埃及局势，中东隐患，苏依士运河，和油价

   The uprisings in Tunisia and Egypt have captured most of the headlines over the past few days, and indeed caused the stock market to dip on Friday.  However, looking below the surface, we find reason to stay optimistic. 

  Friday's sell-off could have been much bigger than it was.  It doesn't take an expert in geography to recognize Egypt is situated close to major oil-producing nations such as Libya and Saudi Arabia.  Egypt also controls the Suez Canal, through which much oil is transported to Europe (not to mention many other goods as well).  No surprise then that oil prices had one of their biggest one-day gains in some time on Friday.

  The problem with Egypt is that it is a poor nation. Unlike its OPEC neighbors, it has no significant oil industry.  Poverty levels are high, with the average real income being around $1,700.  That means half the country probably lives on less than $3 a day – a major source of dissatisfaction with their government.  The situation is similar in other nations in the region such as Tunisia and Yemen.

  On the other hand, Saudi Arabia, Libya, and Algeria, have oil industries and much higher income levels.  They are the “have” nations. However, here's a curious fact about them.  There are no readily available figures on income distribution within these nations.  Not even the CIA has a clue how big the gap between rich and poor is.

  That in itself tells you something.  Statistics on income distribution are generally kept by nations who are endeavoring, to some extent, to close the gap between rich and poor and create opportunities for the average person to better his lot.  (Even China, though it often gets criticized for poor statistics, makes an effort to monitor income disparity.)  The lack of statistics suggests that these nations are not concerned with helping their poor – which implies that the income disparity is probably extremely large.  Unemployment, for instance, in Saudi Arabia and Libya is believed to be in the double-digits.  Nonetheless, the oil-producing nations at least have enough wealth that some may trickle down to the poor.  Kuwait, for instance, is giving its citizens 1,000 dinars ($3,568) in cash and is providing certain food staples for free. In non-oil nations like Egypt, the poor are much worse off and any government subsidies are likely to be far less generous.

  High levels of poverty and dissatisfaction are the perfect breeding ground for revolution.  And a revolution in Egypt could threaten to disrupt the oil supply for Europe.  Under this scenario, it's no wonder oil jumped and stocks dipped.  If investors felt the global economy was truly threatened – perhaps by a disruption in oil supplies that could send prices toward $200 a barrel.

  So the market seems to be telling us not to expect the flames of revolution to spread to Libya, Saudi Arabia, or Algeria.  It also doesn't see much chance the Suez Canal will be closed either.  Rather, it expects growth to increase and commodity prices to climb.  Put aside any doubts you had on this.  If the economy was going to tank this year, it would have tipped its hand over the events in Egypt. 

  Instead, look for a healthier economy in 2011.  Money is flowing very freely.  Stocks (including higher-risk stocks), commodities, and most other assets should be strong (bonds being the one exception). 

   Incidentally, even if the troubles in Egypt soon calm down, oil (and oil stocks) remains a good bet going forward. The recent spike in crude prices underscores the already tight balance between supply and demand. This should prompt countries, most notably China, to boost their oil stockpiles, driving prices even higher.

- from Dr. Stephen Leeb's e-mail