Hate to disappoint but I decided in November that the smart thing to do was to go into high grade high yield, very senior non-bond obligations: Royalty Trusts, REITs and utilities; with active option markets. My call is that somebody on one side or the other of the Shia-Sunni divide is going to decide to reduce the glut by strategic bombing and missile attacks. When or if that will happen and how effective it will be I do not know.
But if you are aggressive, which I am not, buy defense contractors. The wars in Syria, Iraq and Yemen are selling weapons rapidly.
Mass expulsions of Muslims from Europe are increasingly likely and that won't help matters.
Capital flight from China and to a lesser extent Europe should pick up and the US should be the major recipient.
But keep in mind that no one knows when and by how much and if all of that is going to happen and there are wildcards:
Russia has the lowest non-EU shipping costs for energy to the EU, the lowest non-domestic shipping costs to most of China and because of its Pacific Islands it can supply Japan by pipeline. Myanmar can and does ship to India and China. Africa and the Americas are oversupplied by themselves. Pipeline construction in those two areas can take them off the table for the ME. So the remaining big market is India and making up the shortfall from Myanmar. That's a major reason I'm betting on supply reduction by war.
The other reason for war is mass refugee expulsions from the EU or from disgusted ME states that now have what amounts to low cost prostitution for chicks 9 (not a misprint) to 90. I have no idea how that will work out.
So be careful.
w Oil is good for USA IMVHO.
