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| If you were close to the Mississippi River today, you may have heard the explosive opening salvo of the nation's war for water. For decades, Americans have contemplated the idea of a war over the world's most abundant resource.
As our population grows, it's only a matter of time before our national consumption exceeds our availability of fresh drinking water. At least, that's the commonly touted logic. But like so many things we try to predict and prepare for, the real issue is a topic few folks (including investors) have bothered to contemplate.
It's the liquid equivalent of a "black swan" event... and it has officials near Thebes, Illinois packing America's most vital waterway with explosives.
If you haven't followed the plight of the Mississippi River over the last few months, the synopsis is simple: There are too many barges and too little water.
Thanks to the worst drought in generations, water levels in some sections of the river are as much as 20 feet below normal. That means barges carrying everything from corn to gypsum to scrap steel are floating just inches above hull-splitting rock formations.
That's why, starting today, large sections of the river will be closed as explosives blast away rocks that can't be cleared with standard dredging techniques.
But the folks in the midst of the real battle for the Mississippi and her water aren't using explosives... their weapon is political. And, of course, the White House is about to get involved.
There are two increasingly divided sides to the fight - the folks north of St. Louis and the folks to the south.
It's the states with the Missouri River flowing through their borders versus the states downstream.
The farmers and ranchers along the Missouri and its tributaries depend on the river to irrigate their crops and keep their livestock alive. But the folks downstream of the Missouri depend on its flow into the Mississippi to keep barges from smacking into rocks. | Sponsored How Does Alexander Green Beat the Markets? For years, Alex has been able to hand his premium subscribers double-, triple-, and even quadruple-digit gains... despite the markets.
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Really, it's not much different than the fiscal fight we're enduring on the national level. Think of it as the battle between the makers and the takers... the "water rich" versus the poor.
And, as always, there are loud cries demanding the government take from the rich... despite the long-term result.
The shipping industry desperately wants Washington to force open the spigots and spill more of the Missouri's water into the Mississippi. But, like I said, it would have rough effects on the folks upstream.
"There are farmers and ranchers up there with livestock that don't have water to stay alive. They don't have enough fodder. They don't have enough irrigation water," said Robert Criss, a hydrologist at Washington University in St. Louis. "What a dumb way to use water during a drought."
I'll let you draw the ties to the fiscal cliff debate on Capitol Hill this month. But here's a hint... a region that barely has enough water to survive shouldn't send any of it downstream. And a government that borrows 46 cents of every dollar it spends shouldn't spend any more than it has to.
Even so, sources say there's a 50/50 chance Obama will divert more water... and there's an even better chance Washington won't stop spending anytime soon.
The final example of just how desperate the river tenders are comes in the form of Carlyle Lake. That's the reservoir officials began to drain over the weekend. The hope is the lake's water will raise the level of the Mississippi by a mere six inches over the next week.
It's a desperate and temporary solution. But as the Army Corp of Engineers' Gen. John Peabody puts it, at this point "inches make a difference."
Even so, the lake will eventually empty and the mighty Mississippi will continue to recede - much like our country's beleaguered balance sheet, where inches, too, make a difference.
Good Investing,
Andy
P.S. We all know our government loves to take from the rich and give to the poor. But it can't do it without tracking who's making money and how they do it. That's what most investors don't know...
They don't realize Washington keeps extraordinary detailed files on the country's most-successful investors. These obscure records are a national treasure of trading tips. Let me show you... |
   
Market Metrics Kirby Gobbling Up Acquisitions The Midwestern drought discussed above is taking its toll on shippers that operate in the Mississippi. A closure through January is estimated to cost up to 20,000 jobs and $130 million in wages and benefits.
Kirby Corporation (NYSE: KEX) is the largest operator on the Mississippi and the company, as you can see on the chart below, was absolutely hammered this summer.
But since July the stock has gained almost 40% as the company has gone on an acquisition spree due to weakness in competitors. While it's still probably not a good time to bet on a rebound in shippers affected by the drought, if its acquisitions pay off, Kirby could come out of the drought stronger than when it started. It'll be an interesting company to watch throughout 2013.
- Justin Dove 
Click here to view the full chart. |
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