Three Threats on the Immediate Horizon

Martin here with troubling news from this weekend and early this morning.

While the U.S. financial markets drift higher, and while most investors calmly contemplate another year of economic growth, three threats are on the immediate horizon:

	Avian flu is spreading like wildfire in Asia, Europe and Africa. Just in the last three days, new outbreaks in Germany, France, Indonesia, China, India, and most troubling of all, Nigeria have world health officials in a state of high alert …
	Ethnic rioting is gaining momentum on the same three continents Muslims killing Christians, Shiites killing Sunnis, Hindus killing Muslims, and each seeking revenge killings against the other. Plus …
	Crude oil, the most essential commodity in the world, has suddenly been transformed into the economic weapon of choice. Oil facilities are under attack in Iraq, Saudi Arabia and Nigeria. Oil exports are being threatened by Venezuela and Iran. And oil reserves, coveted by world powers since the 19th century, are now rising to the very top of the geopolitical agenda in the US, Britain, Russia, China, India and emerging nations.

But are these seemingly disparate threats truly unrelated? Or do they intersect in time, in space and even in the natural chain of cause and effect?

Whether connected or not, what can you do to protect your money immediately? What new investment opportunities do they open up for your own benefit and for the sake of society?

I certainly dont have all the answers. But this morning, Ill give you the best ones I can …

Avian Flu Now Spreading
At Many Times the Speed
Of the Last Nine Years

The H5N1 avian flu virus first struck Hong Kong back in 1997. Then, for eight long years, it seemed to be strictly an East Asian disease, spreading slowly to neighboring countries.

Nearly 180 million birds were killed by the flu or slaughtered in the valiant efforts to control it.

But now, in just a matter of a few short months, the deadly virus has spread like wildfire … sweeping across continents on the wings of migratory birds … reaching several new countries just in the last few days … and stunning public health officials everywhere.

In Germany, the virus, first reported last week, has just spread to four states from Schleswig-Holstein in the north to Baden-Wuerttemberg in the southwest.

Ruegen, the Baltic island where the German outbreak was first discovered, is usually a popular tourist resort. But this morning, its a veritable war zone.

More than 300 soldiers from the Bundeswehr have been deployed. Chemical warfare specialists are decontaminating cars and boats leaving the island. German Air Force jets are flying overhead to help spot dead birds.

Health officials now say that the virus in Ruegen is the most virulent strain known. Moreover, they say it probably arrived in Europe earlier than previously believed, possibly giving it the chance to spread undetected elsewhere on the continent.

In France, the H5N1 virus reached a poultry farm in the southeastern region of Ain this past weekend, killing thousands of turkeys virtually overnight. Farmers are in panic. The entire country is up in arms.

President Jacques Chirac is trying to tell France to calm down. But his reassurances are falling on deaf ears. Its the first time commercial poultry has been struck anywhere in the European Union. And its spreading more quickly than anyone dreamed possible.

In Indonesia, the bird flu has just killed its 20th human victim, a 27-year-old woman. But unfortunately, unlike most other Asian countries, Indonesia has failed to respond quickly, failed to communicate openly to the public, and failed to stem the spread of the disease, now killing more people there than in any other country in the world.

On Friday, an Australian expert on the disease with nearly a decade of experience in Indonesia declared that the virus thats killing humans in that country is different from the virus thats killing birds. This raises new concerns that it may have mutated. But Indonesian authorities are doing little to counter or even explore that earth-shattering possibility.

In China, authorities have just reported two new human cases of the virus and are now warning of another massive outbreak. In 2005 alone, the Chinese slaughtered 23 million birds, among which 163,000 tested positive for H5N1.

But it was apparently not enough. If theres a new outbreak in China as feared, it could threaten the nations 15 billion poultry, more than one-fifth of all the birds produced on the planet.

In India, the virus, first found last week in Maharashtra, has leaped over the state border to neighboring Gujarat.

Culling operations, previously in 22 villages, have now been expanded to 44 a slaughter of a half million birds in that area alone. In response, several countries have banned poultry imports from India.

Indias health officials say poultry is still safe to eat if cooked properly, but no one believes them. Even Indias own parliament, military, railways and major airlines have stopped serving chicken and eggs.

They know sanitary conditions in India are already poor to begin with. And they realize that with tens of billions of people packed into remote villages or urban squalor throughout the subcontinent, the real danger is the likely infection of thousands of men, women and children, potentially leading to the transformation of the crisis into a human pandemic.

But nowhere on the globe is that danger greater than in Africa …

In Nigeria, H5N1 was just detected earlier this month. A few days later, on February 16, Larry wrote to you about its implications:

This is the event that world health officials have been dreading praying it could be prevented or at least put off.

There are few health care facilities on the continent, fewer trained health care workers and, except perhaps for countries like Egypt and South Africa, no labs that can facilitate early detection.

This means that vast, densely-populated regions stretching from the Sahara desert in the north to the Kalahari in the south are fertile breeding grounds for the disease.

