Every nation has its problems, but those of Israel arouse more passions than just about any other country. Doubtless there are many people in the world who just don’t care, but there are 1.8 billion Muslims and 15.7 million Jews worldwide who have fairly strong opinions on the matter. Much of the worldwide Christian population also follows events in Israel closely. And the worldwide need for oil and dependence on Middle Eastern shipping and transit lanes are also affected by tensions in the region.
In short, when tempers flare in the Levant, they flare worldwide. We’ve seen this fact on open display over the past week, and it doesn’t promise to go away. Some people blame Hamas, some blame Iran, some blame Israel, and some blame all of the above. Important peace initiatives that were on the table are in danger or have been halted, and actors outside the region could be drawn in by hostilities. This is a crucial time, and people’s need and desire for accurate news is immense.
Serious economic and financial analysts have the opportunity to be far more informed and thoughtful than many observers given that they spend so much time examining the forces that move markets. After all, markets are not autonomous. They are derivatives of society, and depend for their existence on certain human innovations such as money, products, places to buy and sell, transportation, transaction facilitators such as banks and brokerage firms, laws and regulations conducive to trade, the will to transact with others, and more. And all of these are deeply affected by political systems and actions.
So it’s no surprise that the analysts summarized below spend a great deal of time looking at politics at every level, along with economic and financial developments. They are all related. So as your need to know what’s going on increases, don’t ignore the efforts of analysts whose livelihoods depend on their ability to tie it all together. Your livelihood might depend on it, too.
Key Takeaways:
- Is the US following in Israel’s footsteps?
- Disorderly trading is becoming “ominous”
- Oil casts a large shadow, which might be getting very dark
- Can charts anticipate black swans?
The McAlvany Weekly Commentary: David and Kevin focus this week on the war in Israel and its many ramifications. Both hosts have read extensively about the region and visited it as well. Too, David has interviewed seminal writers and thinkers from the region in the Weekly Commentary, or met with them in Israel. So even as the hosts’ sympathies tend toward Israel, they are objective in their analysis of events. Israel has made serious errors leading up to the incursion, and many of those arise from dissensions and turmoil within the country itself. And one of the most germane observations the hosts make during the program is that many of Israel’s problems leading up to the war mirror conditions in America. America’s enemies are doubtless paying attention.
Credit Bubble Bulletin: “Perhaps it goes back to a passage I recall reading years ago that recounted the 1929 experience: ‘Everyone was determined to hold their ground. But the ground gave way.’ Difficult this week to shake that foreboding feeling. It’s as if things barely clinging together started to come loose – a most tenuous stasis about to spiral out of control. Global markets. Gaza, Israel, the Middle East – and a hostile world.” So begins Doug’s summary of the week, first in general terms and later with respect to markets. Both foci are succinct and quintessential, highlighting the implications for both political and economic realms worldwide. In short, the political events that dominated the newscasts this past week shook up governments and roiled markets. Doug surveys the landscape and both summarizes and provides pertinent news excerpts on the damage.
Hard Asset Insights: Morgan also focuses on the elephant in the room, but quickly turns the focus from events in the Middle East to their impact on energy prices. Despite the best efforts of alternative energy advocates everywhere, the world still runs on oil—and will continue to do so for the foreseeable future. Anything that raises the cost of oil raises the cost of life, and the Hamas/Israel war is raising the cost of oil. If Iran’s involvement is proved, and its oil flow is impacted, that effect could be greatly increased. Despite the immense implications of such possibilities, much damage has already been done. Morgan characteristically focuses on the human component of markets, and notes that consumer sentiment has already taken a nosedive. That development coupled with events in the Levant cause him to conclude that “despite the popular goldilocks narrative, the inflation fight is far from won, there is no ‘mission accomplished,’ and oil prices now threaten to reverse any and all progress made on our serious consumer price problem.”
Golden Rule Radio: After voicing their sadness regarding the human cost of events in Israel, hosts Rob, Miles, and Tory return to the reason for the show, and note the impact that Middle Eastern events are having on markets. In last week’s program, the hosts noted that gold was significantly oversold and ripe for a correction upward. That move came in response to events in Israel, prompting Miles to observe that, “I’m always incredibly fascinated how somehow, magically, events and natural market moves just happen to coincide… Like we said last week, we knew a bounce in gold was coming.” That bounce came in response to an event no one predicted, but it came in a way that the hosts clearly did predict—prompting Miles’ observation regarding the mysterious interface between the seen and the unseen. And that observation does not pertain to a one-off event. Miles ties it into events surrounding the Covid episode as well, and notes that the phenomenon is not uncommon.
