Well, Happy New Year! This is the first post of a new decade and a year that should be unforgettable. It makes me wonder what we will be talking about this time next year. I would prefer to start out the new year talking about goals and new years aspirations. Unfortunately, we have a situation escalating in the Middle East with Iran that deserves some commentary.
As you may know by now, the US killed a very strategic popular Iranian (Terrorist) General, Qasem Soleimani. I have heard it said that he was considered the number one terrorist still alive. Of course, that set off threats of retaliation and shades of war. This wouldn’t be the first time that threats were made from the Middle East against the US. Having said that, (and I hate to utter these words) this time feels different. This action taken by the US was no small matter considering the General’s value to Iran and his popularity.
This starts off a dangerous process of threats and retaliation. Over the weekend President Trump said that the US was prepared and ready to attack up to 52 strategic targets. It is highly unlikely that Iran is going to be a doormat seeing how everything has unfolded over the past 48 hours. Their threats are to a President who believes in defending America no matter what. They are even threatening to strike the White House. I doubt that is going to happen. However, cyber terror threats and wreaking havoc and destruction on allies and killing Americans are unfortunately real threats.
I have no problem with President Trumps decision to eliminate terrorists who wish to do America harm. It is about time that a President took action verses attempting a diplomatic approach. There is no good time to take this type of action and diplomacy has proven in effective with people who want you dead.
This could go one of two ways. First, we could draw the line in the sand and have a staring contest because really no one wants to blink and escalate things into a full fledged war. Second, they retaliate, then we retaliate, then they retaliate, etc. until this escalates into a dangerous situation.
Effect on the Markets
CNBC.com and other popular finance sites are downplaying this situation and the effect on the markets. Maybe that is the right call. However, this obviously creates uncertainty. The market hate uncertainty. I see a period of time up-front where this could rock the markets when threats are flying and bombs are bombing. It is to early to tell. Of course President Trump will undoubtedly use every tool available to keep the markets calm. At some point, the markets will get comfortable with it. The biggest threat are the consequences we don’t see. Generally speaking, that is how bear markets start. However, let’s not get to far ahead of ourselves.
Stay tuned – On the radio show and in these posts I will keep you up to date. The bottom line is to know your risk level, the amount of risk you are taking, and be comfortable with it.