The ordinary, seasonal influenza virus is also widespread in Africa … also poorly detected … and also poorly reported. Therefore, now, as thousands of Africans become infected, the H5N1 virus will have dramatically increased opportunities to exchange genetic material with ordinary flu viruses, gaining the ability to transmit itself among humans.

Thats when the danger of a human pandemic will be the greatest. And thats when the fear-reactions around the world will suddenly intensify.

When Larry sent you this message, the virus had been detected in only one Nigerian state Kaduna, in the north.

Now, less than two weeks later, it has been officially confirmed in five states and the capital, with another three states also reporting widespread bird deaths.

To investors focused on the Dow or the Nasdaq, this may seem far away and irrelevant. But its anything but for a number of reasons:

Reason #1. As I explained exactly one week ago, (Energy Markets Surging with Overseas Turmoil), the United States imports more oil from sub-Saharan Africa than it does from Canada, Mexico, Venezuela or Saudi Arabia; and Nigeria is responsible for the bulk of the African production.

Reason #2. A growing share of Nigerias exports are already being cut off by militant attacks on oil facilities in the Niger Delta, located directly to South of the region hit by the bird flu. A human pandemic in the area or merely a panic reaction by the population can only exacerbate the turmoil already evident in the Delta.

Reason #3. Northern Nigeria precisely where the bird flu is today also happens to be the site of the most violent rioting in the world in response to the publication of the Danish cartoons depicting the Prophet Muhammad. In fact, the cartoon-inspired riots have caused more deaths in Nigeria than theyve caused in all other countries combined.

Reason #4. Most important, Nigeria is not a small, isolated country.

Nigeria is the most populous on the continent and among the richest in the developing world.

Nigerias largest city, Lagos, is a 7-hour, non-stop flight from London, easily the most heavily traveled connection between the two continents.

And, as Ive shown you, Nigeria stands at the intersection of the three crises that are criss-crossing the globe. Thats why …

Nigeria Can Teach Us Some Critical
Lessons about Our Near-Term Future

First, it shows that turmoil respects no boundaries and no stop lights.

Indeed, in the crossroads of history, we have repeatedly seen that, before striking a country or its people, one particular crisis does not conveniently wait for another crisis to pass.

In the late 1910s, for example, the world was simultaneously struck by the first global war … the worst bird flu pandemic in modern times … and the first worldwide inflation of the century.

At the time, no one connected the dots … except perhaps to wonder why so much hardship would befall them all at once.

But later, when historians put the pieces together, they discovered that all three world events were actually more closely linked than anyone had realized:

The Spanish flu virus, a kissing cousin of todays H5N1, was incubated and spread by the troops in World War I … while generals on both sides, prioritizing the war effort, made the conscious decision to ignore its consequences.
Both the war and the pandemic caused chronic shortages of critical commodities food, energy and raw materials.
And those shortages led to worldwide inflation, one of the worst seen before or since.

Today, we can discern similar connections in Nigeria: Ethnic warfare deepening the poverty … poverty associated with unsanitary health conditions … poor health facilities allowing the spread of the pandemic … the pandemic threatening the local economy … and the economic strife of recent years already prompting attacks against foreign oil interests.

Is Nigeria Unique?
Absolutely Not!

Look at the rest of Africa. Look at the Middle East, South Asia, East Asia, and alas, the Americas as well. What do you see?

Forty years ago, when I was a young man attending college, we already saw abundant, shocking evidence of the wealth disparities between rich and poor nations.

Even back then, we said it was a pressure cooker that needed to be cooled … or released.

Instead, after all these years, the only thing that has changed is that the heat has been turned up: We have far greater wealth disparities and far deeper hatreds. We have far more demand for commodities. And all of these trends are tied to a single megatrend: Rapid, uncontrolled, helter-skelter growth of population and industry, all seeking to grab more of the same thing: Energy and other scarce resources.

Even with all the new wealth, modernization and new technology, there still isnt enough to go around.

Sean has told you how China, India and the U.S. are vying against each other in a Great 3-Way Race for Energy.

I have shown you how this conflict is escalating into a series of Oil Wars.

Larry, reaching back to statistical data from centuries ago, has demonstrated how the Cycles of War are now approaching.

And last Thursday, Larry also connected all these dots back to the underlying force that drives them a global natural resource deficit equivalent to 2.5 billion soccer fields of land. (See Natural Resources: The Biggest Global Deficit Ever.)

So dont let anyone tell you that what happens in Nigeria doesnt matter … or that 12 cartoons published in Denmark are just a passing fetish. Its all tied together. And its all coming to the fore right here and now.

What to Do

First, start taking steps to protect your familys health and wealth from the coming bird flu pandemic.

Much of the rest of the world is already feeling its impacts. And the next panic-triggering event will be the discovery of H5N1 in North American wild birds … and soon thereafter, in U.S. domestic poultry.

By that time, you should already have your own personal and business contingency plan in place. Will you? If not, you may find yourself scrambling to catch up.

