Geopolitical Update : Israel under attack – World edges closer to war – Markets
By Christian Takushi, Macro Economist. Switzerland – Sat 7 Oct 2023. (Public release delayed & truncated 8 Oct 2023)
This is a first analysis on a serious situation that is developing in Israel.
Because there is so much information and drama going at this hour, I will stay true to our principles: I will not repeat what you can read in the newspapers or watch on TV – that would be adding to the noise. In this hour, I’d like to add value by putting this in the global context – so we can make better sense of what is at stake.
The latest attack on Israel will embolden in the first days Israel’s security assessment from the year 2017. But longer term, Israel will be told “you need external help”. This is a dangerous hour in the Middle East, but Saudi Arabia could weigh in. With the US-sponsored Abraham Accords on the one hand, and the China-sponsored Iran Rapprochement on the other .. it could be the balancing force (in a narrow but well defined corridor of options) now and help shape the future security arrangement. Thus, not the USA nor China directly, but Saudi Arabia could play peace maker. Not what Israel had wanted and if that materialises, the BRICS would gain massive influence on the Middle East.
I will make a few short statements:
- The highly structured attack on Israel on such a highly symbolic day could derail the geopolitical strategy of all powers: USA, Russia, China, Turkey, Saudi Arabia, Egypt, Iran etc and drag them all into a bloody conflict. Although the long term interests and strategies of all world and regional powers could be upended and hurt, there are probably only few short term beneficiaries in all this.
- The timing of this conflict could prove a heaven-sent help for a politically beleaguered US President in the US Congress. Just what may save US financial markets over the next 40 days from a cascading of crises by mid November triggered by a potential government shutdown or US default. But it could also help Prime Minister Netanyahu if he can strike hard and successfully. A third beneficiary could be Saudi Arabia. But they all face multiple dynamic risks as well.
- Many of you know what I have been saying since 2010:
the Middle East is where all conflicts and geopolitical strategies in this world are increasingly converging. What we are witnessing could be the foreshadow of or the beginning of a major global conflagration. The build-up could take years, the unfolding could be just a matter of hours. - Since the 1960’s all major geopolitical tensions and alliances around the world connect with the Middle East – Increasingly driven by how nations are positioning themselves on (how they view) Israel’s alleged rights on the West Bank or the ancient Samaria & Judea (as Israel sees it, their biblical homeland). Thus, feeling “let down” by its allies, Israel could be tempted to strike hard at Iran and also fully annex the disputed territories.
- Since 2015 we are expecting 3 to 4 major wars in the future – all of them will take place in Northern hemisphere. In two of these wars Israel will be targeted or attacked.
- If there is a World War Three (we have no doubt there will be one, actually there is likely to be a WW3 and WW4), it is very likely that the Middle East will play an important role.
- Based exclusively on our independent analysis I ascertain as of this evening that Jerusalem’s first take is that this massive attack against Israel was planned many months ago involving several countries (in the region and outside the Middle East) and advanced communications. Two painful questions arise:
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10.Most investors have all their assets in the Northern hemisphere or in territories that are very likely targets in a major conflict. In case of a large scale war and depending on the scenarios and alliances (remember there are more alliances than competing nations!) , territories like the Panama Canal, the Suez Canal, the Gulf region and the Strait of Malacca could be prime targets. To have your assets near those locations was excellent over the past 20 years, but may not in the next 20 years. While you can stay put there, you may need a real geopolitical diversification.
Barring any counter policy moves .. Oil, Gold and the USD are likely to trend higher in the short term. Should there be a possibility for the USA to be dragged into the conflict (Iran?), there is a possibility of a rush to US Treasuries. That could see a sharp decline in USD Yields and a most welcome rally for beleaguered bond holders.
By Christian Takushi MA UZH, Independent Macro Economist and Geopolitical Strategist. Switzerland – Sat 7 Oct 2023. (Public release delayed & truncated 8 Oct 2023)
Research made in Switzerland
Geopolitical and economic conditions need close monitoring, because they can change suddenly.
No part of this analysis should be taken or construed as an investment recommendation.
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