As if there wasn’t enough global government event risk that world markets have to focus on, whether Chinese and other Asian central bank rate hikes, also in Latin America, European sovereign debt and solvency issues, and US Fed policy, Egypt and its potential ripple effect consequences throws us another wrench. Without getting into the geopolitical science of Middle Eastern goings on and what this means over the long term, all investors have to do right now is watch the price of oil in gauging the potential economic impact. With Friday’s spike in crude, the CRB index closed at its highest level since Oct ’08 and commodity inflation and coincident level of interest rates will be the single most important macro factor to impact markets in 2011. Euro zone Jan CPI rose 2.4%, above estimates of 2.3% and up from 2.2% in Dec. It’s the fastest pace since Oct ’08. In response, 3 month Euribor rose to the highest since July ’09 as the ECB will be less easy.
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