The New Egypt

Sam Stovall: What the protests in Egypt mean for the global economy

Jeremy Hobson Jan 31, 2011
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The New Egypt

Sam Stovall: What the protests in Egypt mean for the global economy

Jeremy Hobson Jan 31, 2011
HTML EMBED:
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TEXT OF STORY

JEREMY HOBSON: Now let’s get to the big story — the protests in Egypt, and what it all means for the global economy.

Sam Stovall is chief investment strategist with Standard and Poors, and he’s with us now live. Good morning.

SAM STOVALL: Good morning, Jeremy.

HOBSON: Sam — first of all — explain why what’s going on in Egypt matters to global markets.

STOVALL: Well, I think that investors are using the tensions as a catalysts to digest the 24 percent advance in share prices that we have seen since August. And what they’re also trying to do is to ascertain what kind of an affect this will have because by itself, Egypt, Tunisia and Yemen represent less than one half of one percent of global GDP, and the entire 21 nation region represents about 3.5 percent, so by itself it’s not the big issue.

HOBSON: So it’s really an issue of whether this is going to spread to other countries in the region?

STOVALL: Exactly. If we find that the Suez Canal gets shut down, if we find that this political tension spreads to oil producing countries, and thereby disrupting output, well then we could see higher gasoline prices here that could then result in lower consumer confidence and a threat to our economy.

HOBSON: And Sam, quickly, do you think that this situation has the capacity to really cause a slowdown in global markets, the way say the European debt crisis did?

STOVALL: Not yet, our belief is that it probably will end up being curtained or contained in the Middle East-North Africa region, and that as a result it’s something that will end up being a blip for all of 2011. But I think because things are so uncertain, because geo-political issues can get out of control like wildfires, that Wall Street is certainly paying very close attention.

HOBSON: Sam Stovall, chief economist at Standard and Poors Equity Research, thanks for your time this morning.

STOVALL: My pleasure.

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