It’s been a long time since anyone on Wall Street cared about what was going on in the geopolitical world, but that may be about to change. A quiet war has been heating up between Israel and Iran with the potential to send an already weak U.S. stock market into a steep dive. Recently, a bunker-buster bomb reportedly took out hundreds of missiles Iran was hiding on a Syrian base. Because Hezbollah is likely to possess some of the same weapons, it’s no longer unthinkable that Israel would strike the terrorist group’s base of operations in Lebanon pre-emptively.
Flaming kites from Gaza have been causing major damage to Israeli farms. Add to this volatile mix an impending decision by Trump about whether to extend the nuclear deal with Iran. There are very good reasons why he should not. Read this New York Times column by Bret Stephens if you think Iran has lived up to its side of the bargain. There is also the planned move, on May 15, of the U.S. embassy from Tel Aviv to Jerusalem, an event that Israel’s enemies may treat as an opportunity to disrupt the world in some horrific way. The Middle East is a powder keg. If it is about to explode, the clearest and earliest warning won’t be found on the evening news, but in crude oil’s charts. We should see the price of oil move above $70 a barrel within the next week or so if war is imminent. For your information, NYMEX futures settled Wednesday at $67.68.