[...]... the tie that binds extreme weather and financial markets? The tie that binds these two things together is commodity supply shocks The extreme weather- based specialized definition of supply shock is one of the most critical things to understand in this entire book It is the link between extreme weather events and the stock market Let me explain Definition: Supply Shock The temporary and sometimes permanent... supply and demand are both going in the same direction P1: OTA JWBT604-c01 JWBT604-Oxley November 17, 2011 4 15:56 Printer: Courier Westford EXTREME WEATHER AND FINANCIAL MARKETS Demand Shrinking Demand Growing Lots of Supply Coming Very Little Supply Coming Neutral Jackpot Big Problem Neutral FIGURE 1.1 Commodity Categories For example, it is acceptable if supplies are growing as long as demand is growing,... understand the extreme weather based specialized definition of a commodity Definition: Commodity Bulk goods and basic materials including metals, grains, food, minerals and energy, all derived from natural resources, which may or may not trade in the futures market The price is subject to the forces of supply and demand Price is particularly sensitive to supply shocks associated with extreme weather. .. scientists are correct and the effects of global climate change do in fact get more frequent and powerful, the number of 1 P1: OTA JWBT604-c01 JWBT604-Oxley November 17, 2011 2 15:56 Printer: Courier Westford EXTREME WEATHER AND FINANCIAL MARKETS weather- based investment opportunities will increase significantly Every investment idea in this book will work under today’s global climate condition and will get even... starting with the Jackpot commodities P1: OTA JWBT604-c01 JWBT604-Oxley November 17, 2011 6 15:56 Printer: Courier Westford EXTREME WEATHER AND FINANCIAL MARKETS Copper Copper has among the healthiest fundamental outlooks for commodity materials The supply/demand balance for copper remains tight despite the fact that the United States residential and nonresidential construction markets remain soft but... 15:56 Printer: Courier Westford EXTREME WEATHER AND FINANCIAL MARKETS Silver The key end markets for silver are shown in Figure 1.11 As shown, the endmarket demand is quite diversified and, in fact, mirrors GDP more so than it mirrors jewelry consumption, as one might expect Aside from the secular decline occurring in digital conversion in the photography end market, the demand is growing overall, particularly... Preface xtreme weather is hitting all regions of the globe with increasing severity Despite the damage that can and will be caused from these extreme weather events, certain industries will nevertheless benefit and certain industries will be hurt It is the purpose of this book to identify and evaluate the sectors, industries, companies, and more specifically the particular stocks, bonds, and futures that... racked with severe drought or severe flooding, the price of soybeans goes up and U.S Demand Uses for Soybeans Other 15% Soybean Meal & Vegetable Oil 85% FIGURE 1.5 U.S Demand Uses for Soybeans Source: USDA, 2010 P1: OTA JWBT604-c01 JWBT604-Oxley 10 November 17, 2011 15:56 Printer: Courier Westford EXTREME WEATHER AND FINANCIAL MARKETS therefore represents an opportunity for us (we will cover this in... there are only a few locations in the world with very high quality iron Global Demand for Iron Ore Other 2% Steel 98% FIGURE 1.7 Global Demand for Iron Ore Source: USGS, 2010 P1: OTA JWBT604-c01 JWBT604-Oxley November 17, 2011 14 15:56 Printer: Courier Westford EXTREME WEATHER AND FINANCIAL MARKETS ore, including Brazil and western Australia, for example China has lots of iron ore but of the lower-quality... of action plan tables that point out the specific company and commodity “biggest winners” and “biggest losers” resulting from extreme weather events occurring anywhere in the world! The inclusion of real-life examples and specific investing rules for the extreme weather based investor, as well as simplified tutorials on the basics of stock, bond, and futures market investing, all provide the reader with . Aus- tralia and Asia, Wiley is globally committed to developing and marketing print and electronic products and services for our customers’ professional and personal knowledge and understanding. The. because supply and demand are both going in the same direction. P1: OTA JWBT604-c01 JWBT604-Oxley November 17, 2011 15:56 Printer: Courier Westford 4 EXTREME WEATHER AND FINANCIAL MARKETS Lots. winners” and “biggest losers” resulting from extreme weather events occurring any- where in the world! The inclusion of real-life examples and specific investing rules for the extreme weather based