The turmoil in Egypt is causing economic jitters across the globe, pushing up food and oil prices so far, but bigger worries are ahead.
The unrest already has affected U.S. energy prices.
The average price for a gallon of regular gasoline in the U.S. was $3.12 on Friday – up 2.4 cents just in the past week. Analysts expect prices to stay above $3 a gallon – the highest since 2008 – and probably go higher until the conflict in Egypt is resolved and Mideast tensions ease.
Oil prices hovered at about $90 a barrel over the past week. Some analysts predicted the Egyptian crisis will lead to $100 per barrel prices sooner rather than later.
Traders worry the unrest might spread to oil-producing countries in the region and even affect shipments through the Suez Canal. Egypt is not a major oil producer, but it controls the canal and a nearby pipeline that together carry about 2 million barrels of oil a day from the Middle East to customers in Europe and the United States.
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The U.S. recovery will continue this year, and U.S. stocks will continue to advance, though investors can expect whipsaw trading patterns and must beware of the point when the U.S. Federal Reserve ends the cheap-money mindset that’s fueling the advances, says Money Morning Chief Investment Strategist Keith Fitz-Gerald.
But uncertainty also brings opportunity, and Fitz-Gerald sees tremendous profit potential for those who are willing to remain invested – and who have the courage to make opportune choices. Commodities of all types, so-called “BEE” (Big Emerging Economy) markets and the stocks of companies that derive a major portion of their sales from these fast-growing overseas economies should be on everyone’s investment menu.
And don’t ignore multinational stocks from your own backyard: While it might surprise many investors to discover this, many U.S.-based companies are major players abroad, Fitz-Gerald says.
“I see the markets generally rising until mid-2011, which is when the reality of stimulus spending, the looming budget battle and fiscal follies set in.
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