Market Overview

Three Months Later, Japan Still in Meltdown

Japan's tsunami and nuclear crisis entered its third month Saturday in an event marked by quiet contemplation and loud protests against nuclear power across Tokyo.

It was three months ago Saturday that a massive earthquake shook the island nation of Japan, rocking buildings and setting off a chain of events that has observers wondering if Japan will even survive, let alone thrive again. The earthquake launched a tsunami, which killed thousands, and knocked out the nuclear power plant at the Fukushima Dai-ichi nuclear power plant, about 140 miles northeast of Tokyo, setting off a series of explosions, fires and large radiation leaks at the facility.

The tsunami that followed the earthquake knocked out the backup generators, leaving plant operators scrambling to keep the fuel units from overheating, melting down, and releasing radiation into the air and sea. For the most part, the efforts were a mixed bag of results. Early reports hinted at success; later reports indicate the company and the government seem to have engaged in a conspiracy to hide the truth of what was happening at the plant.

In all, three reactors (of the six) are believed to have melted down. The environmental disaster cannot even be estimated, as a human being would face deadly exposure levels of radiation within two minutes of entering the hot zones of the plant. The estimate so far is that the total release from the event is roughly one-sixth of what was released at Chernobyl.

Seawater pumped in to cool the plant's reactors kept the situation from growing exponentially worse, but appears to have spread radiation into the surrounding seawater. Fishing and whaling industries in Japan may never recover.

The nuclear disaster has come at a crucial time for the world, as most of the governments of the developed world weigh alternatives to traditional carbon-based fuels. For a while, it appeared nuclear power had overcome its initial hurdles of fear and the industry was poised to grow in the coming decades. Now, facing the realization that each plant is a ticking time bomb, and any series of negative events could wipe out millions of citizens, the world's governments are rethinking nuclear power.

For its part, Germany is closing down all its plants and switching over to alternative fuels. Japan was set to increase its electricity generation from 30% to 50% from nuclear power; it will now focus on wind, solar, and other alternative fuels. Might this event be the catalyst that kills the nuclear power industry?

Action Items

Bullish: Traders who believe that nuclear power is a doomed industry might want to consider the following trades:

  • Solar power would probably benefit in the long run, as carbon-based fuels are in limited supply. Three ways to play the solar market include (Nasdaq: SOLR), (NASDAQ: FSLR), and (NYSE: LDK). Those three companies offer different price points for stocks and market caps, and offer their own spin on the future of solar energy.
  • If nuclear energy were shut down now, the short term gain might belong to oil, so perhaps United States Oil (NYSE: USO) is worth a look.

Bearish: Traders who believe that nuclear power is only facing a blip and will rise again may consider taking positions in the following:

  • General Electric (NYSE: GE) supplied three of the reactors at the plant in Japan, and could be available to rebuild future nuclear devices.
  • Cameco Corporation (NYSE: CCJ) has some of the best, high-quality uranium sites in the world. They make an interesting two-way play, first for bears if nuclear slides a bit, and then for bulls if nuclear gains again.

Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.

Posted-In: Fukushima Dai-ichiNews Movers & Shakers Politics Global Trading Ideas ETFs General Best of Benzinga

 

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