Top of the News: Boeing shares are off more than 2.5 percent this morning and it involves more than being caught in the downdraft of one of the market’s moments of clarity. Boeing may suffer fromincreasing tensions between Beijing and Washington.
The official Xinhua news agency has reported that Boeing, Sikorsky, Lockheed Martin and Raytheon may face “unprecedented sanctions” as China shows its displeasure with the Obama administration’s decision to sell $6.4 billion in arms to Taiwan. Boeing has faced a “flood of criticism” on Chinese Internet forums.
Boeing, the most valuable of America’s dwindling export giants, supplies more than half the commercial airplanes for China’s fast-growing airline industry. Of course, as the Times reported, China has an interest in keeping American firms there, to gain U.S. technology. Still, China is being much more assertive than in the past.
I hope somebody asks Gary Locke about this at the National Press Club speech today, where he is expected to announce $6 billion in export aid for small businesses. Here’s a big business he has some experience with.
The Back Story: You know about peak oil: It’s one of those hippy-dippy whacko envio-green deals. Except that every honest oil executive also knows it’s simply a reality of geology when the world will use up half of this one-time gift — and the remainder will be much more expensive to extract and refine. One speaking out is the head of Brazil’s Petrobras, Jose Sergio Gabrielli.
According to the Oil Drum, Gabrielli said this is the year peak will set in, as new projects fail to offset the rate of falling production. “Gabrielli states in his presentation that the world needs oil volumes the equivalent of one Saudi Arabia every two years to offset future world oil decline rates.” (There’s a reason China is racing to corner both oil supplies and the renewable energy market).
Oil peaks bring nasty consequences, as happened when the U.S. hit peak around 1973. Now as the world economy picks up, and developing nations want the American lifestyle, the likelihood of a price spike presents one of the biggest dangers to U.S. recovery.
Today’s Econ Haiku:
Rise in unemployment claims.