Buying on a War Scare
Baghdad, Iraq. 3rd January 2020. A US drone strike kills Qasem Soleimani, Iranian Major General of the Islamic Revolutionary Guard Corps. It’s a World War 3-inducing, illegal assassination of a war criminal. 2020’s off to a flyer!
The price of Brent Crude rose sharply on Friday in custom with rising tensions in the Middle East. At times like this, the region’s vital oil refineries turn into strategic targets, and supply and demand fears grip investors. An oil spike of 3% sent shock waves through the airline industry, trucking business, and indeed anything running on unhedged kerosene.
However, there’s still plenty of upside out there. Investors have darted for safe havens like bonds and gold, afraid this geopolitical chaos could tip the global economy over the edge.
War-ready aerospace and defense firms climbed higher on rumors they could be called into action, and equity markets as a whole are expected to recover aptly over the medium-term (3-6 months).
Of course, every world power is now trying its very best to diffuse tensions, and stop an all-out war in the first place. Every world power except Iran and the US, it seems!
Both sides went all-caps on Twitter over the weekend in a no holds barred, hyperbole-heavy shoving match. The Iranian Information and Telecommunications minister compared President Trump to Adolf Hitler and Genghis Khan, promising “he will learn very soon that NOBODY can defeat !” The Trumpian response? To threaten 52 sacred Iranian sites with strikes “VERY HARD AND VERY FAST!” We’re not sure who to believe, here.
In practice, traditional brawn and brute strength might not win either side a conflict in this day and age. Coalitions of unknown allies on unknown sides could anonymously wreak havoc through cyber warfare or online disinformation campaigns. The odds are growing of an antiballistic ‘Operation Unthinkable,’ a weaponized ‘Disease X’ pandemic like Bill Gates warned, and of course, a Thermonuclear button press. Every investor is hoping Trump hasn’t already hit the iceberg here. But it’s Iran’s move!