The money manager points to reports, ignored in the American press, that the German government admitted holding back evidence of smallpox-virus arsenals in Iraq. The news organization Frankfurter Allgemeine Zeitung says German authorities may have been worried that news of the arsenals would ruin Chancellor Gerhardt Schroeder's re-election effort.
Schroeder on Wednesday will visit Moscow at the invitation of Russian President Vladimir Putin. The Russian leader this past weekend sent a former prime minister, Yevgeny Primakov, to meet with Saddam in Baghdad.
Stratfor describes Primakov as a friend of Saddam.
...............................................................
"Look, Saddam does have smallpox, the virus, and it is a biological weapon, and Germany knows about it," he says. "As these things start coming out in the open, and Putin gets involved, a lot of personal things that can be politically damaging will shape events. Over the last two or three days a lot of reports have come out that are damning to a lot of people."
From Thom Valendra's emailed CBSMarketWatch Report. Entire report is below. There is more in it about Chirac and Saddam.
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ENERGY MARKET SET FOR TUMBLE
SAN FRANCISCO (CBS.MW) - Energy investors will face a jolt of reality
if Iraqi leader Saddam Hussein sidesteps a looming physical assault on
his nation, says a financial author and money manager.
"If indeed Saddam does capitulate, this is the major story that most of
the Western media is missing," says Joseph A. Duarte, author of
"Successful Energy Investing" (http://www.joe-duarte.com/) and president
of River Willow Capital Management in Dallas.
Duarte was watching energy futures and other market bellwethers from
his snowed-in Dallas office Tuesday. Natural gas futures alone were
rising 10 percent in early trading after a 38 percent gain Monday. The
Dow Jones Transportation Index (26099605) Tuesday was falling 1.5
percent, taking the key industrial barometer below 2,000 for the first
time since September 1996.
_______________________________________________________________________
Duarte also uses shares of energy companies Lone Star Technologies
(LSS) and Apache Corp. (APA) as ciphers on the geopolitical landscape.
Both are up sharply since the start of the year, with Lone Star logging
a 50 percent gain. "Both have predictive abilities in terms of the
energy futures," says Duarte, who is also a practicing medical doctor
and anesthesiologist.
Duarte says many investors will require anesthesia in coming hours or
days because they are deducing simplistic probabilities from the Iraq
situation. He relies on several little-known news outlets to form a
thesis that soaring energy markets may soon crash.
One of those news outlets, subscription service Strategic Forecasting,
is run out of Austin, Texas, and goes by the name Stratfor.com
(http://www.stratfor.com/). George Friedman, a former Director of the
Center for Geopolitical Studies at Louisiana State University, started
the service in 1996.
Strategic Forecasting's reports on the evolving influence of France,
Germany and Russia in the Iraq conflict are getting almost no attention
from U.S. newspapers and broadcasters. One article, published late last
week, describes a nearly three-decade personal relationship between
French President Jacques Chirac and Saddam Hussein.
In late 1974, then-French Premier Chirac traveled to Baghdad and met
then-Vice President Saddam Hussein. "In September 1975, Hussein traveled
to Paris, where Chirac personally gave him a tour of a French nuclear
plant," said the article. France later sold two reactors to Iraq - "in
other words, enough weapons-grade uranium to produce three to four
nuclear devices."
Duarte also monitors The Moscow Times (http://www.themoscowtimes.com/)
for reports about Germany and Russia. He says, "There has been
documented evidence of correspondence between Saddam and Chirac over the
years and the French government has not denied there have been personal
letters."
_______________________________________________________________________
Duarte, who gets credit for being among the first, along with
Stratfor.com, to recognize the political problems that shut down
Venezuela's oil industry late last year, says four or five political
figures face their greatest challenges in the next several weeks.
The money manager points to reports, ignored in the American press,
that the German government admitted holding back evidence of
smallpox-virus arsenals in Iraq. The news organization Frankfurter
Allgemeine Zeitung says German authorities may have been worried that
news of the arsenals would ruin Chancellor Gerhardt Schroeder's
re-election effort.
Schroeder on Wednesday will visit Moscow at the invitation of Russian
President Vladimir Putin. The Russian leader this past weekend sent a
former prime minister, Yevgeny Primakov, to meet with Saddam in Baghdad.
Stratfor describes Primakov as a friend of Saddam.
Duarte in the past 18 months has forecast accurately the growing
volatility of energy markets. He also has laid out the growing
importance of Russia and the diminishing influence of the Organization
of Petroleum Exporting Countries on supply and demand in the oil
marketplace.
"Look, Saddam does have smallpox, the virus, and it is a biological
weapon, and Germany knows about it," he says. "As these things start
coming out in the open, and Putin gets involved, a lot of personal
things that can be politically damaging will shape events. Over the last
two or three days a lot of reports have come out that are damning to a
lot of people."
France, Germany and Russia have submitted a proposal to the United
Nations calling for a step-by-step disarmament of Iraq. At the same
time, intelligence reports, according to Duarte, suggest Russia's Putin
may be preparing an Iraq message to U.S. and British oil companies,
inviting the multinationals back into the oil-producing country.
_______________________________________________________________________
Duarte says it is in the interests of several world leaders to see a
peaceful resolution to the Iraq crisis. "If we don't see a solution,
then a lot of things are going to unravel for a lot of people. Political
futures are being shaped here for Putin, Chirac, Schroeder and President
Bush. This is like the Winston Churchill stage of World War II. It is no
longer just about war, it is about the people, and this is when things
start to happen."
Duarte sees some signs that energy markets may be "topping out." He
says the futures prices of heating oil, crude oil, gasoline and natural
gas have been "parabolic, and they can't keep going straight up,
regardless of a war or a cold winter." One anecdotal sign a plateau is
near for energy futures come from the bold statements of Devon Energy 's
(DVN) chairman and chief executive, J. Larry Nichols. He said in a
conference call that natural gas prices will be "permanently" higher.
"We've permanently moved into a new era of gas prices," Nichols said
Monday. Natural gas futures on the New York Mercantile Exchange Tuesday
were selling for as much as high as $8.63 per one million British
thermal units. Devon, seizing the day, says it will buy Ocean Energy for
about $3.5 billion worth of common stock.
_______________________________________________________________________
For those who don't follow energy markets, such bold statements and
actions are something like Internet giant Yahoo buying Geocities, a
multi-billion purchase that happened during the hysteria that
surrounded the growing use of online services and the World Wide Web in
the late 1990s. On the energy scene, the Devon purchase would make the
Oklahoma company the largest independent producer of oil and natural gas
on American shores.
"Whenever anyone says something is headed permanently higher, smart
investors should be looking over their shoulder," says Duarte. "Everyone
is talking about yesterday's news, but I think it may pay to start
thinking about what happens when the futures prices crumble."
In that event, shares of energy beneficiary Apache, a Houston company
that is near an all-time price high, easily could lose 15 percent to 25
percent of their value in a short span.
_______________________________________________________________________
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