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Global Markets

Supply Chain Disruptions from Japan Disasters Hit Auto, Electronics Industries

Companies both in Japan and around the world have begun to feel the sting of supply chain disruptions resulting from the catastrophic March 11 earthquake and its aftermath.

In addition to the damage done to factories in northeastern Japan by the quake itself, companies must contend with ruined roads, fuel shortages, and rolling power blackouts. Many companies are not sure when some of their facilities will be able to resume production, creating uncertainty for companies further down the supply chain.

"This is serious and it's still difficult to evaluate," Nissan Motor Co. Ltd. (PINK: NSANY) Chief Executive OfficerCarlos Ghosntold Bloomberg News. "You have the earthquake, you have the tsunami, rolling blackouts, and fuel shortages hitting at the same time, and they aren't only hitting the car manufacturers, but also the suppliers and the dealers."

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Insurance Companies Likely to Survive – And Even Prosper – Following Japan's Earthquake

With estimates for insured losses from Japan's March 11 earthquake ranging from $12 billion to $35 billion, many investors have lost faith in reinsurance companies that have exposure to the stricken island nation.

But despite having to make some significant payouts, reinsurers ultimately may prosper from the disaster.

"Reinsurers typically benefit from a major disaster that's big enough to affect prices but not big enough to kill the industry," Karl Huber, a fund manager at Pioneer Investments in Munich, told Bloomberg Business Week. "That's the business of reinsurance."

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Japan Disaster Update: Crisis Investing Strategies From Money Morning's Top Experts

The Group of Seven (G-7) nations today (Friday) joined together to sell Japanese yen, a currency-weakening intervention move that's aimed at helping Japan deal with the after-effects of last week's earthquake and tsunami, and a nuclear power plant problem that could end up as one of the worst ecological disasters in history.

Japanese authorities apparently requested the assistance, according to a statement issued by the G-7 after a morning conference call between members.

The G-7 said that "in response to recent movements in the exchange rate of the yen associated with the tragic events in Japan, and at the request of the Japanese authorities, the authorities of the U.S., the U.K., Canada and the European Central Bank will join with Japan, on March 18, in concerted intervention in exchange markets."

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Japan Update: How to Proceed in the Wake of Japan's Tragedy

Japan's earthquake-ignited nuclear crisis has gone from bad to worse.

Radiation levels at the Fukushima Daiichi nuclear plant rose today (Thursday) as attempts to cool the stricken reactor with high-pressure hoses failed. The No. 3 reactor's spent fuel rod pool is overheating and could release dangerous amounts of radiation into the atmosphere.

Sadly, the nation's death toll already has climbed above 5,300, with many more missing or in danger. And analysts now estimate that the direct monetary costs from Friday's 9.0 magnitude earthquake and tsunami will range from $160billion to $200billion.

Indeed, the early reports forecast that the disaster could trim the output of Japan's $5.39 trillion economy by half a percentage point – which would add another $25 billion to that tab.

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Japan Nuclear Crisis: New Power Plant Construction Renaissance in Peril

Concerns revived by the nuclear crisis in Japan could well reverse a renaissance in new power plant construction in many countries, while design upgrades to prevent similar reactor failures will make those that are built more expensive.

The 9.0 earthquake and resulting tsunami that struck northeastern Japan on Friday have caused a series of catastrophic failures in several nuclear reactors at the Fukushima Daiichi plant. Attempts to cool overheating fuel rods have led to four explosions, giving rise to fear over how much nuclear radiation may have escaped.

As the crisis has deepened, so has its potential to inflict lasting damage on the nuclear industry.

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Japan's Stock Market Plunges as Export Disruption Threatens Global Supply Chain

Japan's stock market fell the most in two years yesterday (Monday) in the aftermath of Friday's devastating earthquake, the biggest in Japanese history. Rolling blackouts and factory damage threatened exports for some of the country's biggest companies, many of which play a key role in industries' global supply chain.

The Nikkei 225 stock index closed down 6.2% yesterday at 9,620.49, after falling 1.7% Friday.

"The market is pricing in a better understanding of the enormity and complexity of the two natural disasters that struck Japan," Mohamed El-Erian, chief executive officer at Pacific Investment Management Co., told Bloomberg News. "The immediate impact will be felt through lower global aggregate demand, disrupted supply chains and funds flows into Japan."

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What My Mother Taught Me About the Global M&A Market

When PPL Corp. (NYSE: PPL) agreed to buy British power distributor Central Networks from German owner E.On AG (PINK ADR: EONGY) last week, the $5.6 billion bid by the Allentown, Pa.-based utility highlighted a key advantage that U.S. firms have when it comes to corporate-takeover battles in the international arena: In most countries, the staff and customers of the target company prefer a U.S. suitor to those from most other nations.

How do I know this? Simple … my mother told me.

Mideast Crisis Turns Attention to Saudi Arabia Oil Supply

Libya's political turmoil yesterday (Thursday) continued to rage near the country's important oil patch cities, as Col. Moammar Gadhafi's military fought to secure ports and refineries.

Libya's government tried to portray a sense of security to foreign reporters who toured the Zawiya Oil Refinery Co. yesterday, even as rebel forces remained in place throughout the surrounding city.

Rebels also infiltrated Brega, an oil port in eastern Libya, as government warplanes struck the site, according to the Associated Press.

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Mideast Crisis Update: Don't Count on the Saudi Oil Supply

As the autocratic rule that has dominated the Middle East for decades continues to unravel, volatility in the global oil markets continues to point toward one overriding concern: How can we maintain an oil-flow balance in the face of this escalating uncertainty?
Global oil prices spiked to their highest levels in more than two years on Friday because of worries that the unrest and resulting production curbs in Libya would spread to other oil-exporting countries.
Oil prices retreated a bit yesterday (Monday) in the aftermath of several developments that investors perceived as positive. In the first, reports said that Libyan protesters were allowing oil shipments to resume from certain parts of the country. And in the second, Khalid Al-Falih, the head of state-owned Saudi Aramco, said that that "all incremental needs" for extra oil have been met.
Of course, even with the Saudi oil supply pledge, these developments offer only a momentary respite in the Mideast crisis. Almost two-thirds of the world's known conventional oil supplies are located in the Middle East region. And the question that isn't being answered – or even asked – right now is this: Are oil supplies sustainable in the face of a longer-term crisis?
The answer to that question will leave you feeling less than sanguine.
<<BREAK HERE>>To understand why this crisis is worse than most believe, please read on…

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This Middle East Meltdown Will Send Oil to $300 a Barrel – and Pump Prices to $9.57 a Gallon

The unrest in the Middle East oil patch is roiling the global oil markets on an almost daily basis.

The events in Egypt, Libya, Saudi Arabia, Oman and other countries are also forcing us to ask that long-dreaded question: What happens if the countries throughout the Middle East region fall to radical governments?

The answer is both stunning and surprising.

In an absolute worst-case scenario – if the entire Middle East falls under radical control – we could be looking at $300-a-barrel oil and pump prices of $9.57 a gallon. Definitely a stunner.

Here's the surprise: Even such a worst-case outcome would not result in the end of Western civilization as we know it. In fact, you can hedge against such a meltdown – just follow the recommendations that we detail below.

For two moves to make now, please read on…

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