The British government has issued the UK Influenza Pandemic Contingency Plan. Its by no means perfect or intended to prevent a pandemic. But its the best they can do for now, and one of the model plans you can refer to. It calls for:

Enough vaccine to cover the entire UK population 120 million doses, but to be developed only after the pandemic has started.
Manufacturers to tender in advance for the contract to supply the vaccine. A stockpile of 14.6 million courses of anti-viral drugs is being built up. It is not a cure and its not enough. But it would be used to protect those most at risk of serious illness.
National mobilization of radio, TV and newspapers to make public announcements.
Banning of all public meetings, such as concerts and football matches, in an attempt to contain the disease.
Strict travel restrictions both domestically and internationally.
Intensive training of government employees and health care workers on how to cope with the massive demands likely to be placed on them during a panic.

At the Weiss Group here in Jupiter, Florida, our Avian Flu Task Force met on Friday, and we established the following priorities:

First, we decided to beef up our work-at-home systems for all employees, providing everything we need to continue servicing our customers during a pandemic.

Bruce Rigdon, our Chief Information Officer, reports that, with our Citrix remote servers, we already have the infrastructure to support all critical staff at home, much like we did during last years hurricanes. Now, we will expand that capability to cover nearly all staff.

Jennifer Moran, who, like many employees, telecommutes one day per week, says the system works very efficiently just like being at my desk at the office.

Julia Scully, Operations Manager, adds that customer service staff can also hang a home extension on our central phone network so they can take your calls from home, exactly as they would if they were working at the Weiss Group headquarters.

Our task forces next steps:

To flush out a complete contingency plan and to share the highlights with you just as soon as its ready.
To launch a free information service, in partnership with one of the nations leading research think tanks in the field Bio-Era to keep you up to date and informed. (Details to come.)

Second, make sure your financial house is in order. That includes keeping a nice chunk of your money tucked away in a fund that buys exclusively short-term Treasury securities or equivalent, such as the Weiss Treasury Only Money Market Fund (800-814-3045).

Third, invest in companies that are, or will be, in the forefront of defending the public against a likely pandemic. Larry has just posted a report to a free web page on this very subject: Five companies that are bound to get the lions share of the $10 billion already allocated to bird flu defense.

Currently, Tamiflu, made by Roche, is the only effective treatment for influenza. But Roche has already said it cant possibly manufacture the billions of doses that will be needed. So its negotiating with others to license the drug. In his report, Larry provides the latest on which companies have got their fingers in that pie.

The dilemma for the UK contingency plan I just told you about and for pharmaceutical companies is that its impossible to create a vaccine for a virus strain that does not yet exist. Until the virus mutates into one thats contagious through person-to-person contact, the focus has to be on setting up the machinery for the future manufacture of vaccine.

One of the big pharmaceutical companies youll read about in Larrys report has already signed a $100 million contract with the U.S. government to develop a bird flu vaccine as soon as a contagious strain appears. If they come up with an effective vaccine, the worldwide demand will be huge, and the rights will be worth staggering amounts of money.

In his report, entitled Follow the Money 5 Companies That Will Get the Lions Share of the $10 Billion Avian Flu Defense Budget, youll also learn about another big drug company thats an even bigger opportunity.

Its stock has been beaten up because its new flu drug failed phase III testing. But now, subsequent tests are showing that a single injection of this new drug may be comparable to five days of Tamiflu treatments, greatly lowering the risk of death from bird flu. His report, free with a subscription or renewal to his Real Wealth Report, provides all the specifics.

Fourth, make sure you have a stake in energy. As you can plainly see from the news, the forces driving energy markets higher are already marching forward long before bird flu becomes a factor. So hold on to Enerplus (ERF) as well as any energy ETFs or mutual funds. Ditto for basic materials, precious metals and other natural resource investments.

Fifth, for funds you can afford to invest aggressively, take advantage of the huge leverage now available in LEAPS (long-term call options) on major energy companies.

For example, one of the companys were looking at is one the worlds largest oil drillers with nearly 100 mobile offshore units. We feel its perfectly positioned to capitalize on the high prices that are already being paid for its services. That alone justifies the investment. But whats really striking is that its so grossly undervalued, trading at half the valuations of some of its competitors.

400 shares of this company would cost you about $28,800. If the stock rises to Larrys target over the next 12 months, you could make about 77% on your investment. Not bad. But theres another way.

Instead of shelling out $28,800, you can purchase four LEAPS on this company, effectively controlling the same $28,800 for just $1,400. If the stock hits his target within a year, they could be worth $11,200 a gain of 700%!

In other words, the return on your investment using LEAPS would be nearly nine times greater than on the shares. Your total risk: The $1,400 plus any commissions you pay your broker. (For more details, plus information on two other similar opportunities, call 877-719-3477.)

All three of the recommendations are going out to subscribers Thursday. So be sure to act before Wednesday night.

Good luck and God bless!

Martin

About MONEY AND MARKETS

MONEY AND MARKETS (MAM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Larry Edelson, Tony Sagami and other contributors. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MAM. Nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MAM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical inasmuch as we do not track the actual prices investors pay or receive. Contributors include Marie Albin, John Burke, Beth Cain, Amber Dakar, Michael Larson, Monica Lewman-Garcia, Julie Trudeau and others.

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