This Ain’t No Libya
We spoke last week about war – its near-term inevitability, ubiquity and longevity – and it appears the latest developments in the Middle East may have pushed the battle calendar forward.
With the British Embassy in Tehran sacked and bellicose statements issuing from government and media sources in London, we now see the chance of a wider regional conflagration being sparked at any moment. And it won’t be no Libya.
Raising the Stakes
The complicating factors surrounding any Iranian-Western confrontation come from the following factors.
- Germany, Holland and France just joined the UK in condemning the Iranian government’s sanctioned break-in of the British embassy in Tehran, but didn’t take the further step of closing their Iranian embassies as the British did. Nonetheless these European allies will support morally, if not materially, any western action.
- Iran has promised to launch 150,000 missiles against Israel and Turkey (!) if they are attacked by a western country or any western-led coalition that includes Arab states. They will also seek to close off shipping lanes in the Strait of Hormuz, through which 40% of the world’s oil supply moves.
- At the same time, an increasingly aggressive posture against Iranian ally, Syria, by both the west and the Arab League has led Damascus to state that they, too, will launch an aggressive hail of missiles against Israel and Turkey (!) if attacked.
- Israel has promised a swift response to any attack on her citizenry, citing the need to send only one or two projectiles in return.
- What makes the situation even more explosive is Russia’s repositioning of its single aircraft carrier, the Admiral Kuznetsov, off the Mediterranean Syrian coast, joining three other Russian warships already docked at Syrian ports, in what appears to be a bid to warn the West of intervening with Russia’s latest Middle Eastern ally.
- America appears unmoved by the Russian threat. President Obama recently authorized the deployment of aircraft carrier George H.W. Bush along with three cruisers and five destroyers to begin patrolling the eastern Mediterranean coast. The idea behind seventy additional U.S. fighter bombers in the region is to provide air cover for local (Arab) parties to successfully unseat Syrian President Bashar Assad.
- China’s military has stated that it will risk a third world war to protect Iran from any American attack.
- Israel all but admits that has operational plans for the destruction of Iran’s nuclear capacity and that it will be forced to act within the next six months if it hopes to preempt an Iranian bomb.
- Lebanese based Hizb’allah and Gaza’s Hamas – both staunch allies of Iran – appear to be provoking an early and heavy handed Israeli response to renewed missile attacks on its population centers. This would turn the diplomatic tide away from the Syrians and Iranians and justify a missile barrage against the Jewish State (but not likely Turkey.)
Re-election Chances for President Booming?
According to popular financial blog site, ZeroHedge (via Gallup), Barack Obama is now officially the least-approved president ever at this stage of his re-election campaign (see the links), and some believe it behooves him to pull out all the stops to turn things around.
We’re in that camp, though we’re not sure we’re so comfortable there, considering the company we’re keeping. It appears none other than Donald Trump has also weighed in on the matter, just this week tweeting that,
“In order to get elected, @BarackObama will start a war with Iran”
In the end, however, he may not have to.
The economy and the markets are on a tear.
Economic numbers are surprising like a shark attack.
Pending home sales just shot higher on a monthly and year over year basis, beating all expectations:
Employment figures from the payroll people, ADP, also surged beyond expectations, printing 206,000 new private sector jobs on expectations of just 132,000. The true test for jobs, however, will be Friday morning’s official Non-Farm Payroll Report by the US Labor Department.
And finally, the Chicago PMI, a bellwether measure of industrial business activity, shot up to 62.6 on expectations of 58.4.
The Bernanke Blink
With the U.S. economy starting to cook, Fed Chair Bernanke apparently felt ready to ante up on a European bailout, and the market has been aflight ever since.
Look for that to continue at least until the first shots are fired.
And consider returning to the energy sector, maybe via some of the richer Canadian plays, like Suncor (NYSE:SU), Canadian Natural Resources (TSE:CNQ), or Imperial Oil (NYSE:IMO), all of which offer a roughly 1% dividend to boot.
Many happy returns,