Anthony Peters
SwissInvest strategist
I’m not sure whether it is the 12th, the 13th or the 14th commandment but it does state “Thou shalt not get involved in other people’s religious conflicts”. There is much debate about the worrying goings on in Iraq and significant railings against George W Bush and Tony Blair over the decision to depose Saddam Hussein. Trust me, I am no fan of the former and even less so of the latter who appeared on television in this country on the week-end wearing his most saintly of saintly faces in order to reassure us that his decision to join in the invasion of Iraq had been correct and that Western reticence in Syria and now maybe in Iraq again would be a mistake.
I would have expected more from the man who has turned being a politician into becoming a money making machine into a fine art. Saddam was about politics; I suspect the underlying Sunni/Shia strains were not understood. Now they are. Removing authoritarian leaders always leaves a mess but if part of the tyrant’s game was holding various religious or ethnic grouping in check, then uncapping the bottle is inviting the genie to escape. Just look at the break-up of Yugoslavia.
Risk asset markets might be in for a spot of volatility this week but past history has always marked Middle-East generated softness in prices as a better buying opportunity.
What is happening in the Middle East looks to be developing into a full-out fight between Sunni and Shia. The best we Judeo-Christians can do is to stay as far away as possible.
Nations have come and gone through the passage of time and nothing is writ in stone, least of all the borders of the artificial countries which were created during the European colonial period of the mid-19th century through to the early 20th. It might well be that the ebb and flow of history is about to redraw them.
A rumbling volcano
Rather than fighting to defend a crumbling status quo, we should be asking ourselves what we can do to help in the peaceful transition, which is of course tantamount to trying to create a controlled release of pressure from the magma chamber of a rumbling volcano. Great idea, unlikely outcome.
As has repeatedly been pointed out, when the fighters are west of the Syrian/Iraqi border they are freedom fighters and when they are to the east of it they are terrorists. I am not sure what President Barak O’Bama has in mind but I don’t have a good feeling. It is probably true that the last US President to “get” global politics was Richard Nixon, he who understood that the only thing America could do with Viet Nam was to get out. Had it not been for Watergate, he might now be seen as a great President but it was not thus and he will be remembered as not much more than a crook and a common criminal.
Meanwhile, oil prices are responding with WTI closing in New York on Friday at US$107.33 and Brent in London at US$113.07, up from the January levels of roughly US$92.00 and US$107.00 respectively. Smart cookies are commenting that most of the Iraqi oil is in the South and well away from the insurgency but forget to account for the ongoing troubles in Libya, another country “freed” with Western support. Why WTI should have so desperately outperformed Brent is something of a mystery, not least of all as it is built on US energy independence. If it is rallying on the basis that the US might need to support the world market if, as and when supplies from Iraq are interrupted, then I would understand.
Risk asset markets might be in for a spot of volatility this week but past history has always marked Middle East-generated softness in prices as a better buying opportunity. As yet I see no reason why this time should be any different and I would therefore be tempted to be prepared to slip in a few bargains if they present themselves. Mark-to-market volatility might make life a little hard for a while but in the fullness of time, it should pay off.
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On a different note, a year ago I bet with a stockbroker friend of mine when Cable was around US$1.50 that it would trade 5% weaker before it traded 5% stronger. This morning it briefly breached US$1.70 and I humbly eat my words. I owe you dinner, Nick.
