP^®, MBA

“We never know the worth of water till the well is dry” ~ Thomas Fuller

Sources: www.navellier.com, Investors Resources Inc.,  WSJ.com

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