VIX is the Fear Gauge and it is screaming about the Panic now.
We have a panic now and it could be pretty much warranted. With Japan tragedy and nuclear fears we have Greed Meltdown in place, which can provide a very good entry point into the markets if it is Not The End of The World. Here is the most important part - you have to decide yourself what is really going on.
We will run just a few thoughts:
1. This tragedy will lead to another reminder about the scarcity of all resources.
2. Bill Gross at Pimco has sold all position of its US Treasuries just before this Black Swan event.
3. Japan has a lot of US Treasuries (885.9 billion second after China with 1154.7 billion in January 2011), but will need Safe Food, Energy (read Oil and Gas) and metals now.
4. With all that scare US Dollar remains below long term uptrend line. It was not able to rally substantially even after all this panic - it is the big question mark. Somebody is already pricing Qn+1.
5. We should expect QE3 now almost for certain. Who will buy treasuries now, but the FED? It means more US Dollar supply - it means Inflation. Place to be Lithium, Rare Earths, Gold, Silver, Copper, Zinc and other Commodities.
6. Middle East explosion is ongoing on the backstage now with the long term implications for the Oil market.
7. In the long term Japan will be rebuild - we do not know about tomorrow, but in five years time this wealthy and one of the most resilient nations will have a better infrastructure than before.
8. We will have huge Economy Number 3 in the world - we expect that now China will overtake Japan as Number 2 by all means - as a new consumer of all commodities needed to rebuild the nation.
9. Nuclear Power will come under pressure - it will become more expensive to build and approve the plants - Uranium price will be even less elastic to the Demand. We do not have a call on Uranium now, but juniors with other projects in gold, Silver and Copper were all sold off on Uranium scare - bargains will be found for the value of Non Uranium assets.
10. Alternative Energy will be the future, we all will be ready to pay more for the safe and secure Energy supply.
11. Lithium sell off on Japanese battery makers worries will be the great opportunity to accumulate your favorite plays in this strategic sector. Lithium Brine projects are not about only Lithium production, but mostly about Potash production by the output. Here is not only Investment Play on Electrification of our transportation, but the Food play as well.
12. Rare Earths will experience rotation from the leaders in the sector after last year unbelievable run into the underdogs of the sector with solid projects - the future is here in Lithium and REE - the way to produce, store and use the Power in the most convenient form - Electricity. It is all about Electric Cars, Batteries, Solar and Wind now.
You can meditate on our Catalyst thoughts and chose what you like - if the logic will be still in place according to your personal judgement.